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THE EXTENT TO WHICH 'BIG GOVERNMENT' WAS REDUCED - Coggle Diagram
THE EXTENT TO WHICH 'BIG GOVERNMENT' WAS REDUCED
Context- legislation etc.
Deregulation:
Didn't deregulate as much as he desired.
Slashed agency budgets.
Appointed James G. Watt, secretary of interior.
Watt blocked creation of wilderness areas, and made a million acres of land available to oil companies for drilling. This angered environmentalists.
Vetoed the renewal of the clean water act, but congress overrode his veto.
Reagan signed executive orders/ passed acts to:
deregulate oil and fuel prices.
stop wage and price regulation.
deregulate controls on fuel prices.
deregulate bus services.
deregulate foreign shipping.
give the president more rights in making trade treaties to benefit the USA.
Cuts in federal programmes
He intended to cut/eliminate federal programmes.
Pensions, medical aid for the elderly, veterans benefits, school lunches and head start weren't touched. Generally, he didn't cut welfare for his voters such as elderly or veterans.
He emphasised building up the national defence.
Reduced the level and range of benefits such as AFDC
Department of Education:
cut staff by 25%
decreased education block grants to the states by 63%.
failed to abolish it.
Carter had begin deregulation of airlines, railways, finance, environment.
'IT WAS REDUCED'/ POSITIVES
Cut federal regulations in half, reduced the cost of heating and fuel.
Federal strike force saved $2 billion in 6 months!
Initially deregulation brought lower prices through competition.
Deregulated wages and prices, oil and fuel prices, bus services, foreign shipping.
Replaced federal agencies with private sector ones and federal employees with volunteers.
Small scale savings- more real to the public.
'IT WAS NOT REDUCED'/ NEGATIVES
The rising deficit showed how Reagan failed to control overall debt, and suggests on the surface that big govt wasn't reduced significantly.
Deregulation of savings and loans institutions led to increased competition. This led to institutions making increasingly risky investments, which led them to lose money and even fail.
By 1988, Savings and Loans Institutions had lost $10 billion!
Led to the property market collapsing in 1989.
The savings and loans collapse forced Bush to intervene, and sign the Financial Institutions Reform, Recovery, and Enforcement Act, which set up federal regulators. It cost $150 billion.
Under deregulation, it meant that when smaller companies were struggling, big companies could buy them out easily. Big businesses boomed while smaller companies struggled.
Businesses set their own standards of safety, and wages, usually lower than govt regulations.
Big govt was not reduced as much as Reagan had hoped. Congress wasn't consistent on deregulation. For example, they deregulated oil prices but blocked plans to remove regulations on pollution.
Certain areas of the USA suffered. Cuts in federal programmes meant collapse of programmes through lack of funding.
Loss of 15% of manufacturing jobs.
US became the largest debtor nation.
IMPACT ON TRADE
Foreign imports became cheaper. Rise of imports gave consumers more choice.
USA became an attractive place in which to do trade and do business. (no tariffs)
Leading investors around the globe renewed their commitment to the US economy.
The balance of world trade shifted against the USA as the buying power of the dollar weakened.
Foreign goods becoming cheaper led American companies to lose business.
E.g. Textile industry was badly affected. 1980-85, about 300,000 textile workers lost their jobs.
Foreign companies invested their profits back into their own companies rather than the USA.