ShmoopTube

00:08

Reagan, Recovery and Reaganomics, a la Shmoop.

00:11

Ronald Reagan once declared, "You can tell a lot about a fella's character by whether

00:16

he picks out all of one color of Jelly Beans or just grabs a handful."

00:20

If this was the case…

00:21

Reagan had a whole lot of character.

00:23

Unfortunately, Reagan’s jellybean preference shouldn’t be used in evaluating his economic policies…

00:28

So here’s the lowdown.

00:30

Reagan strolled into office in 1980 with almost 40 million votes…

00:34

Coincidentally, the same number of Jelly Beans consumed at his Inaugural parties.

00:38

Yeah, you wish you were there.

00:40

His campaign preached a return to American conservatism in the economy

00:44

meaning lower taxes, welfare cuts and less government spending.

00:48

He liked things old school.

00:50

Americans welcomed the promise of economic change,

00:53

as the economy had tanked during the previous Carter administration

00:56

worse than Lindsay Lohan’s career.

00:58

Unemployment was rising…

00:59

Wages were falling…

01:01

Products cost more…

01:02

And after 57,000 American deaths, 140 billion dollars spent, and 15 years of misery…

01:09

the U.S. pulled out of Vietnam.

01:11

And you thought the country was suffering when Snooki announced she was procreating.

01:15

Reagan thought the problem was that the government was too involved in the economy –

01:18

and believed a free market could solve the country’s problems.

01:22

Pretty much meaning that less government regulation

01:24

would allow for more spending and production -

01:27

Helping the economy grow. Danny DeVito felt a little left out.

01:31

Reagan signed into law the Economic Recovery Tax Act of 1981,

01:35

which reduced income taxes by 23% and gave incentives to small businesses.

01:40

Then, his Tax Reform Act of 1986 decreased income tax…

01:44

again, and these two Acts became known as the “Reagan tax cuts.”

01:48

He also cut welfare programs and significantly decreased the power of unions.

01:52

By the end of his administration, unemployment had dropped to 5.4%,

01:57

inflation went down and manufacturing productivity went up.

02:01

Reagan was on top of the world.

02:03

Yet his anti-labor and anti-welfare stances

02:05

widened the gap between the wealthy and the poor in America,

02:08

The basic idea was that Reagan felt that wealth

02:11

"trickled down" from the haves to the have-nots.

02:14

When the wealthy are truly wealthy and have money with which to speculate.

02:18

They have the means to start businesses. And invest in new opportunities.

02:22

New businesses have to be managed by someone.

02:25

So suddenly there are plenty of jobs for the poor.

02:27

So what do you think? Good policy? Bad policy?

02:30

Does trickle down work?

02:32

Shmoop amongst yourselves.

02:33

We’ll let some jelly beans trickle down to ya.

02:35

Maybe.

Full Transcript