1. IT’S THE ECONOMY, STUPID Big Idea: The success or failure of an administration often hinges on the economy, despite the fact there are other controlling factors. Unit 1 Lesson 2

2. Objectives To compare Keynesian and Supply-Side Economic theories. To evaluate successes and failures of the Reagan, Clinton, and Bush economic plans. To identify additional factors influencing the success or failure of the overall economy. To analyze causes of current economic crisis and research government interventions.

3. Warm up: What was this video clip about? How does it relate to our current studies?

4. Key Economic Terms Deficit – difference between what govt takes in (taxes) and what it spends annually Difference must be borrowed…aka deficit spending Debt – accumulated debt govt owes from yrs of borrowing to pay off annual deficits Owed to people, co’s, state/local govts, foreign govts Debt Ceiling – cap on amt of debt fed govt can borrow Interest – rate paid on borrowed money

5. Key Economic Terms Surplus – take in more than spend Subtracts from total debt Inflation – rate of increase in the price of goods and services over a given period of time Dollar buys less 2-3% good Stagflation – inflation, high unemployment, and stagnate economy Recession – an economic downturn, slow business activity

6. Reagan(omics) Supply-Side Economics Tax cuts to rich … “Trickle-down” $ invested in business = produce more = more jobs = more income = more spending = more taxes (revenue) Deregulation-energy, transportation, banking, cut size and# regulatory agencies New Federalism Social funding cut 10%...left to States Increased Defense Spending

7. Reagan(omics) The Good Inflation rate down Stocks soar Employment up Streamline tax code The Bad Deficit up ($3 trillion) Stock scandals Crash ’87 S & L Bailout Unequal distribution $ Farm Crisis Manufacturing Losses Recession ‘90s  Discovery Education:  http://app.discoveryeducation.com/player/view/assetGuid/542FCB5E-759E-4C11- 881B-33193F51B6B4 http://app.discoveryeducation.com/player/view/assetGuid/542FCB5E-759E-4C11- 881B-33193F51B6B4

8. Bush and “No New Taxes” 1990s Recession & Rising Nat’l Deficit = NEW TAXES = No re-election! The Bad International Trade Deficit Unemployment Up, Poverty Rates Up, Welfare Programs Cut The Good? NAFTA

9. Clinton’s “Fiscal Discipline” Tax increases (on wealthy) & spending cuts to reduce deficit Dot.com boom = ↑ tax revenue (salary & capital gains) Balanced Budget Left office with $127 b budget surplus Pay down debt…not erased On track to pay off debt b/t 2008-2015?

10. Closure How does knowing all of this information impact you? Why is it important to know?