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Learn about the impact of the OPEC embargo in the 1970s on the US economy and Reagan's supply-side economics policy in the 1980s. Explore how these events shaped the economic landscape and affected government policies.
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How has the U.S. government historically attempted to help the U.S. economy? (Part 3) Notes #23
During the 1970s, OPEC placed an embargo on oil imported by the U.S. in response to the U.S.’s continued support of Israel. President Jimmy Carter (Dem.); 1977 – 1981 Organization of the Petroleum Exporting Countries (Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela)
This embargo increased the cost of oil and caused a rise in inflation in the U.S., which hurt the growth of the U.S. economy during the 1970s.
In 1980, Ronald Reagan was elected president and he created an economic boom for the U.S. with his supply-side economics policy. President Ronald Reagan; 1981–1989
Under this policy, federal income tax rates were lowered with the idea that saved tax money would be reinvested into the U.S. economy.
However, with lower tax revenues and increased spending on national defense, the budget deficit in the U.S. grew under Reagan.
This deficit forced 1988 presidential winner George H. W. Bush to go back on a campaign promise to not raise federal income tax rates, . . . President George H. W. Bush; 1989–1993
. . . which resulted in Bush losing the presidency to Bill Clinton in 1992.
