Ronald Reagan (1981–1989): Conservative Revival and Economic Reform
- Reagan’s presidency focused on reducing the role of government in the economy and restoring national confidence after the economic problems of the 1970s.
- His policy of Reaganomics promoted tax cuts, deregulation, and cuts in social spending to encourage business growth.
- Military spending increased sharply, which helped end the Cold War but also expanded the national debt.
- Social programs were reduced, which critics said increased poverty and inequality.
- Reagan strengthened conservative values, opposing abortion and promoting traditional family ideals.
Impact on the Region
- Reagan supported anti-communist governments in Latin America through funding and training programs.
- His policies in Central America (e.g., Nicaragua, El Salvador) shaped U.S.–Latin relations for decades.
George H. W. Bush (1989–1993): Moderation and Economic Challenge
- Bush inherited large deficits and an economic slowdown after Reagan’s high spending.
- Despite promising “no new taxes,” Bush raised taxes in 1990 to reduce the budget deficit, which hurt his popularity.
- The Americans with Disabilities Act (1990) and Clean Air Act (1990) were major social achievements that promoted equality and environmental protection.
- The early 1990s recession increased unemployment and public dissatisfaction.
- Bush’s domestic challenges weakened his presidency, contributing to his defeat by Bill Clinton in 1992.
Impact on the Region:
- Bush signed the North American Free Trade Agreement (NAFTA) framework, which later took effect under Clinton.
- His focus on economic cooperation strengthened U.S.–Mexico and U.S.–Canada relations.
Definition
Deficit
- The amount by which government spending exceeds its income in a given year.
Case study
The North American Free Trade Agreement (NAFTA), 1994
Background and Causes
- By the early 1990s, the United States, Canada, and Mexico wanted to increase trade and economic cooperation across North America.
- The agreement was promoted by U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney, and Mexican President Carlos Salinas de Gortari.
- NAFTA aimed to eliminate tariffs (taxes on imports and exports) and create one of the world’s largest free trade zones.
- Supporters argued that the deal would boost investment, create jobs, and make North America more competitive in the global market.
- Critics warned it could hurt local industries and workers, especially in Mexico and parts of the U.S., by encouraging companies to move production to places with cheaper labor.
Main Features and Implementation
- NAFTA was signed in 1992 and officially took effect on January 1, 1994.
- The deal removed most tariffs on goods traded between the three countries and opened access to new markets for agriculture, manufacturing, and energy.
- It also included rules on environmental protection, labor standards, and investment to reduce exploitation and trade disputes.
- Supporters in the U.S. and Canada believed it would expand exports, while Mexico expected new factories (maquiladoras) and jobs along its northern border.
- NAFTA encouraged cross-border investment, allowing companies to operate more freely across the region.
Impact and Legacy
- Trade among the three countries tripled in the decade after NAFTA began, and supply chains became deeply connected.
- U.S. and Canadian companies benefited from lower costs, but many factory jobs moved to Mexico, causing job losses in some industrial areas.
- Mexican agriculture suffered when cheap U.S. corn flooded the market, hurting small farmers and increasing migration to cities and the U.S. border.
- NAFTA helped modernize parts of Mexico’s economy and strengthened ties among the three nations.
- Critics argued it widened the wealth gap and favored corporations over workers and the environment.
- In 2020, NAFTA was replaced by the United States–Mexico–Canada Agreement (USMCA), which updated trade rules on labor and digital commerce.
Definition
Maquiladoras
- Factories in Mexico, often near the U.S. border, that assemble imported materials for export.
Bill Clinton (1993–2001): Globalization and “Third Way” Politics
- Clinton promoted a centrist approach blending free-market policies with social reform, often called the “Third Way.”
- The economy grew rapidly due to technology innovation and the rise of the internet, creating budget surpluses by the late 1990s.
- Key policies included welfare reform (1996), the Family and Medical Leave Act (1993), and expansion of healthcare for children.
- Clinton’s presidency faced major scandals, including the Monica Lewinsky affair and his impeachment trial (1998), though he remained in office.
- Globalization under Clinton deepened U.S. economic ties in Latin America and Asia.
Impact on the Region:
- Clinton supported democratic reforms in Latin America and helped expand trade and investment through NAFTA and the Summit of the Americas (1994).
- He emphasized cooperation on immigration, environment, and drug control with neighboring countries.
Definition
Globalization
Process of increasing global interconnectedness through trade, investment, culture, technology, and population movement. Complex interdependence (Nye).
Common Mistake
- Treating the three presidents as having identical policies. Reagan’s conservatism, Bush’s moderation, and Clinton’s centrism were distinct.
- Ignoring regional effects, such as NAFTA and U.S. influence on Latin American economies.
- Overemphasizing scandals (like Clinton’s impeachment) instead of policy achievements.
Exam technique
- Use a compare-and-contrast approach to show how each president’s policies reflected changing U.S. priorities.
- Link domestic policy to regional or global impact.
- Include economic data or legislation names to strengthen essay credibility.
Theory of Knowledge
- Power and Responsibility: How should leaders balance moral integrity with political performance?
- Knowledge and Economics: Can economic growth justify widening inequality?
- Ethics and Policy: How do domestic choices (e.g., trade or environmental policy) affect neighboring nations?
Self review
- To what extent did the domestic policies of Reagan, Bush, and Clinton reshape the U.S. economy?
- Examine how far U.S. domestic policies between 1981 and 2001 affected relations with Latin America.
- Assess the effectiveness of the economic and social reforms of Reagan, Bush, and Clinton in addressing inequality.
