Education, Social Studies, History, Civics, Current Issues

Civics Era 10 – The Great Depression and the New Deal (1929-1945)

New Jersey Council for the Social Studies

www.njcss.org

Engaging High School Students in Global Civic Education Lessons in U.S. History

The relationship between the individual and the state is present in every country, society, and civilization. Relevant questions about individual liberty, civic engagement, government authority, equality and justice, and protection are important for every demographic group in the population. In your teaching of World History, consider the examples and questions provided below that should be familiar to students in the history of the United States with application to the experiences of others around the world.

These civic activities are designed to present civics in a global context as civic education happens in every country. The design is flexible regarding using one of the activities, allowing students to explore multiple activities in groups, and as a lesson for a substitute teacher. The lessons are free, although a donation to the New Jersey Council for the Social Studies is greatly appreciated. www.njcss.org

Era 10 The Great Depression and the New Deal (1929–1945)

The beginning of the 20^th century marks the foundation of the transformation of the United States into a world power by the middle of the century. In this era economic prosperity and depression, the ability of our government to provide for the needs of people experiencing economic hardship, and the rise of dictators attacking innocent civilians and threatening the existence of democratic governments leading to a second world war dominate the narrative of this historical period. The development of the new technologies of electricity, transportation, and communication challenged our long-held traditional policies of limited government, neutrality, and laissez-faire capitalism.

Activity #1: Father Charles Coughlin, BBC and ABC: Can the ruling political party use public media to advocate for its policies?

In the 1930s, Father Charles Coughlin, a Roman Catholic priest, had a weekly radio program with millions of listeners in the United States. In 1926 he broadcast weekly sermons but as the economy shifted into a recession and depression, his broadcast became more political and economic. They also reflected anti-Semitism with verbal attacks on prominent Jewish citizens. His broadcast following Kristallnacht on November 10, 1938 was particularly divisive. The owner of WMCA, a New York station, refused to broadcast Father Coughlin’s messages

The owner of WMCA, the New York station that carried his program, refused to broadcast Coughlin’s next radio message. The Nazi press reacted to the news with fury: “America is Not Allowed to Hear the Truth” declared one headline. “Jewish organizations camouflaged as American…have conducted such a campaign…that the radio station company has proceeded to muzzle the well-loved Father Coughlin.” A “New York Times” correspondent in Germany noted that Coughlin had become for the moment “the hero of Nazi Germany.”

In the United States the Federal Communications Act of 1934 and subsequent additions regarding television and quiz shows mostly protects licenses, ensures equal access to all geographic areas, and provides for a rapid communications system regarding emergencies and national defense. It protects First Amendment rights regarding content, with some restrictions regarding profanity or inappropriate sexual content or images. The absence of specific content regulations allowed Orson Welles in 1938 to produce “War of the Worlds” over the radio leading to a panic by many citizens regarding their fear of an alien invasion. The Fairness Doctrine of 1949 requires broadcasters to allow responses to personal attacks and controversial opinions. In 1969, the U.S. Supreme Court’s decision in Red Lion Broadcasting Co., Inc. v. Federal Communications Commission challenged the constitutionality of the Fairness Doctrine allowing the popularity of political radio and television talk and news programs.

Federal Communications Act of 1934

Broadcast Media Policy in the United Kingdom

The use of public media in the United Kingdom has specific statues to balance the perspectives of opinions and to prevent or limit the public broadcast media as a platform to present the views of the government, propaganda, or to advocate for a particular point of view on a controversial issue. The diversity of opinion in the United Kingdom for the BBC must respect opinions reflecting urban and rural populations, age, income, geography, culture, and political affiliations. There are also reasonable guidelines regarding the editor’s judgment to exclude a particular perspective. Facts and opinions must be defined and clearly stated. Section 4 Impartiality: 4.3.14 BBC Editorial Policy

Questions:

How is broadcast media (radio and television) substantially different than print, telegraph or telephone media?
How is social media substantially different than radio and television broadcasting?
Does the U.S. Constitution allow for government regulation of content?
To what extent is self-regulation effective or ineffective regarding news, weather, traffic, programs, and ethical standards?
Are the regulations of content justified when their protect the mental health of people and prevent false or misleading statements and prohibit explicit sexual images and content determined to be pornographic?
To what extent is censorship a problem in the publication of information. Should restrictive editorial policies be considered a form of censorship?

Activity #2: The Federal Deposit Insurance Corporation in the United States and Bank Deposit Insurance in Other Countries

In the United States, deposits in most banks are protected up to $250,000 for each investor. This protection restored confidence in American banks during the Great Depression and is an important reason for a sound financial system in the United States. Investments in stocks and bonds fluctuate with market conditions. Every bank in the United States also has deposits that are not insured. Investments in stocks, mutual funds, and corporate bonds are not insured by the Federal Deposit Insurance Corporation.

The Federal Reserve Bank establishes a reserve requirement, currently 10%, for banks to maintain to ensure adequate funds for withdrawals. The Federal Reserve Bank also monitors the member banks in the Federal Reserve System. Banks are assessed on all of their deposits quarterly and a formula is used to calculate their insurance payment. The FDIC is self-insured, although backed by Congress in the event of a catastrophic collapse of the banking system.

The Banking System in Japan

In Japan, the Deposit Insurance Act was enacted in 1971. The DIA fully insures deposits that do not earn interest. In the United States amounts in checking, savings, money market accounts, and Certificates of Deposit are insured. Deposits that earn interest in Japan are insured up to 10 million yen, or about $70,000.

The most recent crisis in Japan is the exposure of the Aozora Bank to bad loans and investments in the United States. In 2024, it posted a net loss of 28 billion Japanese yen or about $191 million in U.S. dollars. A major earthquake in Japan, effects from extreme weather, or a military conflict would likely present major risks to Japan’s banks.

Examples of countries without any defined deposit insurance are China, Egypt, Israel, Pakistan, and South Africa. Perhaps one-third of the countries in the world do not protect deposits in their banks.

Failed Banks in the U.S. by Year (Forbes)

Federal Deposit Insurance Corporation

Video: FDIC (13 minutes)

Japan’s Banking Crisis in the 1990s (Video)

Questions:

There are about 6 million households in the United States without bank accounts. If you consider this a concern, what can be done to address this situation?
What is the role of banks in the macroeconomy?
Does the deposit insurance system in the United States provide sufficient protection?
Are some banks too big to fail? If yes, then is the federal government justified in using taxpayer dollars to protect a large bank from failure or takeover?
To what extent should pension investments, property and homes, investments in government bonds be protected? Should insurance for these investments be paid for by the depositor or the bank?
Is the primary purpose of federal deposit insurance to protect the banks or its depositors?

Activity #3: Governor Huey P. Long and Health Insurance in the United States and other Countries

Huey P. Long is a challenging person for historians and educators. His ‘Share the Wealth’ program, use of the media, authoritarian actions, and criticisms of voter manipulation provide for diverse perspectives. However, he improved healthcare in Louisiana by expanding the Charity Hospital System, creating the Louisiana State University Medical School, reforming institutions to care for the disabled and mentally challenged, and providing free health clinics and immunizations. As a result, many lives were saved.

As governor, Long tripled funding for public healthcare. The state’s free health clinics grew from 10 in 1926 to 31 in 1933, providing free immunizations to 67 percent of the rural population. By building bridges and paving new roads, he made it possible for the rural poor to have access to medical and dental health care and hospitals. In the long historical timeline toward universal health care insurance in the United States, Huey P. Long is a pioneer.

Before Huey Long’s reforms, patients at the Central Hospital for the Insane were locked in chairs during their ‘recreation’ time. from Every Man a King by Huey Long; reproduced by permission.

Long by-passed the negative press by distributing his own newspaper, “The American Progress,” and he spoke directly to a national audience through radio speeches and speaking engagements. In a national radio broadcast on February 23, 1934, Huey Long unveiled his “Share Our Wealth” plan a program designed to provide a decent standard of living to all Americans by spreading the nation’s wealth among the people. Long proposed capping personal fortunes at $50 million each (roughly $600 million in today’s dollars) through a restructured, progressive federal tax code and sharing the resulting revenue with the public through government benefits and public works. In addition, he advocated for a 30 hour work week, four weeks of paid vacation for every worker, free college or vocational educational and limiting annual incomes to $1 million or about $60 million in today’s dollars. He also advocated for pensions and health care provided by businesses and the government.

Long believed that it was morally wrong for the government to allow millions of Americans to suffer in poverty when there existed a surplus of food, clothing, and shelter. By 1934, nearly half of all American families lived in poverty, earning less than $1,250 annually. He supported a health care system for all people using government funds. Long’s authoritarian use of power helped him achieve his goals until his assassination in 1935.

There are four basic health care models

The United States has one of the most expensive health care systems in the world. It invests in research,

However, in 2021, 8.6 percent of the U.S. population was uninsured. The U.S. is the only country where a substantial portion of the population lacks any form of health insurance. The U.S. has the lowest life expectancy at birth, the highest death rates for avoidable or treatable conditions, the highest maternal and infant mortality, and one of the highest suicide rates in the world. It also has the highest rate of people with multiple chronic conditions and an obesity rate nearly twice the average of other developed countries.

The current programs provided by Medicare (for people over age 65), Medicaid (for people with low incomes), and the Affordable Care Act (current program for most people) are each under attack because of the high costs associated with them and government regulation of the prices paid.

In your research and discussion consider the following models of health insurance and the programs Gov. Huey P. Long implemented in Louisiana in the 1930s.

The Beveridge Model

This model is named after William Beveridge, the social reformer who designed Britain’s National Health Service. In this system, health care is provided and financed by the government through tax payments, just like the police force or the public library.

Many, but not all, hospitals and clinics are owned by the government; some doctors are government employees, but there are also private doctors who collect their fees from the government. This system has the lowest costs per person, because the government controls what doctors can do and what they can charge. Great Britain, Spain, most Scandinavian countries, New Zealand, and Cuba are countries using this model or one that is similar.

The Bismarck Model

The Bismarck models uses an insurance system financed jointly by employers and employees through payroll deduction. Every person is covered. Doctors and hospitals are private operators. Although there are many payers to this model, costs tend to be regulated by the government. Germany, France, Belgium, the Netherlands, Japan, Switzerland, and some Latin American are countries that use this model.

The National Health Insurance Model

This system has elements of both Beveridge and Bismarck models. It uses private-sector providers, but payment comes from a government-run insurance program that every citizen pays into. Costs are considered low because there are no profits, no advertising, and claims are pre-approved. It is a single payer system and as a monopolist it is in a position to negotiate for the lowest prices. This system also has the ability to limit the medical services it will pay for, such as preventive care or what is considered elective procedures. Canada, Taiwan, and South Korea are countries using this model. For Americans over the age of 65, Medicare is similar to this model.

The Out-of-Pocket Model

Health insurance is mostly a benefit for industrialized countries. Of the 195 countries on planet Earth, about 40 or 25% have established health care systems. In countries using this model, the poor are neglected. This is a problem for hundreds of millions of people who have low incomes or are living below the poverty line.

Questions:

Does preventive care provide long-term savings for a country?
Who has the primary responsibility for physical and mental health care in a country?
Is government sponsored health care part of the vision of the Declaration of Independence and the U.S. Constitution?
Are there limits to what a government or business can and should provide for its populations?
Local communities finance public education with taxes and the salaries of educators and graduation requirements are controlled by local Boards of Education with some supervision from the state government. Should this model be considered for health care?
Which of the four models would you adopt or adapt for the United States?
How can the United States best address the health care crises it faces regarding obesity, mental health, cancer, and chronic conditions. (i.e. diabetes, hypertension)
Should health care models also include the costs of vision, hearing, and dental expenses?

Activity #4: Dr. Francis Townsend and Direct Payments to Citizens Living in Poverty and Income Transfer in the United Kingdom

In 2023, the official poverty threshold in the United States was $30,900 for a family of two adults and two children. Families can earn well over this amount and still find they cannot pay all of their bills.

Poverty is relative. Someone in your class, school, community, etc. will be in the bottom 25% of income earners. An individual earning an hourly wage of $20.00 an hour who works for 35 hours a week earns $700 a week or $36,400 a year. This total is reduced by state and federal taxes and a 7.65% tax on Medicare and Social Security. Although $20 an hour is higher than the minimum wage in every state, it is not considered a living wage.

About one in seven (14%) of children under age 16 are in poverty in the United States. This means that about 10 million kids in 2023 were living in households that did not have enough resources for basic needs such as food, housing and utilities. The poverty rate in New Jersey is 10% of the population or about 950,000. See the SPM child poverty rate in your state The highest rates of poverty generally occur for the youngest children — under age 5 — kids in single-mother families, children of color and kids in immigrant families. The numbers of children and adults living in poverty are increasing and they are a serious problem. The effects of living in poverty are the concern of your discussion as is the most effective way to reduce or eliminate it.

The effects of economic hardship disrupt the cognitive development, physical and mental health, educational success of children. Researchers estimate the total U.S. cost of child poverty ranges from $500 billion to $1 trillion per year based on lost productivity and increased health care expenses.

Poverty in the United Kingdom

In the United Kingdom, the poverty rate for children is 31% or double the rate in the United States. There is no single, universally accepted definition of poverty for the world. The United States identifies an income level for family categories and the United Kingdom uses a measure of disposable income (after taxes) below 60% of the median income (income of the largest group in the population) on an annual basis.

For example, the median income in the United States is $40,000. If we used this formula, the poverty level would be $24,000 (after taxes). If we consider a 20% federal tax, 8% FICA and Medicare tax, and a 5% state tax for a person employed in New Jersey making $40,000, their disposable income would be approximately $27,000 or similar to the measure used in the United Kingdom. If you consider the cost of rent at $2,000 a month, transportation costs at $200 a month, and food at $500 a month for a family or individual in New Jersey, these expenses are $2,700 a month or $32,400 a year. An income threshold of $30,000 a month is not practical.

The Townsend Plan

Dr. Francis Townsend, a medical doctor living in Long Beach, California, introduced a plan in 1933 to provide direct payments to people over the age of 60. The money would be raised through a national sales tax, which in some countries is labeled a Value Added Tax of VAT.

“It is estimated that the population of the age of 60 and above in the United States is somewhere between nine and twelve millions. I suggest that the national government retire all who reach that age on a monthly pension of $200 a month or more, on condition that they spend the money as they get it. This will ensure an even distribution throughout the nation of two or three billions of fresh money each month. Thereby assuring a healthy and brisk state of business, comparable to that we enjoyed during war times.

“Where is the money to come from? More taxes?” Certainly. We have nothing in this world we do not pay taxes to enjoy. But do not overlook the fact that we are already paying a large proportion of the amount required for these pensions in the form of life insurance policies, poor farms, aid societies, insane asylums and prisons. The inmates of the last two mentioned institutions would undoubtedly be greatly lessened when it once became assured that old age meant security from want and care. A sales tax sufficiently high to insure the pensions at a figure adequate to maintain the business of the country in a healthy condition would be the easiest tax in the world to collect, for all would realize that the tax was a provision for their own future, as well as the assurance of good business now.”

Dr. Townsend’s plan became popular with the people and became known as The Townsend Movement. Although it was criticized by President Franklin Roosevelt, the Social Security Administration is similar to what Dr. Townsend proposed. He published a newsletter, The Modern Crusader, to promote his plan. The Social Security plan is funded by a tax on incomes because the burden is shared proportionately by different income levels.

Welfare, unemployment compensation, Medicaid, Medicare, and Social Security are payments to United States’ citizens that are currently being discussed and evaluated. The average monthly payment is slightly less than $2,000. These are direct payments to people from the government, which also benefit local communities as the money is spent on food, housing, and basic needs, and provides a safeguard against bankruptcy and financial hardship. They may also increase the federal debt of a country in times of high unemployment or a pandemic.

Policy makers and economists must also consider public policies regarding the poor and senior citizens. The discussion questions below address the question of poverty for the young, disabled, and elderly and how to finance them.

Questions:

Do governments have a responsibility to provide financial assistance or a guaranteed living wage to individuals or families with inadequate finances for basic needs?
Are direct income payments a burden on a government or do they provide an efficient return on their investment over time?
Is the question of how to reduce or prevent poverty a matter of taxation or a a matter relating to the priorities of the federal budget?
When people with mortgages apply the cost of interest as a deduction on their income tax, should this be considered an income transfer policy of the government providing assistance to people who are able to own property or their own home?
Should income transfers be made in cash or in-kind benefits such as food stamps, vouchers for health care, etc.?
Should the government regulate the consumption expenses of people receiving income transfers?
Should income transfers be financed by income taxes, consumption taxes, or another method?
What will likely be the effects of our government ending its income transfers for Social Security, medical, and/or unemployment? What will be the short-term and long-term effects?

Resources:

https://www.ssa.gov/history/towns5.html (The Townsend Plan)

https://www.ssa.gov/history/towns8.html (Francis Townsend’s Autobiography)

https://socialwelfare.library.vcu.edu/eras/great-depression/townsend-dr-francis/ (Social Welfare History Project)

https://lordslibrary.parliament.uk/child-poverty-statistics-causes-and-the-uks-policy-response/#heading-2 (House of Lords Library)

Presidents and Labor Strikes

The Impact of Economic Decisions by American Presidents Series

Presidents and Labor Strikes

Hank Bitten, NJCSS Executive Director

Most decisions by American presidents and other world leaders do not have an immediate impact on the economy, especially regarding the macroeconomic issues of employment and inflation. For example, President Franklin Roosevelt’s bank holiday, President John Kennedy’s tariff on imported steel, and President Ronald Reagan’s Economic Recovery Tax Act had limited immediate effects on the economy, but their long-term effects were significant. The accomplishments or problems of a previous administration may impact on the administration that follows.

For example, President Biden faced criticism about the economy during his administration. The jobs created with the Bipartisan Infrastructure Law and the interest rate policy of the Federal Reserve Bank to lower inflation did not show results until years later. The drop in Real Disposable Income from the administration of President Trump is another example. Real Disposable Income is a measure of income that is adjusted for inflation. The drop between the administration of President Bident and Trump is the result of extended unemployment benefits, people working from home during the pandemic when businesses were closed, and stimulus checks from the government. The economic transition following the end of the pandemic had a significant impact on the economy.

President	GDP Growth	Unemployment Rate	Inflation Rate	Poverty Rate	Real Disposable Income
Johnson	2.6%	3.4%	4.4%	12.8%	$17,181
Nixon	2.0%	5.5%	10.9%	12.0%	$19,621
Ford	2.8%	7.5%	5.2%	11.9%	$20,780
Carter	4.6%	7.4%	11.8%	13.0%	$21,891
Reagan	2.1%	5.4%	4.7%	13.1%	$27,080
H.W. Bush	0.7%	7.3%	3.3%	14.5%	$27,990
Clinton	0.3%	4.2%	3.7%	11.3%	$34,216
G.W. Bush	-1.2%	7.8%	0.0%	13.2%	$37,814
Obama	1.0%	4.7%	2.5%	14.0%	$42,914
Trump	2.6%	6.4%	1.4%	11.9%	$48,286
Biden	2.6%	3.5%	5.0%	12.8%	$46,682

This series provides a context of important decisions by America’s presidents that are connected to the expected economic decisions under the second administration of President Trump. The background information and questions provide an opportunity for small and large group discussions, structured debate, and additional investigation and research. They may be used for current events, as a substitute lesson activity or integrated into a lesson.

In the case study below, have your students investigate the economic problem, different perspectives on the proposed solution, the short- and long-term impact of the decision, and how the decision affects Americans in the 21^st century.

The Economic Problem

One of the first labor strikes in the United States occurred in Paterson, New Jersey on July 3, 1835. About 2,000 textile workers stopped working in about 20 textile mills demanding better hours. Workers, including women and children worked 13 hours a day six days a week and their wages were reduced as fines for infractions. The strike eventually led to a 12-hour day and a nine-hour day on Saturday.

In 1835 carpenters, masons, and stonecutters in Boston staged a seven-month strike in favor of a ten-hour day. The strikers demanded that employers reduce excessively long hours worked in the summer and spread them throughout the year. In Philadelphia, carpenters, bricklayers, plasterers, masons, leather dressers, and blacksmiths went on strike. In Lowell, MA, women also went on strike. The history of labor complaints and strikes date back to the colony of Jamestown. Although the common law in England provided protection for peaceful demonstrations, the courts in the colonies and states often fined workers because their organization as a group was viewed as a ‘restrain of free trade’ or a violation of the right of property for employers. In 1842, the Commonwealth of Massachusetts v. Hunt was a landmark decision that allowed peaceful demonstrations. “In March 1842, Chief Justice Lemuel Shaw ruled that labor combinations were legal provided that they were organized for a legal purpose and used legal means to achieve their goals.”

The economic problem was long hours, low wages, and oppressive working conditions. The market revolution led to the demand for consumer goods. The new inventions of the cotton gin, steamboats, locomotives, and factories. The nature of work was changing and this led to profound changes in society. Employers and entrepreneurs believed this was the idea behind the pursuit of happiness in the declaration of Independence and how a republic was governed. Laborers used the press to voice their concerns which led to the organization of trade unions in Philadelphia.

President Andrew Jackson’s decision to let the charter of the Second Bank of the United States to expire had an unexpected and profound impact on ordinary people. Working conditions continued to decline and President Jackson’s decision led to an increase in paper money and inflation. Higher prices led to unemployment and longer hours for those who were employed. Illness or injury and debt led to homelessness and poverty. According to a New York City physician, the laboring poor in the 1790s lived in “little decayed wooden huts” inhabited by several families, dismal abodes set on muddy alleys and permeated by the stench from “putrefying excrement.” Source

In 1840 the federal government introduced a ten-hour workday on public works projects. In 1847 New Hampshire became the first state to adopt a ten-hour day law. It was followed by Pennsylvania in 1848. Both states’ laws, however, included a clause that allowed workers to voluntarily agree to work more than a ten-hour day. Despite the limitations of these state laws, agitation for a ten-hour day did result in a reduction in the average number of hours worked, to approximately 11 by 1850. On May 19, 1869, President Grant issue Proclamation 182 making an 8-hour day for all federal government employees. This expanded the decision of Congress made in 1868.

After the Civil War, manufacturing and economic growth increased dramatically. There were many strikes as farmers and laborers, both skilled and unskilled, formed associations and unions. Below are examples of larger strikes that are likely part of the high school curriculum.

Haymarket Square:

During the first week of May,1886 workers in Chicago staged demonstrations and strikes demanding an eight-hour day. On May 4 a bomb exploded near Haymarket Square in Chicago. Several police officers and protesters were wounded or killed by the blast, and 8 individuals were arrested and convicted. Source

A day to recognize the rights of workers was first proposed by Matthew Maguire from Paterson, NJ in 1882. The balance between the right to have peaceful demonstrations under the First Amendment was respected but the Haymarket Riot became violent, strikes were costly to the profits of employers, and violence and strikes were a threat to property. President Cleveland was the first president challenged by the threat of anarchy from socialists. After the Haymarket Riot, a few states, including New York and New Jersey, recognized a Labor Day holiday. This was the fourth federal holiday after Independence Day, Christmas Day, and New Year’s Day. Congress considered making Labor Day a federal holiday in May, but President Cleveland feared this would become a recognition of the violence of the Haymarket Riot. President Cleveland was the first president to involve the federal government in resolving issues between labor and business interests or capital. Source

Newspaper Accounts of the Haymarket Riot, 1886

Questions:

Under what conditions would you support workers on strike? (higher wages, better working conditions, unfair practices by an employer, benefits, job security, etc.)
Are labor strikes a violation of the property rights of employers?
Do workers have a right to disrupt the production of goods or services by a slowdown in the workplace, strict adherence to their contract agreement, coordinating a sick out, making public expressions or statements about their situation, etc.
Do workers need to be paid in wages or can employers also pay them in other ways? (time off, goods produced, etc.)
Should workers receive an annual salary increase based on their months or years of service, inflationary costs of living, or only if they produce more than in the past?
How would you determine a fair wage?
Do the students in your class (or a larger group) support the right to strike workers?

Activity #1

Open the three-day lesson on the 1835 strike in Paterson, NJ. (Update the CPI index from 2012 to the present)

Carnegie Company Strike:

In the months before the presidential election of 1892, President Harrison was faced with a violent strike at the Carnegie Steel Company in Homestead, PA near Pittsburg. The Knights of Labor and the Amalgamated Association of Iron Workers went on strike on June 30 when their contract expired. Workers in Carnegie’s companies in the area supported the striking workers. Henry Clay, the manager of the Homestead plant, hired private Pinkerton guards to protect the plant and keep the striking workers away. President Harrison privately sent Whitelaw Reid to mediate the conflict.

The strikers threw rocks at the guards, the crowd size was estimated to be about 5,000, and gunshots were fired. At one point amid the chaos, shots were fired. The Pinkertons surrendered and the strikers continued with verbal abuse and assaulted them with rocks as they marched them to a local Opera Hall.

On July 12, Pennsylvania Governor Robert Pattison sent 8,500 National Guardsmen to end the strike. In less than 30 minutes the Carnegie mill was under martial law, the strikers were arrested. Sixteen of the strikers were arrested for conspiracy, murder, and inciting riots. The strike ended three months later in November with the workers agreeing to lower wages, the elimination of 500 jobs, and a 12-hour day. The labor unions lost, and their membership declined.

Pullman Company Strike:

President Cleveland faced a nationwide railroad strike that began on May 11, 1894. The American Railway Union went on strike against the Pullman Company and the major railroads. It became a turning point in U.S. labor law. The workers at Pullman protested the layoff of 2,000 workers and wage cuts that amounted to 25%-50% of their wages. The Pullman workers lived in a company town and paid rent to the Pullman Company, which was located near Chicago, Il. The rents were not reduced. The Pullman Company also had a surplus of $4 million at the time of the strike and consistently paid dividends to shareholders.

The Panic or recession of 1893 negatively affected many companies as production declined. The railroads depended on shipping farm products, which were reduced as a result of crop failures. This was the most serious economic recession in the world as investors in Europe purchased gold from U.S. banks, Americans took their savings out of banks, and companies that had speculated in the stock, bond, and commodity markets lost money/ The economic recovery after the recession ended would take several years.

On July 3, 1894, President Cleveland ordered 2,000 armed federal troops to Chicago to end the strike. The strike ended within a few weeks, union leaders were arrested and jailed on charges of conspiracy to obstruct interstate commerce. The justification of using federal troops to move the U.S. mail was based on the Sherman Anti-Trust Act of 1890. This was not the first time federal troops were used to end a strike. President Jackson used troops in 1834 to end the strike by workers building the Chesapeake and Ohio Canal and in 1877 President Hayes send troops to end the violence in Baltimore during the Great Railroad strike.

Coal Strike:

In May 1902 President Teddy Roosevelt was faced with a nationwide strike by coal miners. Many homes were heated by coal and a prolonged strike in the winter could be catastrophic, deadly, and cause riots. On October 3, 1902, with winter weather approaching, President Theodore Roosevelt called a precedent-shattering meeting to negotiate a settlement. The President did not have any legal authority to settle a labor dispute, although Presidents Jackson, Hayes and Cleveland used federal troops to end labor disputes.

President Roosevelt’s administration proposed the Anthracite Coal Commission to complete a fact-finding report and negotiate a settlement. The strike ended on October 20, 1902, and the Commission recommended in March 1903 increasing miners’ pay by ten percent (one-half of their demand) and reducing the working day from ten to nine hours.

Samuel Gompers wrote: “Several times I have been asked what in my opinion was the most important single incident in the labor movement in the United States and I have invariably replied: the strike of the anthracite miners in Pennsylvania … from then on the miners became not merely human machines to produce coal but men and citizens…. The strike was evidence of the effectiveness of trade unions ….

The victory in the anthracite coalfields breathed new life into the American labor movement.55 It strengthened moderate labor leaders and progressive businessmen who championed negotiations as a way to labor peace. It enhanced the reputation of President Theodore Roosevelt. Sometimes overlooked, however, is the change the conflict made in the role of the Federal Government in important national strikes.” Source

Paterson Silk Strike of 1913:

The silk strike began in February 1913 when twenty-five thousand striking silk workers shut down the three hundred silk mills and dye houses in Paterson, New Jersey, for almost five months. There were several textile strikes that preceded the one in Paterson. The Paterson strike was related to an increased workload and the desire for an eight-hour day. The other strikes occurred because of wages. The Industrial Workers of the World (I.W.W.) were active in organizing the strike and produced the “Pageant of the Paterson Strike” in Madison Square Garden on June 7. Pietro Botton opened his home to the labor leaders from New York City and on May 25, a rally of more than 20,000 people took place outside his home. These rallies continued on Sundays until the strike ended in July.

The strikers returned to work without any concessions, although the employers did not implement the plan to have one worker operating four looms instead of two.

Questions:

What is a yellow dog contract, scab, collective bargaining, closed shop, and right to work protections
What are the differences between skilled and unskilled laborers?
How is an Association different from a labor or trade union?
Who has the advantage in a strike: labor employees or employers?
How do strikes affect the economy and the lives of people who are not associated with the union?
Why do you think the union and workers failed to achieve their goal in the Paterson Strike of 1913?

Activity #2:

Make a list of labor unions and associations in the United States.
Use these sources to categorize the list of strikes by length of time, size of the unions, and frequency? List of Unions (Wikipedia) 200 Years of Labor History (NPS)

The Seattle General Strike, 1919

The Seattle General Strike of February 1919 was the first 20th-century solidarity strike in the United States to be proclaimed a “general strike.” Seattle had 101 unions that were part of the American Federation of Labor (AFL). On the morning of February 6, 1919, over 25,000 union workers stopped working to support the 35,000 shipyard workers who were already on strike. Although wartime inflation created a need for higher wages, the goals of the striking workers were not clearly articulated. Mayor Ole threatened to declare martial law and two battalions (about 3,000) U.S. Army troops arrived. The union members had already implemented a plan to provide food deliveries, transport people to hospitals, and patrol the streets to prevent crime. Below is an image of a soup kitchen. Union members distributed 30,000 meals a day during the strike.

The strike lasted six days and was peaceful. There were minimal gains for the workers, but most returned to work. There were several outside agitators who were identified as “Reds” or communists who were arrested. The strike is generally viewed as unsuccessful.

Seattle General Strike Project

History of the General Strike (9-minute Video)

History of the General Strike (4-minute Video)

The Seattle General Strike (Roberta Gold)

“An Account of What Happened in Seattle and Especially in the Seattle Labor Movement, During the General Strike, February 6 to 11, 1919”

Slide show

The Seattle General Strike

The Boston Police Strike

The Boston Police went on strike on September 9, 1919. Police officers worked long hours, received low wages, and had inadequate working conditions. They worked thirteen-hour days and wanted an eight-hour day. They had to purchase their own uniforms which cost $200 (about two months’ salary), were required to sleep overnight in the police station several nights a month, and they had not received a salary increase in over ten years. They were paid about 25 cents an hour and earned about $1,400 a year.

U.S. Supreme Court Decisions (1905 – 1923)

The three cases below were landmark decisions in the labor movement. The Lochner decision ruled that employers could issue contracts without any restrictions such as an 8- or 10-hour day. The Adkins decision supported this and ruled it was illegal to have a minimum wage for workers. The Muller decision ruled that the hours of women could be less than those of men if their health was at risk.

Lochner v. New York (1905)

The general right to make a contract in relation to one’s business is part of the liberty protected by the Fourteenth Amendment, and this includes the right to purchase and sell labor, except as controlled by the state in the legitimate exercise of its police power.

Muller v. Oregon (1908)

The regulation of the working hours of women falls within the police power of the state, and a statute directed exclusively to such regulation does not conflict with the Due Process or Equal Protection Clauses.

Adkins v. Children’s Hospital (1923)

Legislation fixing hours or conditions of work may properly take into account the physical differences between men and women, but the doctrine that women of mature age require (or may be subjected to) restrictions on their liberty of contract that could not lawfully be imposed on men in similar circumstances must be rejected.

Frances Perkins was asked to serve as FDR’s Secretary of Labor. As Secretary, she would pursue: a 40-hour work week; a minimum wage; unemployment compensation; worker’s compensation; abolition of child labor; direct federal aid to the states for unemployment relief; Social Security; a revitalized federal employment service; and universal health insurance. She is the longest serving labor secretary and one of only two cabinet secretaries to serve the entire length of the Roosevelt Presidency.

The Wagner Act (1935) created the National Labor Relations Board to enforce employee rights rather than to mediate disputes. It gave employees the right, under Section 7, to form and join unions, and it obligated employers to bargain collectively with unions selected by a majority of the employees in an appropriate bargaining unit.

The U.S. Supreme Court in NLRB v. Washington Aluminum in 1962 upheld the right of employees to go on strike whether they have a union or not. However, workers and unions still needed to be careful to avoid an unlawful strike.

A strike is likely protected by law if it is in response to “unfair labor practice strikers” or “economic hardship from low wages, excessive hours, or difficult working conditions.”

A strike may be unlawful when it supports an unfair labor practice such as requiring an employer to stop doing business with another company. Workers cannot legally strike if their contract prohibits strikes, although workers can stop working if they are subject to dangerous or unhealthy conditions.

Taft Hartley Act, 1947

After World War II, there were several major strikes and unions were unpopular because of the strikes and fear of the expansion of communism after Churchills’ Iron Curtain speech. The Taft Hartley Act amended the Wagner Act (1935). It was proposed by Rep. Fred Hartley from New Jersey and Senator Robert Taft from Ohio. The Taft-Hartley Act made major changes to the Wagner Act. It was vetoed by President Truman and required a vote by both houses of Congress to override his veto. The Act was amended to protect employees’ rights from unfair practices by unions by making the closed shop and wildcat strikes to be illegal and prohibiting unions from charging excessive fees for membership.

Questions:

What are the differences between a walkout, lockout, strike, and sit-down strike? Do the definitions or labels matter if work stops?
Should certain employees be prevented from having a union to represent their interests?
Should certain employees who serve the public be prevented by law from being able to strike when the public’s safety or interest is at risk? (teachers, bankers, police, sanitation, transportation workers, nurses, etc.)
What is arbitration, fact-finding, and collective bargaining? What is the purpose of each?
What is back pay? Should striking workers be compensated for the days or weeks they did not work?

Activity #3

Interview two or three people or groups of people regarding labor conditions they would like to have negotiated in their favor.
Review the contract between teachers and the Board of Education in your district or another district. Discuss the protections in the contract that are not directly related to salary?

New York City

In January 1966, there was a 13-day transit strike in New York City. The buses and trains were shut down. In 1968, the teachers and sanitation workers went on strike. Thousands of New York City teachers went on strike in 1968 when the local school board of Ocean Hill – Brownsville, fired nineteen teachers and administrators without notice. The newly created school district, in a heavily black neighborhood, was an experiment in community control over schools—those dismissed were almost all Jewish. The strike began in September and ended on November 17. There are many important issues relevant to this strike – civil rights, integrated schools, poor performing districts, and local control vs. a central Board of Education. The strike raised the issue if public sector employees (police, fire, teachers, and private sector employees should have the right to strike over unfair business practices.

On the morning of August 5, 1981, approximately 13,000 workers of the air traffic control facilities called a strike. President Reagan spoke from the Rose Garden at the White House telling them to return to work within 48 hours or be fired. About 2,000 returned to work and the rest were fired. The government used people from the military and retired air traffic controllers to monitor the flights and hired new air traffic controllers. This one event had a proof und effect on the labor movement as workers feared losing their jobs if they went on strike.

The 232-day baseball strike of 1994-95 was the biggest one in professional sports. Although there have been many work stoppages in professional baseball dating back to 1912, the study of this strike is important because of the challenges it presented to labor negotiators. This problem has historical origins and dates back to the Sherman Antitrust Act of 1890. In 1922, the U.S. Supreme Court ruled that professional baseball was exempt from the anti-trust protection because it was not considered to meet the definition of trade or commerce. Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs et al. The case was appealed several times but not reversed. The only option for players was to strike. Source

The strike began on August 12, 1994, and the World Series was cancelled on September 14. One of the main issues was the salary cap that owners placed on the players. The cancellation of the World Series prompted some senators to propose legislation to end the anti-trust exemption given to baseball. This divided the Congress because the protection was favored by owners of smaller teams. President Clinton attempted to intervene but was not able to negotiate a settlement. As the 1995 baseball season was about to begin, baseball owners planned to hire non-union replacement players, a tactic used by the National Football League in 1987. On March 31, 1995, U.S. District Judge Sonia Sotomayor issued an injunction, and the baseball players returned to the field.

Chronological History of Labor Strikes in the United States (NPS

President Bill Clinton – Public Vaccinations

The Impact of Economic Decisions by American Presidents Series

President Bill Clinton – Public Vaccinations

President	GDP Growth	Unemployment Rate	Inflation Rate	Poverty Rate	Real Disposable Income
Johnson	2.6%	3.4%	4.4%	12.8%	$17,181
Nixon	2.0%	5.5%	10.9%	12.0%	$19,621
Ford	2.8%	7.5%	5.2%	11.9%	$20,780
Carter	4.6%	7.4%	11.8%	13.0%	$21,891
Reagan	2.1%	5.4%	4.7%	13.1%	$27,080
H.W. Bush	0.7%	7.3%	3.3%	14.5%	$27,990
Clinton	0.3%	4.2%	3.7%	11.3%	$34,216
G.W. Bush	-1.2%	7.8%	0.0%	13.2%	$37,814
Obama	1.0%	4.7%	2.5%	14.0%	$42,914
Trump	2.6%	6.4%	1.4%	11.9%	$48,286
Biden	2.6%	3.5%	5.0%	12.8%	$46,682

The Economic Problem

Public health decisions in the United States have historically been determined by states. (Tenth Amendment) Massachusetts is the first state to require that children have a smallpox vaccine before going to school to prevent the spread of smallpox in schools. Children in the United States receive immunizations through both private and public providers. The federal government has supported childhood immunization since 1963 through the Vaccination Assistance Act. Since 1994, the Vaccines for Children (VFC) program has provided additional support for childhood vaccines. In 2002, 41% of childhood vaccines were purchased by the federal government through VFC and 43% through the private sector. Thirty states have vaccine requirements for students going to college. See the list of vaccines required for K-12 schools on page 8 of the Center for Disease Control document: CDC Document

Adult immunization is primarily performed in the private sector. Since 1981, Medicare has reimbursed the cost of pneumococcal vaccine for its beneficiaries; influenza vaccine was added in 1993. The cost of vaccinations has increased significantly in the past 20 years.

The greatest fear in the 19^th and 20^th century was the spread of unknown or viral diseases. Major epidemics in the United States are cholera, flu, polio, HIV/AIDS, SARS, H1N1, and Covid-19. Vaccines were developed for smallpox and rabies. The virus, poliomyelitis, was a highly contagious disease with symptoms including common flu-like symptoms such as sore throat, fever, tiredness, headache, a stiff neck and stomach ache. Polio also affected the brain and spinal cord, which could lead to paralysis and also death. President Franklin Roosevelt was infected with poliomyelitis in 1921. The disease first emerged in the United States in 1894, but the first large epidemic happened in 1916 when public health experts recorded 27,000 cases and 6,000 deaths—roughly a third in New York City..

Epidemics are costly in the loss of human lives, medical and hospital costs, and absence from school and work. Because preventive health measures and vaccines save money, they are considered by economists as a public good. For example, the average billing costs for non-complex Covid-19 hospitalizations averaged between $31,000 and $111,000. Complex cases with hospitalizations averaged between $132,000 and $472,000. The average hospital cost in New Jersey for Covid-19 in 2020 was $377,198. Source

There were 6 million Americans hospitalized in 2020 with Covid-19. If we estimate the average hospitalization cost at $100,000, the cost of the epidemic would be around $60 billion. If we estimated the cost a5 $50,000, the cost would be $30 billion. The cost to the government in providing vaccines for free in 2020 was $25.3 billion. According to the National Institutes of health, the U.S. government purchased 1.2 billion doses from Pfizer and Modern at a price of $20.69 peer dose. Source. A total of $53.6 million was appropriated in 1956-57 for the polio vaccine.

Analyze the information in the image below to discuss if public health programs are best administered by the states or the federal government.

Questions:

If the cost of a vaccine is $20.69, should the government pay for free vaccines for the general public or encourage people to get vaccinated at their own expense?
Should the cost of vaccinations be the responsibility of private health insurance for people not covered by Medicare?
Is public health a burden that should be shared by government, individuals, and health insurance companies?
To protect the public from an epidemic or the flu, measles, pneumonia, etc. should the government rely on the approximately 40,000 private centers of medical offices and retail pharmacies to distribute and administer the vaccine or use the approximately 6,000 public health clinics and hospitals? Which distribution strategy is the most effective and why?
Should the government encourage masks, hand washing, and other methods to prevent the spread of an epidemic instead of free or subsidized vaccinations?

Activity #1

Invite the school nurse, doctor, and or representative from a health insurance company to your class to discuss the costs and benefits of vaccinations to contain the spread of epidemics.
Research the policies on immunizations and vaccinations by other countries (Japan, Britain, Denmark, Mexico, Canada) Mandatory Vaccinations: The International Landscape Mandatory Childhood Vaccinations
Meet with your Math teacher to analyze the hypothetical costs of hospitalizations, preventive health care, and productivity costs for staying home from work.

Positive Externalities:

Vaccines against contagious infectious diseases have strong spillover effects, since immunization protects not just those being immunized but others as well. Since the benefits extend beyond those individuals who choose to get vaccinated, the public benefits of vaccines are larger than the individual benefits. However, the price of the vaccine (i.e. $20) only benefits the person who paid for it out of pocket. The benefit to the public or larger society is the result when a significant majority is vaccinated and protected.

Economists evaluate the costs and benefits. For example, the government could subsidize the cost by 25% or 50%. The government (state or federal) could provide an incentive and pay individuals to get vaccinated or offer a tax credit or deduction. Public health strategies might include charging less than the market price for vaccines, paying individuals to immunize, or making immunization compulsory. The government can also mandate vaccinations by law.

The economic problem becomes more complex when we consider that some health issues like cancer, tetanus, or diabetes are not contagious. Also, vaccines for HIV/AIDS and Human Papillomavirus (HPV) benefit specific populations. The Public Health Service act of 1972 provided grants to state and local governments for immunizations and vaccine purchases. President Clinton’s administration in 1994 launched the VFC (Vaccines for Children) These provided funds to support schools requiring immunizations, with allowances for religious or moral exemptions.

View the image below from the Center for Disease Control (CDC) and validate its accuracy, bias, or misinformation.

Activity #2:

Interview your school’s administration regarding the policy for vaccinations for students, teachers, and staff.
Research the vaccination policy at state and private colleges in your area.
Meet with a travel agent or use the source from Wikipedia regarding vaccination requirements from countries. Source If the United States discontinues its financial support for vaccinations will this have an impact on Americans travelling to other countries?

Questions:

What is the most effective way to protect public heatlh?
Are the benefits of free or subsidized vaccinations greater than the costs of hospitalization and loss of life?
Should federal programs also include subsidies for preventive health such as mammograms, colonoscopies, blood pressure screening, etc.
Public education is paid for by taxpayers and through money raised by state governments. Should public health follow a similar model or is it different?
Are the economic benefits of government funded vaccinations more important than the scientific evidence or the fact that they may not be effective for everyone and in some cases result in death?

President Ronald Reagan and the Economic Recovery Tax Act (Social Security)

The Impact of Economic Decisions by American Presidents Series

President Ronald Reagan and the Economic Recovery Tax Act

*President*	*GDP Growth*	*Unemployment Rate*	*Inflation Rate*	*Poverty Rate*	*Real Disposable Income*
*Johnson*	2.6%	3.4%	4.4%	12.8%	$17,181
*Nixon*	2.0%	5.5%	*10.9%*	12.0%	$19,621
*Ford*	2.8%	7.5%	5.2%	11.9%	$20,780
*Carter*	4.6%	7.4%	*11.8%*	13.0%	$21,891
*Reagan*	2.1%	5.4%	4.7%	13.1%	$27,080
*H.W. Bush*	0.7%	7.3%	3.3%	*14.5%*	$27,990
*Clinton*	0.3%	4.2%	3.7%	11.3%	$34,216
*G.W. Bush*	*-1.2%*	*7.8%*	0.0%	13.2%	$37,814
*Obama*	1.0%	4.7%	2.5%	*14.0%*	$42,914
*Trump*	2.6%	6.4%	1.4%	11.9%	$48,286
*Biden*	2.6%	3.5%	5.0%	12.8%	*$46,682*

This series provides a context of important decisions by America’s presidents that are connected to the expected economic decisions facing our current president’s administration. The background information and questions provide an opportunity for small and large group discussions, structured debate, and additional investigation and research. They may be used for current events, as a substitute lesson activity or integrated into a lesson.

President Roosevelt introduced Social Security as a transfer payment to workers who would retire at age 65 with a life expectancy of 70 years in 1940. The income of workers was taxed, and Social Security was generously funded by workers. Today, there are only two workers contributing to Social Security for every retiree receiving a monthly check. It is considered a transfer payment because the money received is spent locally on basic needs and part of the amount is taxed.

President Johnson expanded Social Security to include Medicare and Medicaid. President Reagan began taxing the benefits received, raised the retirement age to 67, and allowed for contributions from payrolls to Individual Retirement Accounts. President Trump raised the age from 70 ½ to 73 ½ regarding required minimum withdrawals from private retirement accounts.

The Economic Problem

Retirement is a relatively new concept in economic history. Social Security began in 1935, and American presidents have made significant changes to it, especially in the last 50 years. Defined pension plans were offered to employees in the first half of the 20^th century but became too expensive for most corporations. Today, many public service workers, teachers, police, fire) have defined pensions and receive a monthly distribution. Without monthly Social Security payments, it would be difficult for retired individuals to live above the poverty line.

The evolution of Individual Retirement Accounts began with President Gerald Ford in 1976, and presidents have made changes to it over the past 50 years. Most American workers have an IRA, which may be called a 401(k), 403(b), Roth or something else. Today there is $40 trillion invested in mutual funds and U.S. securities in IRA accounts of Americans. In this case study, you will analyze the economic importance of this money, which is about equal to the national debt of the United States government. Today, about 40% of American households have an IRA account. Most of the remaining 60% will depend on Social Security, personal savings and assets, or fall into poverty.

Questions:

How does having approximately 8% of your paycheck withheld for Social Security and Medicare affect the economy, stock market, and the quality of family life?
How do other countries provide support for their retirees? Is it valid to compare a large country (USA) with a smaller country with a higher ranking (Denmark)? Source
If you were an economic advisor to our current president, what reforms regarding Social Security and retirement income would you suggest?
What risks do current and future retirees face in the short term (next five years)?
Are the options for investing in retirement accounts reasonable, too risky, or too limited?

Report on the Economic Well-Being of U.S. Households in 2023-2024

Statement on Signing the Retirement Equity Act of 1984

Activity #1: The high cost of taxes

Use the table below to calculate the taxes that the average worker in the United States who owns a home pays in state and federal taxes.

Item	Percent of Taxes	$100,000 Example	$200,000 Example
Federal Income Taxes	12%, 22%, 24%, 32%, 35%, 37%	Use 12% or 22%	Use 24%
State Income Taxes (NJ)	3.5%, 5.5%,	Use 3.5%	Use 5.5%
FICA Tax with Medicare	7.65%	Use 7.65%	Use 7.65%
Local Property Tax on a $400,000 property (varies)	10%, 15%	Use 10%	Use 15%
Sales Tax (7% of spending)	Calculate as 2% of income	Use 2%	Use 3%
NJ SUI Taxes	1%	Use 1%	Use 1%
Total	36.15% to 55.15%

Compare these tax rates to those in a European country or Canada.
Find the average cost of what a family pays for medical insurance as a percentage of their income.
Deduct expenses for housing (rent or mortgage), food, vacation, medical, transportation, and savings (10%). How much is left?

Presidents and Congress Have Made Changes to Social Security Over the Decades

The Industrial Revolution sparked the first true need for retirement. Assembly lines and factories demanded constant energy from their workers. Pensions began in the 1800s for older workers to help keep productivity up. But during the Great Depression, older workers didn’t want to leave their jobs — and their paychecks — behind. In turn, FDR designed the Social Security Act, effectively birthing the Social Security program so that older Americans could retire financially. The act is the Federal Insurance Contributions Act (FICA) and was signed in 1935 but didn’t begin payouts until 1940. In 1939, Social Security was expanded to include women. When Social Security became law, workers contributed one percent of their income. Today, they contribute 6.2% and an additional 1.45% for Medicare. Employers match these contributions for a total of 15.3%.

As part of the “War on Poverty,” President Johnson signed the Social Security Act of 1965, which enacted Medicare and Medicaid under the Social Security Administration. In 2018, over 52 million people age 65 and older used Medicare for health insurance.

While President Reagan lowered income taxes, he was the first to make it possible to be taxed on your Social Security benefits in retirement, depending on how much you make. He also raised the full retirement age so that anyone born after 1960 would have to wait until age 67 to receive full benefits. The IRS under the Reagan administration also made it possible to have deductions taken out of employees’ salaries to contribute directly to their 401(k)s — something many workers rely on today.

President Clinton created another level of Social Security taxation, allowing up to 85% taxable benefits depending on how much you make. At the same time, he got rid of the retirement earnings test and prevented the Social Security Administration from blocking retirees from benefits based on earnings.

In 1990, the Older Workers Benefit Protection Act required employers to provide the same benefits for workers over age 65 as younger employees.

In the Unemployment Compensation Amendments of 1992, the rollover rules we know today were implemented. These new rules allowed women who often job-hop to keep their tax-qualified assets protected until retirement.

1993 ushered in the Family and Medical Leave Act (FMLA). This became one of the most important job protections for women after giving birth or providing care for a family member. Now, she could come back to her job and not lose her pay rate.

Although, some consider Social Security as an entitlement, it can be changed by Congress. When workers pay into Social Security, they are contributing to a trust fund instead of a personal account.

Because the combined OASI and DI Trust Funds have accumulated assets of over $2.5 trillion, the excess of program cost over current tax income will be covered by net redemption of these assets in the coming years. It is only when the reserves in the trust funds are exhausted that timely payment of full scheduled benefits becomes an issue. As shown in the chart, at the time of projected trust fund exhaustion in 2037, continuing tax revenue is expected to be sufficient to cover 76 percent of the currently scheduled benefits.

Questions:

Does the Social Security treat women fairly or equally with men? Do you recommend any reforms?
Should Social Security benefits be taxed or tax free?
What will happen to Social Security benefits when the trust fund has insufficient funds?

Treatment of Women in the Social Security System

Senior Citizens’ Freedom to Work Act

Activity #2

Research the impact of a decision by Congress to make Social Security benefits tax free. Research the impact this will have on the trust fund.
How does full employment and a sustained period of high unemployment above 7% affect Social Security and Medicare.
Calculate the amount of money a worker earning $100,000 pays into Medicare over a period of 40 years and the average costs of what Medicare pays for each person today. Medicare Spending and Finance
How have recent reforms under President Biden affected Medicare spending?
Discuss the impact of reduced Social Security benefits for people when the trust fund is depleted, around 2033.

How does Social Security Affect the Economy?

When a person receives their monthly Social Security check it is most likely deposited directly into their bank account. This allows it to earn interest immediately and to be used for expenses. Look at the Circular Flow of Money diagram below to see how government money is transferred to households and distributed through the local economy.

For example, whether a person receives a Social Security check for $1,000 or $5,000 some of the money goes to banks (financial institutions) and is used for loans to businesses, homeowners, students, etc., to purchase government bonds to support government spending (including Social Security), and for the bank to pay taxes, its employees, and operational costs. Since part of Social Security income is taxable, the federal government receives some of the money back in taxes. Perhaps the most important influence Social Security has on the economy is that people spend the money locally in supermarkets, stores, and restaurants and it saves the government money by keeping people self-sufficient and out of poverty. This is how money circulates in the economy and creates income for businesses, local and state governments, doctors, and others.

Money also has a Multiplier Effect. The diagram below illustrates the effect of one dollar. As each dollar enters the economy through the purchase of a bagel or donut, the local store expects that sales will continue to increase. As a result, they hire an additional worker, produce more bagels or donuts, and perhaps they will open a second store. As people buy more bagels and donuts, the store needs more flour, butter, cream cheese, coffee cups, etc. The newly hired employee also receives a paycheck for their work and spends it in the community. Basically, think of money multiplying ten times. For each $1.00 spent, the multiplier effect is that it circulated to different people ten times. If the effect of $1.00 is the spending of $10.00 over a month, imagine the impact of a $1,000 Social Security check ($10,000) or a $5,000 Social Security check.

Questions:

To what extent do government transfer payments (i.e., Social Security) pay for themselves?
What would be the economic effect on the economy if people at the age of 67 did not receive an incentive (Social Security) to retire?
Should people be allowed not to participate in Social Security as an employee?
If Social Security was discontinued, would the effect on the economy be positive or negative?

Activity #3

Calculate different scenarios if a person should collect their Social Security at age 62, 67, or 70. The scenarios should include individuals who are single, married, in excellent health, divorced, collecting benefits while still working, and for a spouse who did not work and make FICA contributions for the required ten years. Benefit Calculator

How do Private Individual Retirement Accounts Affect the Economy?

According to the Investment Company Institute, “there are more than 710,000 plans, on behalf of about 70 million active participants and millions of former employees and retirees. Savings rolled over from 401(k)s and other employer-sponsored retirement plans also account for about half of the $13.6 trillion held in individual retirement account (IRA) assets as of December 31, 2023.” https://www.ici.org/401k ($13.6 trillion is approximately 1/3 of the federal debt)

The IRA, originally offered strictly through banks, become instantly popular, garnering contributions of $1.4 billion in the first year (1975). Contributions continued to rise steadily, amounting to $4.8 billion by 1981.

The Economic Recovery Tax Act (ERTA) of 1981 allowed for the IRA to become universally available as a savings incentive to all workers under age 70 1/2. At that time, the annual contribution limit was also increased to $2,000 or 100% of compensation.

With the passage of the Tax Reform Act of 1986, income restrictions were introduced, limiting the availability of deductible contributions to the TIRA for individuals with incomes below $35,000 (single) or $50,000 when covered by an employer plan. In addition, provision was made for the Spousal IRA, wherein the non-working spouse could make contributions to a TIRA from the working spouse’s income.

1996’s Small Business Job Protection Act saw the implementation of the Savings Incentive Match Plan for Employees (SIMPLE IRA), which provided for employer matching and contributions to the employee plans, a viable alternative in many cases to the 401(k), although with more restrictive contribution limits.

With the Taxpayer Relief Act of 1997, the Roth IRA was introduced. In addition, phase-out limits were increased, plus the distinction was added for limits on deductible contributions if the taxpayer was covered by an employer-provided retirement plan. The Education IRA was also introduced, with features similar to the Roth IRA (non-deductible but tax-free upon qualified distribution).

In 2001 the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), increased contribution limits with a “catch-up” provision for taxpayers aged 50 and older. An additional provision was the option to convert funds from a Traditional IRA to a Roth IRA, regardless of income level.

The Consolidated Appropriations Act of 2016 finally made Qualified Charitable Distributions (QCDs) permanent. This feature applies to individuals age 70½ or older and subject to Required Minimum Distributions. The Qualified Charitable Distribution allows direct distributions to charitable organizations (houses of worship, non-profit organizations, etc.) from their IRAs without having to include the amount of the distribution in gross income for the tax year. In 2019, the age for Required Minimum Distributions was changed to age 73½.

As of the most recent reports from 2021, the Investment Company Institute indicates 37% of all American households own an IRA account of some type (over 48 million households). Approximately 27.3 million households have a Roth IRA, holding roughly $1.3 trillion in assets, while traditional IRA are owned by 36.6 million households, holding approximately $11.8 trillion.

Questions:

How will the taxes paid by retirees on their IRA distributions affect the federal budget and national economy?
How does the flow of money from current workers contributing to their Individual Retirement Accounts affect investment firms and the stock market?
Should Social Security and Individual Retirement account changes be allowed or should changes only apply to people who are working and not retired?
Should anyone not participating in the labor force because they are caring for someone in their home be allowed to contribute to Social Security or an Individual Retirement Account?
Should money in an IRA account be allowed to be deposited in a traditional bank savings account of CD that is insured by the Federal Deposit Insurance Corporation?
Should Individual Retirement Accounts replace Social Security for anyone who has not started paying FICA taxes?

President Richard Nixon – Price Controls and Ending the Gold Standard

The Impact of Economic Decisions by American Presidents Series

President Richard Nixon – Price Controls and Ending the Gold Standard

Most decisions by American presidents and other world leaders do not have an immediate impact on the economy, regarding the macroeconomics of employment and inflation, at least in the short term of their administration. For example, President Franklin Roosevelt’s bank holiday, President John Kennedy’s tariff on imported steel, and President Ronald Reagan’s Economic Recovery Tax Act had limited immediate effects on the economy but their long-term effects are significant. The accomplishments or problems of the previous administration will likely impact the administration that follows. For example, President Biden faced criticism about the economy in his administration but the steps taken to address them may not show results until years later. The drop in Real Disposable Income from the administration of President Trump is significant because it measures income after taxes and inflation.

*President*	*GDP Growth*	*Unemployment Rate*	*Inflation Rate*	*Poverty Rate*	*Real Disposable Income*
*Johnson*	2.6%	3.4%	4.4%	12.8%	$17,181
*Nixon*	2.0%	5.5%	*10.9%*	12.0%	$19,621
*Ford*	2.8%	7.5%	5.2%	11.9%	$20,780
*Carter*	4.6%	7.4%	*11.8%*	13.0%	$21,891
*Reagan*	2.1%	5.4%	4.7%	13.1%	$27,080
*H.W. Bush*	0.7%	7.3%	3.3%	*14.5%*	$27,990
*Clinton*	0.3%	4.2%	3.7%	11.3%	$34,216
*G.W. Bush*	*-1.2%*	*7.8%*	0.0%	13.2%	$37,814
*Obama*	1.0%	4.7%	2.5%	*14.0%*	$42,914
*Trump*	2.6%	6.4%	1.4%	11.9%	$48,286
*Biden*	2.6%	3.5%	5.0%	12.8%	*$46,682*

In the case study below, have your students investigate the economic problem, different perspectives on the proposed solution, the short and long term impact of the decision, and how the decision affects Americans in the 21^st century.

The Economic Problem:

The world’s economy collapsed as a result of World War I. The Bretton Woods Agreement provided stability with a fixed exchange rate of $35 U.S. dollars to an ounce of gold. The strength of the U.S. dollar and economy was good for the United States and other countries. In fact, the gold of most countries was at the Federal Reserve Bank in New York, so it was easy to physically move gold from one vault to another. The Marshall Plan provided $13.3 billion (about $175 billion in today’s money) to rebuild Europe. The Bretton Woods Agreement supported a global economy and international trade and cooperation.

By 1960, the U.S. economy began facing new challenges from the Baby Boomers, national debt, Cold War, trade deficit, higher unemployment and inflation. Economists introduced new research on the economy. The ideas of John Maynard Keynes that were seen as helpful to the challenges of the Great Depression and World War II were questioned in the 1960s by Milton Friedman and Paul Samuelson and other economists who carefully followed the money supply in the economy. In response to the cost of the Vietnam War and the Great Society programs, in addition to the increased consumption of the Baby Boomers, the interest rate policy of the Federal Reserve Bank supported an increase in dollars.

President Richard Nixon understood the political implications of the U.S. economy. Although an inflation rate of 4.7% may not appear to be a concern, it is an increase of 50% from the expected rate of 3% and a GDP growth rate of 2%. When President Nixon became president ever nation wanted dollars. The amount of dollars in circulation increased to four times the amount of gold in reserves. As aa result the dollar was overvalued and very strong. This situation negatively impacted our balance of trade with other countries. In 1971, the United States reported its first trade deficit.

As the supply of dollars increased over the quantity of gold, the United States Treasury feared that countries might ask for their gold and the United States would not be able to meet their demands. As inflation increases, the purchasing power of the dollar decreases. A simple solution would be to devalue the dollar but since it was pegged to gold at $35 an ounce, this was not possible. The situation became critical in 1971when Britain requested selling $3 billion dollars it had from a trade surplus for gold. The United States only had about $10 billion in gold and if other countries asked for gold, there would be an international crisis.

Activity #1 – The Strong Dollar:

Examine the graph below for the years 1950-1970. Calculate the percent decline in the purchasing power of the dollar. How does a weaker dollar affect trade and the national economy? What are the advantages and disadvantages of a stronger and weaker dollar?

Activity #2 – The Weaker Dollar

Examine the data in this chart, especially for the years, 1960-1980. The amount of gold reserves (left axis) is constant but the value of the dollar changes. Which events in the 1960s likely affected the weakening of the U.S. dollar? Which decisions or events in the 1970’s contributed to the noticeable decline in the dollar. How does a weaker dollar affect the economy differently for consumers and investors?

Solutions to the Problem:

President Lyndon Johnson responded to the ‘small’ (18%) decrease in the value of the dollar in 1968 with a temporary (one-year) surcharge of 10% on income tax payments. The purpose of the additional tax was to reduce or stabilize the 3.0 percent rate of inflation. Even with the surcharge, inflation increased to 4.7% within the year. On August 25, 1969, the federal funds rate was at 9.75%, the highest level since World War 2, about seven percent above the GDP growth rate, and will cause an economic recession. The economic advisors, including Arthur Burns, Chairman of the Federal Reserve Bank, informed Nixon that the traditional monetary and fiscal policy tools were not working, President Nixon extended the tax surcharge through 1970. With the presidential election in 1972, Nixon knew that he needed to control the rising rate of inflation and avoid causing a recession.

President Nixon called for a secret meeting at Camp David to address this problem. He knew that politically the need to make a bold decision, like FDR with the decision to close the banks in March 1933. He also wisely sought the perspectives of economists with different points of view.

On August 15, 1971, President Nixon addressed the nation from the Oval Office with his historic decision, Executive Order 11615:

The Fed Funds rate in August 1971 was at 5.75% about three percent higher than the GDP rate of growth. One of the objectives of the “Nixon Shock” was to force other countries, especially China, to revalue their currencies to allow for a competitive free trade market for the United States. The stock market jumped 4% on August 16, but the decision to allow gold to be bought and sold at the market would lead to an unexpected increase in the price of oil. The wage and price controls and tariff surcharge were lifted by the end of 1971 but making the U.S. dollar the reserve currency of the world had lasting implications for the economy. President Nixon won the 1972 election by a landslide but the negative effects of then Nixon Shock would return in 1973.

Activity #3 – Interviews/Oral History:

Invite students to interview senior citizens who will have different perspectives as investors, bankers, union workers, homeowners, etc. on the “Nixon Shock.” For example, I was a high school teacher in New York City earning $5,500 a year. Prices were high from inflation and I was looking forward to a 20% salary increase, about $1,000, on September 1, 1971. My 1969-70 salary was frozen as was the pay scale for another year. In 1973, the price of gasoline increased from 39 cents a gallon to more than 60 cents and gas was rationed. Although the energy crisis was the result of an embargo by OPEC against the United States for our support of Israel in the Yom Kippur War. After the embargo was lifted the higher cost of energy continued contributing to unemployment and continuing inflation. This became known as stagflation.

History of the Gold Standard

Activity #4 – The Popularity of Credit Cards:

Gather information about the new technologies of how credit cards, money markets, and currency swaps increased personal spending, consumption, and the velocity of money.

How did the banking industry change to ‘create’ new money in the economy?

In the chart below, currency represents coins and dollars, what we call cash.

M1 money represents currency plus money in a checking account which can quickly be exchanged for cash.

M2 money represents money that requires going to the bank tor waiting more than one month to convert the money to cash. (i.e. certificate of deposit)

Calculate the slope of the graph in dollars and also by the annual percentage change.

How did this contribute to inequality, consumer debt, and inflation?
What is the difference between installment credit and revolving credit?
How did the credit card change our standard of living?
What were the consequences of higher unemployment and full employment?
How did two income households affect the supply of money?

The Evolution of Consumer Credit in America

Activity #5 – Worker Productivity:

What information is provided in the graph?
What are several reasons for an increase in productivity by workers?
How can high school students become more productive in their social studies class? (i.e. better grades, complete additional assignments and projects)
Should a worker be paid on the amount of work they produce or on the wage they agreed to when they were hired? Should a teacher be paid based on the output (grades) of the students in their classes?
Why do the red and blue lines diverge after 1970? Why is there a significant gap between what workers are producing in one hour and what they are paid?

How did taking the U.S. Dollar off the gold standard affect the economy?

The immediate impact of separating the value of the dollar from a fixed exchange rate of $35 was that the new value increased by 10% to $38 an ounce. It took about four years for the global economy to stabilize and accept dollars as the reserve currency (or safety net) in the event of a crisis. The supply of gold increased significantly after 1971 with about half of the current supply of gold being mined since the ‘Nixon Shock’.

How do countries buy dollars? How does this affect our economy?

Major Foreign Holders of U.S. Treasury Securities as of April 2024

Source:

Is it possible for foreign countries to have too many U.S. dollars?
How would the decision of other countries to adopt a different currency affect the economy of the United States?

If a group of countries made a secret agreement to sell their U.S. dollars in a short period of time and purchase euros or the renminbi instead, how would the United States economy be affected?

What is the future of the dollar as the reserve currency? Does the United States have more advantages than disadvantages of being the dominant economic power in the world? The Dollar: The World’s Reserve Currency

President Bill Clinton – Tariffs and Free Trade Agreements

The Impact of Economic Decisions by American Presidents Series

President Bill Clinton – Tariffs and Free Trade Agreements

Most decisions by American presidents and other world leaders do not have an immediate impact on the economy, regarding the macroeconomics of employment and inflation, at least in the short term of their administration. For example, President Franklin Roosevelt’s bank holiday, President John Kennedy’s tariff on imported steel, and President Ronald Reagan’s Economic Recovery Tax Act had limited immediate effects on the economy, but their long-term effects are significant. The accomplishments or problems of the previous administration will likely impact the administration that follows. For example, President Biden faced criticism about the economy in his administration, but the steps taken to address them may not show results until years later. The drop in Real Disposable Income from the administration of President Trump is significant because it measures income after taxes and inflation.

*President*	*GDP Growth*	*Unemployment Rate*	*Inflation Rate*	*Poverty Rate*	*Real Disposable Income*
*Johnson*	2.6%	3.4%	4.4%	12.8%	$17,181
*Nixon*	2.0%	5.5%	*10.9%*	12.0%	$19,621
*Ford*	2.8%	7.5%	5.2%	11.9%	$20,780
*Carter*	4.6%	7.4%	*11.8%*	13.0%	$21,891
*Reagan*	2.1%	5.4%	4.7%	13.1%	$27,080
*H.W. Bush*	0.7%	7.3%	3.3%	*14.5%*	$27,990
*Clinton*	0.3%	4.2%	3.7%	11.3%	$34,216
*G.W. Bush*	*-1.2%*	*7.8%*	0.0%	13.2%	$37,814
*Obama*	1.0%	4.7%	2.5%	*14.0%*	$42,914
*Trump*	2.6%	6.4%	1.4%	11.9%	$48,286
*Biden*	2.6%	3.5%	5.0%	12.8%	*$46,682*

The Economic Problem

Students in your class are likely familiar with mercantilism and its benefits to the “mother country” or “home country”. 18^th century mercantilism utilized the resources and cheaper labor of colonies or other places to the benefit of one country. Adam Smith challenged the benefits of mercantilism and advocated laissez-faire economics, the balance of supply and demand, and open markets. Smith believed that mercantilism was a self-defeating system that limited economic growth and national wealth. He argued that a free-market system and free trade would produce true national wealth.

However, political leaders may not agree (or understand) economic theories or how economic systems work. In Washington’s administration, Secretary of the treasury, Alexander Hamilton argued for a tariff. His Report on Manufacturers argued for the protection of the new manufacturing sector of the United States (Paterson and the Great Falls) and having a tariff to raise revenue for the federal government. Hamilton compromised on his tariff plan and the Tariff Act of 1789 was only 5%.

Henry Clay’s American System supported tariffs to protect our economic growth from foreign imports. His speech in 1824 was the first attempt to make America self-sufficient and independent of other countries. In 1828, Congress passed the Tariff of Abominations which led South Carolina to pass the Nullification Act. The Tariff of 1828 set a 38% tax on some imported goods and a 45% tax on certain imported raw materials.

Questions:

How was the American System designed to work?
What impact did the American System have on the U.S. economy during the early to mid-1800s?
Did the American System benefit each region equally or did some regions have an advantage?
How did the American System set the stage for the Industrial Revolution and sectionalism?
What lessons should have been learned from the Tariff of 1828?

In the chart below, use the data beginning in 1800 with the Per Capita Income (per person) set at 200. This number indicates that the per person income from 1700 to 1800 doubled. Next, examine the indicator in 1850, which is set at 220. This indicates that the per person income increased only 20% in the fifty years since 1800. This is less than one-half percent per year on average.

Next, compare the date on tariff rates in the graph above with the per capita income rates in the graph below. Do tariffs impact economic growth?

At the beginning of the 19th century, the United States was a rural and agricultural country. Our nation’s population was small compared to Britain and France and scattered over a large area. Our population was 5.3 million in 1800, compared to Britain’s 15 million and France’s 27 million. Tariffs from Britain and France were high and significantly made the price of imported goods in the United states high.

After the War of 1812, the American economy began to grow. The development of steamboats, canals, railroads and the telegraph reduced costs and made communications faster. The growth of cities created markets for industrial goods. New inventions increased agricultural production and textile manufactures. Children, immigrants, and women provided affordable labor. Source

Activity #1

Discuss and debate the role of the federal government in the economy.

Do tariffs support or restrict economic growth?

Does free trade support or restrict economic growth?

Why do you think Britain lowered tariffs after 1828 and France did not?

Is economic growth dependent on the age, health, and skills of the labor force?

Is economic growth dependent on the infrastructure of a country to facilitate the distribution of goods and services?

How can governments best distribute wealth equally in the economy?

Do national leaders have any significant influence on economic growth?

How did the stock and commodities markets provide money (capital) for economic growth?

After the Civil War, the United States experienced unprecedented economic growth with the Industrial Revolution, imperialism, and immigration. The use of greenbacks and silver provided capital, cities provided markets for stores, immigrants provided affordable labor, and new technologies increased productivity and the efficient distribution of goods and services.

The beginning of a market exchange for bonds, agricultural products, and stocks developed with the Buttonwood Agreement in Manhattan. Stockbrokers and merchants met under the Buttonwood tree to sign an agreement that established the foundation for the New York Stock Exchange. The building with the flag is the Tontine Coffee House, where stocks were eventually traded.

The Mohawk & Hudson Railroad Company was the first railroad stock listed on the NYSE in 1830. At that time, the Exchange was called the New York Stock & Exchange Board. Banks and steel foundries were also listed. Mercantile exchanges for agricultural products provided guidance on the future demand for wheat, rice, tobacco, cotton and other products. These investments supported economic growth more than the protectionism of tariffs.

The flow of international capital into the United States provided capital for the Industrial Revolution that followed the Civil War. The market cap/GDP ratio tripled from around 15% in the 1860s to 50% by 1900. The inflation in the United States that occurred after World War I, World War II and the Vietnam War reduced the relationship of the market cap/GDP ratio and slowed the rate of economic growth. After each of these inflationary cycles, a return to higher tariffs to limit cheaper imports from other countries was the solution proposed by political leaders. Economists, Joseph Schumpeter, Friedrich Hayek, John Maynard Keynes and Milton Friedman advocated for lower tariffs, innovation, and entrepreneurs to promote economic growth. The ratification of the 16^th amendment and the adoption of the income tax in the United States undermined the argument that tariffs were necessary to fund the government and to protect industries from foreign competition.

President Hoover signed the Smoot-Hawley Tariff Act in 1930 raising the tariff by an average of 20% to protect American farmers from the effects of the stock market crash. The tariff caused trade between Europe and the U.S. to decline by two-thirds. At the end of World War II, tariffs were decreased substantially, and the U.S. supported the establishment of the World Trade Organization, which has sought to promote the reduction of tariff barriers to world trade.

Questions:

Does the public or private sector have the greater influence on economic growth and stabilizing inflation?
What can be done to limit the effects of business cycles leading to inflation and unemployment?
How effective are tariffs, embargoes, and sanctions in getting leaders of countries to negotiate or change their policies to align with the interests of the United States?
Under what circumstances might tariffs be justified or effective?
Examine the graph below to determine the biggest employer in the United States.

What conclusions can you make about the largest private employers in each state from the map below?

RWJBarnabas Health is the largest private employer in New Jersey, with 31,683 employees. Healthcare is a major employer in the state, accounting for 16% of all jobs. Who is the largest private employer in your county?

Activity #2:

Use the chart below to compare the change in prices for an automobile before and after a hypothetical tariff of 20%. Because automobiles have thousands of parts and assembling an automobile often occurs in different countries, a tariff has the greatest impact on new cars.

Interview a local car dealer in your community about how a tariff will affect their business and how they plan to respond with sales, rebates, reduced financing, layoffs of workers, etc. Also ask about how a tariff will affect parts, tires, and the repair or maintenance of automobiles.

Make a list of five or more other businesses in your community that import supplies from other countries. (phones, Dollar Stores, coffee, clothing, TV monitors, etc.) If possible, research or interview the manager of a local big box store (Walgreens, Target) about how a tariff will affect their business.

Create a graphic design or flow chart to illustrate how the effect of higher prices from tariffs will affect consumer spending. For example, if prices increase by 20% and salaries increase by 5%, how will this affect businesses and households? Higher prices from tariffs are considered inflationary and layoffs from reduced sales are considered recessionary. Discuss what the short-term impact (three years) will be on the economy and your family.

The Movement Towards Free Trade Agreements

In 1951, six countries (France, Germany, Italy, Belgium, Netherlands, and Luxembourg) agreed to sell coal and steel to each other without tariffs. The European Coal and Steel Community (ECSC) established a single common market. In 1957, the European Economic Community (ECC) was created by the Treaty of Rome. The six countries that formed the European Coal and Steel Community agreed to trade additional goods without tariffs, to work together on nuclear power plants for energy, and to form a parliament. In 1992 the Maastricht Treaty was signed by 12 countries leading to the European Union and a common currency, the euro, in 1999. The euro was fully implemented by 2002.

President Clinton’s administration signed the North American Free Trade agreement with Mexico and Canada in 1993 (it became effective on January 1, 1994) removing tariffs between these countries. The Transatlantic Trade and Investment Partnership (T-TIP) is a trade and investment agreement currently being negotiated between the United States and the European Union. This agreement will allow American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services.

In 2020, the Conservative Party in Britain convinced the people to leave the European Union (Brexit). The United Kingdom was the second-largest economy in Europe, its third-most populous country, and one of the largest contributors to the budget of the European union. In January 2024, an independent report by Cambridge Econometrics claimed there were two million fewer jobs, and the prices of essential goods were higher. As a result of Brexit, the average citizen (per person) lost about 2,000 pounds and someone living in London about 3,400 pounds as a result of leaving the common market.

It is difficult to assess the impact of NAFTA on the United States because of currency value fluctuations, trade with China, the impact of technology, the relocation of some corporations, and the values placed on agricultural products. The Center for Economic and Policy Research estimated in 2014 a decline from a surplus of $1.7 billion to a deficit of $54 billion. The data in the graphs below suggest a positive trade balance with Canada and Mexico over the past 30 years. (1994-2022) Mexico, Canada, and China are the three major trading partners with the United States.

In the graph below there is a slight increase in exports from the United States to Mexico and exports with Canada continue at 15%. Exports to China had a significant drop of about one-third.

Data Reflecting the new USMCA ratified in 2019.

Activity #3

Maple syrup, pine lumber, and cranberries are a few items in our homes that are likely imported from Canada under NAFTA or the new USMCA. Lululemon and Blackberry are brands from Canada. Appliances, automobiles, tomatoes, avocados, electronics, monitors are some items from Mexico.

Identify items in your home with labels from Mexico and Canada, interview merchants in supermarkets and department stores, and conduct research to identify the importance of trade between the United States, Canada, and Mexico.

Develop a position statement or a short paper explaining your opinion on tariffs and free trade agreements to stimulate economic growth and stabilize inflation.