Economic Policy Essay

Ronald Reagan, President of the United States from 1981 through 1989, created economic policies throughout his presidency that aimed to pull the United States out of a recession. His policies, called Reaganomics, reduced government spending and reduced tax rates in order to foster economic growth. Reagan also appointed many conservative judges to the Supreme Court and federal courts in order to shift ideologies to the right. Because of this, Reagan was both underrated and overrated as a president.

Reagan really focused on improving the economy during his presidency, with a plan he called Reaganomics, or supply side economics. The main parts of this plan were cuts on taxes and budgets, and monetary policy. Also, he wanted to reduce government regulation on businesses. He thought that these and increasing defense expenditures would heighten economic efficiency. Reagan managed to cut taxes by twenty five percent in three years. However, the plans did not work out at first, causing a recession that some call “The Great Inflation.” The national debt heightened substantially, and the rate of unemployment reached up to eleven percent. Despite these negative outcomes, the economy experienced a sudden growth and prosperity in 1983, which was

It is even abnormal for the rate of inflation to reach double digits. In fact, most of the time the rate of inflation stays below 5 percent. In addition to the increasing rate of inflation, the unemployment rates were at 7.6 percent (Marsico 62-63). The nation did not like this because more people were out of jobs, yet the cost of products were continuing to increase. Reagan’s plan was to have Congress embrace financial policies, decrease government spending and reduce its regulation of business. Most people know this plan as Reaganomics. His whole plan relied solely on the Economic Recovery Tax Act, which cut taxes over a three year period. The reason he relied on the recovery tax act was because he wanted the act to help people save money (Marsico 63-64). He wanted people to save money so that they could pay bills and taxes; in the long run, if people save money, it helps the government. Also, it would help people invest in the stock market and

President Reagan’s radical tax cuts lead to a decrease in unemployment and an increase in incomes for Americans of all statuses. Despite the fact that, “in the late 1970s, the US economy was experiencing what was then the greatest economic crisis since the great depression… almost every economic measure substantially improved after Reagan’s reforms took effect” (Hannaford). Editors Pat Hannaford and Darcy Allen observe that, “by reducing America’s tax burden, Reagan’s

Leading up to the year 1981, America had fallen into a period of “stagflation”, a portmanteau for ‘stagnant economy’ and ‘high inflation’. Characterized by high taxes, high unemployment, high interest rates, and low national spirit, America needed to look to something other than Keynesian economics to pull itself out of this low. During the election of 1980, Ronald Reagan’s campaign focused on a new stream of economic policy. His objective was to turn the economy into “a healthy, vigorous, growing economy [which would provide] equal opportunities for all Americans, with no barriers born of bigotry or discrimination.” Reagan’s policy, later known as ‘Reaganomics’, entailed a four-point plan which cut taxes, reduced government spending,

Inflation and unemployment numbers rose simultaneously, in contrary to the Keynesian theory that the Nixon administration based their policies upon. Criticism of Keynesianism became louder as the belief of a declining US economy grew and instead, economic liberal theory associated with Friedrich von Hayek and Milton Friedman won popularity. Inevitably this led to a paradigm shift towards laissez-faire economics and the idea that “government intervention necessarily impedes growth and prosperity” (CroG, p. 89). President Jimmy Carter executed the 1978 Revenue act that lowered corporate, capital gains and individual tax. In line with neoliberal ideas, numerous sectors were deregulated. In 1981, Ronald Reagan took office and carried out reforms that built on the legacy of Carter. Comparing the Reagan administration to Carter’s, the former manifested even stronger support for neoliberal ideas (CroG, p. 89). The 1981 Economic Recovery Tax Act was inspired of the Laffer curve, a theory that lower tax rates increases government revenues and economic growth as people will increase their productivity when allowed to keep a greater part of their income. Tax levels retained progressive and were in average cut by 30 % (CroG, p. 91). Following the reforms, the U.S economy grew and income levels

Within seven years the wealthy had more money, but could also afford to give better pensions and pay raises. He reduced income tax from the top bracket 70% down to 28% spurring growth from the top on down and vice versa. This gave some people who lived in poverty a view that Reagan was indifferent to their struggles. This may have seemed the case but growth did happen, and hopefully those critics found jobs; however, driving to those jobs still pinched the pocket book a bit due to the energy crisis at that time.

Reagan then wanted to make large tax cuts, approximately 25%. Reagan was very well liked and his charm on TV and support from the “boll weevils” had help pass this bill as well. The plan called for "supply-side economics,” but more commonly due to the time of Reagan’s presidency and ideals of Reagan they were nicknamed “Reaganomics.” Which are policies that supported businesses. Such as lower taxes and less government intrusion. These “Supply-side finances” would help to boost investment, establishment, employment, and ultimately through its growth, it would reduce the federal

President Reagan achieved large part of his goals. Although he had many down falls. One of the goals that he achieved was to cut taxes for Americans. In the reading, "The Economy in the 1980's" it states, "He got 25% tax cut for individuals". Also Reagan wanted to decrease the unemployment rate and give families a higher income. On graph number two, it showed that before Reagan was president the income was rather low. While Reagan's terms went one the income slowly rose. Despite high income shown of graph three the unemployment was considerably high. In the reading, "The Economy in the 1980's" it claims that there was a recession, "The GNP is the total value of goods and services produced by a nation. More people were out of work". Another

He popularized the controversial idea that greater tax cuts for investors and entrepreneurs provide incentives to save and invest, and produce economic benefits that trickle down into the overall economy. Supply-side economics has focused primarily on lowering marginal tax rates with the purpose of increasing the after-tax rate of return from work and investment, which result in increases in supply. In the 10 years from 1972-1982, recessions were deep and recoveries were short. “From 1981-2005, the annual growth rate of real gross domestic product (GDP) in the U.S. was 3.4 percent per year, and 3.8 percent per year during the 1983-1989 Reagan expansion alone” (Laffer Center). Although Supply-side economics appeared to work, it still left the same tax rate for American’s with lower

Monetary policy are actions taken by the Federal Reserve Board to change the amount of money in circulation to affect interest rates, credit

Study of whether the Congress reforms and fiscal responses could balance the struggling US economy following the 2007-2009 Recession. Also a study of a viable projection as to current Macroeconomic concerns including whether the economy is in a sustained recovery, rapidly reducing unemployment, speeding a return to normal output and employment

The U.S. economy has proven to be a power force among competing nations, as it is the largest and most important economy in the world. The domestic challenges in addition to the rapidly transforming global landscape have not withered the strength of the United States, as it represents approximately 20% of total global output. The U.S. economy maintains its powerhouse status through a plethora of characteristics, which includes access to abundant natural resources and a sophisticated physical infrastructure. These elements, along with the strong and well educated workforce, benefit the economic status of the nation and contribute to the economic stability of the environment. The United States, with the world’s largest and most diversified

As the Keynesian Demand Management theory slowly started to lose political support, the Presidential race of 1980 was beginning to get underway. The candidate with the most support was Ronald Reagan, and during his campaign he proposed a new plan to help America out of its economic downturn. What would soon be dubbed “Reaganomics” was a

Evaluate the theoretical argument that price and wage flexibility allow an economy to correct a negative demand shock. Provide evidence from Japan in the 1990s to illustrate your answer and consider briefly what policy lessons may follow for dealing with the impact of the current world financial crisis.