Reaganomics Essay

1894 Words Oct 10th, 2014 8 Pages
How Reaganomics Will Affect My Life
Reaganomics was economics policies which were propelled by United States President, Ronald Reagan during 1980s. These policies were based on fours pillars namely; reduction of the growth of government spending, reduction of income and capital gains marginal tax rates, reduction of government regulation of economy, and controlling of the money in supply so as to reduce inflation. Their basic aims were to lower taxes and create a leaner government. According to Reagan his decision was informed on stimulation of the economy taxes, financed by borrowing. Lowering taxes was aimed at reviving the economy, which in turn would see the increased tax revenues being used to offset the debts incurred (Niskanen
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Another theory that influenced reaganomicism was that of Milton Friedman. He was the founder of monetarism. His theory asserts that the “level and direction of spending on the federal budget is more important than the amount of the deficit, and that a stable monetary policy allows borrowing to finance an unbalanced budget”. Reagan used the two when he oversaw a plan that relied on faith in free enterprise, not necessary in government, as the basis for economic expansion (Boskin1987). As a result of lower taxes, it prompted corporation to invest, leading U.S consumers to buy more. As the company grew, due to increased consumer spending, it would indirectly raise government tax revenues. The trend would trickle to benefit even the poorest U.S citizens. Reaganomics principles encouraged many industries to have self-control during the early 80s. This led to greater competition and lower prices for consumers (Boskin 1887).
Reaganomics in a nut shell espouses that if a government offers incentives to the upper class tax cuts, better operating environment they would in turn create jobs and the benefit trickles down to the middle and lower classes. Today’s reforms in