President Ronald Reagan served two terms, lasting from 1981 to 1989. During his tenure, he is noted for economic policies that favored the wealthy and a conservative agenda that took care of business interests at the expense of social efforts. More than fifteen years after Reagan’s tenure, we still see his influence not only in the things he changed in the 1980s, but also in the politics and economic policies of current conservatives, particularly true of current President George W. Bush who, like Reagan, will also enjoy eight years to push his supply-side agenda.
In the year before Reagan took office, 1980, the United States economy was stagnant (Reaganomics). Inflation was 13. 5 percent and unemployment was 7. 1 percent. Gross domestic product (GDP) had only grown 2. 8 percent from 1974 to 1981. Americans were anxious for a new agenda and Reagan responded with a different economic approach commonly referred to as either Reaganomics or supply-side economics. This form of economic policy holds that the supply side of the economy such as economic activity and production have to be stimulated to create wealth.
Reaganomics consisted of four key elements to reverse the high-inflation, slow-growth economic record of the 1970s: (1) a restrictive monetary policy designed to stabilize the value of the dollar and end runaway inflation; (2) a twenty-five percent across-the-board tax cut enacted under The Economic Recovery Tax Act of 1981 designed to spur savings, investment, work, and economic efficiency; (3) a promise to balance the budget through domestic spending restraint; and (4) an agenda to roll back government regulation (Niskanen and Moore, 1996).
The success of Reaganomics has received mixed reviews. Inflation did fall from 13. 5 percent in 1980 to 4. 1 percent in 1988 and unemployment fell from 7. 5 percent to 5. 3 percent for the same time period (Reaganomics). GDP from 1981 to 1989 was 3. 2 percent per year, compared with 2. 8 percent from 1974 to 1981. With regards to the tax cuts, the wealthy benefited the most. The highest twenty percent of income earners saw an income increase of almost nineteen percent from 1983 to 1989 while the lowest twenty percent only saw income rise by about twelve percent.
However, Reagan countered that the poor and middle class would also indirectly benefit from the “trickle down affects” of his tax cuts. Reagan did not keep is promise to balance the budget primarily because of dramatic increased in the military budget (Ronald Reagan). By the end of Reagan’s second term the national debt had nearly tripled. Reagan embraced a conservative agenda (Ronald Reagan) , considered by many to favor businesses over the rights of the working people. Most notably, he fired most federal air traffic controllers when they went on an illegal strike.
This move was viewed by liberals as limiting the power of public employee unions and sending the message that businesses in the private sector could also play hardball with unions. Conservatives countered that lowering the risks of hiring would increase employment. Reagan’s administration successfully slowed the growth of welfare and other social spending and was heavily criticized by the gay community for its slow response to the HIV-AIDS crisis. Even though two of the three Supreme Court justices Reagan selected, Sandra Day O’Connor and Anthony Kennedy, voted to uphold Roe v.
Wade, Reagan himself took a strong stand against abortion and was said to be very disappointed that Roe v. Wade wasn’t overturned. Reagan’s stance on crime was more punitive than corrective. There was a “Just Say No” campaign spearheaded by his wife (Ronald Reagan) designed to prevent drug use. But, Reagan’s policies in the “War on Drugs” emphasized imprisonment for drug offenders while simultaneously cutting funding for addiction treatment, resulting in a dramatic increase in the United States. prison population (Reagan Administration).
Reagan also signed legislation authorizing the death penalty for offenses involving murder in the context of large-scale drug trafficking. Although Reagan is no longer with us, his legacy lives on. His greatest influence by far is Reaganomics. To this day, advocates of Reagan’s supply-side economics argue that it is the best way to stimulate the economy. Present President George W. Bush signed tax-reform legislation in 2003 based on the belief in this theory, lowering the top personal tax rate to thirty-five percent (Kamin and Shapiro, 2004).
The increase in after-tax income is, on average, more than two and a half times larger for the top one percent of households than for those in the middle of the income scale. Like Reagan, Bush is also running a huge deficit and is doing so in a similar supply-side fashion. Instead of growing the government in general, such as pumping resources into public works, health care and education which would have an immediate effect on sorely needed job creation, Bush’s policies focuses on those areas that represent conservative and business-friendly constituencies, namely the military and military contractors (Gumbel, 2004).
Regan’s cutbacks in social spending were not even reversed under more liberal President Clinton and certainly are going to remain under the Bush administration. Bibliography : Gumbel, A. (2004, January 6). How the war machine is driving the US economy. Independent. Retrieved November 14, 2005 from Web site: http://www. commondreams. org/views04/0106-12. htm Kamin, D. and Shapiro, I. (2004, September 13). Studies shed new light on effects of administration’s tax cuts. Retrieved November 14, 2005 from Web site: http://www. cbpp. org/8-25-04tax. htm Niskanen, W.
A. and Moore, S. (1996, October 22). Supply tax cuts and the truth about the Reagan economic record. Cato Policy Analysis No. 261. Retrieved November 14, 2005 from Web site: http://www. cato. org/pubs/pas/pa-261. html Reagan administration. Retrieved November 14, 2005 from Web site: http://en. wikipedia. org/wiki/Reagan_administration Reaganomics. Retrieved November 14, 2005 from Web site: http://www. thereaganlegacy. com/version2/reaganomics. asp Ronald Reagan. Retrieved November 14, 2005 from Web site: http://en. wikipedia. org/wiki/Ronald_Reagan