Reaganomics and the Economy
Besides ending the Cold War, Reagan also accomplished many other things during his presidency, but the crown jewel was his very own Reaganomics. Before Reagan, America went through a decade of inflation and unemployment, for short called stagflation. Inflation averaged 12.5% per year, and unemployment peaked at 10.8% of the population, which was the highest since the Great Depression. “Reaganomics” was the nickname given to the series of economic policies implemented by Reagan during the 80’s, often associated with supply-side economics.
Reaganomics comprised of four main policies, including the reduction of growing government spending, the reduction of federal income tax and capital gains tax, the reduction of government regulation, and the reduction of the money supply in order to reduce inflation. Reagan also promoted ideas such as laissez-faire and the free-market fiscal policy. The purpose of Reaganomics was to boost the economy by lowering taxes, which would leave more money for people to invest with. Reagan also partnered up with several organizations to create jobs in the Job training Partnership Act of 1986, causing one of the US’ first public-private partnerships and creating over 16 million jobs.
Reagan cut taxes heavily across the board, bringing the top marginal tax down to 50% from 70%, and the lowest marginal tax down to 11% from 14%. After these, Reagan actually continually increased taxes throughout the rest of his presidency to fund programs such as Social Security. Tax increases included the Deficit Reduction of 1984 (DEFRA), and the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Though TEFRA was the largest peacetime tax increase in US history, the GDP recovered quickly.
During Reagan’s presidency, the economy was boosted drastically, bringing inflation from 12.5% to 4.4%, and taking unemployment down to around 5.4%. Also, the GDP began increasing almost 8% each year. Overall, the economy came out of one of its biggest recessions of the 70’s and was spurred dramatically all throughout Reagan’s presidency.
Reaganomics comprised of four main policies, including the reduction of growing government spending, the reduction of federal income tax and capital gains tax, the reduction of government regulation, and the reduction of the money supply in order to reduce inflation. Reagan also promoted ideas such as laissez-faire and the free-market fiscal policy. The purpose of Reaganomics was to boost the economy by lowering taxes, which would leave more money for people to invest with. Reagan also partnered up with several organizations to create jobs in the Job training Partnership Act of 1986, causing one of the US’ first public-private partnerships and creating over 16 million jobs.
Reagan cut taxes heavily across the board, bringing the top marginal tax down to 50% from 70%, and the lowest marginal tax down to 11% from 14%. After these, Reagan actually continually increased taxes throughout the rest of his presidency to fund programs such as Social Security. Tax increases included the Deficit Reduction of 1984 (DEFRA), and the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Though TEFRA was the largest peacetime tax increase in US history, the GDP recovered quickly.
During Reagan’s presidency, the economy was boosted drastically, bringing inflation from 12.5% to 4.4%, and taking unemployment down to around 5.4%. Also, the GDP began increasing almost 8% each year. Overall, the economy came out of one of its biggest recessions of the 70’s and was spurred dramatically all throughout Reagan’s presidency.