In class last Thursday, we talked a little about Reagan's economic policies, which became known as "Reaganomics". This post aims to give a little preview about the mechanics of "Reaganomics"before we delve deeper into this topic in class.
During Carter's presidency, the economy went downhill, hence the reason why many Americans consider Carter's presidency a failure. When Reagan came into office, he believed that a high tax burden along with excessive government regulation prevented economic growth. Thus he proposed a tax cut, in which the bulk of the cut was concentrated at the upper income levels. Contrary to popular belief, Reagan believed that the upper income levels, the big businesses, should be helped directly instead of the lower levels. By cutting their taxes, the rich would be able to spend and invest more, which would stimulate the economy and allow for more job positions. This economic theory was called Supply-Side Economics or the more well-known Trickle-Down Economics. If the expenses of the big corporations and the rich are reduced, their savings and wealth would "trickle-down" to the rest of the economy, spurring growth. At first Reagan's plan didn't seem to work, as inflation continued to increase because of the high-interest rates. However, the economy eventually stabilized in 1983 and the remaining years of Reagan's administration showed growth.
Because "Reaganomics" seemed to stabilize the economy, Reagan's presidency could be considered a success. However, during Reagan's presidency, the national debt tripled. Reagan insisted that the US was vulnerable to the Soviet Union in terms of nuclear defense. Thus, he increased the amount of military spending. The tax cuts and the increased military spending cost the federal government trillions of dollars. So, what do you all think - was "Reaganomics" truly a success?
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ReplyDeletehttp://www.forbes.com/sites/peterferrara/2011/05/05/reaganomics-vs-obamanomics-facts-and-figures/
ReplyDeleteThis article goes more in depth on the successes of Reaganomics. However, it fails to mention any failures, such as the tripling of the national debt (quite a large failure to tactfully leave out). It also contrasts some of the successes of Reaganomics Oliver discussed to the failures of Obama's economic policies. If anyone wants more information on the successes of Reaganomics check it out! But be aware that it is heavily biased- the author served in the White House Office of Policy Development under President Reagan and as Associate Deputy Attorney General of the United States under President George H.W. Bush, which explains his bias against democrats like Obama and favoring of Reagan.
Nice post Oliver. I'm going to refrain from giving my own opinion, but I think we can see a strong connection between the Occupy Wall Street movement versus Reaganomics of the 1980's. Those who marched and chanted "we are the 99%" seemed to be fighting against the modern day Republican party that Reagan seemed to create. It began with slashing taxes which resulted in the slashing of government support programs. It all started right here in California with Proposition 13, which reduced property taxes and then cut spending for government services. With the golden state as the pioneers, many other states followed, cutting taxes and as a result cutting government spending.
ReplyDeleteWhen Reagan became president, he proposed a new federal budget which cut $35 billion in social programs. The huge military budget was spared. So what does this have to do with the 99%? Well the Occupy Wall Street movement argued that the Trickle Down Economy, which Oliver described in his post, resulted in a massive wealth gap with a few very very rich, and a lot of middle class; the protestors wanted more wealth distribution. Many Democrats criticize Republicans for supporting this wealth gap. Mitt Romney, for example, in his presidential run was often under fire for just being a privileged rich guy, rather than a self made man. Whether these claims have any validity or not, it seems like the modern day Republicans are characterized by the policies of Reagan: help the rich to help all. On a final note, please realize that the Republican and Democratic Parties are major political systems, and I have made some broad generalizations. One cannot always characterize a Democrat as a supporter of the Occupy Wall Street movement and a Republican as a supporter of the very rich.
I suppose Reaganomics can be considered a success since the economy was stabilized from Carter's presidency but overall I think it is a failure since the national debt was tripled. I'm sure there was a more concise and less cost efficient method that could have been used to save the economy instead of relying on a tactic that would cost trillions of dollars.
ReplyDeleteI would agree that the Reaganomics system seemed like a success, but its motives also seem to contradict one another. Reagan wanted to stimulate the economy and to provide security against a Soviet nuclear threat. So if Reagan wanted to set aside large sums of money for defense, why did he cut taxes?
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