Reagan and the 1980s Term Paper

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Reagan and the 1980s

President Ronal 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% and unemployment was 7.1%. Gross domestic product (GDP) had only grown 2.8% 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 weath. 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).

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The success of Reaganomics has received mixed reviews. Inflation did fall from 13.5% in 1980 to 4.1% in 1988 and unemployment fell from 7.5% to 5.3% for the same time period (Reaganomics). GDP from 1981 to 1989 was 3.2% per year, compared with 2.8% 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 businesss 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….....

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