Reaganomics

1. Reaganomics By Trevor Casellini

2. Description • During the presidential campaign in 1980, Ronald Reagan announced his solution to the economic mess within the United States. He claimed an undue tax burden, excessive government regulation, and massive social spending programs hindered growth. He proposed that 30% of tax cut for the first three years of his presidency. If the taxes were cut for the rich, it would give them the ability to invest and spend more money. Little did he know, that tax cuts would reproduce inflation and raise interest rates. Since there was such a high interest rate in international sales, the amount of American currency went up, making products more expensive. As a result to this, the export rate began to slowly decrease because there was not enough money to keep products running, and the import rate gradually started to increase. Reagan was all for military defense as well. Government contracts were awarded to defense firms to help build up a stronger, more fierce military. Reagan even proposed the Strategic Defense Initiative which was a space missile-based defense system which allowed incoming enemy missiles to be shot down. The revolution of our military, plus on top of that were tax cuts, cost us trillions of dollars, which is why many economists disagree with Reaganomics. Reagan’s plans were indeed passed by congress, however the tax cuts would not go deep enough into a welfare state. As a result of his plans, the national debt was tripled from one trillion dollars, to three trillion dollars during his presidency.

8. Summary • 30% Tax Cut was made • After tax cuts, the amount of the U.S currency increased • At the end of Reagan’s presidency, national debt was tripled from one trillion to three trillion • Reagan was an advocate for tax reduction and military defense • Congress passed his plan, but refused to cut into the welfare state, such as Medicare and Social Security