Reagan's economic policies

• Immediate economic actions

  3 days:

  Sacked Whitehouse staffers

  Created a federal hiring freeze

  Banned buying new office equipment

  Cut government travel expenses

  Advisory groups

  Seen as active and swift response

  Savings were minimal
• How was his legislation passed

  Required support of 26 democrats/bipartisan

  Had to barter

  Make concessions or promise to democrats to get bill passed
• ERTA

  Cut income tax by 23% over 3 years

  Linked tax to inflation

  Benefit the rich mostly

  Highest tax rates fell from 70% to 50%

  Lowest -> 14 to 11
• Reagan's plans to reform

  Presented his budget/tax reforms as a single bill

  Congress had to vote on entire package

  Required support of 26 democrats/bipartisan support
• Reaganomics

  Cutting federal deficit

  Personal and business tax reductions

  Deregulation

  Planned control of the money supply
• Stopping inflation and reducing employment

  Both went down in short term

  Unemployment fluctuated and initially went up

  Peaked in 1983 at 9.6%

  Inflation fell from 13.5% down to 6.2% 1982
• Did policies increase personal wealth?

  Created more wealth for the rich through tax cuts
• Impacts on economic policies on productivity

  Generally positive and increased except for 1982
• Did policies encourage savings and investment?

  Increased after 1982

  Deregulation resulted in more competition and the financial

  sectors took more risks

  Financial environment became unsafe and led to Savings and

  Loans Crisis in 1987

  FRB stepped in encouraged lending
• Did the policies reduce the deficit?

  No. Failure.

  Defense spending increased from 23-28% between by 1987

  Lower taxes meant it was harder to pay off
• To what extent were Reagan’s policies maintained after his

  presidency under George Bush?

  Bush attempted to maintain Reaganomics but it became obvious they were not working in the long-term

  Bush went against campaign promise and raised taxes