Reaganomics

When Ronald Reagan ran for President in 1980, he affirmed his belief in free markets, denounced deficit spending, and rejected the idea that the government should influence business cycles with fiscal revenue. Due to the 80 billion debt when he won, Reagan promised to introduce a new kind of economics: Reaganomics.

Reagan believed  that the government was the problem, not the solution. He believed that through less government spending and lower tax rates would help balance the budget.

Reagan proposed cutting government spending by 67 billion dollars, but Congress only cut spending by $35 billion. If Congress had listened to Reagan’s original policies, then the budget would be balanced by 1984.

Under Reagan, inflation rates dropped from 13.5% in 1980 to as low as 3.2% in 1983, then back up to 3.6% by 1985.

In the late 1970’s, Jimmy Carter cut federal programs to reduce deficit spending, which led country into a recession. During the first two years of Reagan’s presidency, unemployment rose from 5.6 to 10.8 percent, with more than 12 million americans out of work).

Reagan introduced a new way of balancing the federal budget. This relates to our situation today because we are coming out of a recession. Our national debt is in the trillions and we need to find a way to balance the budget. In 2009, Barack Obama signed a 3 trillion dollar spending bill to try and stimulate the economy.

Will Lusk