Reaganomics
Reaganomics is the economic policies of Ronald Reagan, the 40th President of the United States. Reaganomics is often associated with supply-side economics, an economic theory that emphasizes reducing taxes and government regulation in order to stimulate economic growth.
Reaganomics was first proposed by economist Arthur Laffer in the 1970s. Laffer argued that the economy was in a state of stagflation, a period of high inflation and high unemployment. He believed that the government could reduce inflation by cutting taxes and government spending.
Reaganomics was implemented by Reagan during his first term in office (1981-1985). Reagan cut taxes by 25%, reduced government spending, and deregulated the economy. These policies were intended to stimulate economic growth and create jobs.
The effects of Reaganomics are debated by economists. Some argue that it was a success, and that it helped to end stagflation and create a period of economic growth. Others argue that it was a failure, and that it led to increased inequality and poverty.
Reaganomics had a number of effects on the American economy. Some of the most notable effects include:
- Increased economic growth: The economy grew by an average of 3.5% per year during Reagan's first term in office. This was the fastest rate of growth since the 1960s.
- Reduced inflation: Inflation fell from 13.5% in 1980 to 3.2% in 1985. This was the first time inflation had been below 5% since 1965.
- Increased employment: The unemployment rate fell from 10.8% in 1980 to 5.3% in 1985. This was the lowest unemployment rate since 1973.
- Increased inequality: The gap between the rich and the poor widened during Reagan's presidency. The top 1% of earners saw their income increase by 27%, while the bottom 50% of earners saw their income increase by only 6%.
- Increased trade deficit: The trade deficit increased from $10.8 billion in 1980 to $159.6 billion in 1985. This was the largest trade deficit in American history.
Reaganomics is a controversial economic policy. Some economists believe that it was a success, while others believe that it was a failure. The debate over Reaganomics continues to this day.