Economics and Policy - Reagan

Reagan's "Supply-Side" Economic Goal

Stimulate growth by cutting taxes for the wealthy and reducing government regulation.

1981 Economic Recovery Tax Act (ERTA)

Slashed top marginal tax rate from 70% to 50%.

Tax Reform Act of 1986

Simplified tax code, lowered top rate to 28%, and closed loopholes.

National Debt 1980-1988

Tripled from $1 trillion to $2.6 trillion due to defense spending and tax cuts.

"Defense is not a budget item"

Reagan's justification for massive military spending despite a growing deficit.

Shift to Debtor Nation

By the mid-80s, the USA became the world's largest debtor nation (owing Japan/Germany).

The Trade Deficit

Rose from $38bn to over $150bn/year

Savings & Loan Crisis (1989-90)

Post-Reagan collapse caused by deregulation, costing taxpayers $132 billion.

Balanced Budget Act (1985)

Congressional attempt to force spending cuts to manage Reagan's deficit.

New Public Philosophy

Reagan created a consensus that increasing social welfare was "unwise and undesirable."

Paul Volcker's Role

Federal Reserve Chair whose "tight money" policies helped Reagan drop inflation to 4.7%.

Reagan's Judicial Legacy

Appointed 400+ conservatives to the judiciary, making discrimination suits harder to win.