Reaganomics - key facts

Budget bill - cutting federal deficit

Aimed to reduce the federal deficit from 22% of the GNP in 1981 to 19% in 1986

Budget bill - unidentified cuts

$76 billion

Budget bill - Senate changes

Cut tax reduction for personal tax from 30 to 25%

Economic Recovery Tax Act 1981 (ERTA) - income tax

Cut marginal income tax by 23% over 3 years and linked tax bands to inflation

Economic Recovery Tax Act 1981 (ERTA) - tax bands

• Highest income tax band rate fell from 70 to 50%

• Lowest fell from 14 to 11%

1981 Omnibus Budget Reconciliation Act

Tax cuts to take $35 billion out of federal spending

Initial bill had proposed $45 billion worth of cuts

Unemployment rates

• 1980 - 7.1%

• 1983 - 9.6%

• 1988 - 5.5%

Inflation

• 1979 - 11.3%

• 1980 - 13.5%

• 1982 - 6.2%

Output per worker per hour

• Lowest: 1982 (-1)

• Highest: 1983 (4.5)

GNP growth

• Lowest: 1982 (-2%)

• Highest: 1984 (7.25%)

Reducing deficit

• 1980 - $59 billion, 9% of federal spending

• 1983 - $208 billion, 14% of federal spending

Human resources - federal spending

• 1980 - 28%

• 1987 - 22%

Defence - federal spending

• 1980 - 23%

• 1987 - 28%

Increase in defence spending

$1.5 trillion between 1981 and 1984

National debt

1982 - Above $1 trillion

1986 - $2 trillion

Job creation

1983-89 18 million new jobs

1986 Tax Reform Act

• Tax brackets - 14 → 2

• Tax rates - highest went down 50% → 28%