WHAT WAS REAGONOMICS? DID IT WORK? WHY?

Greetings.

Reaganomics was a financial strategy to improve the US economy in the
1980s.  The starting point was the 1981 'Economic Tax Recovery Act',
cutting marginal tax rates signifigantly.  This is the key to the
supply-side economic theory behind Reaganomics - if the people and
businesses have more money, they will spend more, thus driving an
economic recovery.  The tax rates prior to the 1981 act were as high
as 70% for the top income bracket.  While this could cause signifigant
shortfalls in government income, the predicted $750 billion shortage
never appeared, and in fact, tax recipts rose by $375 billion.

The 1981 act had four major policy objectives: (1) reduce the growth
of government spending, (2) reduce the marginal tax rates on income
from both labor and capital, (3) reduce regulation, and (4) reduce
inflation by controlling the growth of the money supply. These major
policy changes, in turn, were expected to increase saving and
investment, increase economic growth, balance the budget, restore
healthy financial markets, and reduce inflation and interest rates.

A signifigant benefit of Reaganomics was to reduce the inflation rate
from over 12 percent in the early 1980s to as low as 2.5% in 1988. 
Additionally, interest rates dropped by more than half, from a high of
over 20%.

Did Reaganomics succeed?  In part, yes it did.  It put the US back on
a sound financial foothold, and prepared it for the 'tech boom' of the
1990s.

However, that is a difficult question to fully answer within the scope
of Google Answers.  For a fuller discussion of the topic, I suggest
you read this recent paper by Prof. George Viksnins of Georgetown
University:

http://www.georgetown.edu/faculty/viksning/papers/Reaganomics.html

This analisys of the paper by the PostPolitics website is also quite
useful, as is the discussion following it:

http://www.postpolitics.com/blogs/archives/000344.html

A good summary of the policies and results of Reaganomics can be found
at the Wikipedia:

http://www.wikipedia.org/wiki/Reaganomics

A more thourough discussion of the policies and successes of
Reaganomics is found at The Concise Encyclopedia of Economics:
http://www.econlib.org/library/Enc/Reaganomics.html

Additional information, with sources, can be found at this termpaper
sample site:
http://www.termpapers-termpapers.com/dbs/b3/euz251.shtml

If you require more information, please ask for a clarification of
this answer before rating it.


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Even as a Democrat, I can see clearly that Reagonomics produced the
strongest and longest up-turn "ever", in the economy.  Yet Reagon was
subjected to the most cruel ribbing from "all" the
Party-Animal-Democrats and even the experts, who let their loyalty
trump their logic.  Or were they just, plain stupid, or venal?  As I
am wont to say, "there is no polotics, just stupidity or venality".

Cherish a thought, and it becomes an act, cherish an act and it
becomes a habit, cherish a habit and it becomes your character,
cherish a character and it becomes your destiny.  What America needs
NOW, is love, TOUGH LOVE.  No more of this perversion known as
"Unconditional Love".  It requires tough love to be a Democrat yet be
able to appreciate a good GOP program or plan, for even though
reasonable men disagree, only FANATICS disagree without reasoning.

I believe there is no greater acolade than "there goes a fair man.  Of
the magic three (wisdom, knowledge, understang), wisdom seems to be
the most desirable and fairness seems most related to wisdom.  It is a
vice not a virtue to let loyalty trump fairness...