reaganomics
"On February 23, 1977, Congressman John Rousselot, a Republican from California, rose to his feet on the floor of the House of Representatives and said in a booming voice: "Mr. Chairman, I offer an amendment as a substitute for the amendment in the nature of a substitute." It was a historic date, for that arcane legislative language marked the origin of Reaganomics"(Roberts 7). Reaganomics has become somewhat of a political code for economist around the world. Why is the economy in such good shape is what the public is asking. The answer would be Reaganomics, a jumble of "economic libertarianism, supply-side economics, and tax theory"(Schwartzberg 303) devised by Arthur Laffer, was the actual beginning of the economic recovery enjoyed by Americans in the last two decades that Democrats have wrongfully been bragging about."Throughout the 1980 presidential campaign, Republican candidate Ronald Reagan attacked the incumbent, Jimmy Carter, for the performance of the economy. He railed against the $40 billion deficit the Carter administration was running and promised to balance the budget if elected"(Schwartzberg 303). Reagan offered new ideas to ease the stress on the businesses and on the public of America. Usin
g a combination of his ideas and plans by a Arthur Laffer, a "former University of Southern California economics professor"(Walsh 222), Reagan got the public interested in what he had to say about helping the economy. Laffer believed that cutting tax rates would in turn increase the tax revenues. "His "Laffer Curve" became a central tenet of supply-side economics"(Walsh 222), which simply stated that: Real GNP rose 3.6 percent in 1983, the first year that the full tax cut went into effect, and 6.8 percent in 1984. The rate of inflation, which was in the high teens during the Carter years, fell to 3.2 percent in 1983 and 4.3 percent in 1984. The unemployment dropped from 7.1 Percent in 1980 to 5.5 percent by the end of Reagan's term (Bondi 1784). At a 0 percent tax rate a government will receive no revenue, and at a 100 percent tax rate a government will receive no revenue, because no one will work if all wages go to the government. Therefore, there must be some tax rate between 0 and 100 percent that maximizes tax revenues (Bondi 1782). The term supply-side economics was introduced, "Because businesses and workers could keep a larger portion of their incomes, they would supply increased effort to productive endeavors; hence the term "supply-side" economics"(Bondi 1782)."Such measures as tax cuts and benefit cuts to the unemployed are basic supply-side tactics, with the intention of increasing the incentive to work and produce goods and services"(Source 6 35741). "Supply side theory suggested that steep tax cuts would lead to increased investments that would help build the economy, resulting in a larger tax base that would more than offset revenues lost by the tax cuts"(Magill 67). Reagan, being very intrigued by this, made this the basis for his presidential campaign. Many compared it to the
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Approximate Word count = 1225
Approximate Pages = 5 (250 words per page double spaced)
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