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Reganomics The election of the Regan-Bush Republican ticket of 1984 brought many unprecedented and controversial policies to the US economy. Many of these policies,including Reganomics still affect our economy as a whole and are still major points of debates today. Reganomics was not solely based on economics, but rather the included a sense of having moral foundations. Government intervention and regulation of the economy were seen as economically harmful and furthermore morally wrong. It was believed that economic affairs should be left to the wisdom of God and his guidance would produce a successful market and economy. The moral obligation together with extreme Kenseyan theories were the guide to the basic principles of Reganomics. Their objective was to follow a laissez faire attitude,or a hands off government policy. They also wanted to rely on the wisdom of the of the market, meaning that the market is smart enough to take care of and troubleshoot itself,and they tried t!o use a policy of deregulation which would allow companies to make their own economic decisions with out the government limiting their choices. The administration was also weary of anti-trust laws which did not allow for monopolies in our society. The "de
------------------------------------------------------------------------ Americans" (Dunn) However when this great prosperity was acquired in such a short period of time, people got nervous and began to make false accusations against the Reagan administration which were called myths. Myths were created by economists that either did not look at all the statistics or made assumptions before they had all of the statistics. Some of the myths that came from these economists were that Reaganomics caused Americans to divest and de-industrialize. There were also presumptions that every dollar of taxes that were cut would lose a dollar of revenue. They also offered that record deficits were caused by the reduction in marginal tax rates. There is no basis for insisting that tax policy developments were responsible for the budget deficits of the Reagan years. (Ture 35) Some myths created even went so far as to say that the deficits were deliberate in order to reduce social spending while increasing defense spending. In fact the contrary is true. Transfer paym! were that the savings and loan industry collapsed due to fraud and mis-management. Regan knew that deregulation could possibly have adverse effects if there was no degree of regulation at all, so preventative measures were set in place. One such preventative measure was the Office of Information and Regulatory Affairs (O.I.R.A) which insured that deregulation adhered to cost benefit principles to the maximum extent possible. "If government is the problem, not the solution, you do not solve problems by applying a bigger problem to them" (Regan). Another notion behind Reganomics was the Laffer Curve, which conveyed the idea that tax cuts would increase tax revenue. The Laffer Curve is based on the ideology that government should provide a climate in which the incentives for individuals to pursue their own economic progress wouldn't be hindered by governmental taxing, spending, regulations, and/or monetary policies. It is also based on supply side economics. Supply side economic! lyhigh level made U.S exports more expensive, U.S imports cheaper and it added to the trade deficit and the foreign debt. This was also known as "Mexicanization" of the economy. (Galbraith 3) Large budget deficits from the loss of tax revenue, was brought about by the loss of real output during the 1981 - 1982 recession, and unanticipated disinflation. That fiscal year (after adjusting for inflation, tax collections did not incr
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Approximate Word count = 1665
Approximate Pages = 7 (250 words per page double spaced)
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