Reaganomics

Reaganomics

AP US History

In the 1980 election, Ronald Reagan asked the American people, “Are you better off now than you were four years ago?” The country, having dealt with several years of high interest rates, high inflation, and sluggish economic growth, said no—and gave Reagan a convincing victory in November.

Reagan’s program, dubbed Reaganomics, essentially said that if the US economy were freed from high taxes and government regulation, it would achieve high levels of productivity and growth.

Reagan advocated a theory called supply-side economics. He proposed cutting federal income tax rates. This would, he argued, stimulate the economy, more people would have jobs, businesses would enjoy higher profits, and, as a result, more money would flow into the federal treasury. [More people paying taxes even though the rate of taxes was lower.]

Other elements of Reagan’s economic program included the following:

· Cutting regulation of business and industry. Reagan supported the deregulation of banking, savings & loans, transportation, and communications. He moved to open public lands to development.

· Increasing defense spending.

· Cutting spending on social programs such as student loans, school lunches, job training, and mass transit.

· Balancing the federal budget.

Did Reaganomics work? Your job is to look at the facts and make an assessment.

Some terms you need to know:

· Inflation—The increase in prices over time.

· CPI—Consumer Price Index. This compares prices to a base year and shows how much prices have increased. It measures inflation.

· Federal budget—What the government spends.

· Revenues—What the government collects in taxes.

· Deficit—The amount the government goes into debt in a particular year. This is the difference between what the government collects in taxes and what it spends in any one year.

· National Debt—The total amount the government owes. The total of all the deficits put together. In 2008 this was about $9.5 trillion.

· GNP—Gross National Product. Also called GDP—Gross Domestic Product. This is a measure of the total size of the economy.

Check the links below. Gather at least five specific facts. (Note that the text accompanying most of this data has been prepared by the Reagan Presidential Foundation, an organization dedicated to honoring President Reagan. Other interpretations of the data are possible.)

In your Writer’s Notebook, write a half page explanation of why Reaganomics was a success or a failure. Be sure to cite specific facts.

· GNP (gross national product), budget deficit, and national debt

http://www.presidentreagan.info/debt_deficit_gnp.cfm

· CPI (consumer price index)

http://www.presidentreagan.info/inflation.cfm

· Size of federal budget

http://www.presidentreagan.info/reagan_budgets.cfm

· Federal budget revenues (how much the government collected in taxes)

http://www.presidentreagan.info/revenues.cfm

· Federal tax rates (Who paid taxes? The rich? The middle class? The poor?)

http://www.presidentreagan.info/share.cfm

http://www.presidentreagan.info/total_tax_burden.cfm