CheckPoint Reagan�s Economics

CheckPoint Reagan�s Economics - even though the tax...

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Reagan’s primary goal as president was to weaken big government. His budget would become an instrument to reduce bureaucracy and to undermine activist federal agencies in the areas of civil rights, environmental and consumer protection, poverty programs, the arts, and education. In essence, the new president wanted to return government to the size and responsibility it possessed in the 1950s before the reforms of Kennedy and Johnson. At the heart of the Reagan revolution was a commitment to “supply-side” economics, a program that in many ways resembled the trickle-down economic theories of the Harding-Coolidge era. Supply-side theorists argued that high taxes and government regulation stifled enterprising businesses and economic expansion. The key to revival lay in a large tax cut, a politically popular though economically controversial proposal. A cut as this threatened to reduce revenues and increase an already large deficit. The economy would be so stimulated that tax revenues would actually rise,
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Unformatted text preview: even though the tax rate was cut. The president’s second target for action was inflation, the “silent thief” that had burdened the economy during the Ford-Carter years. Reagan resisted certain traditional cures for inflation tight money, high interest rates, and wage and price controls. He preferred two approaches unpopular with Democrats higher unemployment and weakened unions to reduce labor costs. Lower public spending a favorite Republican remedy, might have seemed one likely method of reducing inflation. But the third element of Reagan’s agenda was a sharp rise in military outlays a total of $1.5 trillion to be spent over five years. The president wanted to create an American military presence with the strength to act on one side anywhere in the world. This was a remarkably expansive goal Presidents Nixon, Ford, and Carter had all looked to scale back American commitments through either détente or by shifting burdens to allies in Western Europe....
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