221k views
1 vote
What might be the costs of having such a large national debt? Did the promise that tax cuts would result in a growing economy that would pay for any budget shortfalls come true during the Reagan years?

2 Answers

5 votes

After the recession of 1981-1982, the economy experienced a remarkable recovery that began in 1983. Reagan mobilized the moral majority and preached the return to traditional moral values, including prohibiting abortion, imposing the creationist theory in state schools and granting greater participation in public life to Christianity. He launched a program of re-militarization and the launching of a space armament program entitled Strategic Defense Initiative, which would profoundly modify the balance of forces on a planetary scale and stimulate the militarization of space, spending billions of dollars for its realization. Economically, the Reagan administration had turned the United States into a country with a large trade deficit and the world's largest external debt, which increasingly commits its resources to military companies and lives beyond its means thanks to the contribution of capitals together budget items to arm and train anti-communist groups such as the Contras and the mujahideen in Afghanistan.

One of the main concerns of the first Reagan period was the reactivation of the economy, combined economic stagnation with high inflation, this policy caused a short-term recession (1981-1982), which temporarily lowered public support for Reagan. Others praised him for taking that strategy. Reagan's election campaign was carried out with an economic program that promised to reduce taxes. This type of economic plan has led to a huge deficit and a deep recession. Unemployment had reached its highest point since the Great Depression: 11.6 million Americans were without work (10.4% of the active economic population). Of those, 3.7 million have lost their jobs since the arrival of Reagan to the White House. Entire sectors of production had been dismantled in the first twenty months. The crisis affected traditional industries, automobiles, household appliances, textiles and steel. By the end of 1982 the economic situation was increasingly dramatic, because subsidies in all areas of social services were drastically reduced. With a budget deficit that Wall Street estimates between 140 and 160 billion dollars, one of the highest in history despite the cuts. He made a strategy of combining this policy of contracting the issue with general tax cuts designed to increase investment in business (in Reagan's words: "the Chicago school, fiscal supply, lowering taxes to large companies, reducing controls, privatize public services, diminish the power of workers' organizations and collective bargaining, while this policy was ridiculed by opponents such as voodoo and Reaganomics, the decrease in social spending led to an increase in poverty, ethnic minorities were excluded and social and educational protection systems were strongly affected, the Reagan policy recorded a record budget and trade deficit.

User Juan Tarquino
by
4.3k points
3 votes

The Reaganomics in 1980´s had its roots in the promises of the Reagan campaign: lower taxes and reduce government activity. During his tenure, income tax rates reduced form 70% to the 28%. On the contrary, taxes on payrolls increased, as wells as the effective tax rates of the population with lower incomes to maintain social security financing. As of today, public services were more than before, the budget deficit and performance levels, exceeding any previous indicator as a percentage.

User FGiorlando
by
4.6k points