What Was The Impact Of Reaganomics

Reaganomics was considered one out of the mostly serious attempt to change the course of U.S.

economic policy of any administration since the New Deal. Only by reducing the growth of

government claimed Reagan by that attempt they could increase the growth of the economy.

Reagan's required in 1981 a specific program for economic recovery that included four major

policy objectives One, which would be reducing the growth of government spending, Second,

reduce the marginal tax rates on income from both labor and capital, Third, reduce regulations,

and Forth, reducing the inflation by controlling the growth of the money supply. These specific

major policy changes, in turn, were expected for things in return which is increase saving and

investment,
The growth of defense spending during his first term was higher than Reagan had
Page 2 of 4

proposed during the 1980 campaign, and since economic growth was somewhat slower than

expected, Reagan did not achieve a significant reduction in federal spending as a percent of

national output.

President Bill Clinton’s economic strategy focused on policies that invested in three things

which is people, innovation, and infrastructure. These are the investments that strengthened

communities and the middle class. By pairing that strategy with a smart fiscal approach, his

administration and Congress during his two terms in office transformed a weak economy into a

fundamentally strong one, turned deficits into surpluses, and created the conditions for strong

future growth. And because he saw the changes globalization would bring to the world economy,

his administration began to push for the kind of solutions our country would need to prosper in

the 21st century as well. Unfortunately, policymakers in the eight years that followed the Clinton

presidency failed to build on this strategy, and the United States’ position of strength was lost.

As a result, the U.S. economy faces even greater challenges today than it faced when
This anemic economic growth was also doing less and less to benefit the middle class and those

striving to join it but more to benefit the top earners. As then-Gov. Clinton said when he

announced his run for president, the middle class was spending more time on the job, less time
Page 3 of 4

with their children, and bringing home less money to pay for more health care, housing, and

education. Finally, Clinton’s incoming team was starting to realize that they were inheriting a

tremendous fiscal challenge as well. In January 1993 the federal budget deficit for that year was

expected to top $300 billion, or 5 percent, of gross domestic product—the broadest measure of

our economy—and the Congressional Budget Office predicted that the United States would add

more than $1.8 trillion to the national debt through 1998.

What’s more, the growth was broadly shared and unemployment plummeted across the board,

including those groups for whom the economy never worked very well. Average hourly wages

increased by 6 percent after accounting for inflation, and median household income grew by 14

percent, the highest increase for a two-term president. It turns out, policy matters. Of