In 1981 President Ronald Reagan depicted the economic situation in the USA as critical. While American citizens suffered from excessive taxes external debt was 934 billion. The government had already exhausted two other ways out from the deficit by borrowing money into the market and printing money which led to the increase of the inflation rate. As a consequence of the economic crisis, the American market of autos, steel, and other products also experienced great difficulties, especially in contrast to some other countries. The government’s ability to renew plants and their equipment was stifled by other expenses. America faced the threat of a potential trillion dollars debt on conditions that the previous economic politic would last further.
Though The President’s speech depicted the situation in the American economy as long as “with high inflation and a faltering economy, 1980 began on a shaky note” (Buder, 2009, p. 344), speaking rationally, it was excessive: “though many of the problems of 1970 related to the structural change from an industrial base to a postindustrial or service-oriented economy” (Buder, 2009, p. 343). Still, the public demanded changes in the guideline of the economy and Reagan promised better times. The perspectives of the tax burden-reducing inspired many American people. The main idea of the act lay in the idea of costs compensation by the income which would come thanks to the tax decrease: and the economy would gain from the fact that money would proceed to a turnover.
Reagan promoted the increase of productivity rates. To gather funds for started several reforms in the government reducing costs and “benefits to those who are not qualified because of need” (Reagan). Though Reagan did not promise quick relief he insisted on the implementation of a tax relief package: “I shall ask for a 10-percent reduction across the board in personal income tax rates for each of the next 3 years” (Reagan). In general, Reagan’s economic politics was intended for the implementation of free-market values as well as the downsizing of government expenses.
Reagan and his economic advisors decreased investments into welfare programs, tried to stop excessive taxation, and re-direct money for stimulating growth to balance the budget. Reagan’s reform system sometimes reminded a pendulum which oscillated from taxes reducing to rising with each swing of the pendulum. Economic passed through the new recession. The number of unemployed Americans fluctuated from worse to better and vice versa. Though the recovery was not for the benefit of the majority of ordinary workers as long as they did not feel any substantial improvement, it still gave some changes for the better. Later the President started the deregulation policy in all spheres of the industry which substantially reduced prices and stimulated the American economy.
Though in 1981 President’s words contained enough generalizations and promoting slogans they also included many facts. Although the Reagan administration created an optimistic picture of a relatively fast way out from the economic crisis he and his advisors indeed stimulated the economic recovery. Still, he initiated several unpopular reforms, such as cutbacks of welfare programs which led to the worsening of living conditions for low-income groups of society. At the same time, the increase of national debt was another result of Reaganomics. Though, the results of his deregulation and supply-side economic policy allowed him to stimulate the economy, overcome the high-level unemployment, and create incentives for the development of the free market. The main accent in the American economy moved from the governmental regulation of demand for wares, goods, and services to the stimulation of their production. Investing processes allowed decreasing the recession level.
References
Buder, S. (2009). Capitalizing on Change: A Social History of American Business. North Carolina: The University of North Carolina Press.
Reagan, R. (1981). Address to the Nation on the Economy. Web.