Regan Analysis Paper

Reagan Analysis Paper

Michael Wang

HIS/145

August 15, 2014

Jennifer Moore

Reagan Analysis Paper

        President Ronald Reagan was the 40th President of the United States and one of the most notable in history. He is credited with bringing about the end of the cold war, and restoring a national sense of pride. Reagan’s Approval ratings were 53 per cent at the end of his two term and as people look back those numbers have gotten higher. Even the Iran Contra scandal did little to tarnish America’s opinion of the president. During his presidency, he also implemented a new economic system called side-line economics which was a very large deviation from previous Keynesian economics. Many government programs budgets were reduced during Reagan’s presidency in order to promote growth in the economy. There were some good parts and bad parts of Reagan’s presidency but overall I believe that it was somewhat underrated.

In the latter half of the 1970s the economy was mired in “stagflation”, low growth coupled with high inflation rates as well. It was a top priority during the Reagan presidential campaign to promote growth in the economy. American economic policies derived from Keynesian principles for the last two decades which eventually resulted in the stagflation of the 70s. Not many people had ever heard of Supply-side before Reagan ran for office many people called it “Reaganomics”. The whole idea behind supply-side is to reduce taxes while at the same time, reduce the growth of the federal government in order to promote growth. Another aspect of this economic principle relies on individuals drive to work, invest, and save. Changing relative prices will influence incentive to buy/invest. In August 1981 President Reagan signed into law a bill that would cut personal income taxes by 25% that would be phased in over the course of three years. The recession of 1980 and 1982 had the media and democrats blaming the tax cuts for causing it before they were actually fully implemented. After the initial recession in the early years of Reagan’s presidency, the economy picked up in ’83. The new fiscal policies that were in place were more successful than was thought possible. Across the nation unemployment rates dropped while personal wealth rose and sales of houses, cars, and other amenities rose. Inflation had dropped to 4 per cent, the lowest it had been in several years. As the economy recovered, the budget deficit continued to rise because of government spending. The tax cuts, along with cuts to social services, increased the number of poor, homeless people.

Reagan aimed at reducing government growth and regulations during his presidency. He mostly attempted to do this by appointing people that shared his views on reduction of government to regulatory agencies and cut their budgets. The deregulation of many industries did provide some room for companies to grow, but too often corrupt and risky deals took place and ended up costing the government.

Historians give President Reagan a lot of the credit for bringing about the end of the Cold War. After the Vietnam War during the years 1974- 1980, ten countries had turned communist: South Vietnam, Cambodia, Laos, South Yemen, Angola, Mozambique, Ethiopia, Nicaragua, Grenada, and Afghanistan. Many felt that the Soviets had gained a large advantage over the United States. In the beginning of the Reagan presidency, he took a hardline approach to communism and vowed that America would always support anti-communist resistance around the world.  Almost as soon as the President was sworn into office he made building up the United States military a top priority.  The defense budget was tripled to 1.5 trillion.  It was the most money ever spent on defense in peaceful times. In 1983 the U.S. invaded Grenada and won, overturning the communist government. Grenada was an important victory for the U.S. because it was the first time that a country was liberated from communism.  The administration also lent support to rebels in countries Afghanistan, Cambodia, Angola, and Nicaragua. In March 1983, Reagan announced that a Strategic Defense Initiative (SDI) was under development to deploy missile defenses that would supposedly make nuclear weapons obsolete. The project was derided in the media as a fantasy akin to the “Star Wars” franchise, but nevertheless, it was in development. The Soviets weren’t very pleased by this plan and claimed that SDI broke numerous treaties. Reagan’s thinking was that the Soviet Union really wasn’t as powerful as they would have us believe and could be beaten if the U.S. kept spend money on defense. Reagan showed no doubt and appeared to be optimistic although some of his opponents thought he was a war monger. U.S. citizen and Europeans where becoming nervous that all these preparations would eventually lead to a devastating war.  In the latter half of Reagan’s presidency he notably softened his approach to dealing with the Soviet Union and had several meeting with their new leader, Mikhail Gorbachev. They discussed eliminating all nuclear weapons within a decade but couldn’t come to an agreement based on disagreement about SDI and the anti-ballistic missile treaty. In 1987, Reagan and Gorbachev signed a treaty to eliminate an entire class of nuclear weapons. The Cold War didn’t officially end until President Bush was in office but it certainly wouldn’t have happened then if it weren’t for the efforts of President Reagan.