Ronald Reagan came into the oval office after a bad economic term by Jimmy Carter. Jimmy Carter left the office with high inflation, unemployment and interest rates. One of Reagan’s biggest goals he had for his presidency was to save the economy. Many people labeled his economic policy “Reaganomics”. With many new policies comes doubt and Reaganomics had its fair share of doubt from many people around the country. Even though the Federal Reserve Board and many economists doubted Reagan’s economic beliefs, Reaganomics proved to be beneficial to the American economy as well as unemployment rates and poverty percentage.
One of Reagan’s most important and pursued goal of his was to help people gain major steps in the economy from the poor all the way up. He wanted acheive this by reducing the tax burden on the American public. He started with the poor by pardoning families who received less than $14,000 in annual income from paying any federal taxes(Novak). This relief allowed many people under the poverty line to be able to function without having the federal government breathing down their backs.
It also gave some confidence back to these people that the president was on their side which is vital for any system to work. One act that was passed changed the way taxes were laid out. The Tax Reform Act of 1986 continued the reform process, expanding the Earned Income Tax Credit to the point where households with dependents in effect now pay no federal taxes up to nearly $10,000, and only a fraction of the combined employer/employee contribution to FICA up to nearly $20,000. Novak)
This act changed the tax bracket system simplifying it and cut higher taxes and slightly raised lower taxes(Tax Reform Act Of 1986). This simplification allowed for more of an even pay and sometimes a lesser pay. He believed in Trickle-Down Economics which meant lowering taxes more on the rich. This would lead to more spending than more job and service opportunities. Poverty during Reagan’s presidency saw an decrease. The amount of the population below the poverty line dropped from 7 million to 3 million during his term(Reiland).
Many Americans were starting to move up the income ladder and this was creating a larger upper class while the the lower brackets were shrinking. This enlarging of the upper class was also creating more overall income for the government(Reiland). Another one of Reagan’s beliefs was that the government hould not have as much control as they did at the time he came into office. He said, It is my intention to curb the size and influence of the federal establishment and to demand recognition of the distinction between the powers granted to the federal government and to the people.
All of us need to be reminded that the federal government did not create the states; the states created the federal government. (Reagan) He fully believed that with the federal government not fully involved in everything that happened in each state it would create a better and easier working system within the US. With this change, the American public was able to make more choices. Banks were making more investments in assets. Also price controls were eliminated on oil, cable TV, etc(Niskanen). This freedom was allowing for economic opportunities.
Along with the idea of the government freedom was reduced government spending. This was achieved but with little success as compared to his other accomplishments. were making big leaps in the 80’s. The African American community was growing faster than it ever had in history. The African American workforce grew to a staggering 11. 4 million, he largest it had ever been in America at this point in history. those reserved to the states or The poor were not the only ones who With this increase in workers came the rise of total black in come to over $60 million(Novak).
The median income of black households was also rising and finished 12% above where it started. Also, during Reagan’s term the number of African American households making over $50,000 a year rose by 300,000 which was a rise from 7% to 14%. All these number point to an incredible increase in the prosperity and success of African Americans in the time Reagan was in office. This also roves Reagan’s willingness to fight for all the American public and not just for the upper class as some people try to point out.
By 1988, over half of all African American families had achieved an income of over $30,500 which had been the highest median income achieved by African Americans ever in America. All of the increases in income can be explained by this chart. Agresti explains this by saying, “.. the data above and other Census data showing that every income quintile of black families experienced real cash income growth in this era. “(1) Another contribution to this increase in wealth came from the African American intent to prosper in this new economy created by Reagan.
The number of black owned business in the country rose by 38% and also the black employment in managerial and professional occupations grew by one-third. These achievements can all be accredited to his work in lowering more economic hardships in America at the time. one of Reagan’s key goals he set for himself was to cut down on inflation, lower the number of unemployed people and to chop the interest rates. This started with inflation rates(Novak). This Another decrease in inflation can be attributed to the endorsed eduction of money growth(Niskanen).
They dropped throughout his term from by 9. 5% from 13. 5% to 4%(Novak). This reduction allowed for people to be able to afford prices leading to more spending. Paul Roberts tells how many were surprised by this success when he says, “Reagan’s economic policy caused an increase in the willingness to hold dollars. The decline in velocity, together with tight monetary policy and a smaller tax component in the cost of labor and capital, broke the back of inflation more rapidly than forecasts, constrained by concepts such as “core inflation,” had predicted. Roberts)
As Roberts says, many people were not expecting the Reagan administration to do as much as they did when it came to the reduction of inflation. Reagan also reduced interest rates and unemployment. When it came to interest rates, they dropped by a high 11%. This was from 19% before he took office and was down to 8% by the tim he left office(Novak). This decrease can be to the endorsement of the reduction of money growth as well as the inflation was(Niskanen).
When interest rates went down this allowed people to invest in things they want such as homes, cars, etc. cause they were not killed with high interest prices. And then finally came the decrease in unemployment which could be thought of as the most important. When Reagan took office the unemployment percentage was at 7% and he reduced it to 5. 2%. The percentage might seem small but the raw number of jobs created during the 80’s was over 19 million(Novak). Unemployment in African American teenagers also fell by 21% (Reiland). All of these factors contributed to the growing and prosperous economy that Reagan was creating Even with the doubt from the Federal Reserve Board and many economists,
Reagan’s economic beliefs, Reaganomics, proved to be beneficial to the American economy as well as unemployment rates and poverty percentage. Reagan’s unwillingness to give up proved to be one of his greatest assets when it came to making the economy better. Reaganomics helped the poor get out of a growing hole. It also was very rewarding to African Americans in business and all around income. And all of the main goals Reagan had for the economy were fulfilled. This fulfillment left many people surprised and some still do not want to accept the fact that Reaganomics led America out of bad economic times.