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					Reagan Myths
Reaganomics

  -- cut government spending
  -- cut taxes(for the rich)
  -- cut regulations
  -- (have a military buildup)
  The economy will prosper
“cutting spending”
  -- Reagan never actually cut federal spending; he only cut
  the rate of GROWTH in federal spending
  -- Federal budget became larger in both dollars and
  inflation-adjusted dollars
  (None of the conservatives ever cut spending; they just
  spend it on different clientele)
cutting inflation

   -- Reagan’s economic policies did not purge inflation
   -- Paul Volker, a Carter appointee, did
 Chairman, Federal
      Reserve

-- appointed by Carter in
1978
-- term of office is 4 years

Monetary Policy

-- set interest rates
extremely high
-- this purged inflation
and threw the economy
into an extremely deep
recession in 1982
-- Reagan re-appointed
him
                          Reagan Myths


 David Stockman

  Reagan’s Budget
     Director
-- key architect of the
Reagan plan
-- left in 1984,
disillusioned with the
Reagan economic
policies
-- Wrote a book claiming that the Reagan policies had
failed
                      Reagan Myths


 David Stockman

   Basic point

-- It wasn’t possible to balance
the budget by cutting taxes,
cutting some spending and
increasing defense spending
-- They had to fudge the budget
numbers (“Rosy Scenario”)
-- One of the central flaws: tax-
bracket creep
Emergency Tax increase

-- After Reagan blew a hole in the budget, he had no
choice but to pass an emergency tax bill
-- Effect: scale back his huge tax cut
   • cut corporate tax loopholes and deductions
   • raised Gas tax.
   • Raised Federal Unemployment Tax

				
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posted:11/22/2012
language:English
pages:8