Introduction
As soon as Reagan was elected as the President in 1981, his administration focused on dealing with two primary issues, namely, military spending and tax cuts. Reagan believed that the efficient economy is possible through cutting federal personal income tax and moderating deregulation.
Though Reagan’s policies proved to be quite effective, this period of the American history obtained the name of “the decade of corporate greed” because cutting the taxes led to setting new standards of living, thus making the rich richer and the poor poorer.
Evaluation of the period
The authoritative social figures and journalists express their opinions about the decade of corporate greed as “conspicuous opulence” (McKenzie, 1992). The consumption rates increased significantly with more and more people starting moving to wealthier communities. The sales of expensive cars and luxury items also increased, as well as the popularity of MBA degrees.
This all contributed into the creation of surrogate aristocracy which was so not typical for a democratic society. This further increased class tensions for the wealthy who paid lower taxes according to new policies used their profits to the fullest extent. Thus, economically, the situation seemed to be improving, though socially the U.S. experienced class inequality.
The role of the mass media in the 1980s was rather influential. It was namely the media that first started criticizing the results of Reagan’s policies trying to ardently point at these policies’ disadvantages. The media blamed corporations for their greed and for their only taking from the society without giving anything back.
At the same time, media magnates sought for huge profits themselves. For instance, the New York Times chose to buy the Boston Globe instead of helping the poor; in this way, the media did not practice the socialistic gospel which it itself was preaching (Perkins, 1995).
National Debt
The period was harmful for the US national debt. Despite the fact that Reagan’s policies aimed at reducing the federal debt, it grew continuously during the decade. The statistics showed the outrageous cases of bankruptcy and illegal owning of properties and material amenities.
However, there existed certain divergence between the federal debt trends and the private-sector ones. The federal debt was rising at a rather slow pace, while the private-sector one showed the fastest growth rates.
Thus, despite the federal government’s and the private sector’s decreasing credit demands, there still was a considerable rise in the federal debt. And, though the economy of the U.S. experienced growth in that period of time, the national debt almost doubled.
Tax Policy
Reagan’s policy of tax decrease is often called an “opportunity” for fulfillment of the personal interests among the richest people of America. Income and corporate taxes have been cut for all the money to be left in private hands. Reagan expected this to lead to the national investment growth (due to the budget deficit and, thus, strong dollar rates). The budget deficit, in its turn, was caused by the increased rate of military spending. However, the national investment boom which Reagan hoped for so much never took place; this is why military spending was often blamed for the budget deficit.
Trojan Horse of Reaganomics
Reagan tax reforms have been called “Trojan Horse” by David Stockman because they simply resulted in the rich getting more profits, while the poor almost did not feel this reduction and were pleased that the government did not take away their money. Together with lowering the taxes, millions of people lost high-paying jobs; even a bigger number acquired low paying jobs. Thus, the economic growth which America experienced during that decade was only short-term. Far better (and long-term) economic performance could have been achieved by investing into education and research; this, however, has been ignored by the then government.
Favoured layers of tax policies
Since Reagan’s tax policies have led to the budget deficit and other non-beneficial changes in the U.S. economy, their advantages are often underestimated. Apart from the economic growth (though it did not last for a long time), the reduced taxes prevented the expansion of government and saved America from the decline which awaited the Western Europe in the 1990s. This helped the United States to become a prosperous country and restored the confidence of the country. Whether or not it can be considered a benefit, but Reagan’s policies increased the number of millionaires in the country, as well as rich people in general.
Charitable giving
Despite the fact that the period from 1980 till 1990 is called “the decade of corporate greed”, the population was registered give away much money for charity. The sum of money given away depended greatly on the profits of the organization or a separate individual and for that period the number of people trying to make personal investments in charitable activity was high. Among givers the representatives of private sector exceeded those of the corporate one; however, the fact still remains that the rich population shared its profits with the needy.
Conclusion
In sum, Reagan’s policies had their advantages and disadvantages, though the latter are still more numerous. From the very beginning, the Reagan administration followed the wrong course. The changes that it has undertaken led only to the short-term growth of the U.S. economy. The distribution of profits was still unequal, but lowering the taxes only made the contrast between classes more vivid. Thus, the wealthy population got even wealthier because it did not have to pay income taxes. Meanwhile, the poor got poorer due to the increased living standards. Moreover, federal debt did not reduce as was expected; on the contrary, it continued rising at the fastest rates. Therefore, Reagan can be said to have altered the U.S. policy agenda, but the changes which his policies brought were not beneficial for the country and its population.
Reference List
Campagna, A.S. (1994). The economy in the Reagan years: the economic consequences of the Reagan administrations. New York: Greenwood Publishing Group.
Clayton, J. L. (2000) The global debt bomb Volume 1111. New York: M.E. Sharpe.
Emayzine (1980) The Reagan Revolution. Web.
McKenzie, R. (1992) Decade of Greed? Web.
Perkins, R. (1995) Logic and Mr. Limbaugh: a ditto head’s guide to fallacious reasoning. Chicago, IL: Open Court Publishing. Pemberton, W. E. (1998) Exit with honor: the life and presidency of Ronald Reagan. New York: M.E. Sharpe.
Steuerle, C. E. (2008) Contemporary U.S. Tax Policy. Washington, DC: The Urban Institute.
Woods, T. E. (2004). The politically incorrect guide to American history. Washington DC: Regnery Publishing.