Reaganomics: The Combination of “Reagan” and “Economics” There are more than 40 Presidents in the history of the United States of America. Each American has their favorite president. Some like George Washington because he established the nation. Some like John Kennedy as he was a “golden president”, and he was also the youngest among the presidents. Some like Lyndon Johnson who created the Great Society. Some like Abraham Lincoln because he was a smart and successful leader in the Civil War. People love their favorite president as they had done some good service for people. And I, who am a new American immigrant, also have my favorite president, Ronald Reagan. The reason that I admire him is because he was a very special character in America. His history is like a cartoon story full of fantasy.
The first time I saw President Reagan on TV was shortly before his death. I was very shocked by the news of his death, but I was more surprised by the fact that this news impacted thousands of people in this century. Most American people were in pain after they knew of this nightmare from newspaper, TV, and radio. I remembered that moment was like some tragedies in the movies. Innumerable people cried like new born babies. The president of that time, George B. Bush, was very sad and he allowed that the American flag to be flown at half mast on the day of Reagan’s funeral. All of America was mourning. But I, who was like a country boy in the city, did not even know who Reagan was. The way Americans remembered and respect Reagan showed that he must have been a great man in America.
The great man, Ronald Wilson Reagan was born On February 6, 1911, to Nelle and John Reagan in Tampico, Illinois. He went to Eureka College and majored in economics and sociology. He was an active student; he played on the football team and acted in school plays. He was famous in his college because he was kind and handsome, he showed up in communication all the time. His involvements in a school setting prepared him to learn about appearing in front of people and cameras. After he graduated from college, his experiences enabled him to become a radio sports announcer. Year after year, his fame was gaining very fast like lighting. Later on, Reagan became famous; he went to Hollywood and became both an actor and speaker. In 1937, he won a contract in Hollywood for his heroic bearing in the movies and his attractive and powerful speech in front of camera. Day after day, He gradually became a very successful Hollywood and television actor; he appeared in more than 50 films and shows. His pictures appeared in many advertisements and his big name was mentioned by all the time (President Reagan 1911-2004).
After about 30 years of life living under the limelight, he gave up his Hollywood bright life and decided to work for the American government. However, his fame had not decreased after he left Hollywood. In the article, The Reagan Years by Stephen F. Knott and Jeffrey L. Chidester, it says:
After campaigning on a platform of reducing waste in government and confronting the student movement, Reagan defeats incumbent governor Edmund G. (Pat) Brown by nearly 1 million votes (Knott Page 250).
The election was taken place as George Christopher, who was the 34th Mayor of San Francisco, served in that office from January 1956 until January 1964. Once his term ended Reagan competed with Brown for the open position. He defeated Brown with his platform, which mainly focused on reducing waste government at that moment. He won the election with nearly 1 million votes, which is equivalent to receiving 77% of the total votes. His good policies and his fame let him become the 35th Governor of California. American people loved this super star Governor a lot.
The new role and life as being a governor was not easy for Reaan. He was facing one of the biggest problem at that time—a two-hundred-million-dollar deficit in the state budget. However, he was not carefree at all and he worked really hard. He took immediate action to tackle the problem, for instance:
During Reagan’s tenure as governor of California, corporate taxes almost doubled, the state sales tax increased from 3 to 4.75 percent, and the maximum state income tax increased from 7 percent to 11 percent. Despite some complaints from his conservative base, Reagan benefited politically from this willingness to compromise on taxes, in part because it revealed a pragmatic streak that many critics had believed he lacked (Knott Page 6).
He regulated the amount of money wasted in government, and also approved tax hikes to balance the budget. His policy was very successful and helpful at that time. In his first 4 years as his Governor of California, California was going better and he was even more popular than he was before. Therefore, in 1970, Reagan was re-elected as Governor of California.
During his eight years as Governor of California, the American people loved Reagan so much, for he took care of his people by providing people with more job opportunities and a better life. Therefore, with a solid base of support from the people, “Reagan officially began his campaign for the 1976 Republican presidential nomination against incumbent president Gerald Ford” (Stephen 251), who was the 38th president of the United States. Reagan was challenging Ford, who was very popular at that time. Finally, Reagan only failed by a few votes (about 10%); “On Election Day, February 24, 1976, Ford tallied 54,824 votes to Reagan’s 53,507, a margin of 1,317 votes out of more than 108,000 cast” (Knott. Page 251). However, the lost did not dampen Reagan’s enthusiasm in running for the president and the fire was lived in his mind.
Four years after his failed campaign, he tried to run for presidency again for American people. And this time, he had to challenge the President Jimmy Carter, who was the 39th president of the United States. Reagan had learned from his experiences: “he outlined his vision of a balanced budget, lower taxes, and a stronger national defense” (Knott Page 253). He explained to the public about his great and powerful economic plans and proposals. His plans were amazing; people bought his ideas as the plans never happened before. He became for many the chief spokesman for the Republican opposition. He was obviously more experienced than during the previous campaign. A great day, On January 20, 1981, his dream came true when he was 70 years old. He defeated Jimmy Carter by winning “60 percent of the total vote in 33 primaries” (Knott Page 13) and he became the 40th President of the United States. However, he was also the oldest president in American history.
Unfortunately, his honeymoon period in presidency was short. He was also shot to death 69 days after he took the office. Even though he was sick and weak, he returned to the White House very quickly. The reason of his prompt return was “his grace and wit during the dangerous incident caused his popularity to soar” (White House.com). Thus, he had to treasure the moment in which he had the most popularity to pursue his goals in office.
Reagan kept calm and smart, even as he faced a very serious deficit in America. He found out that the ex-Presidents of the United States projected budgets that treated American people very badly. He said: “I regret to say that we’re in the worst economic mess since the Great Depression…it’s time to try some thing different” (Stephen 38). He did not follow the policies laid by Jimmy Carter, instead, he created such a new type of policy at that time. He proposed
a 30 percent, three-year tax tare cut, increased defense spending, cutting $41 billion from Jimmy Carter’s projected budget for fiscal year 1982, including cutes in some 83 programs, all of which, Reagan contended, would balance the budget within three years. Reagan believed that ‘if we cut tax rates and reduced the proportion of our national wealth that was taken by Washington, the economy would receive a stimulus that would bring down inflation, unemployment, and interest rates, and there would be such an expansion of economic activity that in the end there would be a net increase in the amount of revenue to finance important functions of government” (Knott Page 39).
This great policy was also called “Reaganomics” which was putting “Reagan” and his “Economics” together, which was an unforgettable title in American history. Therefore, I believe that he was an expert economist. Reagan used his tactics in economy very effectively. The deficit of America was like an empty bottle, and he was very confident in filling up this bottle. Reaganomics raised the economy of America from floor to sky; it helped people to get more job opportunities. Thus the middle class and poor American families’ increased a lot more than before; it was like a new start for American people.
However, nothing is perfect in this world. Some people thought that Reaganomics was detrimental for America because of tax cuts. Reaganomics did not really help American Government to make huge money for filling up the deficit and it lost a lot of money from government to Americans. Therefore, the deficit was like an impossible mission and it was never solved.
Advocates of the Laffer Curve contend that the tax cuts did lead to a near doubling of tax receipts ($517 billion in 1980 to $1,032 billion in 1990), so that the deficits were actually caused by an increase in government spending (Wikipedia).
Immediately, the people who worked in the government found out that American government spent more money than they received from taxes. Therefore, the effect came out in American government was like hiring more people but making less money.
Reagan was a person who really focused on the economic. He usually had long far-flung plans to alleviate the economic situation of that time. He cut so many services; including the health services, from American people in order to save more money for the American government. The cut was based on the assumption that people would pay for their own programs that they needed. However, the president overestimated his people; they had a more short sighted view, and only cared about the more immediate things. They would not worry about the far future, like the government or Reagan thought. Therefore, the United States is like a father to take care of their children, American people, who are always dependent and who never grow up! Before the years with high tax, some American people did not really know how to save their extra money from the low tax, they spent as much as they earned. For example, some poor American people had more money than before because of the tax cuts, but they did not manage with their money well; they just bought whatever they wanted and never considered about their future. Therefore, they did not have enough money when they had to pay for their health service or some other programs.
In other view, I believe that the most important missions for a President of the United States are taking care of his people and leading the country to be stronger. So, I think Reagan did a very correct choice of taking care of people first. People are like the building blocks of a country. If people in America had a better life, America would be stronger and richer. In the other words, if Reagan helped Americans to be rich, the American economic would be increasing at the same time. He understood the feelings of his fellow American people a lot, for they had to pay the huge tax for recently years because of the government’s deficit. He did not follow the way the former presidents did and he followed his own economic philosophy, the Reaganomics:
Reagan presents his economic recovery program to a joint session of Congress, calling for a $41.4 billion budget cut, a three-year, 30percent tax cut, and an increase in the defense budget (Knott Page 254).
His Reaganomics helped American median and poor families a lot after they did not have to pay that huge tax and they could save some money. Saving more money and being richer were the two main goals that Reagan was planning about
Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years (Hauser).
$4000 for one family was a lot of money at that time. People could use their extra money to buy a house or send their children to a better college. This extra money was a wonderful chance to change their lives in their eyes and have a better life and a bright future. Especially, some people would start their own business and make more money. When Americans got richer the timing was perfect; the tax was very low at that time, people would like to buy more stuff because their lives were no longer suffering under high taxation. They were like hungry wolves and they would get the things they desire. Therefore, a bunch of penny can be a “golden mountain”. Even though the tax was much lower than before, people spent more money in America, and government was still making money. For example, a boat is sold for 10,000 dollars, there are only few people will buy it if it costs 30 percent (about 3,000dollars) for the tax. But if it only costs 10 percent (about 1,000 dollars) for the tax, more people would like to buy that with a low price. 3 times 10 percent is equal to 30 percent; if people will buy 3 boats with low taxes; American government will still receive that 30 percent of the real price from the customers. Reagan realized that was the same effect for American budget, and Reaganomics created a win-win situation for both the American government and people.
Reagan was very successful and famous, and yet he was still very humble. His humility won much fame and credits to the government. He accepted the feedbacks from Democrats and people despite he was the president of the United States. For example,
Reagan then moved to secure the passage of his tax cut package of 30 percent spread over years. Democrats rejected this proposal and offered an alternative of a 15 percent cut stretched over two years, with most of the cuts aimed at those in low-income bracket. Reagan reluctantly agreed to alter his plan somewhat; agreeing to a 25 percent tax reduction over three years, phased in at 5 percent, 10 percent, 10percent annually. This was done to win some wavering Democrats in the House, whose support was essential to securing passage there (Knott Page 40).
This case proved that his great personality and Reaganomics made him to win the campaign for his presidency again. He received nearly 60 percent of the popular votes. The reason that he got that many votes was because American people realized that he Reagan was the solution to the problems like a real prince of the United States; Reaganomics was giving them a better life. In 8 years of his presidency, Reaganomics never stopped working on the economic problems in the United States.
Cutting taxes was not the only one reason that he raised American budget, he also created so many jobs for Americans. More job opportunities would get more incomes. More incomes would pay more taxes. These orders were like a function for increasing the American budget and filling up the deficit.
During Reagan’s two terms, from 1980-1988, involuntary part time jobs alone grew by 50%–i.e. two and a half times faster than full time jobs. No less than 2.7 million new involuntary part time jobs were created during this period. Voluntary part time employment also grew by another 2 million during the Reagan years. 4.7 million new additional part time jobs were thus created during the 1980s, increasing the total number of part time jobs from around 15 million at the start of the decade to about 19.6 million at its end (Rasmus).
Reaganomics led the American economic got into another level; “Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years” (Hauser). Although his presidency was in a hard timing, he still had done a better job than other Presidents of the United States. That might be another reason why he was more popular than others.
After Reagan left Hollywood, his fame is never gone, and is still uphold even until today. People can still remember his smile, his Hollywood star looks, and his great and powerful speech. Therefore, we still see him in some newspapers and magazines. Sometimes, news does not only talk about his fantastic Hollywood life, it also talks about Reaganomics. Reaganomics is a good economic example for many people to learn. People will consult Reaganomics when they face the economic problems. Reagan’s humbleness, resolution, and friendly smile are the best example for me and other young people to study.
It’s above suspicion, Reagan was such a smart and successful president; however, he was not perfect. I believe that no one is perfect, as the world is not perfect and we are all human beings. But Reagan was always there for his people, trying the best he could. He never gave up his people. For example, even the best President of the United States is not perfect; he still has his good sides and bad sides during presidency because everything has more than one side—just like a coin has both sides. Most people will remember the better side of the coin, as Reagan had done much good to his people.