Reaganomics (a portmanteau of Reagan and economics attributed to Paul Harvey) refers to the economic policies promoted by the U.S. President Ronald Reagan during the 1980s. The four pillars of Reagan's economic policy were to: (1) reduce government spending, (2) reduce income and capital gains marginal tax rates, (3) reduce government regulation, and (4) control the money supply to reduce inflation. In his stated intention to increase defense spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors. Reagan enacted lower marginal tax rates in conjunction with simplified income tax codes and continued deregulation.
William A. Niskanen, one of the architects of Reaganomics, summarizes the policy as "Reagan delivered on each of his four major policy objectives, although not to the extent that he and his supporters had hoped", and notes that the most substantial change was in the tax code, where the top marginal individual income tax rate fell from 70% to 28%, and there was a "major reversal in the tax treatment of business income", with effect of "reducing the tax bias among types of investment but increasing the average effective tax rate on new investment." Roger Porter, another architect of the program, acknowledges that the program was weakened by the many hands that changed the President's calculus, such as Congress. The effect was primarily a change in the composition of tax revenue, towards payroll and new investment, and away from higher earners and capital gains on existing investments, with comparatively small effect on overall tax revenue: the changes "reduced the federal revenue share of GDP from 20.2 percent in fiscal 1981 to 19.2 percent in fiscal 1989," a 1% reduction.
Source: "Reaganomics." Wikipedia, the Free Encyclopedia. Wikimedia Foundation, Inc. 31 Dec. 2010. Web. 4 Jan. 2011.
While Wikipedia is often thought of as
an unreliable source, when it comes to Reaganomics, Wikipedia was able to give
a comprehensive overview on the topic as well as thorough explanations. First, Wikipedia discusses the four main
pillars of Reagan’s economic policy. The
pillars were: to reduce government spending, reduce income and capital gains
marginal tax rates, reduce government regulation, and to control the money
supply to reduce inflation. Next,
William A Niskanen, one of the architects of Reaganomics, is mentioned and
explains how Reaganomics works with reducing tax bias and how the effect was
primarily a change in the composition of tax revenue. To further credibility, graphs of the
economic situation in the United States are shown prior to Reagan and using
historical context, explain why what he did was beneficial. Then, Reagan’s plans for taxes as well as deregulation
are brought up. It is even mentioned how
economists of Reagan’s era thought everything would be a failure since other
presidents had tried such stunts before, such as Jimmy Carter. Reagan’s economic record and tax receipts
are given with specific numbers and are explained as beneficial. To end this
source, justifications of the political and economic moves made by Reagan are
provided as well as criticism from the other side of political spectrum.
I gave this source a score
of 15. It weaknesses were far less than
its strengths, but the source itself did not provide an author or credentials.
While Wikipedia is very well known, it is not always a reliably source the way
that a college sponsored site might be.
However, the information provided in this source proves credible with
numerous footnotes and pictures are even cited.
Wikipedia is a known business and does have some sources that can be
very credible. Obviously, the main
purpose of this site is to provide detailed facts and figures of Reaganomics as
well as the political controversies associated with Reaganomics.
This article was a little different
because it started out addressing someone else’s article about Reaganomics. The author provides another perspective
into Reaganomics. Reagan did not stop
anything but rather started new ideas.
For instance, in the beginning of the article, the author talks about
how Reagan noticed that Keynesian economics had put together a lot of wrong combinations
and so yes, Reagan had to stop things like stagflation and the Cold War. However, he started to focus on the
trade-offs between employment and inflation. Then, Reagan changed the economy
to focus on supply-side economics. The
author mentions that this new policy was reverse of what was originally in
place yet it worked. The author even
dives into reviews from the time, including one from the Harvard University
Press. Then, Reagan reduced taxes and
income rose thirty percent over the next three years. However, the author says that we should not
be fooled. Supply side economics was not started by Reagan. He simple knew how to execute it and even got
democrats on his side. Finally, the
author talks about who Reagan and his policies can and cannot be linked with
people such Bill Clinton (not linked).
To conclude, the articles states that Reagan was not perfect, but that his
execution of supply side economics was a modification and not a way to keep the
Evaluation: I gave this source a score of fourteen
because while it is very current and the author appears to be an expert in the
field, citations could have been done better than they were and the sponsorship
is not as well known (I never heard of it!).
These are the main reasons that the article lost points, however, it
makes up for them by providing facts and an giving readers an educational
article that gives more insight to Reaganomics and what Reagan stood for.
This article starts in the “now” (2000),
and talks about progress that has been shown.
It states: “This week
America crosses one of the great economic milestones in our nation's history.
We will break the record for the longest business-cycle expansion in U.S.
history. The previous record was 106 months during the 1960s.” It then moves on the talk about how Reagan is
the influence for this. The article opens saying that this economic progress
is not because of Bill Clinton but because of Ronald Reagan. The article also mentions that they are using
information based on information from the National Bureau of Economic Research. Then, the article moves on to talk about how
when Reagan implemented supply side economics, it lead to a boom of economic
prosperity. The article then shows the
changes in the stock market during Reagan’s era with graphs and text to match. After explaining the changes in the economy
and individual economic prosperity, the article mentions how this can be seen
today in people’s actions, including personal stock ownership. Finally, the article sites other economists
who gave proper views on Reagan and even mentioned some wrecking balls that
could have destroyed the economy. Overall, this article was more historical and
like others, provided facts with graphs for credibility.
Overall, I gave this source score of fourteen
because the author, website sponsor, and evidence are educational, factual, and
well-known. This article lost points in
its age. However, it made up for this by providing what were then present
examples and even giving brief histories to back up the claims and statements
made. There is not a lot of immediate opinion in the essay until the end, but
that does not affect the quality of the cited facts. Finally the essay was far more entertaining
than many I read on the same subject.
Summary: This source came from authors who
provided adequate credentials but its weakness is that it is not the most
current site out on the internet. However, when it was written, it was new and
an impressive investigation into Reaganomics. The article starts with a minor
introduction which mentions that the authors examined 8 of the 10 key economic
variables as well as the history before, during, and after Reagan’s era. The article opens with the four key elements
of Reaganomics: (1) a restrictive
monetary policy designed to stabilize the value of the dollar and end runaway
inflation; (2) a 25 percent across-the-board tax cut enacted (The Economic
Recovery Tax Act of 1981) designed to spur savings, investment, work, and
economic efficiency; (3) a promise to balance the budget through domestic
spending restraint; and (4) an agenda to roll back government regulation. Then the article provides the model used to
examine Reagan’s financial record and goes into the exact record with cited
facts and figures. It shows economic
growth in the eighties compared to the seventies and the rise in median
household incomes, to name a couple.
Then, graphs representing inflation, productivity, unemployment, and
more are presented for examination.
Then, the fiscal record is examined and shows that the debt doubled and
so did defense spending. The article
starts to conclude by addressing the fables of the Reagan era, such as, The
Federal Reserve, not Ronald Reagan, deserves the Credit for ending the 1970’s
Era of High Inflation. The article ends stating that the 1980’s were a time of
economic progress, not decline.
I gave this source a score of 13. It lost points in its age. However, the article itself and the authors I
found to be credible. They cited their
sources, provided mostly factual information, and even made Reaganomics easy to
understand. Furthermore, the article
felt educational, had government support, and held true to its purpose, to show
how Reaganomics affected the United States.
The credibility of the authors and the article seemed appropriate and
true and Reaganomics was explained fully.
While this particular article from the
Wall Street Journal is not recent by any means, it is written during the Reagan
era, which gives it credibility and it is written in a very well known journal. The article starts with a little story
about Xerox and quickly transitions in Reaganomics. It focuses on unemployment and what generally
happens to business. But it points out that
in order to help these businesses be successful and lessen national
unemployment, creativity is needed. The
irony of such creativity, according to the article, is that people such as city
planners don’t value ingenuity. It
explains how most entrepreneurs are crazy which explains their room for
creativity. The article explains how
capital is more than money but is also the productive ability in the hearts and
minds of people. It then talks about
Reagan’s goals with tax reduction and how they will be beneficial. It concludes with possibilities for economic
and growth and emphasizes Reagan’s creativity.
Evaluation: I gave this article a score of 12
because it is not current but is written during Reagan’s time. There is no real
citation but the majority of the article is original thought and the author’s
credentials are not fully given, but he is mentioned as the chief of staff to a
Republican congressman. The article
itself is completely unique and supports the thought process of Reagan at the
time. It is represented by the Wall
Street Journal and thus the domain is reputable and well known. Overall, I found this article helpful in
emphasizing why Reagan chose to be as creative as he did and why it was
Summary: This article is actually a speech that
was delivered to The Heritage Foundation’s President’s club. The speech starts out with the speaker,
Arthur Laffer, telling the audience that his speech is about his relationship
with the real president, Ronald Reagan.
He talks about his encounters with him and then goes into the technical
aspects of Reagan. He talks about the
ideas of sound money, taxes, and regulation (3 of the 4 pillars of
Reaganomics). He mentions that because of Reagan, the minimum wage when
compared to the average wage, is the lowest it has been in fifty years. The
final pillar, Laffer mentions, is looking at the United States economy within
the global economy. Reagan wanted free
trade and now trade is prosperous. He
mentions that outsourcing is not a new idea.
He then talks about trade deficit and mentions that it is the capital
surplus and it shouldn’t be thought of as bad.
He starts to conclude with Reagan’s idea of cash flow, which relates
back to the four pillars and without them, America would not be as great as it
I gave this article a score
of 12 because while it is fairly recent, there is a huge lack of source citing
however, a lot of the information appears to be either factual or from personal
experience. The author provides his
credentials and the article is sponsored by the Heritage Foundation. Furthermore, the article is made
entertaining, even for those who do not necessarily know or enjoy history or
economics. It is clear that there was
research done to understand Reaganomics and the pillars and it is also clear
that the author is knowledgeable in the subject area, but as stated, he could
have cited more sources. Finally, the
article made me feel more informed about Reagan himself and the four pillars
that he focused on.
Summary: This article is very straight forward
and gets right to the point on what Reaganomics is all about and how it was a
rupture from Keynesianism.
Reagan put an emphasis on the supply side of economics instead of the demand.
The author mentions that it may surprise people that the prime minister in
Belgium spoke out for Reaganomics. Then
the author goes into the counterarguments presented against Reaganomics. He says that generally, if one is to read
into these counter arguments, one will see that most of the statements are
prejudice towards Reagan. Then the author mentions how during the oil crisis of
the seventies is can be seen that Keynesianism did not work. After this, he mentions the term stagflation
and explains that we (America) had a combination of creeping inflation,
recession and unemployment. The middle of the article present numerous graphs
that demonstrate taxes paid, growth of wealth, government spending, incomes,
job creation, and even debt. The next
paragraph is a comparison to Keynesianism of everything mentioned prior. Then, it is mentioned that Reagan was not the
first person to think of supply side economics and mentioned that Ireland has
just as much success through supply side economics. The article concludes with
how Reaganomics affected Belgium
Evaluation: This was actually one of
the most informational articles I read. However, I could only give it a score
of 12 because the author does not provide his credentials and it is not the
most current site. Still, one is able to
get a view on how Reaganomics became a global phenomenon and helped other
countries provided a lot of insight into supply side economics. Every source appeared to be cited on the website
and was supported by one of the largest journals in Brussels. The information provided gave comparison of
the economy before and after Reagan, provided American information and Belgium
information, and even provided a counterargument with reasons why the
counterargument may not be taken as accurate.
I also appreciated the international perspective. Overall, a very impressive site.
Summary: This article was unlike most that I read
that praised Reagan for all of his good deeds for America. Rather, this article starts with the flaws
that were in Reagan’s presidency and points out how he did “go against” what he
said he would do. The article points
out that the deficit increased with revenue.
It also talks about how Reagan had to agree to tax increases during his
second term. Then, the author questions if everything that has been stated was
part of a ploy to make supply side economics look adequate. Then, a graph is
presented that shows the increase in national debt during the Reagan years. It is also pointed out that when the first
George W. Bush was inaugurated, he did very similar things to Reagan and the
debt continued to increase.
Evaluation: Overall, I gave this source
a score of 12 because it is not the best at citing sources and it is a little
aged. However, the author provides full
credentials and clearly writes this article from an academic perspective, even
if it is different from most. Finally,
the domain and website itself appear to be legitimate business for educational
articles. Overall, this is a decent source to learn about a different perspective
Summary: This author is unlike any other and
starts saying that he believes that “Reaganomics” started in 1978. Representative William Steiger started proposing
tax cuts and when Reagan inducted, economics fell on Reagan and he choose to
continue on the path that seemed to be working.
Then the article compared Keynesianism before the Reagan administration and how
Reagan’s toleration of deficits was actually a political calculation to fight
the size of the “overly-large” government.
This strategy has been successful, but rarely is it actually understood,
as the author points out. An example of this was the first President Bush
trying to implement a “flexible freeze”. The author also mentions that the deficit
is measured on a cash basis and has a twin, trade deficit. While explaining the deficits, the author also
mentions that perhaps interest rates were not thought of as much as they should
have been during the Reagan Era. The article concludes with final comparison to
other presidential economic techniques.
Evaluation: This source, while
informational, was a little jumbled, not a lot of information was cited, and it
is dated. Because of this, I gave it a score
of 11. However, the article was able to
explain economics as it relates to other presidents and mentioned other ways to
run the economy. It takes into account what was thought of and what was not,
and even mentions that while the idea of supple side economics was not new or
even original, Reagan was the one who was able to make it successful. In regards to the articles age, while it is
old compared to now, it was very relevant for its time since it was written
when Reagan was leaving office. Overall,
it was an informational article and provided another perspective into
Summary: This article starts with a brief
explanation of the term “Reaganomics”. Then it goes straight into the
explanation of what Reaganomics was and how it worked. The article mentions classical economists
such as Adam Smith and explains how they were the start to Reaganomics. It also talks about possible counterarguments
and rebuttals, such as perhaps people did not understand Keynesian economics. Then, it heads into the history of
Reaganomics and briefly explains the “trickle down” effect since it is
difficult to define specifically and how it was contrary to demand side
economics. It tries to explain that the rich employ the lower classes and
lessening their taxes would result in more employment. The article then brings in a couple of
statistics on how economic growth changed during the Reagan years and how the
median family income grew by $4,000. To
conclude, the article gives replies to this defense, like deregulation of the
Evaluation: This article was actually set up similar
to Wikipedia, however, it was written with more understandable words, perhaps
for high school students, and did not cover nearly as much information. I gave this source a score of 11 because it
was aged and the author is not even named.
Yet, the article still provides elementary information about Reaganomics
and presents it in a way that just about everyone could understand. It made Reaganomics seem like a simple
solution to a simple problem, but it is clear that Reaganomics was far more