Reagan's Economic Policies - Term Paper Example

? Reagan's Economic Policies Reagan's Economic Policies One of the most notable features of the American presidency is the impact that presidential policies have on the United States as a country and on international arena as a result of the foreign policy that the presidency adopts. While it is agreeable that most of the policies by presidents are shaped by the party they represent (either Democratic or Republican) and the ideologies associated with those parties, these policies are also informed by their personal beliefs and desire to advance a particular great cause. Besides, presidential policies are sometimes informed by the desire to discover new idea or to carry on the legacy of the American founders.1 Policies by respective presidential candidates greatly determine if they will win the elections or not; in other words, the electorates vote for a particular candidate based on the belief that his policies will propel America to greater heights of prosperity, as well as promoting national and international safety and security. Throughout the American history, the persons who have graced presidency have had various policies that have had positive and negative impacts to the country. It is well-known fact that these policies have been entrenched in the country’s history and defines each presidency that has existed. This paper will consider the President Ronald Reagan’s policies and actions concerning economic policies and his policies on the air traffic strike in particular. President Ronald Reagan was in office between 1981 and 1989. He took office in 1981 in the wake of the worst recession since the Great Depression and he was determined to turn around America’s economic fortune. This desire was evident in his inaugural address where he articulated his intention to make the government work. In the address he said “In the days ahead, I will propose removing the roadblocks that have slowed our economy and reduced productivity.”2 His economic policies became so endeared within the broader America’s economic policies; these policies actually earned the tag of “Reaganomics.” These policies were aimed at attempting to change the United States economic policy’s course. The economic policies were contained under the Reagan’s Program for Economic Recovery of 1981 which had four main policy objectives: to reduce the government spending growth; to reduce regulation; to reduce inflation through the control of the growth of the money supply; and to reduce the marginal tax rates on income from capital and labor. These policy objectives were expected to increase investment and saving, balance the budget, reduce interest rates and inflation, restore healthy financial markets, and increasing economic growth.3 It is imperative to understand the historical context that informed Reagan’s economic policy. This historical context not is critical in understanding what exactly was motivating President Reagan towards pushing for his economic policies. As it will be seen from the historical context, Reagan was consciously working within the Constitutional provisions and he was seeking to advance a particular great cause which was to rejuvenate America’s economy. Prior to the administration of President Reagan, the economy of the United States had experienced a decade of increasing inflation and unemployment which was popularly known as “stagflation.” His immediate predecessors had favoured stimulus that were resulting to money supply expansion. Reagan’s approach to stagflation that was facing the United States was to depart from his the approach used by his immediate predecessors.4 Reagan intended to reduce the growth of government. His policies was based on the supply side economics theory which states that tax cuts encourages expansion of the economy to eventually widen the tax base. To achieve this, he stated his intention of increasing defense spending while at the same time reducing taxes. He enacted lower rates of marginal tax in addition to continued deregulation and simplification of income tax codes. In the speech delivered to a Joint Session of Congress on April 28, 91 on support for his Economic Recovery Legislation, Reagan was very categorical about reducing government spending and reducing tax rates. He had noted that “We must bring government spending under control and reduce tax rates.”5 As a result of his policies, the economy witnessed increase in annual deficits, increase of GDP per working-age adult, reduce3d unemployment rates, and increase in productivity.6 Generally, it can be said that President Reagan retained conservative economic values which were based on supply side economics theory. As part of his efforts to reduce the growth of government spending, he undertook various measures. However, one of the most notable actions of President Reagan as he was implementing his policies was the firing of about 12,000 striking air traffic control workers. There had been a 7-months negotiations between the Air Traffic Controllers union and the Federal Aviation Administration and seemed not to yield any substantive outcome. The striking employees were seeking fewer working salaries and higher salaries.7 This is what prompted President Reagan to make a decision regarding the strike through a speech dubbed “Remarks on the Air Traffic Controllers (August 3, 1981).” Reagan made an announcement that the striking situation had become an emergency under the descriptions contained in the Taft Hartley Act of 1947. At a press conference held in the White House on August 3, 1981 regarding the strike, Reagan made the following remarks “if the air traffic controllers do not report for work within 48 hours, they have forfeited their jobs and will be terminated.”8 Two days after Reagan had made those remarks, the air traffic controllers had not resumed to work, a situation that prompted Reagan to fire about 12,000 workers. President Reagan’s policies on the air traffic control strikes were motivated by the need to work within the constitutional provisions for the executive branch. The strike by the air traffic controllers was illegal under the federal law. As such, it was necessary for the President to use the powers accorded to him by the constitutional provisions. Among the powers accorded to the executive branch by the constitution is to ensure that the provisions of the constitutions are upheld and that they are not violated as was the case by the strike of the air traffic controllers. Since the employees were working for the federal government, their strike was a violation of the federal law which prohibited federal employees from striking. The strike and the subsequent firing of air traffic controllers led to the cutting of the scheduled commercial flights by nearly a half on the first day of the strike which resulted to the airline industry losing substantial revenue. The actions by Reagan were against the precedents set by the previous four presidents, who did not fire striking government employees. After the action by Reagan, the Federal Aviation Administration was faced with the immediate need to recruit and train new air traffic controllers that enabled the airline industry to recover quickly.9 In addition, his actions on this issue were motivated by the need to advance a particular great cause which was to improve the economy of the United States which was at that time performing poorly. Apart from the fact that the striking employees were violating the federal law, they were also interfering with the growth of the economy. Inarguably, airline industry plays a very important role in the economy especially in regard top transportation of people and cargo from one destination to the other. Therefore, any interference or actions that negatively affect the industry definitely affects the functioning of the economy as a whole. This explains why the actions by Reagan to fire the striking employees were supported by most of the Americans. Reagan’s actions were also informed by his desire to ensure that the national safety is not compromised. He declared the strike as a “peril to national safety” and invoked the provisions of the Taft-Hartley Act of 1947 and ordered the workers back to work.10 His move showed his intent to work within the constitutional provisions not only to promote economic and national interest but also to leave a legacy that individuals could not be allowed to violate the law and get away with it; there was a cynic belief that no President would ever the law of firing employees on constitutional grounds. Actually, his action gave private employers legal rights which were previously not exercised to hire and fire workers at their own volitions. This went a long way in stabilizing the labour market; which is a key ingredient of economic growth.11 In outlining his policies on the air traffic control strike he brought the grand idea that come what may the Government cannot stop to operate, and neither none of its agencies should. In the remarks on August 3, 1981, Reagan said that “I respect the rights of workers in the private sector to strike...but we cannot compare labor-management relations in the private sector with government. Government cannot close down the assembly line. It has to provide without interruption the protective services which are government’s reason for being.”12 This grand idea of continuous and uninterrupted protective services by the government is what informed Reagan’s actions and was the basis of the justification of his actions. To further give credence to his actions and the essence of prohibition of strikes by government employees, Reagan argued that the Congress had recognized this need and that is why it passed the law that prohibited strikes by government employees as this would compromise the public safety. He went ahead and read the solemn oath that is taken by each of government employees and a sworn affidavit when they accept their jobs. Bibliography Anderson, Martin. 1990. Revolution: the Reagan legacy. Stanford, California: Hoover Inst. Pr. Greenspan, Alan. “The Reagan Legacy.” Accessed June 6, 2012. http://www.federalreserve.gov/boarddocs/speeches/2003/200304092/default.htm McCartin, Joseph, Professional Air Traffic Controllers Strike (1981), CRC Press, 2006), 1123-1126. Miller Center, “Ronald Reagan: Remarks on the Air Traffic Controllers Strike (August 3, 1981),” Accessed June 6, 2012. http://millercenter.org/president/speeches/detail/5452 Reagan, Ronald, Kiron K. Skinner, Martin Anderson, and Annelise Anderson. 2002. Reagan in his own hand. New York: Simon and Schuster. The National Archives. “President Reagan's Speech in Support of His Economic Recovery Legislation. Delivered to a Joint Session of Congress on April 28, 1981.” Accessed June 6,2012. http://www.archives.gov/presidential-libraries/ Read More