The Age of Reagan - Essay Example

His tenure marked a period of economic prosperity, a significant drop in the unemployment rate, increased growth in GDP, millions of new jobs, and decreased inflation rate. However, there was a sharp rise in national debt. His foreign policy scored impressively. He curbed the spread of communism and in fact led to the totalitarian communism and which marked the end of cold war. Well, President Reagan domestic and foreign policies successfully turned around the economy though not the extent that both he and his supporters anticipated.

Reagan attributed the faltering economy he had inherited to the excessive government growth and spending. According to lecture notes, “Reagan concluded early in his administration that entitlement programs serving 80 million people and costing $21 billion every year, principally Social Security, Medicare, and defense. Social Security, for example, made up 21 percent of the total budget and continued to rise 3.5 percent every year.” (Lecture notes, 2 December 2013). Therefore, he undertook to manipulate government spending by cutting expenditures in certain domestic programs, while he increased spending in other sectors of the economy.

According to Galupo, this suited well with Keynesian Economics. He states that “It is government intervention to support total spending, and especially the use of public spending power, in the military or elsewhere, to bring the economy out of a ditch” (Galupo, “Ronald Reagan Practiced Keynesian Economics Successfully”). Accordingly, he successfully managed to convince a democrat controlled congress to approve cuts in spending in government programs and departments such as EPA. This way, he managed to achieve another core objective of Reaganomics: balanced budget.

One of the core pillars of Reaganomics was reduced tax cuts to both individual and body corporate. As Mooney explains, “he argued that a dramatic reduction in tax rates, especially for the richest American, would increase the production of goods and services, expanding the economy so that, even with lower tax rates, more revenue would flow to the federal government. (Mooney, 187). The success of this policy is evidenced by the manner in which he managed to convince a republican controlled senate and democrat controlled congress to pass the Tax Reform Law of 1986.

Tax cuts managed to spur the growth of businesses and check the rise in inflation. However, they dramatically reduced the income of the government. Despite reduced tax and income, Reagan dramatically increased public spending in the military. He advocated for a rearmed and strong military. Accordingly, “during the first seven years of his presidency he spent over $1.5 trillion on national defense- “a staggering amount,” according to former advisor Martin Anderson” (Mooney, 192). He believed that Government spending on the military flowed through the defense establishment and into the broader economy, helping to stimulate economic recovery.

This policy was to a large extent successful in turning around the U.S economy. However, because the government expenditure exceeded income, the government resulted to borrowings. As a result, the national debt skyrocketed. Some critics of Reaganomics argued that the improved economic environment was directly attributed to the