The Budget Deficit Explosion during the 1980s - Essay Example

The argument proposed by this article is that the budget deficit explosion that occurred during the 1980s was a direct result of President Reagan's tax cuts, and the resulting lack of available funds to earmark toward social programs contributed to the "deconstruction of the American welfare state" (Stoesz & Karger, 624). The article takes as its starting point the conservative ideological foundation that if people rely upon government welfare strategies it will be a disincentive for them to work, therefore the less the government helps the poor, ultimately the more they will help themselves and the better off they will be.

President Reagan was a firm believer in this methodology and almost immediately set to work on dismantling government entitlement programs when he signed the Omnibus Budget Reconciliation Act (OBRA). OBRA served to cut federal funding programs for the poor as well as inducements for states to provide funding. Unfortunately, cutting funding for programs was not enough to revolutionize the welfare programs in the way that conservative ideologues desired. To completely undermine the progressive system of entitlements to the poor, the Reagan administration began to use tax reform as a method of undercutting welfare.

By cutting taxes and instituting such concepts as the Earned Income Credit, Reagan gave the appearance of helping poor families, but the tax cut gains hardly made up for the loss in benefits the poor no longer received because of cuts and changes to entitlement programs. Throughout the Reagan presidency, cuts and rollbacks to welfare programs were systematically enacted even as the income gap between the richest and poorest Americans reached peak proportions. While the wealthy were benefiting from tax cuts, the poor were losing ground because of them.

When Reagan finally left office and his Vice President George Bush ascended to the Presidency in the election of 1988, Bush inherited historic budget deficits of over 3 trillion dollars that left little opportunity to increase spending on social programs even if he had desired to do so. Because the enormous deficit threatened all spending programs, a budget compromise deal was cut in Congress. The compromise contained provisions to increase funding for many social programs that had been assaulted during the Reagan presidency.

Despite the best efforts of the social progressives to spin these gains into a success story, the compromise required to ensure these budget increases came at the price of effectively undermining completely the very structure of program funding. For one thing, any budget gains coming from a reduction in spending on defence programs had skyrocketed during the Reagan era and therefore represented a potential goldmine that would go toward deficit reduction and not be eligible for spending on domestic programs.

And secondly, any increase in spending on domestic programs would have to be offset by a reduction in spending on another domestic program. The conclusion made by the authors in this article is that a profound shift in the paradigm toward government entitlement theory was created by the Reagan policies of tax cuts and deficits. The exploding deficit led to an unavoidable clash of ideologies resulting in a compromise plan to cut the deficit that has left funding for social programs almost irrevocably altered to the detriment of the welfare state.

Therefore, one of the legacies of President Reagan Greatest American of All Time, according to a Discovery Channel poll- was the significant deconstruction of the American social policy of taking care of those least able to take care of themselves.