The Four Pillars of Reaganomics
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1980s America: The Ronald Reagan Presidency
Lesson Plans by Richard Cleggett
Ronald Reagan was an iconic and controversial president during the twilight of the Cold War. The impacts of his presidency remain in the news today; Reagan continues to be praised as a conservative hero, but is criticized for the long term impact of his social and economic policies. Learn more about his presidency with Storyboard That.
Storyboard Description
Reagan Presidency -The Four Pillars of Reaganomics
Storyboard Text
- SIDE-SUPPLY ECONOMICS
- CORPORATIONS
- TAX BREAKS
- REDUCE FEDERAL TAXES
- REAGANOMICS
- One principle of Reaganomics was to institute the economic theory of side-supply economics. This theory predicted that by cutting taxes, businesses would gain more capital, hire more workers, and produce more goods. Essentially, it was trickle-down economics, where money would "trickle" down from capital gains to the everyday worker.
- INCREASED INCOMES
- WORKERS
- BUSINESSES
- MORE SPENDING
- PRODUCTION
- Cuts in the federal income tax also stood as an important pillar in Reagan's economic changes. Income tax brackets were simplified. Tax reductions for the highest tax brackets dropped from 70% in Reagan's first year, to 28% by 1986. The wealthy benefited from this reduction the most; however, the theory was more Americans would have more money to spend.
- REDUCED TAXES
- REDUCED REGULATION
- REDUCE GOVERNMENT REGULATIONS
- STATE GOVERNMENTS
- THE FOUR PILLARS OF REAGANOMICS
- RESTRICT THE MONEY SUPPLY / INFLATION
- VALUE OF MONEY
- INFLATION OF VALUE
- Reagan initiated heavy deregulation of federal spending. Reagan took aim at programs that had grown in the early 1900s and during FDR's New Deal programs. He believed Americans could prosper through individual effort, not government aid. He let states control federal aid. Reagan referred to this as the "New Federalism".
- FEDERAL CONTROL
- To reduce inflation, Reagan restricted the money supply while the Federal Reserve raised interest prices to counteract inflation. As a result, recession ensued between 1981-82. Inflation cooled and confidence began to be restored amongst investors and consumers alike. Defense spending and low tax revenues increased the federal deficit.v
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