LYCOS RETRIEVER 
Reaganomics
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The historical experience of Reaganomics is of a leveling off of non-defense spending after decades of increase, increased defense spending, and large federal deficits. Nobel Prize-winning economist Milton Friedman has pointed to the number of pages added to the Federal Register each year as evidence of Reagan's anti-regulation presidency (the Register records the rules and regulations that federal agencies issue per year). The number of pages added to the Register each year declined sharply at the start of the Ronald Reagan presidency breaking a steady and sharp increase since 1960. The increase in the number of pages added per year resumed an upward, though less steep, trend after Reagan left office. In contrast, the number of pages being added each year increased under Ford, Carter, George H.W. Bush, Clinton, and others.[2]
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In truth, Reaganomics was a smoke screen for a hidden agenda. Taxes were cut, only in the first year of his presidency, to keep the American public happy while a plan to increase the national debt by $2.5 trillion was being concocted. What for? The United States systematically overspent on national defense to crush the Soviet Union since it was obvious they couldn't keep up. It took Reaganomics only 8 years to increase the national debt from $1 trillion to about $3.5 trillion!
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Reaganomics had roots in two of Reagan's campaign promises: lower taxes and a smaller government. Reagan reduced income tax rates, with the largest rate reductions on the highest incomes; the top tax bracket rate dropped from 70% to 50% in his first tax legislation and to 28% by the end of his presidency. He proposed reduction in federal civilian programs, although political forces prevented him from obtaining the large reductions he sought. He scaled back federal regulation, starting with the elimination of federal oil price control, and left more discretion to the private sector. However, Reagan had ... promised a military buildup to counter the Soviet Union, and this included a dramatic increase in government contracts. During a time of battling inflation combined with broken promises from the Democratic-controlled Congress to cut spending, Reagan raised deficit spending to its highest level (relative to GDP) since World War II.
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Reaganomics had many positive effects. Marginal tax rates were as high as 70% and they came down to 28%. They were too high and that the lower rates were a good thing. Perhaps they were dropped a little low for wealthy people. Reaganomics did advocate cuts in government spending but that didn't materalize. Defense spending, in particular, went from $130 billion to $300 billion.
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Reaganomics was and remains controversial. The country suffered a severe recession in 1981รข€“1982, but inflation fell from 13.5 percent to 3.2 percent. In 1983, the economy began a substantial boom that lasted through 1989, and unemployment gradually fell to 5.3 percent. Throughout, inflation remained under control, hovering between 3 and 4 percent a year. But Washington ran heavy deficits throughout the 1980s, with the federal debt tripling. The international balance of payments went from equilibrium to an annual deficit of over $100 billion, and the distribution of income became less equal.
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Conclusion If you still believe in Reaganomics, remember what supply-siders predicted in 1993, when Bill Clinton raised the top marginal tax rate (the one on the wealthy) to 39.6% - an increase of 40% over Reagan's final 28% rate. Newt Gingrich told us the tax increase would "kill jobs and lead to a recession," The Wall Street Journal told us the budget deficit would soar sky high, and Forbes told us the stock market was doomed to a deadly crash, so take your money out now. The predictions couldn't have been more wrong - America actually got an expansion longer than Reagan's, a stock-market boom, and a budget surplus. But if supply-side economics were true, the predicted disasters are exactly what should have happened. Supply-siders who nowadays try to credit the Clinton boom to "delayed effects" of the Reagan tax cuts conveniently forget their projections from 1993, and more to the point, ignore the many, many causes, large and small, that played out during the 1990s. (For example, tax-shifting by the wealthy in the year before the cut temporarily allowed them to avoid the higher tax rate.) Besides, they overlook the partial reversal of Reagan's cuts by the first George Bush (who raised marginal tax rates on the top bracket from Reagan's 28% up to 31%) as well as Clinton, as well as increases in payroll taxes during Reagan's term.
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