What exactly were Reaganomics?
Reagan’s economic policies were established to turn around the aforementioned situation. First of all, and probably the most important part of the policies, Reagan established major tax cuts to encourage businesses to grow. The top income tax rate was deducted from 70 percent to 50 percent. Meanwhile, for the remainder of the tax income brackets, the rates were reduced by 25 percent. However, it is simply a popular myth that Reagan only cut taxes. In fact, apart from his first and last year as President, he actually increased various taxes, such as payroll taxes, and corporate taxes. The latter represented the greatest tax increase rate in history in 1986.
He also reduced federal spending by 5 percent or over $30 billion. In current year terms, this would be an unfathomable $175 billion cut. Remember, these cuts came when the Cold War was at its peak and defense building saw a significant increase in spending. Despite this, non defense expenses were decreased so significantly that the net spending kept falling.
In order to maintain and even improve the value of the dollar, money supply was decreased significantly to ensure that demand outstripped supply; therefore, the currency was not devalued. Furthermore, deregulation was enforced by Reagan, and as price controls were removed from natural gas and oil, production improved significantly, which in turn actually cut the price of oil in half. So, are this fact, among the other reaganomics facts: good, bad, failed or succesfull?
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