Americans voters were seeking an answer to the rhetorical question to Ronald Reagan’s campaign team on whether the country had gotten better in the four years of administration by Jimmy Carter’s party. The obvious answer was a resounding no which made Reagan beat Jimmy carter by a significant margin. President Ronald Reagan steered the united states of America through an economic depression, and the country emerged strongly in the mid-1980s, setting an excellent example of leadership all over the world. Indeed, the government did more than enough through that economic depression and the cooperation that it received from the people of the US was overwhelming (Stephen, 2017, p. 72). This paper discusses the amount of credit that Ronald Reagan and his government take for the economic recovery of the mid-1980s (Smith, 2018, p. 66).

In a bid to achieve a broad economic objective of improvement, the president had to consider broad economic perspectives. The thinking had to be as comprehensive as possible, such as moving from agriculture, monetary policy and fiscal to social housing and employment. Although the president left a country that was hugely waved by bad economic debts and trade deficits, he made sure that the employment rate went to its highest. The unemployed attained jobs more than ever before and employers had a lot of job openings to offer to Americans so that none remained unemployed. However, the jobs were lower paying ones because the conditions provided so and the people had to hold on to what was availed to them.

When the president was getting elected in the 1980s, there was a lot of opposition from jimmy carter. However, Ronald reign posed a rhetorical question to the American voters asking them if they were better off economically before he got into power. The answer was indeed a no, and so he won by a landslide margin, granting him the second term. After ruling for eight years, he left the country and its economy better off and healthier than it was at the time he was getting into power. Employment got boosted significantly while the economy expanded and inflation went down dramatically. The Reagan administration was established by the fact that it reduced inflation and increased the growth of the economy in a big way (Xue, 2017, p. 101). The records obtained from the economic policy studies indicate that in the early 1980s, the economy was rising amid experiencing some small slump.

The country’s economic future was set up to rise in the coming years because the economic platform was prepared for much rising. Indeed, the country was left on high gear in terms of economic prosperity. The numerous changes also seemed to bring the economy down but were not so significant. Nonetheless, the united states were transformed from its status of being a creditor to a debtor because it borrowed a lot in trying to boost the economy. When Ronald Reagan saw that the economy was not on a right rail to recovery and therefore he had to force the changes. This is because without investing in the economy, there would be no stimulation that would bring about change and instill potential growth. The president put it a priority to cut taxes so that businesses would be enabled to rise further and reduce their operational costs. Whenever costs were high, the level of unemployment would go up because the employers retrenched their workers, leaving many of the employees jobless. Therefore, the strategy to cut taxes was heaven sent for the Reagans regime. Nevertheless, there was no means to give the government money and thus the income from tax revenue reduced. It necessitated the government to look for the funding of its projects and running costs from other sources. The sources were external and also internal. However, there were not enough internal sources because the economic situation did not warrant such a thing. The external sources of funding were in plenty, and they offered a lot of support to the government (The Balance, 2019, p. 1). Before the depression, the country was known as the biggest lender. The economic slump turned the country into a borrower, transforming the economy negatively from a creditor to a debtor. The spending on defense by the government was so significant that it cost the economy much. This was not a good measure compared to the requirements of the country at that time. The economy had to change because it depleted its money reserves while funding the military.

However, the country was transformed later by numerous steps taken to the budget and trade deficits. Nonetheless, the levels were eventual because they were expected to be completed after some while because the economy could not be turned around within a short while. This meant that it would take the country some time for the recovery process to take effect. The critics of Reagan started attacking him for his fiscal irresponsibility as they accused him of paralyzing the economy. During the time of President Reagan, the congress sided with the federal government and gave it so much confidence by allowing all the funding that they thought necessary. They did not oppose any of his changes and thus approved everything as part of the strategy to see the government strategies succeed so that they could not be blamed for the failure of the regime. This means that the Congress did not try to scale back any changes or proposed pieces of legislation that would allow the diversion of money from some main economic sectors to others such as defense.

The president’s proposals to divert money into sectors that would not give back to the federal government in the form of taxes were seen as if they were dangerous form the economy. However, the government insisted on giving tax cuts and wasting money on defense when it was starved financially (Sperry, 2019). The Congress ought to have rejected the request by the president by sanctioning everything that he did.

However, it did not play its role but became a puppet of the government. Most Americans struggled with poverty and were victims of the administration’s inability to make crucial decisions regarding the economic future of the US. However, the reforms that were brought about by president Ronald Reagan were strong enough to overcome these negative setbacks which were overshadowed by the success of steering the economy through depression.

The reforms that were achieved by the government were significant. Although the tax cuts sent the government into debts, they were meant to stimulate the economy through the depression by encouraging expansion of economic activities which would directly benefit the citizens. Markets were deregulated to allow free entry and exit so that many entrepreneurs could be allowed to sprout up. Indeed, many of the business people wanted to quit the market but were highly protected by the government (Sperry, 2019, p. 2). The government made sure that it did safeguard the market against collapsing by improving on the attention that it was giving to the market. A lot of money was spent in simulating the market although the government did not expect anything back from the markets. This meant that these reforms boosted all traders. The cutting of taxes gave them more venues that allowed them to contain the rising costs due to the hard economic times.

Monetary policies were made as sound as possible by funding money into circulation for stimulation and growth of the economy. When the amount of money in distribution seemed to go down, the economists advised the government to wake up and take the step of rejuvenating them. The government thus tried the expansionary monetary policy such that all the available finances were channeled into investments and banks and other lenders were ordered to give loans on lower interest rates. When the traders received loans in significant quantities, they were able to invest and fund their means so that the level of economic growth would be increased. Production increased because of such measures that did not constrict the output from the private sector. The largest-ever economic boom was realized as a result of Reagan’s actions. More people were employed. Over 35 million people got jobs in the informal and formal sector. However, it was the informal sector that emerged the strongest because most of the businesses were small enterprises. Also, medium firms came up and sprouted all over the country, developing actively.

It is generally known that there would always be some side of the Congress that would oppose any changes, either good or bad. This group was present during Reagans time, and they argued that the people had to be taxed heavily to allow for government funding. However, according to Reagan, there was no other alternative in getting the economy on its feet other than taking the measures that he made. This section argued that the president was wrong in letting the taxpayers keep a large amount of the money that they ought to have paid as taxes. Through this measure of tax cutting, Reagan aimed to achieve the victory of transferring power from the government to the ordinary people without any condition. President George Bush aimed at organizing such economics as Reagan’s but failed because the people and the Congress were not supportive. The revenues of the federal government increased although the increase was not significant enough to get the economy out of debts.

The tax cuts cannot be underestimated in terms of its effects although the measure drained the treasury reserves. However, the fact is that the revenues did increase between the years of 1980 to 1990. The revenues doubled because before 1980, they were being estimated to be $517 billion and yet they folded to a whopping sum of $1 trillion by the year 1990. The different statistics indicate that there was a 28 percent increment in the federal revenues when it is estimated from the GDP as a percentage. However, there was a slight decline in the revenues from 18.9 to 18% in the first quarter of 1990. The measures of tax collection were working because they were being implemented slowly and the increase was from 244 billion dollars to $467. The real values have to be extracted by incorporating the inflation factor on the prices from an economic perspective. This means that when this factor is considered, the increase in the federal revenues was 35.8%. The cold war made the president to increase federal spending on defense by about 50 percent, but he cut it down when the tension ended. This was all meant to protect the people of the united states of America. The reduction in military spending was 15% which was initiated from 1989 to 1993.

The government also invested heavily in Medicare and social security. The president’s administration did do a lot concerning the investments that bring benefits to the people (CQ Researcher by CQ Press, 2019, p. 3). There was inflation during the years f 1973, and they had to be eliminated. The economic boom that was during Reagan’s time lasted for 92 months. This was the most extended economic boom to have ever existed in the US history. The president had to carry out stagflation aimed at building the economy. The changes were conservative because the economic policies were being carried out aggressively. The inflation was reduced from four digits. Ronald Reagan lowered the influence of the government on the economy and then introduced the laisses faire style of administering the economy.

Free market, as well as capitalism, were what the president saw as the efforts to deliver the economy. This meant that the federal government gave the US citizens the right to trade when the market has been deregulated so that it would be free such that anyone could establish a business. The people were allowed to amass wealth for themselves so that the economy could grow and such individuals even led to the government because they had lots of money in their possession. The mood of the 1980s in the American system was “greed is good,” and they improved on the economy because everyone got to work in a bid to produce the highest amount of wealth for themselves. Although the status quo was a bit different, Reagan displayed another class of politics in as far as the economy was concerned. The former presidents Johnson and Nixon did expand the role and the involvement of the government in the activities of the market and wealth creation by people and individual businesses.

Therefore, tax cuts were proposed by the Reagan regime in four critical areas of the economy. The first one was the growth and expansion of the spending of the government in the marketplace. The capital gains taxes and income taxes were reduced to encourage people to invest their money into profitable activities meant for revenue generation to the government and earn more income for themselves. The regulations on businesses were reduced dramatically so that the market would become as free as possible. More so, money supply in the economy was expanded, so that supply-side economics was emphasized the more (Rees, 2017, p. 26). The supply side economics that was proposed by classical economists argue that the government has to involve the cutting of taxes so that more money for investment may be availed to the citizens who want to venture into entrepreneurship. When more cash is allowed into businesses, the owners get the money to start expanding and hiring more workers, and thus the economy grows tremendously. More incentives to workers were also given so that they could be engaged in the wealth creation process. They aimed at increased labor supply. This is because labor is a critical input I the production process. The success was however achieved when the president got to attain on his policy objectives. The victory was so big that none between his government and its supporters hoped to gain such. The rising inflation became tamed because of the successful application of monetary policy (CQ Researcher by CQ Press, 2019, p. 3). Fiscal policy was not significantly used because it aims to use the government means in influencing the market and the general economy.

The spending of the government was not reduced but was shifted to the defense so that more debts were realized when funding the military (Scerri, 2017, p. 34). It is a fact that the security of a country is not profit generating and thus any finances that are used to fund the defense would not be returned in terms of revenue. The fact that the government diverted the investments from the domestic arena to the military tripled the public debt. There was slow spending that was aimed at stimulating growth. The increase in the expenditure of the government was just by 2.5 percent each year. However, social security payments were never cut. The same applied to the fees for Medicare. The budget of the government was just 22 percent of the total domestic production. This means that the increase was only by two percent over the usual 20 percent (Schwab, 2017, p. 12).

President Nixon had tried to fix some price control policies aimed at regulating the domestic prices of oil and gas. However, early in the year 1981, Reagan eliminated such controls (Sinn, 2018, p. 3). The free market equilibrium would have led to the prevention of inflation. However, the free market equilibrium was being held back by the controls of oil and gas prices. There were also other services that had been regulated by the federal government and Reagan came in to deregulate them. These are the interstate services of buses, the telephone service, cable to as well as ocean shipping. Regulations on banks were also removed so that there would be the natural state of equilibrium.

The fiscal policy application was the removal of rules and deregulation that majorly involved the tax cuts and increased military spending. However, the government did cut on its general spending by a margin aimed at leissez faire economics. Tax revenues increased from 1981, and they were used by the federal government to sponsor the defense because of the cold war tension. The program was dubbed rearm America. By the year 1982, just two years into Reagan’s government administration, the budget deficit jumped from 79 to 128 billion dollars. The tax reform act brought some positive implications although they were not sufficient to bring about a revolution. The 1986 tax law by Ronald Reagan is also counted as an achievement by his government. The significant success was the reduction of the high-interest rates that worked against trading activities.

Reference List

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