Tax Cuts and Reagan's Administration

Paper Summary:

This paper discusses how the Reagan Administration managed to pass tax cuts in order to cover some of the country's deficit during the 1980's. It looks at the origins of "stagflation" and what Reagan's agenda was. The paper examines the statistics of reduction in government spending and how this was governed by the Administration's policies.

From the Paper:

"In the 1970s the economy hit the followers of complacency economics with a severe blow. The 70s began in the middle of a recession and the Vietnam war, and it inherited all of the problems created in the proceeding decade as well as a quasi-war economy. (Sahu, Ronald 1991) Just as the war ended OPEC's Arab member states declared a kind of economic war on the already inflation plagued U.S. economy by withholding their oil exports. This, coupled with other supply side problems in the U.S. economy ended up creating stagflation, the coupling of economic growth being stagnant while U.S. prices continued to rise. Stagflation made a trade-off between price stability and unemployment seem obsolete. The 1970s ended with the threat of another recession, this was forecasted in 1978 and 1979 but did not actually arrive until 1980, the year Ronald Reagan was elected President."

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