Introduction to Reaganomics
Former British Prime Minister Margaret Thatcher summed up Reagan's achievements this way: "While others predicted the decline of the West, he inspired the United States and its allies to carry on the faith in the mission of freedom." ...... Others were anxiously expecting the best possible outcome of coexistence with the Soviet Union, but he won the Cold War – not only by not firing a single shot, but by inviting his opponents to come out of their fortresses and turn enemies into friends. ”
In the early seventies of the last century, the United States broke out the largest economic crisis since the Great Depression in 1933, and the oil crisis caused by the Middle East war triggered a severe economic recession. The Vietnam War, which lasted from the early '60s to the '70s, and the Cold War, which lasted from the Soviet Union, to the Soviet Union continued to erode people's sense of American values, and it became urgent to revitalize the economy and rebuild the American spirit. In January 1981, Ronald Wilson Reagan, who was 70 years old, was inaugurated as the 40th president of the United States.
By the seventies, Keynes advocated increasing spending by implementing deficit budgets, issuing more public debt, money, and lowering interest rates, which increased the level of stagflation and exacerbated the economic crisis. When the myth of Keynesianism was difficult to continue, Reagan decided to do the opposite, Keynesianism has always emphasized the "demand" in supply and demand, while Reaganomic economics is based on the "supply school", emphasizing that "supply creates its own demand", the purpose is to reduce taxes, *** economy, and create jobs. To this end, Reagan *** took a series of measures.
1. Cuts in fiscal expenditures (excluding military spending), especially "arbitrary" social welfare spending. From Roosevelt's New Deal to World War II, the United States established a superior social security system, and the federal *** institutions also swelled as a result, according to statistics, "between 1965 and 1980, the federal deficit increased by 53 times, the relief funds under various federal 'nominal' programs increased fourfold to nearly $300 billion a year, and the federal budget increased by about five times", and a lot of money was wasted in administration. With the arrival of stagflation, more and more people need relief, and the problem is getting worse. When Reagan took office, he said, "*** is not the solution to the problem, *** itself is the problem." After coming to power, he carried out drastic reforms of social welfare. The main measures are: to change the excessive social welfare burden of the federal government, to drastically reduce social welfare spending, especially discretionary spending, and to increase the responsibility for social welfare security by the states and localities. In April 1983, Reagan signed a package of social welfare reforms passed by Congress that cut some social security programs, especially "arbitrary" social welfare spending. In the 1982-1985 fiscal year, spending on family benefits and food stamps for minor children decreased by 13 percent, Medicaid decreased by 5 percent, and child nutrition assistance decreased by 4 percent compared to 1981. £´£¥¡£ As a result of austerity in spending, the federal budget deficit fell from $195 billion in 1983 to $175 billion in 1984.
2. Large-scale tax cuts. In 1981, the U.S. Congress passed the tax law proposed by Ronald Reagan***, which required three cuts in personal income tax over a three-year period from October 1981, reducing personal income tax by 23 percent and reducing the marginal tax rate from 14 percent to 70 percent to 11 percent to 50 percent, reducing federal tax revenue by 3 from 1981 to 1984. $15.2 billion. On October 23, 1986, Reagan signed into law an amended tax law approved by the U.S. House of Representatives and Senate, known as the Tax Reform Act of 1986. This was the largest tax cut since the war, and under this act, the top rate of personal income tax was lowered, the tax rates of all classes were reduced, and the national per capita tax exemption was reduced by 6. 4%, and within seven years, the disposable income of each household will increase by about $600-900 per year.
3. Relax the restrictions on enterprise rules and regulations and reduce state intervention in enterprises. In the sixties and seventies, the control of enterprises in the United States reached a peak. As can be seen from a series of data, the number of federal regulations in the "Federal Register" increased from 2,599 pages in 1936 to 65,603 pages in 1977, an increase of 300% in the 70s. The number of employees in regulatory bodies increased from 2 in 1970. 80,000 increased to 8 in 1979. 10,000 people. In 1980, it was estimated that it would take 1.2 billion hours a year to enforce the rules and regulations that existed in the United States at the time. If the wage cost of an hourly workload is equivalent to $20, the total expense would be more than $36 billion! At the same time, excessive intervention hinders the free development of market capitalism, suppresses the autonomy and flexibility of enterprises, and stifles the innovation power of enterprises. Soon after taking office, Reagan formulated 10 guidelines for regulatory reform, a series of measures that played a great role in restoring the vitality of the market economy.
Fourth, we should strictly control the growth of money supply and implement a stable monetary policy. In 1979, the U.S. general rate was as high as 13. 3%, compared to less than 2% in the early 60s, inflation is alarming. In his televised speech after becoming president, Reagan also admitted that the $1 dollar in 1960 was worth only 3 jiao and 6 cents in 1981, and that after taking office, he implemented a strict tightening monetary policy, strictly controlled the amount of money issued, and implemented high interest rates. The effect of the strict controls was evident, with inflation falling from 18 per cent in 1980 to 3 per cent in 1987. Prices by 12 in 1980. 4% fell to 3 in 1982. £¹£¥¡£ The high interest rate policy caused nearly $100 billion of capital to flow into the United States every year from 1985 to 1986, which led to the rebound of the American economy.
Reagan's series of economic policies began to bear fruit at the end of 1982 and became effective in the second and third quarters of 1983, and in August 1983, the index of industrial production in the United States rose for nine consecutive months, very close to the pre-crisis high. GDP grew by 4 in the year. 5 per cent, with several quarters of economic growth as high as 8 per cent. A total of 3.5 million jobs were added throughout 1983, a trend that continued into the 1984 U.S. presidential election year. When Reagan sought re-election in 1984 and asked voters, "Are you better off than you were four years ago?" the American people rewarded him with a landslide victory in 48 states and a whopping 60 percent approval rating. During his second term, the U.S. economy recovered further, with a remarkably strong economic development and a nearly half-cut fiscal deficit.
During the Clinton years, the federal budget finally turned from a deficit to a surplus, and the federal budget surplus was nearly $211 billion when he left office. But Mr. Reagan owes a lot of credit to Mr. Reagan, who in 1993 inherited a technology-driven economy with low inflation since the end of the Cold War. Reagan *** The revival of the US economy, which was mired in stagflation, and the economic adjustment, the reduction of the deficit, the vigorous development of science and technology, the establishment of the status of the sole superpower, and the opening up of the world market have all laid a solid and good foundation for the economic glory of the Clinton era. The glory of the 90s is inseparable from the hard work of the 80s.
In 2005, millions of viewers voted for their "greatest American", and the top 10 list included Lincoln, Martin Luther King, Jr., George Washington, Clinton, Franklin D. Roosevelt, and other political figures who had a profound impact on American politics. We had two victories, two things that I'm proud of, one is that the economy has recovered, and the American people have created 19 million new jobs. The other is that the moral spirit of the Americans has been restored. ”
Reagan saved the declining American economy in the 80s, aided and hastened the end of the Cold War. Lech Walesa, leader of Solidarity Poland, said: "The freedom we have been given is what he has given us. West German Chancellor Helmut Kohl said: "His presence is a blessing for the world." Two years after Reagan called on Gorbachev to tear down the Berlin Wall, the Wall literally fell, and 11 months later Germany was reunited. ”
Reagan's economics repositioned the relationship between the state and the market, restructured the American economy, and his greatest legacy was the restoration of the American spirit, the glory and confidence of a great power, and the "complete freedom, dignity, and opportunity" (Reagan said in his second inaugural address in 1985), and he became a role model for Americans and won the applause of the world.