Taming the lion called government spending was another key component of the plan – the “third leg of the stool.” Here, too, President Reagan did what he said he would do. Employment of African-Americans rose by more than 25% between 19, and more than half of the new jobs created went to women. Not only were there millions of new jobs, but the benefits of job creation were not limited to one segment of society. Tax cuts were only one “leg of the stool.” The second, jobs, was equally strong. Given actual rates of inflation, through 1987, the Reagan tax cuts saved the median-income two-earner American family of four close to $9,000 in taxes from what it would have owed in 1980. The prime interest rate was slashed by more than half, from an unprecedented 21.5% in January 1981 to 10% in August 1988.Net worth of families earning between $20,000 and $50,000 annually grew by 27%.Over the eight years of the Reagan Administration: A few years later, the Tax Reform Act of 1986 brought the lowest individual and corporate income tax rates of any major industrialized country in the world. In August 1981, President Reagan signed the Economic Recovery Tax Act of 1981, which brought reductions in individual income tax rates, the expensing of depreciable property, incentives for small businesses and incentives for savings. He wanted them to know he meant business.
Ronald Reagan may have been the first President to wear pajamas to a meeting with the bipartisan Congressional leadership.
While still recovering, he summoned Congressional leaders to the White House to twist their arms. Even a near-fatal assassination attempt did not slow him down. From day one, he and his team worked tirelessly to get Congress to pass legislation to put the economy back on track. He knew that only if people had money in their pockets and incentives to invest and build businesses would jobs be created, inflation tamed and interest rates reduced.Īlmost as soon as the Inaugural ceremony was over, President Reagan set his sights on Capitol Hill. Some skeptics derisively called his plan “Reaganomics,” but President Reagan was undeterred. He had a simple, but specific plan, of which he spoke often during the campaign: cut taxes, get control of government spending and get the government out of the way so that the entrepreneurial spirit of the American people could be unleashed.
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President Reagan had earned a degree in Economics at Eureka college, and even though he would sometimes joke about “two economists having three opinions”, he knew what needed to be done and how to do it.
All must share in the productive work of this ’new beginning,’ and all must share in the bounty of a revived economy.” Ending inflation means freeing all Americans from the terror of runaway living costs. Putting America back to work means putting all Americans back to work. “This Administration’s objective will be a healthy, vigorous, growing economy that provides equal opportunities for all Americans, with no barriers born of bigotry or discrimination. He shared his vision in his Inaugural Address: Taxes were high, unemployment was high, interest rates were high and the national spirit was low.īringing America back was the new President’s top priority. When Ronald Reagan took the oath of office as America’s 40th President on January 20, 1981, the country was experiencing some of bleakest economic times since the Depression.
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