American history

Reaganomics

In 1980, Ronald Reagan was elected President by a landslide, and immediately began a series of cuts in taxes and spending. The Reagan Revolution reduced taxes and regulation. Inflation dropped dramatically from 13.5% annually in 1980 to just 3% annually in 1983, and real GDP growth began to grow.

The unemployment rate continued to rise to a peak of 10.8% in late 1982, but then dropped as sharply as it had risen to a level of 5.4% at the end of Reagan's presidency in January 1989.

Critics of the Reagan Administration often point to the fact that the disparity between the those in the upper socioeconomic levels and those in the lower socioeconomic levels increased during Reagan's presidency.

Critics also note that the federal debt tripled (from $930 billion on December 31, 1981 to $2.6 trillion on September 30, 1988; note that fiscal year 1986 began on October 1), reaching record levels. Of course, the debt regularly reaches record levels as the debt has not been reduced over the course of a Presidency since Calvin Coolidge was in office. In addition to the fiscal deficits, the U.S. started to have large trade deficits.

The U.S. went from being the world's largest creditor nation to becoming the world's largest debtor nation during his second term. It was during his second term that the Internal Revenue Code of 1986 was passed.

Reagan's Vice President of 8 years, George H. W. Bush, easily won election in 1988. The early Bush Presidency's economic policies were essentially a continuation of Reagan's policies, but in the early 1990s, Bush let down many Reagan supporters by agreeing to a tax increase in a compromise with Congressional Democrats.

Bush ended his Presidency on a moderate note, signing regulatory bills like the Americans With Disabilities Act and a law mandating that toilets use low amounts of water, as NAFTA (more formally, "the NAFTA") came into effect. In 1992, Bush and Ross Perot lost to Democrat Bill Clinton.