Reagan and Bush on the Economy
December 22, 2006Ronald Reagan and George W. Bush. Two fine Republicans. These men shared more than just their political party. They both had very similar views on what sh ould be done about the domestic economy. Alhtough Reagan was much more of an extremist when it came to implementing his principles, both men believe in the “trickle-down” theory.
The trickle down theory, also known as supply side economics, or Reaganomics, was based on the principle that if people did not have to give their money to the government, and had more money, they would spend more, making business flourish. These businesses that have excess cash would reinvest it into their company, hiring more people, providing jobs, which would then start the cycle all over again.
When Ronald Reagan came in to office in 1981, one of the first things he did was slash federal personal income taxes by 25%, and to offset the lower revenue for the government, cut many social spending programs too. After a slight recession when he first came into office, the economy grew by an impressive 7.9 % over his presidency. The lower taxes and high defense spending, in addition to fixing up social security led to the federal deficit growing.
George W. Bush believes in a similar policy, but not taken to the extreme like Reagan did. When Bush first came into office, one of the first things he did was implement nation wide tax cuts, totaling $1.2 trillion. He then removed many restrictions and increased the number of exemptions for certain taxpayers. What has the result of all of this been? Unemployment is now just above 4%, after a peak of 6%, Wall Street has set numerous records over the past few years, and the economy is strong.
Bush and Reagan’s economic policy are quite similar, with a few minor differences. There is empirical evidence that laissez-faire economics do work.
http://en.wikipedia.org/wiki/Ronald_Reagan
http://en.wikipedia.org/wiki/George_W._Bush#Economic_policy
Posted by mrcliffster