Reaganomics is based on four point economic program: reduce tax rates to re-establish economic growth, less spending of the federal income tax, anti-inflation monetary policy to reduce inflation and deregulation. It was believed that these points can pump in more money into the business, which in return would help expand, create jobs and give money back to the people.
Economic conditions are different than it was during the Regan era. Because of different economic conditions, there is a demand for different policies. Reaganomics can harm the economy. For example, reducing the tax rate does not lead to GDP growth. In 1960s, the taxes for the rich were reduced to 35 per cent and implementing Trickle Down Economic theory led to a further reduction of 28 per cent. The economy went up for a short time, but it was soon hit by recession. During Clinton’s tenure, the taxes for the rich were increased which strengthened the economy. When George W. Bush stepped in, taxes for the rich were reduced and recession hit us. Lower tax rates also reduces income growth, wage growth, and no increase in the job.
The truth is that this 30-plus years of experiment with low tax rates on the rich and powerful has made America’s wealthier people more wealthy and left everyone else to stagnate or fall backward. Wall Street, banks, corporations, are making profits, while workers, small businessmen and Main Street are under loss. Deregulation and reducing tax rates for big corporations and rich people (so that they could create jobs to help the economy) has shown that Reaganomics has failed miserably. Due to this policy, wealthy oil barons to dot com billionaires are manipulating election results. Referred to as lobbyists, they influence government policies and, in fact, take an active part in creating policies. Whether it is from the government or opposition, they don’t face any resistance.
Rich and powerful people can easily exploit the middle and lower income group people. Reducing the tax for the rich allows money to get stagnated at the top level. Jobs take a backseat, wages do not increase, there is no rise in the income and, therefore, working class suffers. In short, 90 per cent Americans’ money is held by the one per cent rich Americans. For instance, during President Clinton’s tenure, the poverty declined by 25 per cent in 2000 that increased to 37 per cent in 2008 with the resurgence of Reaganomics under President George W. Bush tenure. These statistics tell us why Reagan’s policies worked then and why it is not relevant today.