#PRESIDENT WITH HANDS OFF LEADERSHIP STYLE FREE#
Reagan, however adhered to his free trade stance, and was the primary proponent of the Free Trade Agreement with Canada, which evolved into the North American Free Trade Agreement (NAFTA). Americans continued to buy more foreign-made goods than they were selling. The budget deficit was exacerbated by a trade deficit. The economic gains, however, came at a cost of a record annual deficit and a ballooning national debt.
As Reagan left office, the nation was experiencing its sixth consecutive year of economic prosperity. history (unemployment hit a 14 year low in June of 1988). After the 1982 downturn, the reduced inflation rate (under 5% for the remainder of the administration), lowering interest rates, and added discretionary income from tax cuts sparked record economic growth, and produced one of the lowest unemployment rates in modern U.S. The administration modified its economic policy after two years by proposing selected tax increases and budget cuts to control rising deficits and higher interest rates. At the same time, he insisted on, and for the most part, was successful in gaining increased funding for defense.Īlthough inflation dropped from 13.5% in 1980 to 5.1% in 1982, a severe recession set in, with unemployment exceeding 10% in October, 1982 for the first time in forty years. Bush once called it, "voodoo economics." The President also vowed to protect certain entitlement programs (like Medicare and Social Security) while cutting the budgets for other social programs by targeting waste, fraud and abuse.ĭuring his first year in office, Reagan engineered the passage of $39 billion in budget cuts into law, as well as a massive 25 percent tax cut spread over three years for individuals, and faster write-offs for capital investment for business. This overall approach became known as "Reaganomics," or as Republican primary candidate Vice President George H.W. Higher revenues would then be used to increase defense spending and balance the federal budget. Reagan embraced the theory of "supply side economics," feeling that tax cuts encouraged economic expansion which would result in increases in federal government revenue at a lower tax rate.
Reagan's economic policies highlighted his long-standing dislike of high federal income taxes. During the campaign Reagan promised to restore the free market from excessive government regulation and encourage private initiative and enterprise. When Reagan took office the economy was one of double-digit inflation and interest rates near 20%. Internationally, Reagan demonstrated a fierce opposition to the spread of communism throughout the world and a strong distrust of the Soviet Union, which in 1983 he labeled an "evil empire." He championed a rearmed and strong military and was especially supportive of the MX missile system and the Strategic Defense Initiative ("Star Wars") program.
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Reagan advanced domestic policies that featured a lessening of federal government responsibility in solving social problems, reducing restrictions on business, and implementing tax cuts. Reagan served as arguably the first true conservative U.S. president in over 50 years. His triumph capped the rise of the new right/conservative wing of the Republican Party and ushered in a new era of governing. Ronald Reagan was elected President of the United States on November 4, 1980.
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