Reaganomics refers to the economic policies that marked the presidency of Ronald Reagan who became US president during ‘stagflation,’ a period known for high inflation and unemployment. The four cornerstones of Reaganomics, a set of policies and economic view, are: reduction in the growth of government spending, reduction in marginal tax rates on income from labor and capital, reduction in government regulation of the economy, and control of the money supply to reduce inflation.

Reagan wanted to cut back on domestic spending while lowering taxes, making him markedly different from his immediate predecessors. True to two of Reagan’s campaign promises, Reaganomics lowered taxes and ‘decreased’ government. What Reaganomics actually translated into were cuts to social programs, as well as large-scale deficit spending on the military.

According to economic experts, Reagan’s tax reforms actually ‘pushed both the international transactions current account and the federal budget into deficit, leading to a significant increase in public debt.’ The tax cuts nearly doubled tax receipts ($517 billion in 1980 to $1,032 billion in 1990). The budget deficits were actually caused by an increase in government spending.

Furthermore, Reagan reduced income tax rates, with the largest rate reductions on the highest incomes. Operationally, from the eyes of the average American taxpayer, what Reagan did was fatten the rich and hoped that their excreta will nourish the poor.

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Via Ludwig von Mises Institute