The Theory Behind Reaganomics Essay, Research Paper
The theory behind Reaganomics was sound, but when applied in real life its consequences are still present more than ten years after the fact. The tax cuts applied early in Reagan’s first term cemented the ideology for what the next eight years of his reign would uphold. The Economic Recovery Tax Act would cut taxes roughly twenty five percent over a three-year period. The ideology of Reagan’s administration quickly received supporters of what he was doing. Entailed in these tax cuts were reductions in welfare programs which was also a popular idea amongst Reaganites. But what is puzzling is that David Stockman held a large portion of the truth of these tax cuts from Reagan and the public.
What would occur with the ERTA was a substantial deficit. This deficit was not the intent of Reagan. Reagan’s intent was that the tax cuts would allow the public to have more money. This additional money which would have otherwise been spent on taxes was supposed to be put back in the economy by the people. The ability of people to now spend more on homes, cars and other goods would boost the prosperity of the economy. But Stockman had a theory of his own. He saw that this deficit would force Congress to make cuts of its own on social programs. Stockman with held this information from the public and from Reagan so that when Congress would reallocate funding, it would avoid giving it to social programs.
Stockman’s theory does not make sense with the political views of the time. If Reagan and the public were in favor of cutbacks on the welfare system, why would Stockman with hold this information from a population who was in favor of the result? Stockman was an intelligent man who for some time worked in the House of Representatives and had connections to many people in Washington. He served as the budget director for the Reagan Administration. As budget director, his intentions were to acquire a balanced budget by the next term.
Although Stockman’s intentions for a balanced budget were good, what he did betrayed Reagan and the public. He never had the authority to with hold such pertinent information. If his intents were to maintain a balanced budget, why would he devise a plan for such high tax cuts which would create the most unbalance budget our economy has seen. It seems as if this overly intelligent scholar was attempting to achieve a task that was way out of his power to do so.
Later on Stockman revealed his secret to journalist William Greider. By him doing so after the fact, and owning up to his wrongdoing is in no way redeeming. It reminds me of when Robert S. MacNamara claimed that in retrospect he was wrong in sending all of those troops to fight in Vietnam. Although the results of Stockman’s actions did not cause the death of thousands of young men and women, he in a sense did the same thing by claiming he was wrong after the fact.
The deficit caused by the Reagan Era is still present and is a concern to our economy. However, the eighties was a time when the majority of America lived the high life, and when the poor suffered the consequences. But in politics there will always be a group that will feel the burden of some one else’s pleasure. Now, the welfare state is adequately funded, and those who lost the government aid that they relied on during Reaganomics are once again receiving what they need.