1981 Reaganomics

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  • Reagan cut taxes in 1982 and 1986, which resulted in:
    • federal revenues skyrocketing from just over $517 billion in 1980 to more than $1 trillion in 1990 (+28% inflation adjusted dollars)
    • Real GDP went from 3.2% avg in Carters term, to 4.5% (avg or final) over Regan's 6 years (post tax cut).
    • Inflation dropped from ≈13% to ≈5%.

We can get more into the weeds on the total tradeoffs, but to those who aren't challenged by simple math or logic, Democrats predicted the tax cuts would be ruinous. But all the important indicators were up and they were completely wrong about ruination. The automatic increases that their social programs had baked in, did cost us a lot in deficit increases -- but the majority of that was non-discretionary and passed by Democrats, and is their cross to bear (not his). His comparatively modest defense spending increases resulted in the collapse of the Soviet Union, and a huge peace dividend.


📚 References