For the past century, the United States has been regarded as the greatest hegemonic power in the world. The U.S. played the most important role in the advancement of mankind from social, political, scientific, military, and economic standpoint. Unfortunately, today this is no longer true. Since the 1980’s the U.S. has been on a gradual decline. The introduction and implementation of trickle down economics, otherwise known as “Reaganomics,” has contributed greatly to the systemic dismantling of the socioeconomic structure that made America great. When President Reagan took office, the U.S. was on the back end of the economic prosperity World War 2 had created. The U.S. was experiencing the highest inflation rates since 1947 (13.6% in 1980), unemployment rates reaching 10% in 1982, and nonexistent increases GDP. To combat the recession the country was experiencing, President Reagan implemented the beginning stages of trickle down economics – which was a short-term solution aimed to stimulate the economy. Taxes in the top bracket dropped from 70% to 28% while GDP recovered. However, this short-term growth only masked the real problem at hand. Many argue that Reagan “enacted irresponsible tax giveaways for the rich…[starving] the federal government of revenue [which] led to unprecedented deficits.” There is no doubt that “today’s budget deficits [can] impoverish our descendants.”1 Since 1980, America has experienced a quick and drastic change in income distribution between the top 1% and the rest of the country. The graphs below from the Center on Budget and Policy Priorities show how tax policies implemented by the Reagan Administration have compounded over the past thirty-three years to create drastic income disparities. W... ... middle of paper ... ...der.com/here-are-25-more-signs-that-america-is-not-1-2012-6>. Stone, Chad, Danilo Trisi, Arloc Sherman, and William Chen. "Center on Budget and Policy Priorities." A Guide to Statistics on Historical Trends in Income Inequality. Center on Budget and Policy Priorities, 6 Nov. 2013. Web. 03 Dec. 2013. . Talbott, John R. Obamanomics: How Bottom-up Economic Prosperity Will Replace Trickle-down Economics. New York: Seven Stories, 2008. Print. Thompson, Derek. "The Atlantic." The Atlantic. Reuters, 22 Nov. 2013. Web. 05 Dec. 2013. . U.S. Government. "2012 World Oil Consumption." Countries. U.S. Energy Information Administration, 2012. Web. 03 Dec. 2013. .
Leading up to the year 1981, America had fallen into a period of “stagflation”, a portmanteau for ‘stagnant economy’ and ‘high inflation’. Characterized by high taxes, high unemployment, high interest rates, and low national spirit, America needed to look to something other than Keynesian economics to pull itself out of this low. During the election of 1980, Ronald Reagan’s campaign focused on a new stream of economic policy. His objective was to turn the economy into “a healthy, vigorous, growing economy [which would provide] equal opportunities for all Americans, with no barriers born of bigotry or discrimination.” Reagan’s policy, later known as ‘Reaganomics’, entailed a four-point plan which cut taxes, reduced government spending, created anti-inflationary policy, and deregulated certain products. Though ‘Reaganomics’ was successful both at controlling “stagflation” and promoting economic growth, it has and always will be an extremely controversial topic regarding the redistribution of wealth.
In 1980, Ronald Reagan was elected President of the United States, taking over the country from President Carter. Many issues existed when Reagan took office, during his presidency more would follow and continue into the George H. W. Bush presidency. Marc Cornman who was a young family man during both of these administrations recalls the problems and benefits of the mid to late 1980’s. His family was low-income building their way up to middle class by the Clinton Administration, moving from state to state hoping to find better employment after leaving the military. The main aspects of the economy, social issues and global conflicts during President Reagan’s 1980-88 and President Bush’s first two years of his administration and the positive and negative effects they had.
Lyndon B. Johnson became president in 1963. As many know LBJ had the mandate to get things done. His most notable achievement being ‘The Great Society’. While The Great Society was a great thing for many people and achieved never before seen progress in civil rights and poverty, it was very expensive. The Vietnam War that LBJ escalated was very expensive as well. As it is noted in McDougal Littell’s The Americans, “In February 1964 Congress passed a tax reduction of over $10 billion into law” (Source 10). While tax cu...
The assistance, which was given to workers during the New Deal, was to be eroded by the Reagan administration. Reagan's economic policies towards middle to lower class workers recognized the economic imbalance of American society as a problem, which could not be solved by so called subordination of the American taxpayer. The implication of this was that the government would not subsidize, using taxpayer money, administrations and programs that were similar to those of the New Deal. One can derive this conclusion by looking at Reagan's policy towards cutting unemployment insurance and his hesitation towards raising the minimum wage.
The US has been in and out of debt countless times throughout history, going as far back as the Civil War. However, debt did not become a truly relevant problem until much later, in the 1980s (Budget Deficits). Up to that point, large budget deficits were generally only allowed during wartime, but this pattern ended after the Great Depression. Roosevelt’s New Deal meant that the government spent much more than it previously did, even after the economy improved (Budget De...
This opened Reagan’s eyes to what could be possible in politics. He became the governor of California in the year 1966; with this his political career sky rocketed. In 1968 Reagan announced that he would be running for President. Reagan’s main goals were to lower taxes, limit the government, and his plans for Reaganomics. Reaganomics was a “trickle down” type of economic plan which was to lower the taxes on the rich in turn this would cause more money to trickle down to the rest of the American people. Many agree that this plan helped in the long run many also think this was just hurting the less fortunate and keeping the rich richer and happier. Reagan influenced the conservative politicians in many ways, but Reaganomics helped create a blueprint for what could be done. When people think of the Republican party many see the image of Ronald Reagan it’s as though he was what the party
The Economic Recovery Tax Act of 1981, introduced in Document Three, was drafted with the purpose of encouraging economic growth, strategically limiting taxes in ways such that the wealthy disproportionately benefitted in hopes that said recipients of these advantages would put their surplus money into the nation’s economy. This Reaganomics policy corresponded to the neoconservative President Ronald Reagan’s promise to let taxpayers keep more of their money, thus decreasing the government’s financial supply, which would in turn reduce government spending and power. This historic tax and budget reduction set a tone for the rest of the Reagan presidency, whose advocation of the conservatives’ ideal limited government marked the end of new Great Society-like social programs, therefore contributing to the change of American politics to pursue economic growth without government interference. In the 1980s, the increasing federal deficits, shown in the graph of Document Seven, alarmed Americans and well as the Reagan administration. These historically exorbitant national deficits, which reached over 150 trillion dollars more than any other point in American fiduciary history, were found to be caused in part by entitlement programs, such as Social Security, as health care costs increased with the age. This concern led to Reagan creating even more political changes when he contradicted his campaign promise to lower taxes in effort to compromise with Democrats in Congress, increasing taxes by scaling back on previously approved fiscal deductions for businesses so that the government would still be able to sponsor and stabilize the highly favored, yet expensive Social Security Act, as described by Paul Krugman is his opinion piece The Great Taxer, observed in Document Six. This bipartisan
Price, Mark. “The Increasingly Unequal States of America: Income Inequality by State, 1917 to 2011.” Economic Policy Institute. N.p., 19 Feb. 2014. Web. 30 Apr. 2014
In the United States there are four social classes : the upper class, the middle class, the working class, and the lower class. Of these four classes the most inequality exists between the upper class and the lower class. This inequality can be seen in the incomes that the two classes earn. During the period 1979 through the present , the growth in income has disproportionately grown.The bottom sixty percent of the US population actually saw their real income decrease in 1990 dollars. The next 20% saw medium gains. The top twenty percent saw their income increase 18%. The wealthiest one percent saw their incomes rise drastically over 80%. As reported in the 1997 Center on Budget's analysis , the wealthiest one percent of Americans ( 2.6 million people) received as much after-tax income in 1994 as the bottom 35 percent of the population combined (88 million people). But in 1977 the bottom 35 percent had about twice as much after tax income as the top one percent. These statistics further show the disproportional income growth among the social classes. The gr...
There was general prosperity in America following the Second World War, however in the 1970s inflation rose, productivity decreased, and corporate debt increased. Individual incomes slipped as oil prices raised. Popular dissent surrounding the economic crisis helped Reagan win the 1980 election under promises to lower taxes, deregulate, and bring America out of stagnation. Many New Right supporters put their faith in him to change the system. To start his tenure, Reagan passed significant tax cuts for the rich to encourage investment. Next he passed the Economy Recovery Tax Act that cut tax rates by 25% with special provisions that favored business. Reagan’s economic measures were based on his belief in supply-side economics, which argued that tax cuts for the wealthy and for business stimulates investment, with the benefits eventually tricking down to the popular masses. His supply-side economic policies were generally consistent with the establishment’s support of free market, ...
Income inequality in the United States has increased and decreased throughout history, but in the recent years, the widening gap has become a serious issue. Income inequality is usually measured by Gini coefficient. According to this method coefficient varies between 0 and 100; while 0 represents complete equality (income is distributed equally among all the population of the country), 100 represents complete inequality (only one person receives all the country’s income, while the rest of the population receives nothing). According to the Census of Bureau, the official Gini coefficient in the U.S. was 46.9 in 2010. This is way higher than the all-time low coefficient of 38.6 set in 1968 (qtd. in Babones).
Income inequality in the United States, as of 2007, has reached levels not seen since 1928. In 1928, the top one percent received nearly 24% of all income within the United States (Volscho & Kelly, 2012). This percentage fell to nearly nine percent in 1975, but has risen to 23.5% as of 2007 (Volscho & Kelly, 2012). Meanwhile, in 2007 (see
Prior to the 2007-2009 recession, the 1981-82 recession was the worst economic downturn in the United States since the Great Depression. Rising inflation of the U.S. dollar of the 1970s resulted in the tightened monetary policy from the Federal Reserve, while regime change in Iran led to rising oil prices. By the early 1980s, the United States found itself with falling inflation from before, but still rising unemployment. Unemployment grew from 7.4 percent at the start of the recession to nearly 10 percent a year later. The unemployment rate reached nearly 11 percent late in 1982. This was the apex of the unemployment rate of the post-World War II era.
Middle class Americans represent more than half of the United States’ population. They are the backbone of U.S. economics, and have been since the very beginning of the country’s history. However, an unstable job market, created by outsourcing, combined with a minimum wage which has not been raised since 1989, is gradually shrinking this economic group. To avoid the extinction of this critical class, the next president of the United States will have to go to extraordinary measures. Without major reformation, the middle class will continue to be absorbed by the lower class, ultimately resulting in the complete loss of one of America’s most important socio-economic bodies.
Desilver, Drew. “U.S. Income Inequality, On The Rise…” Pew Research Center. 5 Dec. 2013. Web. 12 Feb. 2014.