Negative Effects Of Reaganomics

On the negative side of the spectrum, Reaganomics initially led to a deep recession in 1981 and 1982 due to high interest rates. These high interest rates also messed with foreign affairs as they caused the value of the U.S. dollar to rise on the international exchange market, thus making American products more expensive, which in turn caused imports to increase while exports decreased. This unfavorable balance of trade is still seen today as a report from 2015 shows that the U.S. exports amounted to approximately $1.6 trillion while imports amounted to approximately $2.4 trillion. Reaganomics also resulted in an increased income gap between the rich and the poor in America, a problem that is still present today. Only the rich actually benefitted from Reagan’s economic plan as the top 1 percent of

That is an 80% increase for the rich versus a 3% increase for the rest of america after a decade of Reaganomics. People of the lower classes actually started making less and small businesses suffered as their former customers no longer had any money to spend. However, big luxury franchises prospered as they found their customers had more to spend. On December 30th, 1989 the UPI reported that the income gap between the richest and the poorest was the biggest it had ever been since 1947. They found no evidence in which supported that the benefits the rich had received trickled down to the lower-income americans. The socioeconomic gap has only continued to grow as research shows that as of 2014 upper-income families were seven times more wealthy than middle class income families compared to being 3.4 times more wealthy in 1984. Though Reaganomics did encourage budgets and some government spending to be cut by cutting extra grants, services, and programs that weren’t needed; big welfare programs that consume the largest amount of taxpayer dollars (such as social security and medicare), did not have their budgets