How did Reagan's policies affect the economy?
About this video
John Dickerson explains that Reagan believed good government programs had ballooned into a system that rewarded the loudest voices and trapped people in dependence. His plan was to cut taxes, cut spending and cut regulation, return power to the states, and rely on supply-side economics, which held that tax cuts would generate more revenue.
You'll be able to
- explain why Reagan thought government programs had stopped helping people in need.
- list Reagan's three big policy goals.
- describe the basic idea of supply-side economics as Reagan understood it.
Key words
- regulation
- Rules the government sets for businesses and individuals.
- government dependence
- Relying on government help in a way that makes it hard to become independent.
- supply-side economics
- The theory that cutting taxes boosts the economy enough to bring in more government revenue.
- revenue
- Money the government collects, mostly from taxes.
- domestic spending
- Government money spent on programs at home rather than on defense or abroad.
Transcript
- [Instructor] How did Ronald Reagan's policies affect the government and economy?
- What Ronald Reagan believed is that good programs, he had been a New Deal democrat, he believed that what had happened was good programs that had tried to help people who needed the help, the poor, the infirm, the elderly, those programs had ballooned, and what had happened was they were no longer prioritizing help to those who needed it, but they had become a kind of system where those who made the loudest noise got the most government, got the most money and got the attention from the government, and that that in fact stopped helping people in need and ended up hurting people, ended up sort of entrapping them in government dependence.
And so what he said was he was going to do two big things. Or three big things actually. He was going to cut taxes, and what that was going to do was shrink the amount of available money towards government, which he was then going to also do by cutting spending, and he was going to cut regulation.
So it was essentially paring down government, which he thought was inefficient towards giving resources to those who need it, he wanted a lot of that power to go back to the states, and he also believed in an economic program that both cut money from domestic spending but also cut taxes, which he believed would actually generate more revenue because of something called supply-side economics, and so his both economic theory and his theory about shrinking government were kind of matched up in his first budget and in his first major tax cut.
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