"Reaganomics" was the most serious attempt to change the course of U.S. economic policy of any administration since the New Deal. "Only by reducing the growth of government," said Ronald Reagan, "can we increase the growth of the economy." Reagan's 1981 Program for Economic Recovery had four major policy objectives: (1) reduce the growth of government spending, (2) reduce the marginal tax rates on income from both labor and capital, (3) reduce regulation, and (4) reduce inflation by controlling the growth of the money supply. These major policy changes, in turn, were expected to increase saving and investment, increase economic growth, balance the budget, restore healthy financial markets, and reduce inflation and interest rates.
Just like Kennedy's tax cuts in the 1960's, Reagan's tax cuts in the 1980's reduced the overall tax burden and allowed the economy to expand due to increased investment in it. In both cases, tax revenues rose in spite of the lowered rate because those rates were being applied to a larger economy. [continues]
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