Supply-Side Tax Cuts and the Truth about the Reagan Economic Record
by William A. Niskanen and Stephen Moore
Bob Dole’s proposal for a 15 percent income tax cut has reignited the long-standing debate about the economic impact of Reaganomics in the 1980s. This study assesses the Reagan supply-side policies by comparing the nation’s economic performance in the Reagan years (1981-89) with its performance in the immediately preceding Ford-Carter years (1974-81) and in the Bush-Clinton years that followed (1989-95).
On 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years.
- Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years.
- Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.
- Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.
- The only economic variable that was worse in the Reagan period than in both the pre- and post-Reagan years was the savings rate, which fell rapidly in the 1980s. The productivity rate was higher in the pre-Reagan years but much lower in the post-Reagan years.
William A. Niskanen is chairman and Stephen Moore is director of fiscal policy studies at the Cato Institute.
This study also exposes 12 fables of Reaganomics, such as that the rich got richer and the poor got poorer, the Reagan tax cuts caused the deficit to explode, and Bill Clinton’s economic record has been better than Reagan’s
Reagan at Bob Hope’s 80th birthday.
President Ronald Reagan’s 100th birthday anniversary
- Herbert Clark Hoover (1874-1964) gave his White House servants strict orders to hide from him whenever he passed by. Those who failed to do so were at risk of being fired.g
- Lyndon Baines Johnson “LBJ”(1908-1973) affectionately called the many women he slept with his “harem.” He even had a buzzer system installed that rang inside the Oval Office so that Secret Service could warn him when his wife was coming.c
- James Buchanan is the only bachelor president. He was virtually inseparable from William R. King (1786-1853), a senator from Alabama, earning the pair the nickname “Miss Nancy and Aunt Fancy” and “Mr. Buchanan and his wife.”c
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