President Reagan's Neoliberalism In The United States
Neoliberalism was first coined in post-World War I Germany and can be explained as a theory of political economic practices that proposes that to best advance human well-being the state must, within a framework of free trade, free markets and strong private property rights, liberate individual entrepreneurial skills and freedoms (Harvey 2005). Since the term was first coined it has been associated with various politicians. However, the rise of neoliberalism in 1970s is often related to British Prime Minister Margaret Thatcher and US President Ronald Reagan. The two leaders both strived to merge traditional conservative agendas with their economic neoliberalism. Nonetheless, the results were different. Reagan considered high taxes the main cause of poor economic performance, while Thatcher believed the cause was the growth of the money supply. Therefor the politician’s contradictory views led to two separate policy agendas. In this essay we will deal with some of the US President Reagan’s, and later President Bill Clinton’s, neoliberal reforms and how they
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Through reducing marginal tax rates, the program aimed to combat the combination of high unemployment and stagflation. In 1986, The Tax Reform Act cut the tax brackets to four while reducing the average individual income tax rate by around 6%. The reform also increased corporate taxes due to growing fear over the increasing budget deficit. However, critics argued that the tax reforms led to great inequality between the income of the wealthy and the middle class. Another negative result of the tax cuts was that they led to a dramatic increase in deficit spending. The tax cuts introduced by Reagan in the early 1980s inevitably led government revenue which no longer could support spending regarding the military or social policies. The result was the largest deficit in US
Through reducing marginal tax rates, the program aimed to combat the combination of high unemployment and stagflation. In 1986, The Tax Reform Act cut the tax brackets to four while reducing the average individual income tax rate by around 6%. The reform also increased corporate taxes due to growing fear over the increasing budget deficit. However, critics argued that the tax reforms led to great inequality between the income of the wealthy and the middle class. Another negative result of the tax cuts was that they led to a dramatic increase in deficit spending. The tax cuts introduced by Reagan in the early 1980s inevitably led government revenue which no longer could support spending regarding the military or social policies. The result was the largest deficit in US