1. Reaganomics
"Only by reducing the growth of government, can we increase the growth of the economy."
- Ronald Reagan

2. Ronald Reagan President of the United States from 1981-1988
Was originally a movie star and later was the governor of California
Now seen by many Republicans as a “model” president that presidents today should try to be like.

3. Ronald Reagan’s Economic Policies “Reaganomics”
Supply-Side Economics
Ronald Reagan’s economic team decided that they would try to affect the “supply” side of the economy. His plan had two main tenets:
Reduce income taxes significantly to help the “supply side” of the economy.
Reduce government spending significantly
called supply side economics because it is helping the rich or the or the suppliers of goods and services in the economy – the rich

4. Tax Cuts
The wealthiest tax bracket had their taxes decreased from 70% to 28% (over the course of a few tax cuts)
Corporate income tax was decreased from almost 50% to 34%
Capital Gains taxes and estate taxes were also cut
*** Capital gains – when you make money on stocks***

5. Spending Changes
Reagan cut a number of social programs to try to keep the country from going into debt
But Reagan increased defense spending to try to scare the Soviet Union during the Cold War

6. What is a better way to create jobs
What is a better way to create jobs? Government spending or tax cuts for the rich?

7. The Logic Behind Tax Cuts

8. 1. How Government Spending Creates Jobs
Increase in Income of the businesses.
DEMAND SHIFTER: Income of consumers (businesses).
What do businesses buy?
JOBS!
JOBS
GRAPH
supply
New Jobs Price (Wage)
Original Jobs Price (Wage)
Income of consumers because they are paying businesses to pave roads etc.
demand
Original Quantity of jobs
New Quantity of jobs
Quantity of jobs

9. 2. How Tax Cuts for Everyone (But Mostly the Rich) Create Jobs.
Increase in Income of the rich, increases the demand for goods they buy
supply
tax cuts benefit the rich the most – the poor also have their taxes cut but they don’t see as much benefit
demand
Original Quantity of goods
New Quantity of goods
Quantity of
Goods that the rich buy

10. 2. How Tax Cuts for Everyone (But Mostly the Rich) Create Jobs… (cont
Increase in Income of companies, increases the demand for the people they hire
supply
More jobs cutting taxes for jobs
demand
Original Quantity of Labor
New Quantity of Labor
Quantity of
labor

11. So cutting taxes for the rich will…
Give them more income to spend on things they like to buy
This means businesses that produce these items will be selling more items and making more money.
So their demand for labor will increase, and they will hire more people!
build a second story on their house, re-do their yard…

12. Logical Reasoning
Without taxes, businesses and workers will not lose money to the government when they work
If we decrease taxes on rich people and businesses, they will provide more jobs for all people.
Americans will all be more wealthy because of increased productivity in the society.
Even though the taxes mostly affect the wealthy, these benefits will “trickle down” to help out everybody

13. Did trickle down economics actually work?
Did the poor actually benefit from Reagan’s economic policies of decreasing taxes for Americans?