President Reagan is probably best known for three major accomplishments: rekindling the American spirit of entrepreneurship, defeating the Soviets in the Cold War leading to the eventual collapse of the USSR, and creating the most robust peacetime economic expansion in American history. In this posting, we’ll focus on topics more applicable to Reagan’s economic accomplishments. Reagan’s economic philosophy has been referred to by many names including Reaganomics and Supply Side Economics.
Arguably Reagan was dealing with a much more complex economic environment in 1980 than we have today. Reagan was faced with high unemployment, high inflation, high interest rates, a slow-growing economy and a high government deficit as a percentage of GDP. Today we primarily have high unemployment, a slow-growing economy and a high government deficit. However over the last two years the policies implemented by the Obama administration have not significantly reduced unemployment, have dramatically increased the government debt and have started to increase both inflation and interest rates. Note that inflation and interest rates were not a problem when Obama entered office. Continue...