A Look Back at Reaganomics

Almost 30 years have passed but the left continues to blame Reaganomics, which is what they called the legislation to lower top personal income tax rates from 70 to 28%. The result was a seven year period (1982 to 1989) which saw the greatest, consistent burst of economic activity ever seen in the U.S. In fact, it was the greatest economic expansion the world has ever seen – in any country, at any time.
From November 1982, when Reagan’s new economic program was beginning to take effect, to November 1989, 18.7 million new jobs were created. It was a world record: Never before had so many jobs been created during a comparable time period.
The poverty rate also fell steadily. The Federal budget deficits were too high but House Democrats consistently fought the President on domestic spending reductions. Reagan did significantly increase the Pentagon budget but this spending increase made an enormous contribution to the end of the Cold War. The American people delivered a verdict on Reaganomics when the President carried 49 states in his 1984 re-election bid.
Reagan was also the best President our cities ever had. He reformed public housing and helped to destroy the welfare stereotype. He was able to concentrate funding on people in need. He said “We found the overwhelming majority would like nothing better than to be off welfare, with jobs for the future, and out here in the society with the rest of us. The trouble is that bureaucracy has them so economically trapped that there’s no way they can get away. And they’re trapped because that bureaucracy needs them as a clientele to preserve the jobs of the bureaucrats themselves.”
As Bill Clinton has acknowledged, his welfare reform bill had its origins in the Reagan Administration. The “Fort Apache” section of the South Bronx is now a hot real estate market with brownstones approaching $500,000. Jimmy Carter did visit the South Bronx in 1977 but he had little to do with the area’s revitalization. A major reason for the decline was NYC’s rent-control laws which prevented landlords from raising rents in any substantial way to maintain buildings.
As the vacancy rates rose and buildings deteriorated, landlords saw a new way to compensate for their monetary loses in the early 1970s: arson. The South Bronx lost over 40 percent of its housing stock while the Bronx lost more than 300,000 residents, about half of the total. The recovery began in the Reagan Administration and it involved a private/public partnership. Reaganomics made the private investment possible.

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