Reaganomics in the context of Tax cuts

Ronald Reagan's tenure as the 40th president of the United States began with his first inauguration on January 20, 1981, and ended on January 20, 1989. Reagan, a Republican from California, took office after defeating the Democratic incumbent president Jimmy Carter and independent congressman John B. Anderson in the 1980 presidential election. Four years later, he won re-election in the 1984 presidential election, after defeating the Democratic nominee Walter Mondale. Bush was constitutionally limited to two terms and was succeeded by his vice president, George H. W. Bush, who won the 1988 presidential election. Reagan's 1980 landslide election resulted from a conservative shift to the right in American politics, including a loss of confidence in liberal, New Deal, and Great Society programs and priorities that had dominated the national agenda since the 1930s.

Domestically, the Reagan administration enacted a major tax cut, sought to cut non-military spending, and eliminated federal regulations. The administration's economic policies, known as "Reaganomics", were inspired by supply-side economics. The combination of tax cuts and an increase in defense spending led to budget deficits, and the federal debt increased significantly during Reagan's tenure. Reagan signed the Tax Reform Act of 1986, simplifying the tax code by reducing rates and removing several tax breaks, and the Immigration Reform and Control Act of 1986, which enacted sweeping changes to U.S. immigration law and granted amnesty to three million illegal immigrants. Reagan also appointed more federal judges than any other president, including four Supreme Court Justices.

The Anglo-Saxon model (so called because it is practiced in Anglosphere countries such as the United Kingdom, the United States, Canada, New Zealand, Australia and Ireland) is a regulated market-based economic model that emerged in the 1970s.

Based on the Chicago school of economics, it was spearheaded in the 1980s in the United States by the economics of then President Ronald Reagan (dubbed Reaganomics), and reinforced in the United Kingdom by then Prime Minister Margaret Thatcher (dubbed Thatcherism).

The commercial state concept (and its important variant, commercial society) is sometimes associated with Adam Ferguson's concept of civil society and refers to a government or political state devoted primarily to the promotion and advancement of commercial interests. Ferguson, Adam Smith and other representatives of the Scottish Enlightenment (and who referred to themselves as the literati) were more likely to use the term commercial society. The underlying idea of the commercial state can also be linked to the American School of Economics (and in particular to the legacy of the political and economic approach of Alexander Hamilton). In its modern manifestation, national, state and local governments which pursue business and commercial development and other forms of economic and industrial development through tax policies and forms of positive incentives and inducements may properly be termed commercial states. Practical commercial state activities include governmental economic development efforts including encouraging plant relocations, tax rebates, zoning easements and assorted other incentives and concessions.

Several lines of thought and action (e.g. Mercantilism) run from ancient Greek and Roman philosophy through Ferguson and Adam Smith. They can be traced through the Federalist party of Alexander Hamilton and more recently Austrian economists such as Ludwig von Mises, Frederick Hayek. An essentially commercial view of the state has continued down to modern theorists including Milton Friedman and Murray Rothbard, who argue not only for a limited role for government, but also that that residual role is heavily commercial. The modern U.S. Republican Party and Democratic Party in the U.S. both include significant factions of commercial state adherents, although commercial state rhetoric is usually much more evident in the former. (See, for example, discussions of Reaganomics in Ronald Reagan and the U.S. Republican Party.)

Ronald Reagan's tenure as the 40th president of the United States began with his first inauguration on January 20, 1981, and ended on January 20, 1989. Reagan, a Republican from California, took office after defeating the Democratic incumbent president Jimmy Carter and independent congressman John B. Anderson in the 1980 presidential election. Four years later, he won re-election in the 1984 presidential election, after defeating the Democratic nominee Walter Mondale. Reagan was constitutionally limited to two terms and was succeeded by his vice president, George H. W. Bush, who won the 1988 presidential election. Reagan's 1980 landslide election resulted from a conservative shift to the right in American politics, including a loss of confidence in liberal, New Deal, and Great Society programs and priorities that had dominated the national agenda since the 1930s.

Domestically, the Reagan administration enacted a major tax cut, sought to cut non-military spending, and eliminated federal regulations. The administration's economic policies, known as "Reaganomics", were inspired by supply-side economics. The combination of tax cuts and an increase in defense spending led to budget deficits, and the federal debt increased significantly during Reagan's tenure. Reagan signed the Tax Reform Act of 1986, simplifying the tax code by reducing rates and removing several tax breaks, and the Immigration Reform and Control Act of 1986, which enacted sweeping changes to U.S. immigration law and granted amnesty to three million illegal immigrants. Reagan also appointed more federal judges than any other president, including four Supreme Court Justices.

In 1980s and 1990s American politics, "Atari Democrat" referred to Democratic legislators who suggested that the support and development of high tech and related businesses would stimulate the economy and create jobs. The term refers to the Atari brand of video game consoles and arcade machines, which was prominent in the 1980s.

The term was initially used in 1982 for Democratic politicians' focus on investing in high tech industries over sunset industries, primarily Gary Hart, Bill Bradley, Michael Dukakis, Al Gore, Paul Tsongas, and Tim Wirth. The New York Times discussed a generation gap that developed during the 1980s between older liberals who maintained an interest in traditional visions of social liberalism, and the Atari Democrats who attempted to find a middle ground. The Atari Democrats advocated for free markets, neo-liberalism, and for market forces being better able to offer solutions to environmental problems than actual regulations. The older liberals viewed them as advocates for Reaganomics.

This article discusses the domestic policy of the Ronald Reagan administration from 1981 to 1989. Reagan's policies stressed conservative economic values, starting with his implementation of supply-side economic policies, dubbed as "Reaganomics" by both supporters and detractors. His policies also included the largest tax cut in American history as well as increased defense spending as part of his Soviet strategy. However, he significantly raised (non-income) taxes four times due to economic conditions and reforms, but the tax reforms instituted during presidency brought top marginal rates to their lowest levels since 1931, such that by 1988, the top US marginal tax rate was 28%.

Notable events included his firing of nearly 12,000 striking air traffic control workers and appointing the first woman to the Supreme Court bench, Sandra Day O'Connor. He believed in federalism and free markets, passed policies to encourage development of private business, and routinely criticized and defunded the public sector. Despite his support for limited government, he greatly accelerated the nation's war on drugs.