President Reagan’s first year in office was tumultuous to say the least. Minutes after he took the oath of office Iran released the hostages trapped inside the United States embassy. Sixty-nine days into his term the President was shot and seriously wounded by a .22 caliber bullet fired from John Hinckley’s gun. Only seven months into his term he faced a major crisis when the nation’s air traffic controllers decided to conduct an illegal strike. President Reagan had run a campaign that focused on his desire to tackle three challenges: the economic morass the nation was in, diplomatic relations with the Soviet Union, and modernizing the United States armed services. Thirty-five years ago, going in to the second half of his first year in office, the President and his fledgling administration had been unable to make significant progress towards these goals, although the President’s approval rating remained over 50 percent.
Over the course of the summer the administration and Congress worked on economic policy to attempt to address high unemployment and inflation. The Economic Recovery Tax Act of 1981 was a comprehensive piece of legislation that President Reagan endorsed. Introduced in the House of Representatives as House Resolution 4242 in the 97th Congress on July 23, 1981, it eventually became Public Law 97-34 on August 13, 1981 when President Reagan signed the law from his personal retreat, Rancho del Cielo, near Santa Barbara, California.
- Reaganomics refers to the economics policies instituted by former President Ronald Reagan..
- Reaganomic policies instituted tax cuts, decreased social spending, increased military spending, and market deregulation.
- Reaganomics was influenced by the trickle-down theory and supply-side economics.
- Under President Reagan’s administration, marginal tax rates decreased, tax revenues increased, inflation decreased, and the unemployment rate fell.