NCPA - National Center for Policy Analysis

Fruits Of The Reagan Revolution

August 11, 1997

Some economists say the U.S. economy is still benefiting from policies initiated by President Ronald Reagan. They point out that we have enjoyed a 15-year expansion since 1982 -- interrupted only by a shallow eight-month dip in the early 1990s.

In their view, Reagan's pro-business agenda of low marginal tax rates, deregulation, freer trade and low inflation led the foundation for steadily increasing prosperity.

Here are the major Reagan policies cited by business executives and economists in a recent Investor's Business Daily survey as principal factors in current growth:

  • Reagan's tax cuts unleashed a flood of new capital which led to a 5.6 percent annual rate of new small business creation between 1981 and 1989 -- and sent the Dow Jones Industrial Average from around 1,000 points to over 8,000 last month.
  • Deregulation and tax cuts combined to allow the Federal Reserve to cap inflation -- which fell from 13 percent in 1980 to below 3 percent today.
  • Free trade has led to economic globalization and increased world-wide competition -- greatly contributing to lower prices for consumers.

Finally, Reagan's role in bringing the Cold War to a safe close yielded a so-called peace dividend to the federal government worth about $100 billion a year.

Source: Adrienne Fox, "Did the Reagan Boom Ever End?" Investor's Business Daily, August 11, 1997.


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