Reagan gives a televised address from the Oval Office, outlining his plan for tax reductions in July 1981

Reaganomics ( /reɪɡəˈnɒmɪks/; a portmanteau of Reagan and economics attributed to Paul Harvey^[1]) refers to the economic policies promoted by the U.S. President Ronald Reagan during the 1980s. These policies are commonly associated with supply-side economics, or pejoratively as trickle-down economics or voodoo economics.

The four pillars of Reagan's economic policy were to reduce the growth of government spending, reduce income tax and capital gains tax, reduce government regulation of economy, and control money supply to reduce inflation.^[2]

Historical context[link]

Oil prices 1968–2006; peak is 1980, with steep decline over 1980s.

Prior to the Reagan administration, the United States economy experienced a decade of rising unemployment and inflation, (known as stagflation). Political pressure favored stimulus resulting in an expansion of the money supply. President Richard Nixon's wage and price controls were abandoned.^[3] The federal oil reserves were created to ease any future short term shocks. President Jimmy Carter started phasing out price controls on petroleum, while he created the Department of Energy. Much of the credit for the resolution of the stagflation is given to two causes: a three year contraction of the money supply by the Federal Reserve Board under Paul Volcker, initiated in the last year of Carter's presidency,^[3] and long term easing of supply and pricing in oil during the 1980s oil glut.

In his stated intention to increase defense spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors. Reagan enacted lower marginal tax rates in conjunction with simplified income tax codes and continued deregulation. During Reagan's presidency the annual deficits averaged 4.2% of GDP^[4] after inheriting an annual deficit of 2.7% of GDP in 1980 under president Carter.^[4] The rate of growth in federal spending fell from 4% under Jimmy Carter to 2.5% under Ronald Reagan. GDP per working-age adult, which had increased at only a 0.8% annual rate during the Carter administration, increased at a 1.8% rate during the Reagan administration. The increase in productivity growth was even higher: output per hour in the business sector, which had been roughly constant in the Carter years, increased at a 1.4% rate in the Reagan years. ^[2]

Before Reagan's election, supply side policy was considered unconventional by the moderate wing of the Republican Party. While running against Reagan for the Presidential nomination in 1980, George H. W. Bush had derided Reaganomics as "voodoo economics".^[5] Similarly, in 1976, Gerald Ford had severely criticized Reagan's proposal to turn back a large part of the Federal budget to the states. Reagan's policies have since become widely accepted by many Republicans.

Theoretical justification[link]

In his 1980 campaign speeches, Reagan presented his economic proposals as merely a return to the free-enterprise principles that had been in favor before the Great Depression. At the same time he attracted a following from the supply-side economics movement, formed in opposition to Keynesian demand-stimulus economics. This movement produced some of the strongest supporters for Reagan's policies during his term in office.

The Laffer curve illustrates the theory of tax rate elasticity. Cutting tax rates can increase revenue if the tax rate is beyond the revenue-maximizing tax rate (if the tax rate is to the right of the peak), and decrease revenue if the tax rate is to the left of the peak.

The contention of the proponents, that the tax rate cuts would more than pay for themselves, was influenced by a theoretical taxation model based on the elasticity of tax rates, known as the Laffer curve. Arthur Laffer's model predicts that excessive tax rates actually reduce potential tax revenues, by lowering the incentive to produce; the model also predicts that insufficient tax rates (rates below the optimum level for a given economy) lead directly to a reduction in tax revenues.

Policies[link]

President Reagan lifted remaining domestic petroleum price and allocation controls on January 28, 1981^[6] and lowered the oil windfall profits tax in August 1981, helping to end the 1979 energy crisis. He ended the oil windfall profits tax in 1988 during the 1980s oil glut.^{[citation needed]} Reagan followed his 1981 tax cut with two large tax increases.^[7] In 1982 Reagan agreed to a rollback of corporate tax cuts and a smaller rollback of individual income tax cuts. The 1982 tax increase undid a third of the initial tax cut. In 1983 Reagan instituted a payroll tax on Social Security and Medicare hospital insurance.^[8]

With the Tax Reform Act of 1986, Reagan and Congress sought to broaden the tax base, eliminate many deductions, and reduce rates. In 1983, Democrats Bill Bradley and Dick Gephardt had offered a proposal to clean up/broaden the tax base; in 1984 Reagan had the Treasury Department produce its own plan. The eventual bipartisan 1986 act aimed to be revenue-neutral: while it reduced the top marginal rate, it also partially "cleaned up" the tax base by curbing tax loopholes, preferences, and exceptions, thus raising the effective tax on activities previously specially favored by the code. Ultimately, the combination of base broadening and rate reduction raised revenue equal to about 4% of existing tax revenue^[9]

President Ronald Reagan signs the Economic Recovery Tax Act of 1981 at his California ranch.

The primary effect of the tax changes over the course of Reagan's term in office was a change in the composition of tax revenue, towards payroll and new investment, and away from higher earners and capital gains on existing investments. Federal revenue share of GDP declined from 19.6% in fiscal 1981 to 17.3% in 1984, before climbing back to 18.4% by fiscal year 1989. Personal income tax revenues fell during this period relative to GDP, while payroll tax revenues rose relative to GDP.^[4] President Ronald Reagan's 1981 cut in the top regular tax rate on unearned income reduced the maximum capital gains rate to only 20%--its lowest level since the Hoover administration.^[10] This tax benefits the wealthy, however, in 1986 President Reagan set tax rates on capital gains at the same level as the rates on ordinary income like salaries and wages, with both topping out at 28 percent.^[11]

Reagan significantly increased public expenditures, primarily the Department of Defense, which rose (in constant 2000 dollars) from $267.1 billion in 1980 (4.9% of GDP and 22.7% of public expenditure) to $393.1 billion in 1988 (5.8% of GDP and 27.3% of public expenditure); most of those years military spending was about 6% of GDP, exceeding this number in 4 different years. All these numbers had not been seen since the end of U.S. involvement in the Vietnam War in 1973.^[12] In 1981, Reagan significantly reduced the maximum tax rate, which affected the highest income earners, and lowered the top marginal tax rate from 70% to 50%; in 1986 he further reduced the rate to 28%.^[13] The federal deficit fell from 6% of GDP in 1983 to 3.2% of GDP in 1987.^[14] The Federal deficit in Reagan's final budget fell to 2.9% of GDP.^[2] The rate of growth in Federal spending fell from 4% under Jimmy Carter to 2.5% under Ronald Reagan.^[2] As a short-run strategy to reduce inflation and lower nominal interest rates, the U.S. borrowed both domestically and abroad to cover the Federal budget deficits, raising the national debt from $997 billion to $2.85 trillion.^[15] This led to the U.S. moving from the world's largest international creditor to the world's largest debtor nation.^[16] Reagan described the new debt as the "greatest disappointment" of his presidency.^[17]

According to William A. Niskanen, one of the architects of Reaganomics, "Reagan delivered on each of his four major policy objectives, although not to the extent that he and his supporters had hoped," and notes that the most substantial change was in the tax code, where the top marginal individual income tax rate fell from 70.1% to 28.4%, and there was a "major reversal in the tax treatment of business income," with effect of "reducing the tax bias among types of investment but increasing the average effective tax rate on new investment." Roger Porter, another architect of the program, acknowledges that the program was weakened by the many hands that changed the President's calculus, such as Congress.^[2][18] President Reagan, has remained popular as an antitax hero despite raising taxes eleven times over the course of his presidency, all in the name of fiscal responsibility.^[19] Reagan ultimately raised taxes more times than he cut them.^[20] According to Paul Krugman, "Over all, the 1982 tax increase undid about a third of the 1981 cut; as a share of G.D.P., the increase was substantially larger than Mr. Clinton's 1993 tax increase."^[21] According to historian and domestic policy adviser Bruce Bartlett, Reagan's tax increases over the course of his presidency took back half of the 1981 tax cut.^[22]

Results[link]

Spending during Reagan's two terms (FY 1981-88) averaged 22.4% GDP, well above the 20.6% GDP average from 1971 to 2009. In addition, the public debt rose from 26% GDP in 1980 to 41% GDP by 1988. In dollar terms, the public debt rose from $712 billion in 1980 to $2,052 billion in 1988, a roughly three-fold increase. ^[4] The unemployment rate rose from 7% in 1980 to 10.8% in 1982, then declined to 5.4% in 1988. The inflation rate declined from 10% in 1980 to 4% in 1988.^[2]

It has been claimed that Reagan's policies brought about the second longest peacetime economic expansion in U.S. history, surpassed in duration only by the 1990s expansion that began with George H.W. Bush in 1991 and ended with George W. Bush in 2001.^[23][24] This economic expansion continued through the Clinton administration with unemployment rates steadily decreasing throughout his presidency (7.3% at the start of his presidency and 4.2% at the culmination, with the lowest rate reaching 3.9% in 2000). ^[25] During the Reagan administration, the American economy went from a GDP growth of -0.3% in 1980 to 4.1% in 1988 (in constant 2005 dollars),^[26] which reduced the unemployment rate by 1.6%, from 7.1% in 1980 to 5.5% in 1988, but with peaks of around 10.8% in 1983. ^[25][27] A net job increase of about 21 million also occurred through mid-1990. Reagan’s administration is the only one not to have raised the minimum wage.^[28] The inflation rate, 13.5% in 1980, fell to 4.1% in 1988, which was achieved by applying high interest rates by the Federal Reserve (peaked at 20% in June 1981).^[29] The latter contributed to a relatively brief recession in 1982: unemployment rose to 9.7% and GDP fell by 1.9%.

The job growth under the Reagan administration was an average of 2.1% per year, with unemployment averaging 7.5%. Comparing the recovery from the 1981-82 recession (1983–1990) with the years between 1971 (end of a recession) and 1980 shows that the rate of growth of real GDP per capita averaged 2.77 under Reagan and 2.50% under Nixon, Ford and Carter. However, the unemployment rate averaged higher under Reagan (6.75% vs. 6.35%), while the average productivity growth was slower under Reagan (1.38% vs. 1.92%), and private investment as a percentage of GDP also averaged lower under Reagan (16.08% vs. 16.86%). Furthermore, real wages declined sharply during the Reagan Presidency.^[30]

The number of Americans below the poverty level increased 8.4% from 29.272 million in 1980 to 31.745 million in 1988, which means that, as a percentage of the total population, it remained almost stationary, from 12.95% in 1980 to 13% in 1988.^[31] The poverty level for people under the age of 18 increased from 11.543 million in 1980 (18.3% of all child population) to 12.455 (19.5%) in 1988.^[32] The share of total income going to the 5% highest-income households grew from 16.5% in 1980 to 18.3% in 1988 and the share of the highest fifth increased from 44.1% to 46.3% in same years. In contrast, the share of total income of the lowest fifth fell from 4.2% in 1980 to 3.8% in 1988 and the second poorest fifth from 10.2% to 9.6%.^[33] And during Reagan's first term, homelessness became a visible problem in America's urban centers, leading many to blame Reaganomics.^[34] In the closing weeks of his presidency, Reagan told the New York Times that the homeless "make it their own choice for staying out there."^[35] Political opponents chided his policies as "Trickle-down economics", due to the significant cuts in the upper tax brackets.^[36]

During the Reagan administration, federal receipts grew from $618 billion to $991 billion (an increase of 53%); while outlays grew from $ 746 billion to $1144 billion (an increase of 60%).^[38][39][40] According to a 1996 report of the Joint Economic Committee of the United States Congress, during Reagan's two terms, and through 1993, the top 10% of taxpayers paid an increased share of income taxes (not including payroll taxes) to the Federal government, while the lowest 50% of taxpayers paid a reduced share of income tax revenue.^[41] Personal income tax revenues declined from 9.4% GDP in 1981 to 8.3% GDP in 1989, while payroll tax revenues increased from 6.0% GDP to 6.7% GDP during the same period.^[4] This represented a more regressive tax regime, with more revenue derived from the flat payroll tax versus the progressive income tax.

According to a United States Department of the Treasury economic study,^[42] the major tax bills enacted under Reagan, in the short term, increased total tax revenue and reduced the tax burden on the economy (~-1% of GDP). The Economic Recovery Tax Act of 1981 resulted in a reduced tax burden on the economy (~-3% of GDP) but a decrease in total tax revenues (the largest tax cuts ever enacted).^[43] while other tax bills had neutral or, in the case of the Tax Equity and Fiscal Responsibility Act of 1982, a (~+1% of GDP) increase in revenue as a share of GDP. It should be however noted that the study did not examine the longer-term impact of Reagan tax policy, including sunset clauses and "the long-run, fully-phased-in effect of the tax bills".^[42] The fact that tax receipts as a percentage of GDP fell following the Economic Recovery Tax Act of 1981 shows a decrease in tax burden as share of GDP. Total tax revenue from income tax receipts increased during this time. The economic growth and increase in GDP outpaced the increase in tax receipt revenue, resulting in a slightly reduced tax burden as a percentage of GDP for the economy.

Budget Deficit in Billions of Dollars.

Reagan's tax policies contributed to an increase in both the international transactions current account deficit and federal budget deficit, as well as a significant increase in public debt. National debt more than tripled from 900 billion dollars to 2.8 trillion dollars during Reagan's tenure. Nominal national debt rose from $900 billion to $2.8 trillion during Reagan's tenure while the federal deficit fell from 6% of GDP in 1983 to 3.2% of GDP in 1987.^[14] The federal deficit in Reagan's final budget fell to 2.9% of GDP.^[2] Advocates of the Laffer curve contend that the tax cuts did lead to a near doubling of tax receipts ($517 billion in 1980 to $1.032 trillion in 1990),^[45] so that the deficits were actually caused by an increase in government spending.

However, an analysis from the Center on Budget and Policy Priorities argues that "history shows that the large reductions in income tax rates in 1981 were followed by abnormally slow growth in income tax receipts, while the increases in income-tax rates enacted in 1990 and 1993 were followed by sizeable growth in income-tax receipts." Specifically, the analysis calculated that the average annual growth rate of real income-tax receipts per working-age person was 0.2% from 1981 to 1990 and a much higher 3.1% from 1990 to 2001.^[46] An accurate accounting indicates that receipts increased from $599 billion in 1981 to $1.032 trillion in 1990, an increase of 72%. In 2005 dollars, the receipts decreased from $1.25 trillion in 1981 to $1.13 trillion in 1983 and did not return to $1.25 trillion until 1985. The receipts in 1990 were $1.5 trillion in 2005 dollars, an increase of only 20%.^[47] In contrast, from 1991 to 2000, receipts increased by 90% in current dollars, or 60% in 2005 dollars.

In 1982, during Reagan's second year in office, the U.S. recession had not yet ended. The effect of Reagan's tax cuts were at least partially offset by phased in Social Security payroll tax increases that had been enacted by President Jimmy Carter and the 95th Congress in 1977.^[48] An accurate accounting indicates that receipts increased from $599 billion in 1981 to $1.032 trillion in 1990, an increase of 72%. In 2005 dollars, the receipts decreased from $1.25 trillion in 1981 to $1.13 trillion in 1983 and did not return to $1.25 trillion until 1985. The receipts in 1990 were $1.5 trillion in 2005 dollars, an increase of 20%.^[49] In contrast, from 1991 to 2000, receipts increased by 90% in current dollars, or 60% in 2005 dollars.

Critics point to declining real wages as a result of Reaganomics.^[50]

Interpretations[link]

Positive interpretations[link]

According to a 1996 study from the Cato Institute:^[51]

• On 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years.
• Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.
• Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.
• The only economic variable that was worse in the Reagan period than in both the pre- and post-Reagan years was the savings rate, which fell rapidly in the 1980s.
• The productivity rate was higher in the pre-Reagan years but much lower in the post-Reagan years.

Stephen Moore of the Cato Institute stated that "no act in the last quarter century had a more profound impact on the US economy of the eighties and nineties than the Reagan tax cut of 1981." He claims that Reagan's tax cuts, combined with an emphasis on federal monetary policy, deregulation, and expansion of free trade created a sustained economic expansion creating America's greatest sustained wave of prosperity ever. He also claims that the American economy grew by more than a third in size, producing a $15 trillion increase in American wealth. Consumer and investor confidence soared. Cutting federal income taxes, cutting the US government spending budget, cutting useless programs, scaling down the government work force, maintaining low interest rates, and keeping a watchful inflation hedge on the monetary supply was Ronald Reagan's formula for a successful economic turnaround.

In a speech by Milton Friedman to the Cato Institute:^[52], Friedman states that "Reaganomics had four simple principles: lower marginal tax rates, less regulation, restrained government spending, noninflationary monetary policy. Though Reagan did not achieve all of his goals, he made good progress." This is why entrepreneurs flourished under Reaganomics: lower tax rates and inflation coupled with less regulation favored improved environments for market-based funding, risk-taking, access to labor (leading to greater employment), and a more level playing field between these entrepreneurs and large corporations. Illustrating this, the Heritage Foundation:^[53] states that this is why "the U.S. government must allow the entrepreneur to enjoy the rewards of success. If taxes take away most profit, then the entrepreneur will have less incentive to take a risk. If there are great restrictions on how the entrepreneur can use his profit, then there is little reason for the entrepreneur to take a risk. The entrepreneur's courage to take a risk is what leads to new American discoveries and what drives the U.S. economy forward. Reaganomics knows this. It is one of the reasons why Ronald Reagan has reduced American taxes dramatically".

Negative interpretations[link]

A common criticism of Reagan's policies stem from Tax Reform Act of 1986 and its impact on the Alternative Minimum Tax (AMT). The tax reform would ostensibly reduce or eliminate tax deductions. This legislation expanded the AMT from a law for untaxed rich investors to one refocused on middle class Americans who had children, owned a home, or lived in high tax states.^[54] This parallel tax system hit middle class Americans the hardest by reducing their deductions and effectively raising their taxes. Meanwhile, the highest income earners (with incomes exceeding $1,000,000) were proportionately less affected, thereby shifting the tax burden away from the richest 0.5% to poorer Americans.^[55] In 2006, the IRS's National Taxpayer Advocate's report highlighted the AMT as the single most serious problem with the tax code.^[56] As of 2007, the AMT brought in more tax revenue than the regular tax which has made it difficult for Congress to reform.^[55]

Economist Paul Krugman argues the economic expansion during the Reagan administration was primarily the result of the business cycle and the Keynesian monetary policy of Volcker.^[57] Krugman argues that there was nothing unusual about the economy under Reagan because unemployment was reducing from a high peak and that it is consistent with Keynesian economics for the economy to grow as employment increases if inflation remains low. Says Krugman:^[58]

The secret of the long climb after 1982 was the economic plunge that preceded it. By the end of 1982 the U.S. economy was deeply depressed, with the worst unemployment rate since the Great Depression. So there was plenty of room to grow before the economy returned to anything like full employment.

Krugman also notes that federal spending during Reagan's two terms (FY 1981-88) averaged 22.4% GDP, well above the 20.6% GDP average from 1971 to 2009. In addition, the public debt rose from 26.1% GDP in 1980 to 41.0% GDP by 1988. In dollar terms, the public debt rose from $712 billion in 1980 to $2,052 billion in 1988, a three-fold increase.^[4] Krugman therefore argues that these policies, combined with the temporary reduction in taxes during the early 1980s recession, is consistent with Keynesian stimulus theories.

According to William Niskanen, former chairman of the Cato Institute, the Reagan years left three major adverse economic legacies. First, privately held federal debt increased from 22% to 38% of GDP, despite a long peacetime expansion. Second, failure to address the savings and loan problem early led to an additional debt of about $125 billion. Third, trade barriers increased drastically – the share of U.S. imports subject to trade restrictions increased from 12% in 1980 to 23% in 1988.^[2]

Deregulation[link]

A controversial issue concerning Reaganomics is the issue of how much deregulation took place during the Reagan administration. Economists Raghuram Rajan and Luigi Zingales point out that many of the major deregulation efforts had either taken place or begun before Reagan (note the deregulation of airlines and trucking under Carter, and the beginning of deregulatory reform in railroads, telephones, natural gas, and banking). They argue for this and other reasons that "the move toward markets preceded the leader [Reagan] who is seen as one of their saviors."^[59] Furthermore, economists Paul Joskow and Roger Noll argue that the changes in economic regulation did not reflect a sudden ideological change in federal executive branch views and that that many significant reductions in government regulation of the economy occurred during the Carter administration. ^[60]

Economist William A. Niskanen, a member of Reagan's Council of Economic Advisers and later chairman of the Cato Institute, writes that deregulation had the "lowest priority" of the items on the Reagan agenda^[2] given that Reagan "failed to sustain the momentum for deregulation initiated in the 1970s" and that he "added more trade barriers than any administration since Hoover." By contrast, economist Milton Friedman has pointed to the number of pages added to the Federal Register each year as evidence of Reagan's anti-regulation presidency (the Register records the rules and regulations that federal agencies issue per year). The number of pages added to the Register each year declined sharply at the start of the Ronald Reagan presidency breaking a steady and sharp increase since 1960. The increase in the number of pages added per year resumed an upward, though less steep, trend after Reagan left office. In contrast, the number of pages being added each year increased under Ford, Carter, George H.W. Bush, Clinton, and others.^[61] The number of pages in Federal Register is however criticized as an extremely crude measure of regulatory activity, because it can be easily manipulated (e.g. font sizes have been changed to keep page count low).^[62] The apparent contradiction between Niskanen's statements and Friedman's data may be resolved by seeing Niskanen as referring to statutory deregulation (laws passed by Congress) and Friedman to administrative deregulation (rules and regulations implemented by federal agencies).

See also[link]

Footnotes[link]

References[link]

External links[link]

• Laffer, Arthur. "The four pillars of Reaganomics". The Heritage Foundation. http://www.heritage.org/research/economy/wm1311.cfm. 
• "Reaganomics". University of Houston. http://www.digitalhistory.uh.edu/database/article_display.cfm?HHID=406. 

v t e Ronald Reagan February 6, 1911 – June 5, 2004 Life and politics Birthplace · Pitney Store · Boyhood home · Films · Presidential Library · Death and state funeral · Political positions · Governship of California · Honors Presidency Domestic policy · Economic policy · Economic Recovery Tax Act of 1981 · Tax Reform Act of 1986 · Assassination attempt · Strategic Defense Initiative · Foreign policy · Reagan Doctrine · Cold War: first term, second term · Iran–Contra · Judicial appointments Speeches "A Time for Choosing" · "States' rights" · First inaugural address · "Tear down this wall!" · "Ash heap of history" · "Evil empire" · Speech opposing socialized medicine · State of the Union Address: 1982, 1983, 1984, 1985, 1986, 1987, 1988 Books An American Life (autobiography) · The Reagan Diaries · Biographical works Elections Governor: 1966 · 1970 · President: 1968 · 1976 · 1980 (campaign) · 1984 · Electoral history Family Nancy Davis Reagan (wife) · Jane Wyman (first wife) · Maureen Reagan Revell (daughter) · Michael Edward Reagan (son) · Patricia Reagan Davis (daughter) · Ronald Prescott "Ron" Reagan (son) · John "Jack" Reagan (father) · Nelle Wilson Reagan (mother)  · Neil Reagan (brother) Conservatism Portal · Book:Ronald Reagan · Category:Ronald Reagan

Ronald Reagan
40th President of the United States
In office January 20, 1981 – January 20, 1989
Vice President	George H. W. Bush
Preceded by	Jimmy Carter
Succeeded by	George H. W. Bush
33rd Governor of California
In office January 2, 1967 – January 6, 1975
Lieutenant	Robert Finch Edwin Reinecke John Harmer
Preceded by	Pat Brown
Succeeded by	Jerry Brown
Personal details
Born	Ronald Wilson Reagan (1911-02-06)February 6, 1911 Tampico, Illinois, U.S.
Died	June 5, 2004(2004-06-05) (aged 93) Los Angeles, California, U.S.
Resting place	Ronald Reagan Presidential Library, Simi Valley, California, U.S. 34°15′35.5896″N 118°49′11.301″W / 34.259886°N 118.81980583°W / 34.259886; -118.81980583
Political party	Republican (1962–2004)
Other political affiliations	Democratic (Before 1962)
Spouse(s)	Jane Wyman (1940–1949) Nancy Davis (1952–2004)
Children	Maureen Christine Michael Patti Ron
Alma mater	Eureka College
Religion	Disciples of Christ later Presbyterian
Signature
Military service
Service/branch	United States Army United States Army Air Forces
Years of service	1937–45
Rank	Captain

Ronald Wilson Reagan ( /ˈrɒnəld ˈwɪlsən ˈreɪɡən/; February 6, 1911 – June 5, 2004) was the 40th President of the United States, serving from 1981 to 1989. Prior to that, he was the 33rd Governor of California from 1967 to 1975 and a radio, film and television actor.

Born in Tampico, Illinois and raised in Dixon, Reagan was educated at Eureka College, earning a Bachelor of Arts degree in economics and sociology. After his graduation, Reagan moved first to Iowa to work as a radio broadcaster and then in to Los Angeles in 1937 where he began a career as an actor, first in films and later television. Some of his most notable films include Knute Rockne, All American, Kings Row, and Bedtime for Bonzo. Reagan served as president of the Screen Actors Guild, and later as a spokesman for General Electric (GE); his start in politics occurred during his work for GE. Originally a member of the Democratic Party, his positions began shifting rightward in the late 1950s, and he switched to the Republican Party in 1962. After delivering a rousing speech in support of Barry Goldwater's presidential candidacy in 1964, he was persuaded to seek the California governorship, winning two years later and again in 1970. He was defeated in his run for the Republican presidential nomination in 1968 as well as 1976, but won both the nomination and general election in 1980, defeating incumbent Jimmy Carter.

As president, Reagan implemented sweeping new political and economic initiatives. His supply-side economic policies, dubbed "Reaganomics", advocated reducing tax rates to spur economic growth, controlling the money supply to reduce inflation, deregulation of the economy, and reducing government spending. In his first term he survived an assassination attempt, took a hard line against labor unions, and ordered an invasion of Grenada. He was reelected in a landslide in 1984, proclaiming that it was "Morning in America." His second term was primarily marked by foreign matters, such as the ending of the Cold War, the 1986 bombing of Libya, and the revelation of the Iran-Contra affair. Publicly describing the Soviet Union as an "evil empire,"^[1] he supported anti-communist movements worldwide and spent his first term forgoing the strategy of détente by ordering a massive military buildup in an arms race with the USSR. Reagan negotiated with Soviet General Secretary Mikhail Gorbachev, culminating in the INF Treaty and the decrease of both countries' nuclear arsenals.

Reagan left office in 1989. In 1994, the former president disclosed that he had been diagnosed with Alzheimer's disease earlier in the year; he died ten years later at the age of 93. He ranks highly in public opinion polls of U.S. Presidents and is credited for generating an ideological renaissance on the American political right.

Early life[link]

Ronald Reagan as a teenager in Dixon, Illinois

Ronald Wilson Reagan was born in an apartment on the second floor of a commercial building in Tampico, Illinois on February 6, 1911, to Jack Reagan and Nelle Wilson Reagan.^[2] Reagan's father was a salesman and a storyteller, the grandson of Irish Catholic immigrants from County Tipperary^[3] while his mother had Scots and English ancestors.^[4] Reagan had one sibling, his older brother, Neil (1908–1996), who became an advertising executive.^[5] As a boy, Reagan's father nicknamed his son "Dutch", due to his "fat little Dutchman"-like appearance, and his "Dutchboy" haircut;^[6] the nickname stuck with him throughout his youth.^[6] Reagan's family briefly lived in several towns and cities in Illinois, including Monmouth, Galesburg and Chicago, until 1919, when they returned to Tampico and lived above the H.C. Pitney Variety Store.^[2] After his election as president, residing in the upstairs White House private quarters, Reagan would quip that he was "living above the store again".^[7]

According to Paul Kengor, author of God and Ronald Reagan, Reagan had a particularly strong faith in the goodness of people, which stemmed from the optimistic faith of his mother, Nelle,^[8] and the Disciples of Christ faith,^[8] which he was baptized into in 1922.^[9] For the time, Reagan was unusual in his opposition to racial discrimination, and recalled a time in Dixon when the local inn would not allow black people to stay there. Reagan brought them back to his house, where his mother invited them to stay the night and have breakfast the next morning.^[10]

Following the closure of the Pitney Store in late 1920, the Reagans moved to Dixon;^[11] the midwestern "small universe" had a lasting impression on Reagan.^[12] He attended Dixon High School,^[13] where he developed interests in acting, sports, and storytelling.^[14] His first job was as a lifeguard at the Rock River in Lowell Park, near Dixon, in 1927. Reagan performed 77 rescues as a lifeguard, noting that he notched a mark on a wooden log for every life he saved.^[14] Reagan attended Eureka College, where he became a member of the Tau Kappa Epsilon fraternity, a cheerleader,^[15] and majored in economics and sociology. He developed a reputation as a jack of all trades, excelling in campus politics, sports and theater. He was a member of the football team, captain of the swim team and was elected student body president. As student president, Reagan led a student revolt against the college president after he tried to cut back the faculty.^[16]

Entertainment career[link]

Radio and film[link]

Trailer from Love is on the Air starring Reagan, 1937

After graduating from Eureka in 1932, Reagan drove himself to Iowa, where he auditioned for a job at many small-town radio stations.^[17] The University of Iowa hired him to broadcast home football games for the Hawkeyes. He was paid $10 per game.^[17] Soon after, a staff announcer's job opened at radio station WOC in Davenport, and Reagan was hired, now earning $100 per month.^[17] Aided by his persuasive voice,^[17] he moved to WHO radio in Des Moines as an announcer for Chicago Cubs baseball games.^[18] His specialty was creating play-by-play accounts of games that the station received by wire.^[17]

While traveling with the Cubs in California, Reagan took a screen test in 1937 that led to a seven-year contract with Warner Brothers studios.^[19] He spent the first few years of his Hollywood career in the "B film" unit, where, Reagan joked, the producers "didn't want them good, they wanted them Thursday".^[17] While sometimes overshadowed by other actors, Reagan's screen performances did receive many good reviews.^[17]

Reagan in Kings Row, which gave a brief boost to his career, in 1942. Trailer from the film.

His first screen credit was the starring role in the 1937 movie Love Is on the Air, and by the end of 1939 he had already appeared in 19 films,^[20] including Dark Victory. Before the film Santa Fe Trail in 1940, he played the role of George "The Gipper" Gipp in the film Knute Rockne, All American; from it, he acquired the lifelong nickname "the Gipper".^[21] In 1941 exhibitors voted him the fifth most popular star from the younger generation in Hollywood.^[22]

Reagan's favorite acting role was as a double amputee in 1942's Kings Row,^[23] in which he recites the line, "Where's the rest of me?", later used as the title of his 1965 autobiography. Many film critics considered Kings Row to be his best movie,^[24] though the film was condemned by New York Times critic Bosley Crowther.^[25][26]

Although, Reagan called Kings Row the film that "made me a star",^[27] he was unable to capitalize on his success because he was ordered to active duty with the U.S. Army at San Francisco two months after its release, and never regained "star" status in motion pictures.^[27] In the post-war era, after being separated from almost four years of World War II stateside service with the 1st Motion Picture Unit in December 1945, Reagan co-starred in such films as, The Voice of the Turtle, John Loves Mary, The Hasty Heart, Bedtime for Bonzo, Cattle Queen of Montana, Tennessee's Partner, Hellcats of the Navy and The Killers (his final film) in a 1964 remake.^[28] Throughout his film career, his mother often answered much of his fan mail.^[29]

Military service[link]

After completing fourteen home-study Army Extension Courses, Reagan enlisted in the Army Enlisted Reserve^[30] on April 29, 1937, as a private assigned to Troop B, 322nd Cavalry at Des Moines, Iowa.^[31] He was commissioned a Second Lieutenant in the Officers Reserve Corps of the Cavalry on May 25, 1937.^[32]

Reagan was ordered to active duty for the first time on April 18, 1942. Due to his nearsightedness, he was classified for limited service only, which excluded him from serving overseas.^[33] His first assignment was at the San Francisco Port of Embarkation at Fort Mason, California, as a liaison officer of the Port and Transportation Office.^[34] Upon the approval of the Army Air Force (AAF), he applied for a transfer from the Cavalry to the AAF on May 15, 1942, and was assigned to AAF Public Relations and subsequently to the First Motion Picture Unit (officially, the "18th AAF Base Unit") in Culver City, California.^[34] On January 14, 1943 he was promoted to First Lieutenant and was sent to the Provisional Task Force Show Unit of This Is The Army at Burbank, California.^[34] He returned to the First Motion Picture Unit after completing this duty and was promoted to Captain on July 22, 1943.^[31]

In January 1944, Captain Reagan was ordered to temporary duty in New York City to participate in the opening of the sixth War Loan Drive. He was re-assigned to the First Motion Picture Unit on November 14, 1944, where he remained until the end of World War II.^[31] He was recommended for promotion to Major on February 2, 1945, but this recommendation was disapproved on July 17 of that year.^[35] He returned to Fort MacArthur, California, where he was separated from active duty on December 9, 1945.^[35] By the end of the war, his units had produced some 400 training films for the AAF.^[31]

Reagan never left the United States during the war, though he kept a film reel, obtained while in the service, depicting the liberation of Auschwitz, as he believed that someday doubts would arise as to whether the Holocaust had occurred.^[36] It has been alleged that he was overheard telling Israeli foreign minister Yitzhak Shamir in 1983 that he had filmed that footage himself and helped liberate Auschwitz,^[36][37] though this purported conversation was disputed by Secretary of State George Shultz.^[38]

SAG president and television[link]

Television star Ronald Reagan as the host of General Electric Theater

Reagan was first elected to the Board of Directors of the Screen Actors Guild in 1941, serving as an alternate. Following World War II, he resumed service and became 3rd vice-president in 1946.^[39] The adoption of conflict-of-interest bylaws in 1947 led the SAG president and six board members to resign; Reagan was nominated in a special election for the position of president and subsequently elected.^[39] He was subsequently chosen by the membership to serve seven additional one-year terms, from 1947 to 1952 and in 1959.^[39] Reagan led SAG through eventful years that were marked by labor-management disputes, the Taft-Hartley Act, House Committee on Un-American Activities (HUAC) hearings and the Hollywood blacklist era.^[39]

Amid the Red Scare in the late 1940s, Reagan provided the FBI with names of actors whom he believed to be communist sympathizers within the motion picture industry.^[40] Reagan testified before the House Un-American Activities Committee on the subject as well.^[41] A fervent anti-communist, he reaffirmed his commitment to democratic principles, stating, "I never as a citizen want to see our country become urged, by either fear or resentment of this group, that we ever compromise with any of our democratic principles through that fear or resentment."^[41]

Though an early critic of television, Reagan landed fewer film roles in the late 1950s and decided to join the medium.^[17] He was hired as the host of General Electric Theater, a series of weekly dramas that became very popular.^[17] His contract required him to tour GE plants sixteen weeks out of the year, often demanding of him fourteen speeches per day.^[17] He earned approximately $125,000 per year (about $1.07 million in 2010 dollars) in this role. His final work as a professional actor was as host and performer from 1964 to 1965 on the television series Death Valley Days.^{[28][better source needed]} Reagan and Nancy Davis appeared together several times, including an episode of GE Theater in 1958 called A Turkey for the President.^{[42][better source needed]}

Marriages and children[link]

In 1938, Reagan co-starred in the film Brother Rat with actress Jane Wyman (1917–2007). They were engaged at the Chicago Theatre,^[43] and married on January 26, 1940, at the Wee Kirk o' the Heather church in Glendale, California.^[44] Together they had two biological children, Maureen (1941–2001) and Christine (who was born in 1947 but only lived one day), and adopted a third, Michael (born 1945).^[45] Following arguments about Reagan's political ambitions, Wyman filed for divorce in 1948,^[46] citing a distraction due to her husband's Screen Actors Guild union duties; the divorce was finalized in 1949.^[21] He is the only US president to have been divorced.^[47]

Ronald and Nancy Reagan aboard a boat in California in 1964

Reagan met actress Nancy Davis (born 1921)^[48] in 1949 after she contacted him in his capacity as president of the Screen Actors Guild to help her with issues regarding her name appearing on a communist blacklist in Hollywood (she had been mistaken for another Nancy Davis). She described their meeting by saying, "I don't know if it was exactly love at first sight, but it was pretty close."^[49] They were engaged at Chasen's restaurant in Los Angeles and were married on March 4, 1952, at the Little Brown Church in the San Fernando Valley.^[50] Actor William Holden served as best man at the ceremony. They had two children: Patti (born October 21, 1952) and Ron (born May 20, 1958).

Observers described the Reagans' relationship as close, authentic and intimate.^[51] During his presidency they were reported to frequently display their affection for one another; one press secretary said, "They never took each other for granted. They never stopped courting."^[49][52] He often called her "Mommy" she called him "Ronnie".^[52] He once wrote to her, "Whatever I treasure and enjoy ... all would be without meaning if I didn't have you."^[53] When he was in the hospital in 1981, she slept with one of his shirts to be comforted by his scent.^[54] In a letter to U.S. citizens written in 1994, Reagan wrote "I have recently been told that I am one of the millions of Americans who will be afflicted with Alzheimer's disease.... I only wish there was some way I could spare Nancy from this painful experience,"^[49] and in 1998, while Reagan was stricken by Alzheimer's, Nancy told Vanity Fair, "Our relationship is very special. We were very much in love and still are. When I say my life began with Ronnie, well, it's true. It did. I can't imagine life without him."^[49]

Early political career[link]

Reagan began his political career as a liberal Democrat, admirer of Franklin D. Roosevelt, and an active supporter of New Deal policies. In the early 1950s, as his relationship with Republican actress Nancy Davis grew,^[55][56] he shifted to the right and, while remaining a Democrat, endorsed the presidential candidacies of Dwight D. Eisenhower in 1952 and 1956 as well as Richard Nixon in 1960.^[57] The last time Reagan actively supported a Democratic candidate was in 1950 when he helped Helen Gahagan Douglas in her unsuccessful Senate campaign against Richard Nixon.^[58] After being hired in 1954 to host the General Electric Theater, a TV drama series,^[59] Reagan soon began to embrace the conservative views of the sponsoring company's officials.^[59][60] His many GE speeches—which he wrote himself—were non-partisan but carried a conservative, pro-business message; he was influenced by Lemuel Boulware, a senior GE executive. Boulware, known for his tough stance against unions and his innovative strategies to win over workers, championed the core tenets of modern American conservatism: free markets, anticommunism, lower taxes, and limited government.^[61] Eventually, the ratings for Reagan's show fell off and GE dropped Reagan in 1962.^[62] In August of that year Reagan formally switched to the Republican Party, stating, "I didn't leave the Democratic Party. The party left me."^[63]

In the early 1960s Reagan opposed certain civil rights legislation, saying that "if an individual wants to discriminate against Negroes or others in selling or renting his house, it is his right to do so."^[64] In his rationale, he cited his opposition to government intrusion into personal freedoms, as opposed to racism; he strongly denied having racist motives and later reversed his opposition to voting rights and fair housing laws.^[65] When legislation that would become Medicare was introduced in 1961, Reagan created a recording for the American Medical Association warning that such legislation would mean the end of freedom in America. Reagan said that if his listeners did not write letters to prevent it, "we will awake to find that we have so­cialism. And if you don't do this, and if I don't do it, one of these days, you and I are going to spend our sunset years telling our children, and our children's children, what it once was like in America when men were free."^[66][67][68] He also joined the National Rifle Association and would become a lifetime member.^[69]

Reagan endorsed the campaign of conservative presidential contender Barry Goldwater in 1964. Speaking for Goldwater, Reagan stressed his belief in the importance of smaller government. He revealed his ideological motivation in a famed speech delivered on October 27, 1964: "The Founding Fathers knew a government can't control the economy without controlling people. And they knew when a government sets out to do that, it must use force and coercion to achieve its purpose. So we have come to a time for choosing."^[70] He also said, "You and I are told we must choose between a left or right, but I suggest there is no such thing as a left or right. There is only an up or down. Up to man's age-old dream – the maximum of individual freedom consistent with order – or down to the ant heap of totalitarianism."^[70][71] This "A Time for Choosing" speech raised $1 million for Goldwater's campaign^[17] and is considered the event that launched Reagan's political career.^[72]

Governor of California, 1967–1975[link]

Ronald and Nancy Reagan celebrate Reagan's gubernatorial victory at the Biltmore Hotel in Los Angeles.

California Republicans were impressed with Reagan's political views and charisma after his "Time for Choosing" speech,^[73] and nominated him for Governor of California in 1966. In Reagan's campaign, he emphasized two main themes: "to send the welfare bums back to work", and, in reference to burgeoning anti-war and anti-establishment student protests at the University of California at Berkeley, "to clean up the mess at Berkeley".^[74] He was elected, defeating two-term governor Edmund G. "Pat" Brown, and was sworn in on January 2, 1967. In his first term, he froze government hiring and approved tax hikes to balance the budget.^[75]

Shortly after the beginning of his term, Reagan tested the presidential waters in 1968 as part of a "Stop Nixon" movement, hoping to cut into Nixon's Southern support^[76] and be a compromise candidate^[77] if neither Nixon nor second-place Nelson Rockefeller received enough delegates to win on the first ballot at the Republican convention. However, by the time of the convention Nixon had 692 delegate votes, 25 more than he needed to secure the nomination, followed by Rockefeller with Reagan in third place.^[76]

Reagan was involved in high-profile conflicts with the protest movements of the era. On May 15, 1969, during the People's Park protests at UC Berkeley, Reagan sent the California Highway Patrol and other officers to quell the protests, in an incident that became known as "Bloody Thursday", resulting in the death of student James Rector and the blinding of carpenter Alan Blanchard.^[78][79] Reagan then called out 2,200 state National Guard troops to occupy the city of Berkeley for two weeks in order to crack down on the protesters.^[78] A year after "Bloody Thursday", Reagan responded to questions about campus protest movements saying, "If it takes a bloodbath, let's get it over with. No more appeasement."^[80] When the Symbionese Liberation Army kidnapped Patty Hearst in Berkeley and demanded the distribution of food to the poor, Reagan joked, "It's just too bad we can't have an epidemic of botulism."^[81]

The Reagans meeting with then-President Richard Nixon and First Lady Pat Nixon in July 1970

Early in 1967, the national debate on abortion was beginning. Democratic California state senator Anthony Beilenson introduced the "Therapeutic Abortion Act," in an effort to reduce the number of "back-room abortions" performed in California.^[78] The State Legislature sent the bill to Reagan's desk where, after many days of indecision, he signed it.^[82] About two million abortions would be performed as a result, most because of a provision in the bill allowing abortions for the well-being of the mother.^[82] Reagan had been in office for only four months when he signed the bill, and stated that had he been more experienced as governor, it would not have been signed. After he recognized what he called the "consequences" of the bill, he announced that he was pro-life.^[82] He maintained that position later in his political career, writing extensively about abortion.^[83]

Despite an unsuccessful attempt to recall him in 1968,^[84] Reagan was re-elected in 1970, defeating "Big Daddy" Jesse Unruh. He chose not to seek a third term in the following election cycle. One of Reagan's greatest frustrations in office concerned capital punishment, which he strongly supported.^[23] His efforts to enforce the state's laws in this area were thwarted when the Supreme Court of California issued its People v. Anderson decision, which invalidated all death sentences issued in California prior to 1972, though the decision was later overturned by a constitutional amendment. The only execution during Reagan's governorship was on April 12, 1967, when Aaron Mitchell's sentence was carried out by the state in San Quentin's gas chamber.^[85]

In 1969, Reagan, as Governor, signed the Family Law Act which was the first no fault divorce legislation in the United States.^[86]

Reagan's terms as governor helped to shape the policies he would pursue in his later political career as president. By campaigning on a platform of sending "the welfare bums back to work", he spoke out against the idea of the welfare state. He also strongly advocated the Republican ideal of less government regulation of the economy, including that of undue federal taxation.^[87]

Reagan did not seek re-election to a third term as governor in 1974 and was succeeded by Democratic California Secretary of State Jerry Brown on January 6, 1975.

1976 presidential campaign[link]

Ronald Reagan on the podium with Gerald Ford at the 1976 Republican National Convention after narrowly losing the presidential nomination.

In 1976, Reagan challenged incumbent President Gerald Ford in a bid to become the Republican Party's candidate for president. Reagan soon established himself as the conservative candidate with the support of like-minded organizations such as the American Conservative Union which became key components of his political base, while President Ford was considered a more moderate Republican.^[88]

Reagan's campaign relied on a strategy crafted by campaign manager John Sears of winning a few primaries early to damage the inevitability of Ford's likely nomination. Reagan won North Carolina, Texas, and California, but the strategy failed, as^[89] he ended up losing New Hampshire, Florida, and his native Illinois.^[90] The Texas campaign lent renewed hope to Reagan, when he swept all ninety-six delegates chosen in the May 1 primary, with four more awaiting at the state convention. Much of the credit for that victory came from the work of three co-chairmen, including Ernest Angelo, the mayor of Midland, and Ray Barnhart of Houston, whom President Reagan tapped in 1981 as director of the Federal Highway Administration.^[91]

However, as the GOP convention neared, Ford appeared close to victory. Acknowledging his party's moderate wing, Reagan chose moderate Senator Richard Schweiker of Pennsylvania as his running mate if nominated. Nonetheless, Ford prevailed with 1,187 delegates to Reagan's 1,070.^[90] Ford would go on to lose the 1976 Presidential election to the Democrat Jimmy Carter.

Reagan's concession speech emphasized the dangers of nuclear war and the threat posed by the Soviet Union. Though he lost the nomination, he received 307 write-in votes in New Hampshire, 388 votes as an Independent on Wyoming's ballot, and a single electoral vote from a faithless elector in the November election from the state of Washington,^[92] which Ford had won over Democratic challenger Jimmy Carter.

1980 presidential campaign[link]

Reagan campaigns with Nancy and Senator Strom Thurmond (right) in South Carolina, 1980

The 1980 presidential campaign between Reagan and incumbent President Jimmy Carter was conducted during domestic concerns and the ongoing Iran hostage crisis. His campaign stressed some of his fundamental principles: lower taxes to stimulate the economy,^[93] less government interference in people's lives,^[94] states' rights,^[95] a strong national defense,^[94] and restoring the U.S. Dollar to a gold standard.^[96][97]

Reagan launched his campaign by declaring "I believe in states' rights," in Philadelphia, Mississippi, known at the time for the murder of three civil rights workers who had been trying to register African-Americans to vote during the civil rights movement.^{[98][99][100]} After receiving the Republican nomination, Reagan selected one of his primary opponents, George H.W. Bush, to be his running mate. His showing in the October televised debate boosted his campaign. Reagan won the election, carrying 44 states with 489 electoral votes to 49 electoral votes for Carter (representing six states and Washington, D.C.). Reagan received 50.7% of the popular vote while Carter took 41%, and Independent John B. Anderson (a liberal Republican) received 6.7%.^[101] Republicans captured the Senate for the first time since 1952, and gained 34 House seats, but the Democrats retained a majority.

During the presidential campaign, questions were raised by reporters on Reagan's stance on the Briggs Initiative, also known as Proposition 6, a ballot initiative in Reagan's home state of California where he was governor, which would have banned gays, lesbians, and supporters of LGBT rights from working in public schools in California. His opposition to the initiative was instrumental in its landslide defeat by Californian voters. Reagan published an editorial in which he stated "homosexuality is not a contagious disease like the measles..." and that prevailing scientific opinion was that a child's sexual orientation cannot be influenced by someone else.^[102]

Presidency, 1981–1989[link]

The Reagans wave from the limousine taking them down Pennsylvania Avenue to the White House, right after the president's inauguration

During his Presidency, Reagan pursued policies that reflected his personal belief in individual freedom, brought changes domestically, both to the U.S. economy and expanded military, and contributed to the end of the Cold War.^[103] Termed the Reagan Revolution, his presidency would reinvigorate American morale^[104][105] and reduce the people's reliance upon government.^[103] As president, Reagan kept a series of diaries in which he commented on daily occurrences of his presidency and his views on the issues of the day. The diaries were published in May 2007 in the bestselling book, The Reagan Diaries.^[106]

First term, 1981–1985[link]

To date, Reagan is the oldest man elected to the office of the presidency (at 69). In his first inaugural address on January 20, 1981, which Reagan himself wrote,^[107] he addressed the country's economic malaise arguing: "In this present crisis, government is not the solution to our problems; government is the problem."

The Reagan Presidency began in a dramatic manner; as Reagan was giving his inaugural address, 52 U.S. hostages, held by Iran for 444 days were set free.^[108]

Assassination attempt[link]

On March 30, 1981, only 69 days into the new administration, Reagan, his press secretary James Brady, Washington police officer Thomas Delahanty, and Secret Service agent Timothy McCarthy were struck by gunfire from would-be assassin John Hinckley, Jr. outside the Washington Hilton Hotel. Although "close to death" during surgery,^[109] Reagan recovered and was released from the hospital on April 11, becoming the first serving U.S. President to survive being shot in an assassination attempt.^[110] The attempt had great influence on Reagan's popularity; polls indicated his approval rating to be around 73%.^[111] Reagan believed that God had spared his life so that he might go on to fulfill a greater purpose.^[112]

Air traffic controllers' strike[link]

In summer 1981 PATCO, the union of federal air traffic controllers went on strike, violating a federal law prohibiting government unions from striking.^[113] Declaring the situation an emergency as described in the 1947 Taft Hartley Act, Reagan stated that if the air traffic controllers "do not report for work within 48 hours, they have forfeited their jobs and will be terminated."^[114] They did not return and on August 5, Reagan fired 11,345 striking air traffic controllers who had ignored his order, and used supervisors and military controllers to handle the nation's commercial air traffic until new controllers could be hired and trained.^[115] As a leading reference work on public administration concluded, "The firing of PATCO employees not only demonstrated a clear resolve by the president to take control of the bureaucracy, but it also sent a clear message to the private sector that unions no longer needed to be feared."^[116]

"Reaganomics" and the economy[link]

During Jimmy Carter's last year in office (1980), inflation averaged 12.5%, compared with 4.4% during Reagan's last year in office (1988).^[117] During Reagan's administration, the unemployment rate declined from 7.5% to 5.4%, with the rate reaching highs of 10.8% in 1982 and 10.4% in 1983, averaging 7.5% over the eight years.^[118][119]