Editing Reaganomics (section)

==Historical context==
{{Ronald Reagan series}}
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[[File:Inflation and oil price 1969-1989 color corrected.png|450px|thumb|left|Inflation and crude oil price, 1969–1989 (pre-Reagan years highlighted in yellow)]]
Prior to the Reagan administration, the United States economy experienced a decade of high unemployment and persistently high inflation (known as [[stagflation]]). Attacks on Keynesian economic orthodoxy as well as empirical economic models such as the [[Phillips Curve]] grew. Political pressure favored stimulus resulting in an expansion of the money supply. President [[Richard Nixon]]'s [[Wage and price controls#United States|wage and price controls]] were phased out.<ref name="greenspan">{{cite book |first=Alan |last=Greenspan |author-link=Alan Greenspan |title=The Age of Turbulence |url=https://archive.org/details/isbn_9780143114161 |url-access=registration |publisher=Penguin Press |year=2007 }}</ref> The [[Strategic Petroleum Reserve (United States)|federal oil reserves]] were created to ease any future short term shocks. President [[Jimmy Carter]] had begun 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: renewed focus on increasing productivity<ref>{{Cite journal |last=Porter |first=Roger B. |date=1983 |title=Perspectives on Productivity: America's Productivity Challenge in the 1980s |url=https://www.jstor.org/stable/3380361 |journal=Public Productivity Review |volume=7 |issue=1 |pages=68–81 |doi=10.2307/3380361 |jstor=3380361 |issn=0361-6681|url-access=subscription }}</ref> and a three-year contraction of the money supply by the [[Federal Reserve Board]] under [[Paul Volcker]].<ref>{{Cite book |url=https://link.springer.com/book/10.1057/9781137283665 |title=Margaret Thatcher and Ronald Reagan |year=2012 |language=en |doi=10.1057/9781137283665|last1=Cooper |first1=James |isbn=978-1-349-33847-4 }}</ref>

In stating that his intention was to lower taxes, Reagan's approach was a departure from his immediate predecessors. Reagan enacted lower marginal tax rates as well as simplified income tax codes and continued [[deregulation]]. During Reagan's eight year presidency, the annual deficits averaged 4.0% of GDP, compared to a 2.2% average during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=k9KW|title=Federal Surplus or Deficit [-] as Percent of Gross Domestic Product|date=March 28, 2018|access-date=June 13, 2018|archive-date=June 13, 2018|archive-url=https://web.archive.org/web/20180613040701/https://fred.stlouisfed.org/graph/?g=k9KW|url-status=live}}</ref> The real (inflation adjusted) average rate of growth in federal spending fell from 4% under Jimmy Carter to 2.5% under Ronald Reagan.<ref name="auto">"The Fortune Encyclopedia of Economics" edited by: David R. Henderson, http://lf-oll.s3.amazonaws.com/titles/1064/0145_Bk.pdf {{Webarchive|url=https://web.archive.org/web/20190412055323/http://lf-oll.s3.amazonaws.com/titles/1064/0145_Bk.pdf |date=April 12, 2019 }} (p.290)</ref><ref>{{cite web|url=https://trumpwhitehouse.archives.gov/omb/historical-tables/|title=Table 1.3—Summary of Receipts, Outlays, and Surpluses or Deficits (-) in Current Dollars, Constant (FY 2009) Dollars, and as Percentages of GDP: 1940–2023|date=June 14, 2018|access-date=June 14, 2018|archive-date=June 6, 2021|archive-url=https://web.archive.org/web/20210606114308/https://www.whitehouse.gov/omb/historical-tables/|url-status=live}}</ref> GDP per employed person increased at an average 1.5% rate during the Reagan administration, compared to an average 0.6% during the preceding eight years.<ref>{{cite web |url=https://fred.stlouisfed.org/series/USARGDPE|title=Real GDP per Employed Person in the United States (DISCONTINUED)|date=December 10, 2012|access-date=June 13, 2018|archive-date=June 13, 2018|archive-url=https://web.archive.org/web/20180613062512/https://fred.stlouisfed.org/series/USARGDPE|url-status=live}}</ref> Private sector productivity growth, measured as real output per hour of all persons, increased at an average rate of 1.9% during Reagan's eight years, compared to an average 1.3% during the preceding eight years.<ref>{{cite web |url=https://fred.stlouisfed.org/graph/?g=k9Lt|title=Business Sector: Real Output Per Hour of All Persons|date=June 6, 2018|access-date=June 13, 2018|archive-date=June 13, 2018|archive-url=https://web.archive.org/web/20180613062532/https://fred.stlouisfed.org/graph/?g=k9Lt|url-status=live}}</ref> Federal net outlays as a percent of GDP averaged 20.27% under Reagan (01/20/1981 - 01/20/1989), compared to 21.14% during the preceding eight (01/20/1973 - 1/20/1981) years.<ref name="FRED">{{cite web |url=https://fred.stlouisfed.org/series/FYONGDA188S |title=Federal Net Outlays as Percent of GDP for United States |date=January 1929 |access-date=April 1, 2017 |archive-date=July 3, 2018 |archive-url=https://web.archive.org/web/20180703071538/https://fred.stlouisfed.org/series/FYONGDA188S |url-status=live }}</ref>

During the Nixon and Ford Administrations, before Reagan's election, a combined supply and demand side policy was considered unconventional by the [[Factions in the Republican Party (United States)#Moderates|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".<ref name="Voodoo_economics-2004">{{cite news |url=http://news.bbc.co.uk/1/hi/world/americas/270292.stm |title=Reagonomics or 'voodoo economics'? |work=BBC News |date=June 5, 2004 |access-date=January 4, 2012 |archive-date=August 29, 2017 |archive-url=https://web.archive.org/web/20170829072015/http://news.bbc.co.uk/1/hi/world/americas/270292.stm |url-status=live }}</ref> Similarly, in 1976, [[Gerald Ford]] had severely criticized Reagan's proposal to turn back a large part of the Federal budget to the states.