Editing Reaganomics (section)

==Policies==
Reagan lifted remaining domestic petroleum price and allocation controls on January 28, 1981,<ref>{{cite web |title=Executive Order 12287 – Decontrol of Crude Oil and Refined Petroleum Products |date=January 28, 1981 |url=http://www.reagan.utexas.edu/archives/speeches/1981/12881a.htm |access-date=January 27, 2008 |archive-date=September 24, 2015 |archive-url=https://web.archive.org/web/20150924085226/http://www.reagan.utexas.edu/archives/speeches/1981/12881a.htm |url-status=dead }}</ref> and lowered the oil [[windfall profits tax]] in August 1981. He ended the oil windfall profits tax in 1988.<ref>{{cite web|url=http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/edf8de04e58e4b14852570ba0048848b|title=Historical Perspective: The Windfall Profit Tax|date=November 10, 2005|author=Joseph J. Thorndike|access-date=August 14, 2013|archive-date=December 16, 2017|archive-url=https://web.archive.org/web/20171216061348/http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/edf8de04e58e4b14852570ba0048848b|url-status=dead}}</ref> During the first year of Reagan's presidency, federal [[income tax in the United States|income tax rates]] were lowered significantly with the signing of the [[Economic Recovery Tax Act of 1981]],<ref>{{cite web|last=Mitchell|first=Daniel J.|url=http://www.heritage.org/Research/Taxes/BG1086.cfm|title=The Historical Lessons of Lower Tax Rates|publisher=The Heritage Foundation|date=July 19, 1996|access-date=May 22, 2007|url-status=unfit|archive-url=https://web.archive.org/web/20070530071923/http://www.heritage.org/Research/Taxes/BG1086.cfm|archive-date=May 30, 2007}}</ref> which lowered the top marginal tax bracket from 70% to 50% and the lowest bracket from 14% to 11%. This act slashed [[Estate tax in the United States|estate taxes]] and trimmed taxes paid by business corporations by $150 billion over a five-year period. In 1982 Reagan agreed to a rollback of corporate tax cuts and a smaller rollback of individual income tax cuts. The [[Tax Equity and Fiscal Responsibility Act of 1982|1982 tax increase]] undid a third of the initial tax cut. In 1983 Reagan instituted a payroll tax increase on Social Security and Medicare hospital insurance.<ref name=KrugmanGreatTaxer>{{cite news |title=The Great Taxer |author=Paul Krugman |url=https://www.nytimes.com/2004/06/08/opinion/the-great-taxer.html |newspaper=The New York Times |date=June 8, 2004 |access-date=August 30, 2011 |archive-date=December 20, 2022 |archive-url=https://web.archive.org/web/20221220114428/https://www.nytimes.com/2004/06/08/opinion/the-great-taxer.html |url-status=live }}</ref> In 1984 another bill was introduced that closed tax loopholes. According to tax historian Joseph Thorndike, the bills of 1982 and 1984 "constituted the biggest tax increase ever enacted during peacetime".<ref>{{cite web | title=Taxes: What people forget about Reagan | url=https://money.cnn.com/2010/09/08/news/economy/reagan_years_taxes/ | access-date=August 3, 2020 | archive-date=December 22, 2017 | archive-url=https://web.archive.org/web/20171222225240/http://money.cnn.com/2010/09/08/news/economy/reagan_years_taxes/ | url-status=live }}</ref>

With the [[Tax Reform Act of 1986]], Reagan and Congress sought to simplify the tax system by eliminating many deductions, reducing the highest marginal rates, and reducing the number of tax brackets.<ref>{{cite book|last1=Brownlee|first1=Elliot|last2=Graham|first2=Hugh Davis|title=The Reagan Presidency: Pragmatic Conservatism & Its Legacies|date=2003|publisher=University of Kansas Press|location=Lawrence, Kansas|pages=172–173}}</ref><ref>{{cite book|last1=Steuerle|first1=C. Eugene|title=The Tax Decade: How Taxes Came to Dominate the Public Agenda|date=1992|publisher=The Urban Institute Press|location=Washington D.C.|isbn=0-87766-523-0|page=[https://archive.org/details/taxdecadehowtaxe0000steu/page/122 122]|url=https://archive.org/details/taxdecadehowtaxe0000steu/page/122}}</ref><ref>{{cite web |url=http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets |title=U.S. Federal Individual Income Tax Rates History, 1913–2011 (Nominal and Inflation-Adjusted Brackets) |date=September 9, 2011 |publisher=Tax Foundation |access-date=August 12, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20130116210911/http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets |archive-date=January 16, 2013 }}</ref><ref>{{cite magazine | url=https://business.time.com/2011/12/01/the-tragic-death-of-the-temporary-tax-cut/ | magazine=Time | title=The Tragic Death of the Temporary Tax Cut | date=October 1, 2011 | access-date=December 1, 2011 | archive-date=July 1, 2012 | archive-url=https://web.archive.org/web/20120701143042/http://moneyland.time.com/2011/12/01/the-tragic-death-of-the-temporary-tax-cut/ | url-status=live }}</ref> In 1983, Democrats [[Bill Bradley]] and [[Dick Gephardt]] had offered a proposal; in 1984 Reagan had the Treasury Department produce its own plan. The 1986 act aimed to be revenue-neutral: while it reduced the top marginal rate, it also cleaned up the tax base by removing certain tax write-offs, preferences, and exceptions, thus raising the effective tax on activities previously specially favored by the code. 
[[File:President Ronald Reagan meets with the Press after signing the 1981 Tax Reconciliation Bill Rancho Del Cielo.jpg|thumb|left|President [[Ronald Reagan]] signs the [[Economic Recovery Tax Act of 1981]] at his California ranch.]]

Federal revenue share of GDP fell from 19.6% in fiscal 1981 to 17.3% in 1984, before rising 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.<ref name="CBO Historical Tables">{{cite web |url=http://www.cbo.gov/ftpdocs/120xx/doc12039/HistoricalTables%5B1%5D.pdf |title=CBO Historical Tables |access-date=January 4, 2012 |archive-date=January 12, 2012 |archive-url=https://web.archive.org/web/20120112075024/http://www.cbo.gov/ftpdocs/120xx/doc12039/HistoricalTables&#91;1&#93;.pdf |url-status=dead }}</ref>  Reagan's 1981 cut in the top regular tax rate on [[unearned income]] reduced the maximum capital gains rate to only {{nowrap|20%{{tsp}}{{mdash}}{{tsp}}}}its lowest level since the Hoover administration ({{nowrap|1929{{hsp}}{{ndash}}}}1933).<ref>{{cite news | url=http://www.ctj.org/hid_ent/part-2/part2-2.htm | publisher=Citizens for Tax Justice | title=The Hidden Entitlements: Capital Gains | access-date=August 15, 2012 | url-status=dead | archive-url=https://web.archive.org/web/20120418112133/http://www.ctj.org/hid_ent/part-2/part2-2.htm | archive-date=April 18, 2012 }}</ref> The 1986 act 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%.<ref>{{cite news | url=https://www.nytimes.com/2012/01/18/us/politics/for-wealthy-tax-cuts-since-1980s-have-been-gain-gain.html?_r=1 | work=The New York Times | title=Since 1980s, the Kindest of Tax Cuts for the Rich | date=January 18, 2012 | access-date=January 21, 2012 | first1=David | last1=Kocieniewski | archive-date=March 25, 2012 | archive-url=https://web.archive.org/web/20120325130257/http://www.nytimes.com/2012/01/18/us/politics/for-wealthy-tax-cuts-since-1980s-have-been-gain-gain.html?_r=1 | url-status=live }}</ref>

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.<ref>[https://obamawhitehouse.archives.gov/sites/default/files/omb/budget/fy2013/assets/hist.pdf Historical tables, Budget of the United States Government] {{webarchive|url=https://web.archive.org/web/20120417053737/http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist.pdf |date=April 17, 2012}}, 2013, table 6.1.</ref> 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%.<ref>{{cite web | url=http://www.cbo.gov/sites/default/files/cbofiles/attachments/effective_tax_rates2004.pdf | title=Effective Federal Tax Rates: 1979–2001 | publisher=Bureau of Economic Analysis | date=July 10, 2007 | access-date=April 30, 2013 | archive-date=April 15, 2013 | archive-url=https://web.archive.org/web/20130415120346/https://www.cbo.gov/sites/default/files/cbofiles/attachments/effective_tax_rates2004.pdf | url-status=live }}</ref> The federal deficit under Reagan peaked at 6% of GDP in 1983, falling to 3.2% of GDP in 1987<ref name="Fisc">{{cite news |title=The Democratic Fisc |url=https://www.wsj.com/articles/SB10001424052748703995104575389430430274968 |newspaper=The Wall Street Journal |date=July 25, 2012 |access-date=March 22, 2011}}</ref> and to 3.1% of GDP in his final budget.<ref name="DefGDP">{{Cite web|url=https://www.multpl.com/u-s-federal-deficit-percent/table/by-year|title=US Federal Deficit as Percentage of GDP by Year|website=www.multpl.com|access-date=October 18, 2022|archive-date=October 18, 2022|archive-url=https://web.archive.org/web/20221018191652/https://www.multpl.com/u-s-federal-deficit-percent/table/by-year|url-status=live}}</ref> The inflation-adjusted rate of growth in federal spending fell from 4% under Jimmy Carter to 2.5% under Ronald Reagan. This was the slowest rate of growth in inflation adjusted spending since Eisenhower. However, federal deficit as percent of GDP was up throughout the Reagan presidency from 2.7% at the end of (and throughout) the Carter administration.<ref name="auto"/><ref name="DefGDP"/><ref>{{cite web|url=https://www.cato.org/blog/presidential-spending-0|title=Presidential Spending|access-date=June 25, 2018|date=February 19, 2016|archive-date=June 25, 2018|archive-url=https://web.archive.org/web/20180625213321/https://www.cato.org/blog/presidential-spending-0|url-status=live}}</ref> 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.<ref name="Historical Debt Outstanding">{{cite web |url=http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm |title=Historical Debt Outstanding |publisher=U.S. Treasury Department |access-date=September 8, 2010 |archive-date=February 6, 2012 |archive-url=https://web.archive.org/web/20120206164959/http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm |url-status=dead }}</ref> This led to the U.S. moving from the world's largest international creditor to the world's largest debtor nation.<ref name="U.S. Debt">{{Cite news |url=https://www.washingtonpost.com/wp-dyn/articles/A26402-2004Jun8.html |title=Reagan Policies Gave Green Light to Red Ink |access-date=May 25, 2007 |newspaper=The Washington Post |date=June 9, 2004 |archive-date=June 14, 2018 |archive-url=https://web.archive.org/web/20180614121249/http://www.washingtonpost.com/wp-dyn/articles/A26402-2004Jun8.html |url-status=live }}</ref> Reagan described the new debt as the "greatest disappointment" of his presidency.<ref name="Cannon128">Cannon, Lou (2001) p. 128</ref>

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 B. Porter|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.<ref name="nisk_concise" /><ref>Niskanen continues: "It is not clear whether this measure [reduce bias, increase effective tax rate on new investment] was a net improvement in the tax code."</ref>