Editing Reaganomics (section)

==Results==
{{originalresearch-section|date=March 2023}} 
===Overview===
[[File:Annual percent change in real GDP 1973-1988.png|450px|thumb|right|Annual percent change in real gross domestic product — 1972 through 1988 (Reagan years in red)]]

Spending during the years Reagan budgeted (FY 1982–89) averaged 21.6% GDP, roughly tied with president Obama, but lagging behind President Trump's 38.2%,<ref>{{Cite web |date=2025-01-15 |title=National Accounts: GDP by Expenditure: Constant Prices: Gross Domestic Product: Total for United States |url=https://fred.stlouisfed.org/series/USAGDPRQPSMEI |access-date=2025-01-22 |website=fred.stlouisfed.org |language=en}}</ref> though much of that was due to the Covid-19 pandemic. Both Obama and Reagan faced a severe recession early in their administration. 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 trillion in 1988, a roughly three-fold increase.<ref name="CBO Historical Tables"/>{{RP|143}}  The unemployment rate fell from 7% in 1980, to 5% in 1988. The inflation rate declined from 10% in 1980 to 4% in 1988.<ref name="nisk_concise"/>

Some economists have stated that Reagan's policies were an important part of bringing about the third longest peacetime economic expansion in U.S. history.<ref name=nationalreview>{{cite news |title=Debt, Lies, and Inflation |author=Paul Craig Roberts |url=http://old.nationalreview.com/reagan/roberts200406101413.asp |newspaper=National Review |date=August 31, 1992 |access-date=February 27, 2010 |url-status=dead |archive-url=https://web.archive.org/web/20110424073621/http://old.nationalreview.com/reagan/roberts200406101413.asp |archive-date=April 24, 2011 |author-link=Paul Craig Roberts }}</ref><ref name="Gardner">{{cite journal |last1=Gardner |first1=Jennifer M. |year=1994 |title=The 1990–1991 Recession: How Bad was the Labor Market? |journal=Monthly Labor Review |volume=117 |issue=6 |pages=3–11 |publisher=U.S. Department of Labor: Bureau of Labor Statistics |url=http://www.bls.gov/opub/mlr/1994/06/art1full.pdf |access-date=April 6, 2011 |archive-date=October 21, 2011 |archive-url=https://web.archive.org/web/20111021172340/http://bls.gov/opub/mlr/1994/06/art1full.pdf |url-status=live }}</ref> <!-- Though other economists argue the longer 1990s expansion begun under [[George H.W. Bush]] in 1991 occurred after an [[George H. W. Bush#Economy|increase in tax rates]] by Congress in November 1990, continuing through the Clinton administration, resulting in a 4.2% decrease in unemployment.<ref name="U.S. Department of Labor: Bureau of Labor Statistics via The Federal Reserve Bank of St. Louis">{{cite web |url=http://research.stlouisfed.org/fred2/data/UNRATE.txt |title=Civilian Unemployment Rate |date=August 3, 2012 |publisher=U.S. Department of Labor: Bureau of Labor Statistics |access-date=August 12, 2012}}</ref>  CLARIFICATION NEEDED: How are these numbers being calculated? E.g. looking at the reference, we see monthly unemployment numbers. From what date to what date is the 4.2%/42% decrease being calculated. --> During the Reagan administration, real GDP growth averaged 3.5%, compared to 2.9% during the preceding eight years.<ref>{{cite web |url=https://www.bea.gov/national/xls/gdpchg.xls |title=Gross Domestic Product |date=July 27, 2012 |publisher=Bureau of Economic Analysis |format=Microsoft Excel spreadsheet |access-date=August 15, 2012 |archive-date=August 14, 2018 |archive-url=https://web.archive.org/web/20180814045606/https://www.bea.gov/national/xls/gdpchg.xls |url-status=dead }}</ref>{{additional citations needed|date=April 2025}} The annual average unemployment rate declined by 1.7 percentage points, from 7.2% in 1980 to 5.5% in 1988, after it had increased by 1.6 percentage points over the preceding eight years.<ref name="U.S. Department of Labor: Bureau of Labor Statistics via The Federal Reserve Bank of St. Louis">{{cite web |url=http://research.stlouisfed.org/fred2/data/UNRATE.txt |title=Civilian Unemployment Rate |date=August 3, 2012 |publisher=U.S. Department of Labor: Bureau of Labor Statistics |access-date=August 12, 2012 |archive-date=September 2, 2011 |archive-url=https://web.archive.org/web/20110902151143/http://research.stlouisfed.org/fred2/data/UNRATE.txt |url-status=live }}</ref><ref>{{cite web |url=http://www.bls.gov/cps/cpsaat01.htm |title=Labor Force Statistics from the Current Population Survey: Employment status of the civilian noninstitutional population, 1941 to date |publisher=U.S. Department of Labor: Bureau of Labor Statistics |access-date=August 12, 2012 |archive-date=August 21, 2012 |archive-url=https://web.archive.org/web/20120821061545/http://www.bls.gov/cps/cpsaat01.htm |url-status=live }}</ref>  Nonfarm employment increased by 16.1 million during Reagan's presidency, compared to 15.4 million during the preceding eight years,<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=k9tV|title=All Employees: Total Nonfarm Payrolls|date=June 1, 2018|access-date=June 12, 2018|archive-date=June 12, 2018|archive-url=https://web.archive.org/web/20180612210716/https://fred.stlouisfed.org/graph/?g=k9tV|url-status=live}}</ref> while manufacturing employment declined by 582,000 after rising 363,000 during the preceding eight years.<ref>{{cite web |url=https://fred.stlouisfed.org/series/MANEMP|title=All Employees: Manufacturing|date=June 1, 2018|access-date=June 13, 2018|archive-date=March 14, 2021|archive-url=https://web.archive.org/web/20210314155456/https://fred.stlouisfed.org/series/MANEMP|url-status=live}}</ref> Reagan's administration is the only one not to have raised the minimum wage.<ref>{{cite web |url=http://www.dol.gov/whd/minwage/chart.htm |title=History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938–2009 |publisher=United States Department of Labor: Wage and Hour Division (WHD) |access-date=December 27, 2009 |archive-date=November 21, 2019 |archive-url=https://web.archive.org/web/20191121102637/http://www.dol.gov/whd/minwage/chart.htm |url-status=live }}</ref>  The inflation rate, 13.5% in 1980, fell to 4.1% in 1988, in part because the [[Federal Reserve]] increased interest rates (prime rate peaking at 20.5% in August 1981<ref>{{cite web |url=https://fred.stlouisfed.org/series/MPRIME|title=Bank Prime Loan Rate|date=June 1, 2018|access-date=June 13, 2018}}</ref>).<ref>{{cite web |url=https://fred.stlouisfed.org/graph/?g=ipl2|title=Consumer Price Index for All Urban Consumers: All Items|date=June 12, 2018|access-date=June 13, 2018|archive-date=August 5, 2020|archive-url=https://web.archive.org/web/20200805050150/https://fred.stlouisfed.org/graph/?g=ipl2|url-status=live}}</ref><ref>{{Cite web|url=https://www.federalreservehistory.org/essays/great-inflation|title=The Great Inflation &#124; Federal Reserve History|website=www.federalreservehistory.org|access-date=October 18, 2022|archive-date=October 18, 2022|archive-url=https://web.archive.org/web/20221018191653/https://www.federalreservehistory.org/essays/great-inflation|url-status=live}}</ref>  The latter contributed to a recession from July 1981 to November 1982 during which unemployment rose to 9.7% and GDP fell by 1.9%. Additionally, income growth slowed for middle- and lower-class (2.4% to 1.8%) and rose for the upper-class (2.2% to 4.83%).<ref>{{cite web|url=http://www.taxhistory.org/www/features.nsf/Articles/2BEBD14445F182F1852579F10058AA9F?OpenDocument|title=Tax Analysts -- Reaganomics -- A Report Card|website=www.taxhistory.org|access-date=June 12, 2018|archive-date=March 17, 2018|archive-url=https://web.archive.org/web/20180317102840/http://www.taxhistory.org/www/features.nsf/Articles/2BEBD14445F182F1852579F10058AA9F?OpenDocument|url-status=live}}</ref>

The [[misery index (economics)|misery index]], defined as the [[inflation rate]] added to the [[unemployment rate]], shrank from 19.33 when he began his administration to 9.72 when he left, the greatest improvement record for a President since [[Harry S. Truman]] left office.<ref>{{cite web|url=http://www.miseryindex.us/indexbyPresident.aspx|title=US Misery Index - Index by President|website=www.miseryindex.us|access-date=June 12, 2018|archive-date=February 14, 2015|archive-url=https://web.archive.org/web/20150214232054/http://miseryindex.us/indexbyPresident.aspx|url-status=live}}</ref> In terms of American households, the percentage of total households making less than $10,000 a year (in real 2007 dollars) shrank from 8.8% in 1980 to 8.3% in 1988 while the percentage of households making over $75,000 went from 20.2% to 25.7% during that period, both signs of progress.<ref>"Income, Poverty, and Health Insurance Coverage in the United States: 2007" by the Census Bureau, https://www.census.gov/prod/2008pubs/p60-235.pdf {{Webarchive|url=https://web.archive.org/web/20210126133037/https://www.census.gov/prod/2008pubs/p60-235.pdf |date=January 26, 2021 }} (Table A-1 on p. 27)</ref>

===Employment===
[[File:1981–1989 monthly unemployment, inflation, and interest rates.svg|thumb|upright=1.3|alt=Line charts showing Bureau of Labor Statistics and Federal Reserve Economic Data information on the monthly unemployment, inflation, and interest rates from January 1981 to January 1989|Monthly unemployment, inflation, and interest rates from January 1981 to January 1989, according to the [[Bureau of Labor Statistics]] and [[Federal Reserve Economic Data]]]]

The job growth (measured for non-farm payrolls) under the Reagan administration averaged 168,000 per month, versus 216,000 for Carter, 55,000 for H.W. Bush, and 239,000 for Clinton. The annual job growth percentages (comparing the beginning and ending number of jobs during their time in office to determine an annual [[Compound annual growth rate|growth rate]]) show that jobs grew by 2.0% annually under Reagan, versus 3.1% under Carter, 0.6% under H.W. Bush, and 2.4% under Clinton.<ref>{{cite web |url=https://fred.stlouisfed.org/series/PAYEMS|title=All Employees: Total Nonfarm Payrolls|date=June 1, 2018|access-date=June 12, 2018|archive-date=August 18, 2021|archive-url=https://web.archive.org/web/20210818204529/https://fred.stlouisfed.org/series/PAYEMS|url-status=live}}</ref>

The unemployment rate averaged 7.5% under Reagan, compared to an average 6.6% during the preceding eight years. Declining steadily after December 1982, the rate was 5.4% the month Reagan left office.<ref>{{cite web |url=https://fred.stlouisfed.org/graph/?g=kbeQ|title=Civilian Unemployment Rate|date=June 1, 2018|access-date=June 15, 2018|archive-date=June 16, 2018|archive-url=https://web.archive.org/web/20180616001858/https://fred.stlouisfed.org/graph/?g=kbeQ|url-status=live}}</ref>

The labor force participation rate increased by 2.6 percentage points during Reagan's eight years, compared to 3.9 percentage points during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=kbkw|title=Civilian Labor Force Participation Rate|date=June 1, 2018|access-date=June 15, 2018|archive-date=June 16, 2018|archive-url=https://web.archive.org/web/20180616030151/https://fred.stlouisfed.org/graph/?g=kbkw|url-status=live}}</ref>

===Growth rates===
Following the 1981 recession, the unemployment rate had averaged slightly higher (6.75% vs. 6.35%), productivity growth lower (1.38% vs. 1.92%), and private investment as a percentage of GDP slightly less (16.08% vs. 16.86%).{{citation needed|date=June 2018}} In the 1980s, industrial productivity growth in the United States matched that of its trading partners after trailing them in the 1970s. By 1990, manufacturing's share of GNP exceeded the post-World War II low hit in 1982 and matched "the level of output achieved in the 1960s when American factories hummed at a feverish clip".<ref>{{cite news | url=https://www.nytimes.com/1991/02/05/business/american-revival-in-manufacturing-seen-in-us-report.html | work=[[The New York Times]] | title=AMERICAN REVIVAL IN MANUFACTURING SEEN IN U.S. REPORT | date=February 5, 1991 | access-date=June 14, 2018 | archive-date=June 15, 2018 | archive-url=https://web.archive.org/web/20180615033947/https://www.nytimes.com/1991/02/05/business/american-revival-in-manufacturing-seen-in-us-report.html | url-status=live }}</ref>

===GDP growth===
Real GDP grew over one-third during Reagan's presidency, an over $2 trillion increase. The compound annual growth rate of GDP was 3.6% during Reagan's eight years, compared to 2.7% during the preceding eight years.<ref>{{cite web |url=https://fred.stlouisfed.org/graph/?g=k9Ev|title=Real Gross Domestic Product|date=May 30, 2018|access-date=June 12, 2018|archive-date=June 13, 2018|archive-url=https://web.archive.org/web/20180613015101/https://fred.stlouisfed.org/graph/?g=k9Ev|url-status=live}}</ref> Real GDP per capita grew 2.6% under Reagan, compared to 1.9% average growth during the preceding eight years.<ref>{{cite web |url=https://fred.stlouisfed.org/graph/?g=k9v7|title=Real gross domestic product per capita|date=May 30, 2018|access-date=June 12, 2018|archive-date=June 12, 2018|archive-url=https://web.archive.org/web/20180612211204/https://fred.stlouisfed.org/graph/?g=k9v7|url-status=live}}</ref>

=== Real wages ===
[[File:Real working class wage in 2017 dollars, 1972-1989.png|454x454px|thumb|right|Under Reagan, real working-class wages continued the declining trend that began in 1973, albeit at a slower rate]]The average real hourly wage for production and nonsupervisory workers continued the decline that had begun in 1973, albeit at a slower rate, and remained below the pre-Reagan level in every Reagan year.<ref>{{Cite web|url=https://www.bls.gov/opub/mlr/2005/05/art1full.pdf|title=Real compensation, 1979 to 2003: analysis from several data sources}}</ref> While inflation remained elevated during his presidency and likely contributed to the decline in wages over this period, Reagan's critics often argue that his neoliberal policies were responsible for this and also led to a stagnation of wages in the next few decades.


===Income and wealth===
In nominal terms, median household income grew at a [[compound annual growth rate]] (CAGR) of 5.5% during the Reagan presidency, compared to 8.5% during the preceding five years (pre-1975 data are unavailable).<ref>{{cite web|url=https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html|title=Historical Income Tables: Households|website=www.census.gov|access-date=June 13, 2018|archive-date=July 13, 2017|archive-url=https://web.archive.org/web/20170713092443/https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html|url-status=live}}</ref> Real median family income grew by $4,492 during the Reagan period, compared to a $1,270 increase during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=k9vM|title=Real Median Family Income in the United States|date=September 13, 2017|access-date=June 12, 2018|archive-date=June 12, 2018|archive-url=https://web.archive.org/web/20180612211154/https://fred.stlouisfed.org/graph/?g=k9vM|url-status=live}}</ref> After declining from 1973 through 1980, real mean personal income rose $4,708 by 1988.<ref>{{cite web|url=https://fred.stlouisfed.org/series/MAPAINUSA672N|title=Real Mean Personal Income in the United States|date=September 13, 2017|access-date=June 13, 2018|archive-date=June 14, 2018|archive-url=https://web.archive.org/web/20180614044619/https://fred.stlouisfed.org/series/MAPAINUSA672N|url-status=live}}</ref> Nominal household net worth increased by a CAGR of 8.4%, compared to 9.3% during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/series/HNONWRA027N|title=Households and nonprofit organizations; net worth, Level|date=June 7, 2018|access-date=June 13, 2018|archive-date=March 11, 2018|archive-url=https://web.archive.org/web/20180311020446/https://fred.stlouisfed.org/series/HNONWRA027N|url-status=live}}</ref>

===Poverty level===
The percentage of the total population below the poverty level increased from 13.0% in 1980 to 15.2% in 1983, then declined back to 13.0% in 1988.<ref>{{cite web|url=https://www2.census.gov/programs-surveys/cps/tables/time-series/historical-poverty-people/?sec_ak_reference=18.577f1cb8.1513195579.2f88|title=Index of /programs-surveys/cps/tables/time-series/historical-poverty-people|website=www2.census.gov|access-date=June 12, 2018|archive-date=June 12, 2018|archive-url=https://web.archive.org/web/20180612143043/https://www2.census.gov/programs-surveys/cps/tables/time-series/historical-poverty-people/?sec_ak_reference=18.577f1cb8.1513195579.2f88|url-status=live}}</ref> During Reagan's first term, critics noted [[Homelessness in the United States|homelessness]] as a visible problem in U.S. urban centers.<ref>{{Cite news|url=https://www.washingtonpost.com/archive/politics/1984/07/29/reagan-welfare-cuts-found-to-worsen-families-poverty/077278f9-a875-4791-9c34-d1cf3cd148b5/|title=Reagan Welfare Cuts Found To Worsen Families' Poverty|newspaper=[[The Washington Post]]|access-date=March 10, 2024|archive-date=December 9, 2022|archive-url=https://web.archive.org/web/20221209165011/https://www.washingtonpost.com/archive/politics/1984/07/29/reagan-welfare-cuts-found-to-worsen-families-poverty/077278f9-a875-4791-9c34-d1cf3cd148b5/|url-status=live}}</ref><ref>{{cite web |url=http://www.nhi.org/online/issues/135/reagan.html |archive-url=https://web.archive.org/web/20041027055709/http://www.nhi.org/online/issues/135/reagan.html |url-status=dead |archive-date=October 27, 2004 |title=Reagan's Legacy: Homelessness in America |author=Peter Dreier |year=2004 |publisher=National Housing Institute |access-date=April 29, 2011 }}</ref> According to [[Don Mitchell (geographer)|Don Mitchell]], the increased cuts to spending on housing and social services under Reagan was a contributing factor to the homeless population nearly doubling in just three years, from 1984 to 1987.<ref>{{cite news|last=Kirk|first=Mimi|date=May 13, 2020|title=How the Streets Got So Mean|url=https://www.bloomberg.com/news/articles/2020-05-13/what-causes-homelessness-start-with-capitalism|work=Bloomberg|location=|access-date=July 14, 2023|archive-date=April 15, 2023|archive-url=https://web.archive.org/web/20230415194420/https://www.bloomberg.com/news/articles/2020-05-13/what-causes-homelessness-start-with-capitalism|url-status=live}}</ref><ref>{{cite book|last=Mitchell|first=Don|author-link=Don Mitchell (geographer)|date=2020|title=Mean Streets: Homelessness, Public Space, and the Limits of Capital|url=https://ugapress.org/book/9780820356907/mean-streets/|location=|publisher=[[University of Georgia Press]]|page=62|isbn=9-780-8203-5690-7|access-date=July 14, 2023|archive-date=July 13, 2023|archive-url=https://web.archive.org/web/20230713191327/https://ugapress.org/book/9780820356907/mean-streets/|url-status=live}}</ref> In the closing weeks of his presidency, Reagan told [[David Brinkley]] that the homeless "make it their own choice for staying out there," noting his belief that there "are shelters in virtually every city, and shelters here, and those people still prefer out there on the grates or the lawn to going into one of those shelters". He also stated that "a large proportion" of them are "mentally impaired", which he believed to be a result of lawsuits by the [[ACLU]] (and similar organizations) against mental institutions.<ref name="New York Times">{{cite news |title=Reagan on Homelessness: Many Choose to Live in the Streets |author=Steven V. Roberts |url=https://www.nytimes.com/1988/12/23/us/reagan-on-homelessness-many-choose-to-live-in-the-streets.html |newspaper=The New York Times |date=December 23, 1988 |access-date=January 4, 2012 |archive-date=January 26, 2018 |archive-url=https://web.archive.org/web/20180126185038/http://www.nytimes.com/1988/12/23/us/reagan-on-homelessness-many-choose-to-live-in-the-streets.html |url-status=live }}</ref>

===Federal income tax and payroll tax levels===
{{Main|History of taxation in the United States}}
During the Reagan administration, fiscal year federal receipts grew from $599 billion to $991 billion (an increase of 65%) while fiscal year federal outlays grew from $678 billion to $1144 billion (an increase of 69%).<ref>{{cite web |url= http://www.presidency.ucsb.edu/data/budget.php |title= Federal Budget Receipts and Outlays |publisher= Presidency.ucsb.edu |access-date= January 4, 2012 |archive-date= May 25, 2010 |archive-url= https://web.archive.org/web/20100525112710/http://www.presidency.ucsb.edu/data/budget.php |url-status= live }}</ref><ref>{{cite web |url= http://www.socialsecurity.gov/history/pdf/4a.pdf |title= Table 4.A1 – Old-Age and Survivors Insurance, selected years 1937–2007 (in millions of dollars) |publisher= U.S. Social Security Administration |access-date= August 12, 2012 |archive-date= May 1, 2011 |archive-url= https://web.archive.org/web/20110501213059/http://www.socialsecurity.gov/history/pdf/4a.pdf |url-status= live }}</ref> 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.<ref name="JEC">{{cite web |url= http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm |title=The Reagan Tax Cuts: Lessons for Tax Reform |author=Christopher Frenze |date=April 1996 |publisher= U.S. Congress, Joint Economic Committee |access-date=March 22, 2011 |archive-date=February 26, 2009 |archive-url= https://web.archive.org/web/20090226201115/http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm}}</ref> 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.<ref name="CBO Historical Tables"/>

===Tax receipts===
[[File:CBO 1981 forecast of impact of Reagan tax cuts vs baseline.png|thumb|right|350px|Both the Reagan Administration and CBO forecast that the Reagan tax cuts would reduce revenues relative to a policy baseline without them, by about $50 billion in 1982 and $210 billion in 1986.<ref name="autogenerated1981">{{cite web|url=https://www.cbo.gov/sites/default/files/97th-congress-1981-1982/reports/81doc11b.pdf|title=An Analysis of President Reagan's Budget Revisions for Fiscal Year 1982-See Table 4|date=March 25, 1981|website=cbo.gov|access-date=June 14, 2020|archive-date=February 4, 2020|archive-url=https://web.archive.org/web/20200204193012/https://www.cbo.gov/sites/default/files/97th-congress-1981-1982/reports/81doc11b.pdf|url-status=live}}</ref>]]
Both CBO and the Reagan Administration forecast that individual and business income tax revenues would be lower if the Reagan tax cut proposals were implemented, relative to a policy baseline without those cuts, by about $50 billion in 1982 and $210 billion by 1986.<ref name="autogenerated1981"/> According to a 2003 Treasury study, the tax cuts in the [[Economic Recovery Tax Act of 1981]] resulted in a significant decline in revenue relative to a baseline without the cuts, approximately $111 billion (in 1992 dollars) on average during the first four years after implementation or nearly 3% GDP annually.<ref>{{cite web |author=Thorndike, Joseph J |publisher=Taxhistory.org |title=Historical Perspective: The Reagan Legacy |date=June 14, 2004 |url=http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/3df8b954567e6c8c85256eb300588d4b?OpenDocument |access-date=November 28, 2007 |archive-date=February 25, 2021 |archive-url=https://web.archive.org/web/20210225011518/http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/3df8b954567e6c8c85256eb300588d4b?OpenDocument |url-status=live }}</ref><ref name=taxtable/> 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. The study did not examine the longer-term impact of Reagan tax policy, including sunset clauses and "the long-run, {{Sic|hide=y|fully|-}}phased-in effect of the tax bills".<ref name=taxtable>{{cite web|author=Treasury Department|publisher=[[United States Department of the Treasury]]|title=Revenue Effects of Major Tax Bills|date=September 1, 2006|url=https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-81.pdf|id=Working Paper 81, Table 2|access-date=November 28, 2007|archive-date=February 25, 2020|archive-url=https://web.archive.org/web/20200225053543/https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-81.pdf|url-status=dead}}</ref> 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 and a commensurate increase in the deficit, as spending did not fall relative to GDP. Total federal tax receipts increased in every Reagan year except 1982, at an annual average rate of 6.2% compared to 10.8% during the preceding eight years.<ref>{{cite web | url=https://fred.stlouisfed.org/graph/?g=kbmr | title=Federal government current tax receipts | date=January 1947 | access-date=June 15, 2018 | archive-date=June 16, 2018 | archive-url=https://web.archive.org/web/20180616030618/https://fred.stlouisfed.org/graph/?g=kbmr | url-status=live }}</ref>

The effect of Reagan's 1981 tax cuts (reduced revenue relative to a baseline without the 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, and further increases by Reagan in 1983<ref>Agresti, James D. and Stephen F. Cardone (January 27, 2011).[http://www.justfacts.com/socialsecurity.asp#%5B27%5D Social Security Facts] {{Webarchive|url=https://web.archive.org/web/20110807133916/http://www.justfacts.com/socialsecurity.asp#%5B27%5D |date=August 7, 2011 }}. Retrieved March 22, 2011.</ref> and following years, also to counter the uses of tax shelters.<ref>{{Cite news|url=http://www.taxpolicycenter.org/taxvox/downmarketing-tax-shelters|title=The Downmarketing Of Tax Shelters|date=January 18, 2018|work=Tax Policy Center|access-date=January 18, 2018|language=en|archive-date=January 19, 2018|archive-url=https://web.archive.org/web/20180119120337/http://www.taxpolicycenter.org/taxvox/downmarketing-tax-shelters|url-status=live}}</ref> An accounting indicated nominal tax receipts increased from $599 billion in 1981 to $1.032 trillion in 1990, an increase of 72% in current dollars. In 2005 dollars, the tax receipts in 1990 were $1.5 trillion, an increase of 20% above inflation.<ref>{{cite web|url= https://obamawhitehouse.archives.gov/sites/default/files/omb/budget/fy2011/assets/hist01z3.xls|format= xls|title= Table 1.3 – Summary of Receipts, Outlays, and Surpluses or Deficits (-) in Current Dollars, Constant (FY 2005) Dollars, and as Percentages of GDP: 1940–2015|publisher= [[Office of Management and Budget]]|access-date= October 12, 2010|archive-date= October 9, 2021|archive-url= https://web.archive.org/web/20211009105732/https://obamawhitehouse.archives.gov/sites/default/files/omb/budget/fy2011/assets/hist01z3.xls|url-status= live}}</ref>

===Debt and government expenditures===
[[File:United States budget deficit, 1971 to 2001.svg|thumb|left|300px|Budget deficit in billions of dollars, 1971–2001]]
Reagan was inaugurated in January 1981, making the first fiscal year (FY) he budgeted 1982 and the final budget 1989. 
* During Reagan's presidency, the federal debt held by the public nearly tripled in nominal terms, from $738 billion to $2.1 trillion.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=k977|title=Federal Debt Held by the Public|date=May 31, 2018|access-date=June 12, 2018|archive-date=September 23, 2022|archive-url=https://web.archive.org/web/20220923151957/https://fred.stlouisfed.org/graph/?g=k977|url-status=live}}</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"/> Reagan described the new debt as the "greatest disappointment" of his presidency.<ref name="Cannon128"/>
* The federal deficit as percentage of GDP rose from 2.5% of GDP in fiscal year 1981 to a peak of 5.7% of GDP in 1983, then fell to 2.7% GDP in 1989.<ref>{{cite web| url = https://research.stlouisfed.org/fred2/series/FYFSGDA188S| title = Federal Surplus or Deficit as Percent of Gross Domestic Product, Federal Reserve Bank of St. Louis| date = January 1929| access-date = February 23, 2016| archive-date = March 22, 2016| archive-url = https://web.archive.org/web/20160322210703/https://research.stlouisfed.org/fred2/series/FYFSGDA188S| url-status = live}}</ref>
* Total federal outlays averaged of 21.8% of GDP from 1981–88, versus the 1974–1980 average of 20.1% of GDP. This was the highest of any President from Carter through Obama.<ref>{{cite web| url = https://www.cbo.gov/publication/53651| title = CBO-Budget and Economic Outlook 2018-2028-Historical Data-Retrieved June 25, 2018| date = April 9, 2018| access-date = June 25, 2018| archive-date = February 2, 2020| archive-url = https://web.archive.org/web/20200202080730/https://www.cbo.gov/publication/53651| url-status = live}}</ref>
* Total federal revenues averaged 17.7% of GDP from 1981–88, versus the 1974–80 average of 17.6% of GDP.<ref name="cbo.gov">{{cite web |title=The Budget and Economic Outlook: 2014 to 2024 |url=https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/45010-outlook2014feb0.pdf |access-date=9 August 2022 |website=Congressional Budget Office |archive-date=December 4, 2018 |archive-url=https://web.archive.org/web/20181204021501/https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/45010-outlook2014feb0.pdf |url-status=live }}</ref>
* Federal individual income tax revenues fell from 8.7% of GDP in 1980 to a trough of 7.5% of GDP in 1984, then rose to 7.8% of GDP in 1988.<ref>{{cite web|url=http://www.cbo.gov/publication/45010|title=The Budget and Economic Outlook: 2014 to 2024|date=February 4, 2014|access-date=June 12, 2018|archive-date=June 12, 2018|archive-url=https://web.archive.org/web/20180612162542/https://www.cbo.gov/publication/45010|url-status=live}}</ref>

===Business and market performance===
Nominal after-tax corporate profits grew at a compound annual growth rate of 3.0% during Reagan's eight years, compared to 13.0% during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=kag2|title=Corporate Profits After Tax (without IVA and CCAdj)|date=May 30, 2018|access-date=June 13, 2018|archive-date=June 14, 2018|archive-url=https://web.archive.org/web/20180614021357/https://fred.stlouisfed.org/graph/?g=kag2|url-status=live}}</ref> The [[S&P 500 Index]] increased 113.3% during the 2024 trading days under Reagan, compared to 10.4% during the preceding 2024 trading days.<ref>{{cite web|url=https://stooq.com/q/d/?s=%5Espx&c=0&d1=19720120&d2=19890120 |title=^SPX - S&P 500 - U.S. |publisher=Stooq |date= |accessdate=2022-08-19}}</ref> The business sector share of GDP, measured as [[gross private domestic investment]], declined by 0.7 percentage points under Reagan, after increasing 0.7 percentage points during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=kbln|title=Shares of gross domestic product: Gross private domestic investment|date=April 27, 2018|access-date=June 16, 2018}}</ref>

===Size of federal government===
The federal government's share of GDP increased 0.2 percentage points under Reagan, while it decreased 1.5 percentage points during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=kakV|title=Shares of gross domestic product: Government consumption expenditures and gross investment: Federal|date=April 27, 2018|access-date=June 14, 2018|archive-date=June 14, 2018|archive-url=https://web.archive.org/web/20180614045812/https://fred.stlouisfed.org/graph/?g=kakV|url-status=live}}</ref> The number of federal civilian employees increased 4.2% during Reagan's eight years, compared to 6.5% during the preceding eight years.<ref>{{cite web|url=https://fred.stlouisfed.org/graph/?g=kal4|title=All Employees: Government: Federal|date=June 1, 2018|access-date=June 14, 2018|archive-date=June 14, 2018|archive-url=https://web.archive.org/web/20180614045926/https://fred.stlouisfed.org/graph/?g=kal4|url-status=live}}</ref>

As a candidate, Reagan asserted he would shrink government by abolishing the Cabinet-level departments of energy and education. He abolished neither, but elevated veterans affairs from independent agency status to Cabinet-level department status.<ref>{{cite news|url=https://www.nytimes.com/1987/11/11/us/reagan-would-elevate-va-to-cabinet-level.html|title=Reagan Would Elevate V.A. to Cabinet Level|last=AP|access-date=June 14, 2018|newspaper=The New York Times|date=November 11, 1987|archive-date=June 14, 2018|archive-url=https://web.archive.org/web/20180614052127/https://www.nytimes.com/1987/11/11/us/reagan-would-elevate-va-to-cabinet-level.html|url-status=live}}</ref><ref>{{cite journal|url=http://www.slate.com/articles/briefing/articles/1996/11/unplug_the_doe.html|title=Unplug the DOE!|first=Steve|last=Chapman|date=November 28, 1996|access-date=June 14, 2018|journal=Slate|archive-date=June 14, 2018|archive-url=https://web.archive.org/web/20180614050954/http://www.slate.com/articles/briefing/articles/1996/11/unplug_the_doe.html|url-status=live}}</ref>

===Income distribution===
{{Further|Income inequality in the United States}}
[[File:Trends in US income inequality 1975-2005.jpg|thumb]]
Continuing a trend that began in the 1970s, income inequality grew and accelerated in the 1980s. ''The Economist'' wrote in 2006: "After the 1973 oil shocks, productivity growth suddenly slowed. A few years later, at the start of the 1980s, the gap between rich and poor began to widen."<ref>{{cite news| url = https://www.economist.com/special-report/2006/06/15/the-rich-the-poor-and-the-growing-gap-between-them| title = The Economist-The rich, the poor and the growing gap between them-June 2006| newspaper = The Economist| date = June 15, 2006| access-date = July 1, 2018| archive-date = November 20, 2019| archive-url = https://web.archive.org/web/20191120053637/https://www.economist.com/special-report/2006/06/15/the-rich-the-poor-and-the-growing-gap-between-them| url-status = live}}</ref> According to the CBO: 
*The top 1% of income earners' share of income ''before'' transfers and taxes rose from 9.0% in 1979 to a peak of 13.8% in 1986, before falling to 12.3% in 1989.
*The top 1% share of income earners' of income ''after'' transfers and taxes rose from 7.4% in 1979 to a peak of 12.8% in 1986, before falling to 11.0% in 1989.
*The bottom 90% had a lower share of the income in 1989 vs. 1979.<ref>{{cite web| url = https://www.cbo.gov/publication/53597| title = CBO-The Distribution of Household Income, 2014-Refer to Supplemental Data for Exact Figures-March 19, 2018| date = March 19, 2018| access-date = July 1, 2018| archive-date = April 12, 2018| archive-url = https://web.archive.org/web/20180412233412/https://www.cbo.gov/publication/53597| url-status = live}}</ref>