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Ronald Wilson Reagan was the US president between 1981 and 1989. He is perhaps one of the few presidents in US history who had ambitious goals to transform the country, and actually managed achieve them. Regan started his term when the US was still reeling from depression, which made his work difficult. However, through his somewhat unorthodox approach, he managed to improve the country. By doing so Reagan left his mark on America. Through the use of Reaganomics, privatization policies, deregulation, and advocacy for the independence of states in the US, Ronald Reagan ensured he remained influential to this day.
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The period preceding Reagan’s term was characterized by economic turmoil. The country had experienced recessions between 1969 and 1982. By the end of the 70’s employment, interest rates, and inflation were in the double digits (Eichner 541-542). Reagan felt that the government was spending a lot of money while increasing taxes, yet the people were suffering (546-547). According to Keynesian economics, recession and inflation could not go hand in hand, yet they were happening. Keynesian economists believe that growth can only be stimulated through fiscal policy, but it was not working (“The Reagan Resolve”). In light of the trends that were occurring, Reagan rejected the principles of Keynesian economics in favor of what is referred to as Reaganomics. According to Reagan, economic growth could be achieved through the use of stimulus programs and incentives being given to companies and individuals to make goods and services (“The Reagan Resolve”). Reagan believed that increments in taxes resulted in reduced incentives to work.
Reagan’s economic program had four major segments. The first one entailed tax cuts (Reaganomics 46-48). Through the use of tax cuts, the president hoped that people would experience an increase in their personal savings, which would, in turn, lead to a rise in the number of investments by private citizens. The second element was that of cutting non-defense spending as a means to reduce the budget deficit (Reaganomics 46-48). At the same time, Reagan pushed for increments in military spending. The third part of Reagan’s economic plan was deregulation while the last one involves coming up with a stable monetary policy (Reaganomics 46-48).
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Furthermore, Reagan changed the way the way the Federal Reserve operated. Instead of using Keynesian approaches of discretionary monetary policies, Reagan favored a stable dollar approach (‘The Reagan Resolve”). As such, he instructed the Federal Reserve to undertake monetary policies as guided by real market prices, including volatile commodities such as copper, oil, and gold (‘The Reagan Resolve”). These measures were designed to prevent the continued cycles of inflation and deflation and that of growth and recession.
Reagan ushered in a new era of privatization within the government. He had the assumption that the government was not as efficient as the private sector in the provision of goods and services (Abramovitz 257). Reagan had the assumption that the private sector had the ability to make goods at a higher quality and to deliver them at costs that were significantly lower than that of the government (258). As such, privatizing the government would improve the nation’s competitiveness.
True to his words, Reagan signed executive order 12615 which required government agencies to source for goods and services from the private sector instead of doing things in-house whenever it was possible (The Code of Federal Regulations of the USA 260).
Some examples of privatization that were undertaken by Reagan include selling of Conrail, which was one of America’s main rail companies (Pines). At the same time, Reagan pushed for changes that allowed private companies to make their own rockets to carry commercial satellites to space (Pines).
Privatization was beneficial because it reduced the role of the government in society, expenses incurred by the government, and it made operations efficient and responsive (Pines).
Through privatization, Reagan demonstrated that some of the problems that plague the government can be solved by engaging with the private sector. The era of privatization that began with Reagan is still in place today and is visible in the way the government outsources significant parts of its programs such as military research to private entities. It also brought about new private-government relations.
Reagan felt that the government was slowing down development through excessive regulations. As such, he started rolling back many of the laws that According to Reagan, regulations were only needed to protect people against fraud and to also address issues on public health and safety (“The Reagan Resolve”). At the same time, he believed that regulations resulted in unnecessary costs and burdens on society and businesses. Moreover, Reagan saw states and local authorities as being in a better position to handle matters of regulation. One of the actions taken by President Reagan to ensure deregulation includes signing Executive Order 12287 (Knight). This executive order removed the restriction on refined petroleum goods as well as crude oil (Knight). The Executive Order has implications that can be felt up to date. Because of the orders, there was a significant flow of investment from the private sector into the US energy sector. The investment led to increments in the supply of low-cost energy.
After signing Executive Order 12287, Reagan also signed Executive Order 12288 which effectively ended the Wage and Price Regulatory Program (Knight). The Wage and Price Regulatory Program was a product of the Carter presidency and was designed to control wages as well as lock out companies that did not meet the program’s requirement from accessing government contracts (“The Reagan Resolve”).
As of today, the US is the largest producer of natural gas, coal, and nuclear energy. These feats could not be achieved if the government was still in the way of private investment. Reagan made sure that the private sector was able to access resources that would help them to not only produce energy but also create jobs and wealth.
One of the first steps that President Reagan took after assuming power was to reduce the influence that the federal government had on states (McKay 183). He called it “new federalism.” Reagan believed greatly in the independence of states. He did not want states to be viewed as departments of the national government (184-185). Instead, he believed that states were to be sovereign and with rights that could not be interfered with by the national government (185).
According to Reagan, “In the recent past, as the Federal Government has pushed each city, county, and State to be more like every other, we’ve begun to lose one of our greatest strengths — our diversity as a people. If we’re to renew our country, we must stop trying to homogenize America” (“The Reagan Resolve”)
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As a result of his beliefs, Reagan took the following steps to promote federalism in the US. First, he instructed Congress and the Executive to find any constitutional authority that limits the freedom of states to operate (“The Reagan Resolve”). Second, he prohibited the federal government from intervening in matters that were reserved for states. Third, President Reagan gave states maximum flexibility when it came to the management of national programs that were under their control (“The Reagan Resolve”).
At the same time, Reagan signed Executive Order 12612 which required the Executive Branch to be the champion of federalism (Peters & Woolley). Some of the clauses in the Executive Order included a recognition that limiting the scope and size of the national government was the best way to ensure political liberties (Peters & Woolley). Also, the document recognizes that the Tenth Amendment is the guiding document for relationships between the state and national governments. Additionally, the Executive Order acknowledged that any acts by the judiciary, executive or legislature to influence states was an overreach and it violated the principles of federalism as per the Founding Fathers (Peters & Woolley).
Through the use of Reaganomics, Reagan ensured that he highlighted the shortcomings of a Keynesian approach of fiscal policy, and he ushered in a new era of prosperity. By privatizing government operations, he ensured that the private sector thrived and that the government was more efficient than before. Reagan also ushered in a new era of private investment especially in the energy and transport sector through deregulations. He would also go on to sign key legislation that would give states greater independence from federal units. Through these actions, Ronald Reagan ensured that his influence was still felt by Americans today.
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- Work Cited
- Abramovitz, Mimi. “The Privatization of the Welfare State: A Review.” Social Work, vol. 31, no. 4, Jul/Aug86, pp. 257-264. EBSCOhost.
- Eichner, Alfred S. “The Reagan Record: A Post Keynesian View.” Journal of Post Keynesian Economics, vol. 10, no. 4, Summer88, p. 541. EBSCOhost.
- Knight, Robert. “The Reagan Resolve, Part IV: Reducing Federal Spending,”Townhall, 6 Feb, 2014
- McKay, David. “Theory and Practice in Public Policy: The Case of the New Federalism.” Political Studies, vol. 33, no. 2, June 1985, pp. 181-202. EBSCOhost.
- Peters, Gerhard & Woolley, John. “Ronald Reagan.” 26 October, 1987,
- “Reaganomics.” International Journal of Political Economy, vol. 19, no. 2, Summer89, pp. 44-97. EBSCOhost.
- The Code of Federal Regulations of the United States of America. Washington: U.S. G.P.O, n.d. Print.
- “The Reagan Resolve.” The Carleson Center for Welfare Reform, n.d,