How the deficits of the 1980's contributed to the prosperity of the Term Paper

How the deficits of the 1980's contributed to the prosperity of the 1990's - Term Paper Example These are: (1) to reduce the growth of government spending, (2) to reduce the marginal tax rates on income from both labor and capital, (3) to reduce regulation, and (4) to reduce inflation by controlling the growth of the money supply† (Niskanen, â€Å"Encyclopedia†). These changes reduced taxes for most wage earners, and most of the poor were actually exempted from taxes. Reagan also eliminated price controls on oil and natural gas, long distance telephone service, and ocean shipping. As reported by the Joint Economic Committee in April of 2000, Reagan’s polices resulted in the largest peacetime economic boom in American history. It also resulted to 35 million jobs for many Americans. The committee reports, â€Å"[i]n 1981, newly elected President Ronald Reagan refocused fiscal policy on the long run†¦these were fundamental changes that proved the foundation for the Great Expansion that began in December 1982† (Sperry, â€Å"Issues†). At the b eginning of the 1990s when Reagan’s tax rate cuts were set in place, tax payers who earned more were taxed more, and those who earned less were taxed less. This gave a chance for those in the lower rungs of the economic ladder to recover from their difficult economic situation. The reductions in income tax for those who had lower income were so dramatic because President Reagan doubled the personal exemption; he also increased the standard deduction, and he tripled the earned income tax credit. Earned income tax credit gave net cash to single-parent families with children at the lowest income levels. Reagan’s economic policies practically took from the rich and took less from the poor, and this gave the lower income group in American society a chance to recover and improve their lives. The eventual manifestations of improved life were later seen in the 1990s. The stimulants for growth in the 1990s can be traced back to the economic measures and policies which were implemented during the