Presidency of Ronald Reagan - Overview

Overview

Reagan was an advocate of free markets and, upon taking office, believed that the American economy was hampered by excessive economic controls and misguided welfare programs enacted during the 1960s and 1970s. Taking office during a period of stagflation, Reagan said in his first inauguration speech, which he himself authored:

His first act as president was to issue an executive order ending certain price controls on domestic oil, which had contributed to the 1973 Oil Crisis and the 1979 Energy Crisis. The price of fuel subsequently dropped, and the 1980s did not see the gasoline lines and fuel shortages that the 1970s had.

Reagan focused his first months in office on two goals, tax cuts and military spending, which was viewed as a successful way to tackle issues and echoed by later presidential advisers. Reagan's economic policies, similar to supply-side economics and dubbed "Reaganomics", achieved a 25% cut in the federal personal income tax, moderate deregulation and tax reform, which he believed would remove barriers to efficient economic activity. After a sharp recession, a long period of high economic growth without significant inflation ensued.

Despite Reagan's stated desire to cut spending, federal spending grew during his administration. However, economist Milton Friedman pointed out that non-defense spending as a percentage of national income stabilized throughout Reagan's term, breaking a long upward trend; the number of new regulations added each year dramatically decreased as well.

One of Reagan's most controversial early moves was to fire most of the nation's air traffic controllers who took part in an illegal strike. Reagan also attempted to increase the solvency of Social Security by cutting disability and survivor benefits, and by increasing the Federal Insurance Contributions Act tax (FICA). He also took tough positions against crime, declared a renewed war on drugs, but was criticized for being slow to respond to the AIDS epidemic.

In foreign affairs, Reagan initially rejected détente and directly confronted the Soviet Union through a policy of "peace through strength", including increased military spending, firm foreign policies against the USSR and, in what came to be known as the Reagan Doctrine, support for anti-communist rebel movements in Afghanistan, Angola, Cambodia, Nicaragua and elsewhere. Reagan later negotiated with Soviet General Secretary Mikhail Gorbachev, and together they contributed greatly to the end of the Cold War.

Reagan authorized military action in Lebanon, Grenada, and Libya throughout his terms in office. It was later discovered that the administration also engaged in covert arms sales to Iran in order to fund anti-communist Contra rebels in Nicaragua. The resulting Iran-Contra Affair became a scandal to which Reagan professed ignorance. A significant number of officials in the Reagan Administration were either convicted or forced to resign as a result of the scandal.

By the end of the Reagan presidency, a high level of public approval (63 percent of the nation) indicated that the administration had recovered its image among the American public because of the perceived restoration of America's power, prosperity and national pride.