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Reaganomics report card

By Charlotte SaikowskiStaff writer of The Christian Science Monitor / January 16, 1984


Ronald Reagan struck political gold in 1980 when he asked Americans, ''Are you better off today than you were four years ago?'' The resounding negative reply helped catapult him into the presidency.

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Today - three years and a solid dose of Reaganomics later - the question is posed anew: ''Are you better off today than you were three years ago?'' As he prepares to confront this election campaign, President Reagan is confident that most Americans are answering in the affirmative.

At this juncture they seem to be. According to the Survey Research Center of the University of Michigan, which polls 700 individuals every month to track public sentiment, the average American's outlook for his own economic prospects and those of the nation is brighter than it has been for a decade.

Whether the majority of Americans are actually better off or not is open to question, studies show. But the fact is they feel they are.

''There is a widespread perception that the President has moved the economy and is successful on his own terms,'' says presidential scholar Thomas E. Cronin of Colorado College, ''and that perception is what is important.''

The reasons for the upbeat mood are self-evident. Inflation is down from a debilitating rate of 13.3 percent in 1979 to less than 4 percent last year. Unemployment has dropped from a high rate of 10.7 percent in late 1982 to 8.2 percent. Retail sales are exuberant. And, while this is a consumption-driven, not investment-led, recovery, capital spending also is picking up more strongly than it has after previous recessions. The US economy, in short, is on the move.

Also encouraging to economists is a ''new sense of realism'' on the part of management and labor.

Because of growing domestic and foreign competition, businesses are making better investment decisions and even unionized employees have accepted a need for restraint in wage demands and for changes in work practices to ensure future jobs. If such attitudes persist, analysts say, it will be easier to avoid another burst of inflation.

How much credit supply-side Reaganomics can take for the economic gains so far is a matter of viewpoint. Many economists argue that the recovery - paradoxically - is the result more of Keynesian than Reaganite policies: The government through its budget policy of tax cuts and hefty spending is stimulating a consumption boom. Some experts say that the administration's fiscal policies exacerbated the recession by producing huge budget deficits that have kept interest rates high. They note that the President's policies did not produce either the surge in private savings or the business investment that he had promised in the 1980 campaign.

''The Fed knocked inflation down, but the economy is barely back to where we started from,'' says economist Barry Bosworth of the Brookings Institution.

''We're better off because the government is worse off,'' comments Stephen Wayne, a political scientist at George Washington University. ''We're spending, not saving. If interest rates go up and industry doesn't modernize, it will be at the expense of our children tomorrow.''

Others have modified earlier judgments. ''Last year the majority of economists wrote off Reaganomics,'' says Edward Yardeni, chief economist at Prudential-Bache in New York. ''But now that we have weathered the pain, most have to admit that what looked to be a failure looks smarter this year. There is a lot of debate over supply-side vs. Keynesian theories, but the bottom line for the individual is that the inflation spiral has been stopped and after-tax incomes are improving. Taking the aggregate of all consumers, Americans are better off.''