Reaganomics did not help revitalize the economy during the 1980s through large-scale government spending. In fact, the most fundamental feature of Reaganomics is cuts to government spending. Reducing taxes across the board, and thus limiting the size of government programs and corresponding expenditures, Reagan hoped to stimulate investment in the private sector as a way to boost economic growth. Government encroachment on business was reduced also in an attempt to deregulate. Whether or not Reaganomics actually did help revitalize the economy remains up for debate but at least on the surface, the policies did correspond to improved GDP and other measurable economic indexes.

Niskanen notes that adjusted for inflation, government spending did decrease from 4% to 2.5 during the Reagan administration. Phrased as percentage of national output, though, federal spending under Reagan did not decrease so significantly: to 22.1% of the GDP in 1989 from 22.9 in 1981. Also, however much Reagan cut government spending, his administration also increased the nation's military budget. The most significant economic impact of Reaganomics was the tax cuts, both to personal and corporate income taxes and to the restructuring of the federal income tax brackets. Reaganomics, which was firmly rooted in increasing private capital, stimulated economic growth by offering investment incentives but only during the early years of the administration (Kiskanen). Moreover, deregulation "was clearly the lowest priority among the major elements of the Reagan economic program," (Niskanen).

Reaganomics overall did improve the economy on several indexes relative to the Carter administration. When Reagan took office, unemployment was high and so was inflation. Both were lowered as a result of Reaganomics. However, the long-term implications of Reaganomics did not revitalize the economy as much as the adminstration predicted or claimed. In general, the cuts to government spending and the reductions in income tax rates remain the lasting legacies of Reaganomics.

Works Cited

Niskanen, William a. Reaganomics. The Concise Encyclopedia of Economics. Retrieved May 19, 2008 at http://www.econlib.org/Library/Enc/Reaganomics.html