Great Experiments in American Economic Policy: From Kennedy to Reagan

Great Experiments in American Economic Policy: From Kennedy to Reagan

Great Experiments in American Economic Policy: From Kennedy to Reagan

Great Experiments in American Economic Policy: From Kennedy to Reagan

Synopsis

During the 1980s, dramatic changes in the federal budget, the Federal Reserve, and the U.S. Treasury initiated the most comprehensive series of economic experiments since the 1930s. This book describes the nature of those experiments and compares them to the Keynesian experiment of the 1960s. In the 1980s, monetarists claimed their policies would permanently subdue inflation and unemployment; supply-siders said their tax cuts would give the economy new life with accelerated growth and a balanced budget; and free floaters promised unprecedented stability in international markets. Actual results fell far short of these promises. This book analyzes why the economic events of the 1980s unfolded as they did and what bearing the results have on the future of economics and the U.S. economy.

Excerpt

Not everyone agreed that the economic experiments proposed by Kennedy's economic advisors in 1961 were going to work. Their proposal to cut taxes and raise government spending simply to manage the economy was a novel idea. While critics predicted disaster and economists debated the numbers, Congress eventually implemented the entire experiment. This was the beginning of one of the most comprehensive experiments in American economic policy.

The Kennedy program in the early 1960s established a blueprint for future economic experiments. It also provides a stark contrast to another experiment that was based on an entirely different economic theory. in early 1981, President Reagan's new appointees moved with surprising speed converting conservative economic ideas into national policy. Once again the experiment was subject to heated debate but was eventually fully implemented as Congress approved the largest tax cut in history.

The supply-side experiment was joined by two other, equally risky experiments. the monetarist experiment, conducted by the. Federal Reserve, began in 1979 and continued into 1982. Coinciding with these experiments was free floating, an experiment conducted by the U.S. Treasury from 1981 to 1985. Other books have been written about supply-side economics and some about mone-

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