Several socioeconomic factors influenced several Americans to support the implementation of Reaganomics. The question of inflation united both the republicans and the democrats to support Reagan’s economic program. Congress usually join hands during crises, and the financial situation following Carter’s presidency was catastrophic for America. The problem of inflation stemmed back to when Lyndon Johnson funded Vietnam and the Great Society programs, and this trend continued unaddressed. Additionally, the crude oil crisis of 1973 contributed to further economic downturn leading to increased unemployment and inflation rates. In addition to the halted flow of oil from Iran, the OPEC nations hiked increases oil prices. These rapid changes had a significant impact on the American economy. Economics dubbed the situation as stagflation due to the high inflation rates. Also, there was a substantial drop in wages by 18.0% between 1973 and 1975. As such, Americans faced adverse economic hardships close to the levels of the Great Depression.
The changing economic patterns contributed to increased inflation across America as the country suffered high deficits and balance of payments. The adverse impacts of the Americans due to increased inflation mobilized Congress Representatives to approve the Reaganomics bills without any focus on party votes. In essence, the fate of Americans influenced such decisions by Congress. With the American economy badly hit by the changes mentioned above, social factors also changed across the country due to the evolving lifestyles. An inevitable correlation exists between social welfare and economic wellbeing. The early years of Reagan’s reign were characterized by a decline in the high wages and high skills jobs in the manufacturing industry. That was due to the restructuring of the economy. For instance, from 1979 to 1982, the automobile industry lost over two hundred and fifty thousand jobs. Low wage and low-skilled workers replaced those laid from the automobile industry, something that hurt several Americans.
Also, between 1963 and 1973, over forty percent of every new job was well-paying, while twenty percent were also classified as low-wages jobs. The standard of living also dropped drastically, and America ranked fifth ranking internationally. That was due to stagflation. While economists argue that a country cannot have high inflation and unemployment rates simultaneously, America faced these two challenges at the same time. These are examples of the factors considered by Congress when passing the Reaganomics bills because politicians understood that overlooking such matters was also detrimental to their political careers. As aforementioned, one of the primary objectives of the Reaganomics was to cut federal expenditure since the government absorbed more national financial resources than other sectors. For instance, the federal government spent over thirty-five percent of the total GDP. That was high spending considering that the government only spent twenty-four percent of national output in the 1950s, and this expenditure only rose to twenty-nine percent in the 1960s.
The years preceding the Reagan administration were also characterized by high taxation on the citizens, especially the middle class and the poor. The Iranian oil crisis, as well as the oil embargo, forced the government to increase taxes, particularly on petroleum products. As such, the top marginal tax rates were high for a majority of Americans. That influenced the bipartisan support Reagan received in Congress when he proposed changes that would significantly reduce taxations on Americans. For instance, the removal of the oil windfall taxes ended the oil crisis seen in 1979 effectively. Both the republicans and the democrats supported this move. Additionally, the deteriorating social and economic factors triggered several citizens to pressurize their Representatives to support the president’s commercial program meant to curb the high inflation. For instance, the Tax Reform Act of 1986 received massive bipartisan support. The government implemented several regulation measures before the Reaganomics, which stifled business growth and expansion.
In essence, several social and economic factors influenced the implementation of the Reaganomics policy due to the adverse financial crises that characterized the period before Reagan came into power. High inflation and unemployment rates affected several Americans, as several citizens lost their jobs, especially in the manufacturing industry. Regulation efforts by the Carter administration worsened the already harsh economic recession that affected America. That is because regulation efforts do not provide ways to rescue struggling businesses. Several factors, like the oil crisis in the 1970s, influenced the government to increases taxes, especially on petroleum-based products, and this had a corresponding negative impact, particularly on the poor and the middle class. Reagan devised the economic program aimed at reversing the harsh economic times faced by Americans during his tenure. While Reagan achieved his economic revival plans, it was not to the levels initially expected and predicted during the campaign.