HW4.6

LUMP- SUM PAYMENTS, STOPPING INFLATION, CUTTING TAXES SHOWS THAT REAGON'S POLICIES FIT HIS 'BRAND' OF CONSERVATISM AS HE DESCRIBED IT IN HIS INAUGURAL SPEECH, JANUARY 1981.

Lump-sum payments showed that Reagan's policies fit his brand of conservatism. Ronald Reagan instituted a system call block grants. This system allowed the states to receive lump-sum payments and to us it as they wish in paying for social programs (History Alive!). "It gave the states flexibility to "allocate resources to suit their needs"(History Alive!). Reagan "went a step further by handing responsibility for many programs in health, education, and welfare to the states themselves." (History Alive!) Therefore, unnecessary social spending was cut and taxes were lowered for upper and middle class.

üBy lowering taxes, Reagan also stopped inflation during his presidency which fits his brand of conservatism. Even though at the beginning of his years, 1981 to 1982, economy dipped deeper into recession. However, with Reagan's encouragement Federal Reserve chairman Paul Volcker restricted the money supply. In his State of the Union messages it said "When celebrating triumphs—whether over inflation, interest rates, unemployment, or communism—Reagan used “we” or “together.” " (Schweikart) Reagan succeeded, the inflation rate dropped from 12 percent to 4 percent in only a few years (Schweikart).

Moreover, Reagan's economic plan of cutting taxes was another promise he kept. In August 1981, Reagan signed a bill that cut federal taxes by 25 percent over a three-year period (History Alive!). Before he was voted for persident, Reagan ran on three simple promises, and one of them is " he would revive the economy through tax cuts and deregulation, cutting the size of government" and again he kept his promise. " (Schweikart)The Economic Recovery Act helped America's economy rapidly, "Lower capital gains rates caused investors to pump money into the economy as never before" (Schweikart). Moreover it allowed the economy to trickle down and "the gross national product grew by 7.1 percent...The recovery created 18.4 million new jobs" (History Alive!).