Liz Truss’s selective Reaganomics won’t work
After cutting taxes, the Gipper reversed course
In july 1981 President Ronald Reagan took to the airwaves promising to “reduce the enormous burden of federal taxation on you and your family”. Inflation was much too high and tight monetary policy had taken interest rates to over 19%—problems Reagan attributed in part to rising government debt. But the president brushed aside the contradiction and argued that tax cuts and deregulation would unleash productivity growth. By August he had signed into law America’s biggest tax cut since the first world war, worth nearly 3% of annual gdp.
This article appeared in the Leaders section of the print edition under the headline “Truss’s rusty Reaganomics”
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