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auguration of President Reagan in 1981, supplyside economics provided the basis for Reagan administration fiscal policy, which was dubbed Reaganomics. The Reaganomics moniker lasted into the first or second year of the second term of the Reagan administration; however, influence of supplyside economists all but disappeared after the midterm congressional elections in 1982. The tax reduction goal of supplyside economists continued to be sought by the

6Gwartney, Stroup, and Studenmund, 275.

3Reagan administration; however, attempts to reduce government spending became a propaganda exercise for the administration, wherein the administration sought to reduce spending on social programs, while seeking increased spending on military proggrams, but was quite prepared to tradeoff cuts in social spending for increases in military spending.

The Reagan administration sought and got a tax reform package in 1981 (the Tax Reform and Economic Recovery Act of 1981), which reduced federal government revenues. With less success, the administration also was able to reduce federal spending. The tax reform in particular, however, was hailed as providing the supplyside incentives for producers, which would lead to surging economic growth. In actual practice, however, the producer incentives were implemented during a time when demand was declining rapidly, and, under such conditions, all the production incentives in the world will not persuade producers to create goods for which no demand exists. As a consequence, the economy plummeted into the worst recession since the 1930s, and the federal government budget deficit soared.

The approval rating of President Reagan plummeted along with the economy, and the Republican Party absorbed a worse than usual drubbing in the 1982 congressional midterm elections. In early1983, President Reagan began to look like another oneterm president. Thus, with no public announcement,

the...