Page "Reaganomics" Paragraph 14

Reagan significantly increased public expenditures, primarily the Department of Defense, which rose ( in constant 2000 dollars ) from $ 267. 1 billion in 1980 ( 4. 9 % of GDP and 22. 7 % of public expenditure ) to $ 393. 1 billion in 1988 ( 5. 8 % of GDP and 27. 3 % of public expenditure ); most of those years military spending was about 6 % of GDP, exceeding this number in 4 different years.

All these numbers had not been seen since the end of U. S. involvement in the Vietnam War in 1973.

In 1981, Reagan significantly reduced the maximum tax rate, which affected the highest income earners, and lowered the top marginal tax rate from 70 % to 50 %; in 1986 he further reduced the rate to 28 %.

The federal deficit fell from 6 % of GDP in 1983 to 3. 2 % of GDP in 1987.

The Federal deficit in Reagan's final budget fell to 2. 9 % of GDP.

The rate of growth in Federal spending fell from 4 % under Jimmy Carter to 2. 5 % under Ronald Reagan.

As a short-run strategy to reduce inflation and lower nominal interest rates, the U. S. borrowed both domestically and abroad to cover the Federal budget deficits, raising the national debt from $ 997 billion to $ 2. 85 trillion.

This led to the U. S. moving from the world's largest international creditor to the world's largest debtor nation.

Reagan described the new debt as the " greatest disappointment " of his presidency.