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The four pillars of Reagan's economic policy were to reduce the growth of government spending, reduce the federal income tax and capital gains tax, reduce government regulation, and tighten the money supply in order to reduce inflation.
Reagan came to office in 1981 with a mandate to reduce federal spending. In reality, he increased it through the escalating military budget, all the while slashing funds for domestic programs that assisted working class Americans, particularly the poor.
Reagan’s fans give him credit for restoring the nation’s prosperity. But whatever economic growth occurred during the Reagan years only benefited those already well off. The income gap between the rich and everyone else in America widened. Wages for the average worker declined and the nation’s homeownership rate fell. During Reagan’s two terms in the White House, which were boon times for the rich, the poverty rate in cities grew.
His indifference to urban problems was legendary. Reagan owed little to urban voters, big-city mayors, black or Hispanic leaders, or labor unions – the major advocates for metropolitan concerns. Early in his presidency, at a White House reception, Reagan greeted the only black member of his Cabinet, Housing and Urban Development (HUD) Secretary Samuel Pierce, saying: “How are you, Mr. Mayor? I’m glad to meet you. How are things in your city?”
Reagan not only failed to recognize his own HUD Secretary, he failed to deal with the growing corruption scandal at the agency that resulted in the indictment and conviction of top Reagan administration officials for illegally targeting housing subsidies to politically connected developers. Fortunately for Reagan, the “HUD Scandal” wasn’t uncovered until he’d left office.
Reagan also presided over the dramatic deregulation of the nation’s savings and loan industry allowing S&Ls to end their reliance on home mortgages and engage in an orgy of commercial real estate speculation. The result was widespread corruption, mismanagement and the collapse of hundreds of thrift institutions that ultimately led to a taxpayer bailout that cost hundreds of billions of dollars.
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