President Reagan’s Program
for Economic Recovery
• The plan is based on sound expenditure, tax, regulatory, and monetary
policies. It seeks properly functioning markets, free play of wages and prices,
reduced government spending and borrowing, a stable and reliable monetary
framework, and reduced government barriers to risk-taking and enterprise.
This agenda for the future recognizes that sensible policies which are
consistently applied can release the strength of the private sector, improve
economic growth, and reduce inflation.
• The plan consists of four parts: (1) a substantial reduction in the growth of
Federal expenditures; (2) a significant reduction in Federal tax rates; (3)
prudent relief of Federal regulatory burdens; and (4) a monetary policy on
the part of the independent Federal Reserve System which is consistent with
those policies. These four complementary policies form an integrated and
comprehensive program.
• The leading edge of the program is the comprehensive reduction in the rapid
growth of Federal spending.
• The second element of the program, which is equally important and urgent,
is the reduction in Federal personal income tax rates by 10 percent a year for
3 years in a row. Closely related to this is an incentive to greater investment in
production and job creation via faster tax write-offs of new factories and
production equipment.
• The third key element of our economic expansion program is an ambitious
reform of regulations that will reduce the government-imposed barriers to
investment, production, and employment.
• The fourth aspect of the comprehensive economic program is a monetary
policy to provide the financial environment consistent with a steady return to
sustained growth and price stability. The planned reduction and subsequent
elimination of Federal deficit financing will help the Federal Reserve System
perform its important role in achieving economic growth and stability.
• The ultimate importance of this program for sustained economic growth will
arise not only from the positive effects of the individual components,
important as they are. Rather, it will be the dramatic improvement in the
underlying economic environment and outlook that will set a new and more
positive direction to economic decisions throughout the economy. Protection
against inflation and high tax burdens will no longer be an overriding
motivation.