How have Reagan's policies affected the government? | US Government and Civics | Khan Academy

How have President Reagan's policies affected the government since he left office?

What Ronald Reagan did was set up a titanic debate, really, between those who believed in the New Deal view of government—which was that it was there to help those who could not help themselves and manage an enormous economy and the enormous life of the world's, uh, only superpower or at least one of the two superpowers—and what that on the New Deal side, that was what government should do.

On the Reagan side, he said, "Get government out of the way and let American free enterprise and individual initiative create greatness in America again." So that was just setting up that ideological conversation.

Now, it continued all the way through Newt Gingrich's revolution in 1994 and his clashes with Bill Clinton. They were over the same kinds of things that Ronald Reagan had brought into the debate when he was elected in 1980.

Now the challenge was that Reagan's defense spending and his tax cuts ballooned the deficit. What ended up happening is that the thing he had come to Washington to try to solve, which was the budget deficit, had actually gotten bigger.

So Reagan, who came to town as a tax cutter, ended up ultimately having to raise taxes to solve some of those problems of having a large deficit.

And why is that bad? Because deficits lead to inflation, and inflation is what was strangling America when Reagan came into office.

Inflation was very high, and unemployment was high. So his solution to it, while it kicked off a strong economic recovery, also ballooned the deficit, which is a problem that is still one they wrestle with today.