Reaganomics on Trial

January 8, 1982

Report Outline
Economic Plan Under Attack
Growth of the ‘Welfare State’
Question of Equity for All
Special Focus

Economic Plan Under Attack

Sliding Economy's Spillover in to Politics

For most of 1981, it appeared that President Reagan would spend his first anniversary in the White House basking in the glow of victory. Dominating Congress like no president since Lyndon B. Johnson, perhaps even Franklin D. Roosevelt, Reagan had won passage of virtually his entire package of legislative proposals. Federal spending for social services and “categorical” grants (see Vocabulary, p. 5) to state and local governments were slashed, defense spending was increased, and the largest tax cut in American history, estimated at $750 billion over five years, was enacted.

Yet as the Jan. 20 anniversary date approaches, President Reagan finds himself the target of the slings and arrows of political fortune. Many Democrats who had pulled their punches earlier in the year are taking potshots at “Reaganomics.” New York Mayor Edward I. Koch, who won re-election in November running as both a Democrat and Republican, told the National League of Cities convention in Detroit on Dec. 1 that the president's “new federalism” is a “sham and a shame,” a “systematic campaign of abandonment” that will lead to hardship for the poor and urban decay.

More surprising and more ominous for the president is the rising chorus of criticism from within his own Republican Party. Gov. Richard A. Snelling of Vermont, a self-labeled conservative who is chairman of the National Governors' Association, told the Detroit conference, “Frankly, I think what is happening is that we are having an economic Bay of Pigs.” Richard Hudnut of Indianapolis, the league's outgoing president, told his fellow mayors: “I think there has been an escalation of concern, coupled with an erosion of support for the president's program, that the cuts are not fair and are too much of a burden on the cities.” Republican Sen. David Durenberger of Minnesota added, “After the first year of the new federalism, we must say to the president that the dream is going sour.”

ISSUE TRACKER for Related Reports
Aug. 12, 1988  Reagan's Economic Legacy
Aug. 21, 1987  Economics After Reaganomics
Jan. 08, 1982  Reaganomics on Trial
Budget and the Economy
Economic Analyses, Forecasts, and Statistics
State, Local, and Intergovernmental Relations