aised the cost of capital instead of reducing the cost. Final analysis of hi eight-year reign concludes that, on net, the cost of productivity was raised through tax policy (Murphy 40-49). “Thus Reagan was not much of a supply-sider, all pretenses in that direction aside, with regard to capital during the course of his Presidency”(Murphy 41). The question that remains is – would supply-side policies to spur capital work if followed through? Based on an intense analysis by economists Charles Bischoff, Ed Kokkelenberg, and Ralph Terragrossar, the answer is maybe. Traditional investment models and … “the neoclassical investment models fail to account for the fact that investment determinants are endogenous. …They … overestimate the efficacy of a dose of supply-side fiscal policy on investment behavior” (Murphy 41). The three economists did use rational expectations through constant variables. The result confirmed that Reagan’s theory would have worked, yet with too small of a gain to have made a significant impact (Murphy 42). Limited Government (Spending) and the Militaristic RegimeThe $125 billion dollar budget deficit the country swallowed in the 1980s was not what President Reagan intended. The following excerpt from Reagan’s Council of Economic Advisors (CEA) states their objectives for limited government and spending: “From a high 23 percent of the gross national product (GNP) in fiscal 1981, Federal outlays are now scheduled to decline to 21.8% in fiscal 1982 and to reach approximately 19% beginning in 1984. From deficit $59.6 billion in 1980, … Federal expenditures are now estimated to Morris 9exceed revenues by $45.0 billion in fiscal 1982 and $23.0 billion in 1983. By fiscal 1984… the Federal budget should be in balance” (Meyer 69).This outline for a balanced budget via reduced government spending and supply-side tax cuts was, well, no...
