Economics l0l, A True-False Test
THE l980s: A DECADE OF GREED?
by Ralph R. Reiland
Regarding the l980s, answer whether the
following statements are True or False:
From l982 to l989, l9 million net new jobs were created in the United States (more than the number of jobs created in Europe and Japan combined), two-thirds of them high or middle paying, resulting in the lowest unemployment rate in l6 years.
The economic growth that flowed from the Reagan tax cuts increased federal tax revenues in the l980s by $1.1 trillion.
These additional federal tax revenues contributed to the reduction of the federal deficit from 6.3% of GDP in l983 to 2.9% in l989 (a Congress loaded with pork peddlers and a press filled with reporters crying about "ketchup as a vegetable" blocked greater spending cuts).
Presidents Kennedy and Reagan both enacted supply-side tax cuts on top income earners and job creators and produced the two longest economic expansions in American history. The Kennedy plan dropped the top marginal income tax rate from 91% to 70%; Reagan reduced the top rate to 28%. The Reagan tax cuts trickled down to produce a 76% jump in new business investment in real (adjusted for inflation) dollars in the l980s and tripled the rate of productivity growth.
Real per capita after-tax income rose by l9% in the l980s, nearly double the rate of the l970s.
Real family income increased every year from l983 through l990 in every income group (from the poorest fifth of households to the richest fifth).
The real income in the bottom fifth of the income distribution increased by 12% in the l980s, reversing a 17% slide between l979 and l983.
86% of the tax filers in the poorest fifth of families in l980 moved out of that bottom quintile by l988 (l6% moved all the way to the top fifth of income earners).
Real median income increased by 5% between l982 and l988 for those who started in the top fifth of income earners, and increased 77% for those who started in the bottom fifth (primarily by moving out of that bottom quintile).
Real family income declined each year from l979 until l982, and declined each year since l99l --- the Reagan terms, sandwiched between these two periods of shrinking income, produced a real increase of $4,877 in median family annual real income. Since l988, the typical American household has lost over $2,000 in real annual income, and the degree of income inequality is now at a post-World War II high.
After growing nationwide by 7 million people during the late l970s, the poverty population declined by 4 million during the l980s; reversing this downward trend, poverty in the 90's is on the rise again. The top income tax rate was reduced from 70% to 28% in the '80s, but the top 5% of all earners paid more, increasing their share of all federal income taxes paid from 36% in l980 to 43% in l990.
In the l980s, the percentage of African-American families earning more than $50,000 in real dollars doubled from 7 to l4%, the unemployment rate for black teenagers fell by 21%, and black employment in professional and managerial jobs expanded by one-third. After declining 10% between 1978 and 1982, the real median income of black families increased by 17% between l982 and 1989. From l982 to 1987, the number of black-owned businesses increased by 38%, triple the overall business growth rate during that period. The number of new Hispanic-owned businesses soared by 81%.
The median weekly earnings of female workers grew 8% faster than male earnings in the l980s, and women entrepreneurs ended the decade employing more people than all of the Fortune 500 companies combined. The number of women-owned firms expanded by 57% in the '80s and the sales volume of woman-owned firms tripled.
Following the double digit annual inflation rates of 11.3%, 13.5% and 10.3% in the Carter years --- an escalation of prices that was especially hard on the poorest families --- the annual inflation rate averaged 3.9% in the two Reagan terms.
Note: All answers are true. All information is based
on Labor Department and Census Bureau studies. |
