In 1984, Ronald Reagan won re-election in a landslide victory over Walter Mondale. Reagan ran on what he called a great renewal of America based on freedom, including economic freedom. Reagan boasted of whipping inflation and bringing back jobs. Critics discredited many of Reagan’s claims, but the people were optimistic about the economy and their future. When Reagan delivered his 1985 State of the Union address on February 6, 1985, he opened with a victory lap.
On January 6, 1985 the New York Times reported that Inflation had been whipped. In fact, they named the very day that inflation had died. It was Friday the 13th, July 1984. That was the day when the collective mind of Wall street stopped looking at forecasts of higher inflation and started looking at reality. Inflation rates that had been as high as 13.3% in 1979 and dropped to 3.8% by 1982 where it remained through 1985. Early in 1984, fears of worsening inflation were again rising as the economy began to grow at a sizzling pace, what the Los Angeles Times described as the fastest growing economy since 1951. Economists were warning that the US economy couldn't sustain such a high rate of growth without high inflation returning, but the Fed allowed the interest rates to go higher and higher and the inflationary expectations were never realized. Not only did the economists and investors think inflation was whipped, but so did the American people. Polls showed that most consumers expected prices to rise about 4%, not 12 percent as they had in the past. For the first time in years, consumers no longer rushed out to buy that new cars or home appliances to beat tomorrow’s prices.
During the 1984 campaign, Reagan boasted of these accomplishments. He talked about cutting personal income tax rates by 25%, defeating the quiet thief of inflation, and lowering the interest rates that stopped people from purchasing homes and automobiles. These were part of what Reagan called economic freedom. Freedom that in Reagan's words was our North Star and "common sense were our constellations". Wherever Reagan went to campaign he talked about a great renewal. Reagan told his audience, that America "made a great turn in the road in 1980". He told the crowd, "we were right when we stopped sending out S.O.S. and started saying U.S.A. again". Crowds ate it up, chanting "4 more years! 4 more years!".
President Reagan ran on this renewal and won re-election in a landslide. Ronald Reagan opened his 1985 State of the Union address with a victory lap. He claimed that inflation was best and that 7.3 million new jobs were created. America was a stronger nation than it was four years earlier. Reagan shared the victory with the families, communities and an "invincible spirit of one great nation under God” but make no mistake he was taking a victory lap after winning reelection in a land slide.
"Tonight America is stronger because of the values that we hold dear. We believe faith and freedom must be our guiding stars, for they show us truth, they make us brave, give us hope, and leave us wiser than we were. Our progress began not in Washington, DC, but in the hearts of our families, communities, workplaces, and voluntary groups which, together, are unleashing the invincible spirit of one great nation under God.
Four years ago we said we would invigorate our economy by giving people greater freedom and incentives to take risks and letting them keep more of what they earned. We did what we promised, and a great industrial giant is reborn.
Tonight we can take pride in 25 straight months of economic growth, the strongest in 34 years; a 3-year inflation average of 3.9 percent, the lowest in 17 years; and 7.3 million new jobs in 2 years, with more of our citizens working than ever before."
Of course, not everyone agreed with President Reagan. Indeed, the same New York Times just days before the 1984 election recorded the candidate’s arguments on the major economic issues in the United States. At the top of this issue was the deficit. The Mondale Campaign argued that higher taxes were needed to control the deficit, while Reagan rejected this except as a last resort. Unemployment remained high at 7.3 percent and Mondale argued that Reagan's recovery simply allowed the economy to keep pace with population growth. On tax cuts, Mondale argued that Reagan's tax cuts favored the wealthy and raising them would help to narrow the deficit. Reagan argued that the soaring value of the dollar reflected the power of the American economy, Mondale warned that budget deficits would put fear in foreign investors and cause the dollar to fall. Reagan rebutted that trade deficits also were proof that the country's strong growth was pulling up the rest of the world by providing a market for foreign goods, Mondale blamed trade deficits on lost jobs and devastating financial losses for farmers.
References
Presidency.ucsb.edu. (2019). Address Before a Joint Session of the Congress on the State of the Union | The American Presidency Project. [online] Available at: https://www.presidency.ucsb.edu/documents/address-before-joint-session-the-congress-the-state-the-union-5 [Accessed 22 Dec. 2019].Los Angeles Times. (2019). 1984--A Year of Remarkable Growth for California Companies. [online] Available at: https://www.latimes.com/archives/la-xpm-1985-06-09-ss-10326-story.html [Accessed 22 Dec. 2019].
Nytimes.com. (2019). INFLATION GETS BACK TO NORMAL. [online] Available at: https://www.nytimes.com/1985/01/06/business/inflation-gets-back-to-normal.html [Accessed 22 Dec. 2019].
Nytimes.com. (2019). THE MAJOR ECONOMIC ISSUES. [online] Available at: https://www.nytimes.com/1984/11/04/business/the-major-economic-issues.html [Accessed 22 Dec. 2019].
The Balance. (2019). How Bad Is Inflation? Past, Present, Future. [online] Available at: https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093 [Accessed 22 Dec. 2019].
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