in 2001, President George Washington w. bush signed the economic growth and tax relief reconciliation act of 2001. this bill cal
led for large tax cuts just as the economic recovery act of 1981 had and largely benefited the wealthiest Americans. President bush's approach to economics was very similar to that of president Reagans'. explain the assumptions behind the theory of supply-side economics, and describe the consequences of Reaganomics
"Trickle-down": supply-side economics creates tax cuts for the wealthy.
Supply-side economics suggests tax cuts for the wealthy. Those tax cuts will be used to create new jobs. New jobs will give more money to the middle-class.
This economic policy makes sense in theory and in some cases the tax cuts resulted in more jobs and higher wages. However, mostly it led to a large gap in wealth as the wealthy kept the money instead of reinvesting in jobs and wages. Eventually as the US moved industry overseas, tax cuts for the wealthy meant the expansion of jobs overseas instead of American jobs. Meanwhile the middle-class pay higher taxes to make up for the loss of taxes from the upper class.
