ABSTRACT
For the past two decades, Washington's policymakers have had difficulty managing the economy to achieve the traditional goals of healthy growth with full employment and stable prices. In the 1970s policymakers oscillated between anti-inflation policies to slow the economy and economic stimulation to reduce unemployment. After aggressive anti-inflation policies caused a deep recession in 1981-82, the Reagan administration pursued vigorous economic growth by running large deficits and expanding credit. For six years the economy grew, but so did the nation's debts and its structural problems: low investment, stagnant productivity, an inadequate education system, and widespread social problems. By the late 1980s the accumulation of economic and social problems had sapped the nation's ability to grow and prosper in the increasingly competitive global economy. Since 1989 growth has virtually halted. Slow growth meant falling tax revenues and rising expenditures on welfare and unemployment. In short, slow growth widened the federal budget deficit.
