Published: 1981
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President Ronald Reagan, speaking from the Oval Offive during a nationally televised address to the nation, uses charts and graphs to illustrate his 33 month, 25 % proposed tax reduction due for resolution in the House July 29, 1981. (UPI Photo/Don Rypka/FILES)

Nick Charles: 1981 was a year of Reaganomics. On February 5th President Reagan told the nation the United States is in the worst economic mess since the Great Depression, and he appealed for support for sweeping spending and tax cuts.

Two weeks later Mr. Reagan outlined his proposed $659 billion budget for fiscal '82. That spending plan provided for a $45 billion deficit, budget cuts totaling $41 billion and an immediate 10% personal tax cut. Initially opposition was strong, but the President used what some people called 'the greatest display of salesmanship in White House history' to win conventional approval. The tax cut turned out to be the largest in U.S. history, cutting taxes 25% over a three-year period. But Mr. Reagan promised no quick fixes and said recovery would take time.

The Federal Reserve Board continued its tight money policy as a means to control inflation, keeping interest rates at double-digit levels. This did cut down spending and pulled inflation down into the single-digit range.

The housing industry suffered one of its worst periods since the end of World War II. Car sales also hit record lows. The Reagan economic plan suffered a setback in November, when Budget Director David Stockman called the plan 'a Trojan horse which benefits the rich'. Stockman apologized and offered his resignation, but the President decided to keep him on.

At about the same time there was another controversy involving the President's National Security Advisor, Richard Allen. Allen came under fire when it was learned he received $1,000 from a Japanese magazine for arranging an interview with First Lady Nancy Reagan. But the Justice Department cleared Allen of any wrongdoing, closing its investigation two weeks later.

James Buchanan: "This is James Buchanan in New York. 1981 saw change in Poland. The labor union solidarity gained in power, changes came in the Polish leadership; but the country remained plagued by its old problems: food shortages, lack of capital and lack of hard goods. As the year neared its end, the Communist military government declared martial law. Communications were severed between Poland and the outside world, and Russia remained a threat over the horizon.

"We'll return to Nick Charles and 1981 in Review in just one moment."