After the economic downturn of the 1980s, the population of Reagan City, California has grown by about four percent annually. This is a remarkable growth considering that Reagan was elected as a Democrat. During the Reagan administration, unemployment reached 10%, the highest level since the Great Depression. Cities were also plagued by homelessness. However, Reagan brushed the problem aside, suggesting that the media exaggerated the problem and that many people chose to live on the streets. Despite the economic downturn, the US GDP grew at an average rate of 4.5% annually for the rest of his presidency, and the nation's debt was almost $3 trillion.
Although Americans were increasingly accepting of racial diversity, the president and Congress tended to approach the issue through an individualistic perspective. For example, the Reagan administration reduced federal programs that provided aid to low-income individuals. The National Urban League concluded in its annual "State of Black America" report that "black economic rights have never been under such powerful attack since the 1960s." Crime and violence were a significant issue in many African American communities, and the federal government did little to address these problems.
The first term of the Reagan administration included a tax cut for the richest Americans. The aim was to encourage them to spend, which would generate more jobs down the socioeconomic ladder. By doing this, economic growth would increase the total tax revenue. In return, this would balance the budget and lower taxes for the rich. This economic policy, called "trickle-down economics," made the president and Congress promise to lower taxes and balance the budget simultaneously.