Bush once called it, "voodoo economics." The President also vowed to protect certain entitlement programs (like Medicare and Social Security) while cutting the budgets for other social programs by targeting waste, fraud and abuse.ĭuring his first year in office, Reagan engineered the passage of $39 billion in budget cuts into law, as well as a massive 25 percent tax cut spread over three years for individuals, and faster write-offs for capital investment for business. This overall approach became known as "Reaganomics," or as Republican primary candidate Vice President George H.W. Higher revenues would then be used to increase defense spending and balance the federal budget. Reagan embraced the theory of "supply side economics," feeling that tax cuts encouraged economic expansion which would result in increases in federal government revenue at a lower tax rate. Reagan's economic policies highlighted his long-standing dislike of high federal income taxes. During the campaign Reagan promised to restore the free market from excessive government regulation and encourage private initiative and enterprise. When Reagan took office the economy was one of double-digit inflation and interest rates near 20%. Internationally, Reagan demonstrated a fierce opposition to the spread of communism throughout the world and a strong distrust of the Soviet Union, which in 1983 he labeled an "evil empire." He championed a rearmed and strong military and was especially supportive of the MX missile system and the Strategic Defense Initiative ("Star Wars") program. Reagan advanced domestic policies that featured a lessening of federal government responsibility in solving social problems, reducing restrictions on business, and implementing tax cuts. Reagan served as arguably the first true conservative U.S. president in over 50 years. His triumph capped the rise of the new right/conservative wing of the Republican Party and ushered in a new era of governing. Ronald Reagan was elected President of the United States on November 4, 1980.
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