Final answer:
The National Forest Service did not lose money, but Reagan's economic policies, including tax cuts and increased military spending without equivalent cuts in social programs, led to significant federal revenue loss and a substantial increase in the national debt.
Step-by-step explanation:
The National Forest Service did not directly lose money under President Reagan, rather the tax cuts implemented during his administration reduced federal revenue significantly. The Economic Recovery Tax Act of 1981 aimed to stimulate economic growth by reducing individual income taxes, which did lead to a decrease in federal revenue by hundreds of billions of dollars annually. These cuts, coupled with increases in military spending and a lack of proportional cuts to social programs, resulted in large budget deficits. Reagan had proposed cuts to Social Security and Medicare to offset the loss of revenue but faced opposition, leading him to reverse these proposed cuts.
The Laffer curve, which suggested that tax cuts could ultimately increase governmental revenue by stimulating economic activity, turned out not to be supported by economic evidence at this scale. The overall effect of President Reagan's policies was a tripling of the national debt, from $900 billion to nearly $3 trillion over his eight years in office, making it impossible to achieve a balanced budget, despite economic growth and a reduction in unemployment rates by the end of his second term.
In short, the tax cuts and increased spending under Reagan led to a significant increase in the national debt without the commensurate economic boom that was expected to balance the federal budget through increased tax revenues from growth.