Final answer:
President Reagan attempted to stimulate economic growth through tax cuts and reduced government regulation, known as Reaganomics. Despite reducing taxes, especially for the wealthy, he faced challenges in reducing government spending. The increase in military spending led to a larger federal deficit.
Step-by-step explanation:
President Reagan is known for his economic policies that focused on tax cuts and reducing government regulation, a strategy deemed Reaganomics. His administration significantly cut taxes, particularly for the wealthy, with the belief that this would spur investment and economic growth. However, the resulting decrease in federal revenue necessitated either reductions in federal spending, increased borrowing, or an economic upturn to balance the budget. While Reagan proposed cuts to social programs and government services, including Social Security and Medicare, he faced significant public backlash, ultimately leading to a compromise that did not significantly reduce overall government spending.
The focus on supply-side economics and the reduction of taxes were thought to stimulate the production of goods and services. Nevertheless, despite tax cuts, government spending did not decrease as hoped; the size of the federal government actually grew under Reagan's leadership, partly due to a substantial increase in military spending. The result was an increased federal deficit, despite initial promises to balance the budget.