Term: 1981–1989
Ronald Reagan's presidency marked a shift to "Reaganomics," built on reducing the growth of government spending, reducing taxes, and deregulation. In 1981, he signed the Economic Recovery Tax Act (ERTA), which slashed rates for individuals and corporations. Simultaneously, he initiated a huge peacetime military buildup to challenge the Soviet Union, aiming to outspend the Soviets on defense.
While the economy experienced growth after the 1982 recession, the deep tax cuts were not matched by equivalent cuts in government spending. Budget deficits reached unprecedented peacetime levels, forcing the government to borrow heavily. Between 1980 and 1990, the national debt more than tripled.
Debt at Start of Term (1981): ~$0.99 trillion
Debt at End of Term (1989): ~$2.85 trillion
Total Increase: ~$1.86 trillion
Percentage Increase: ~186%
The U.S. went from being the world's largest creditor nation to the world's largest debtor nation during this period. Supporters credit these policies with winning the Cold War, while critics point to it as the start of modern chronic deficits.