In theory, the idea was to cut taxes to give wealthier people paying 70% marginal tax rates more incentive to keep working. People would have more money to spend, would spend it, and that would lead to more workers being hired and an increase in economic growth. Government spending was to be cut, but - it wasn't. Defense spending went from $130 billion to $300 billion in a matter of years. Thus the big deficits but the economy did well in the 80s.
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