Answer:
<h2>a combination of increased defense spending and decreased tax revenue
</h2>
Explanation:
<u>Increased defense spending
</u>
<u>
</u>When President Ronald Reagan came into office in 1981, he ramped up American military preparedness with the Stategic Modernization Program. He authorized a program to spend over 200 billion dollars over five years on bombers, cruise missiles, intercontinental ballistic missiles, and more. Then in 1983, Reagan proposed the Strategic Defense Initiative (SDI), which was a plan for a space-based missile defense system against any threat of Soviet missiles. This program added more billions to the defense budget.
<u>Decreased tax revenue
</u>
President Reagan signed the Economic Recovery Tax Act in 1981. Tax rates were cut significantly in an effort to spur economic activity. Reagan's economic approach promoted tax cuts in the interests of "supply side economics" or what has commonly been called "trickle-down economics." The idea was that if you provided tax cuts to those at the top running business, they would invest more in their business, hire more workers, pay better wages, etc. Whether that's how it actually worked out is much debated.
