Along with cutting taxes, Reagan also introduced economic plans which the media labeled "Reaganomics"." Reaganomics, as the name suggests, was President Reagan's economic policy, which called for many tax cuts, an increase in military funding, deregulation of domestic markets, and a decrease in government spending. Before Reagan took office, America was in an economic crisis. Unemployment was at a peak of 10.8%, price inflation was 13.3% in 1980, and poverty was rising to around 15.2%. Once Reagan took office and implemented his policies, things changed for the better. Twenty million jobs were created dropping unemployment to only 5.3%, income tax was cut from 50% to 28%, federal spending was cut to 21.2%, the stock market tripled, inflation reduced to 3.2%, poverty rates declined every year from 1984 to 1989 by one-sixth, and total economic growth averaged 7.1% (FactReal, Reaganomics"). Reaganomics changed America. It allowed more money to be passed around and overall increase in wealth. .
Reagan also boosted the military and homeland defense through his "Peace Through Strength"" mentality. Before his presidency, the world had seen the triumph of Marxism in countries such as Angola and Nicaragua, with El Salvador seeming to follow them, America had been humiliated by the outcome of the Vietnam War in 1975, during the Jimmy Carter administration, 52 Americans in embassies had been captured, which resulted in the American military having low morale, low pay, outdated equipment, and little to no maintenance on what equipment they did have. Thousands of enlisted men's families were surviving on food stamps, not many personnel were re-enlisting, and the high taxes caused them to live poor lives. Many who didn't re-enlist stated that it just wasn't worth it. Then Reagan took office. Along with his economic strategy, he wanted to restore the military to its former glory. Reagan believed the key to victory was through strength.