Hard on the heels of tax cuts came calls to cut spending in a large array of government programs, in the interests of balancing the budgets. On a Friday, the White House was heard to say that when it came to looking at things to cut from the budget, there could be no "sacred cows." The following Monday, Defense Secretary Caspar Weinberger appeared before a congressional committee to argue that all of the (increased) spending for Defense in the president's proposal was absolutely necessary. Obviously, the view that Big Government was evil did not extend to include a similar notion about Big Military.
To review, let's outline the nuts and bolt of the Reagan Agenda at that time.
1. Push through huge tax cuts.
2. Push through huge military spending increases.
3. Point out that, hey, we're short on funds, and it's the fault of the Liberals who keep spending money on frivolous Big Government programs. You know -- the ones that give lazy poor people a free ride by helping them do unnecessary things like eat, go to the doctor and have a place to live.
4. Insist that if the budget is to be balanced, it has to be done without raising taxes or cutting military spending.
5. Keep up the political pressure until Congress trashes most or all of the policies that have been in place since Franklin Roosevelt's New Deal -- or at least since Lyndon Johnson's War on Poverty.
Reagan succeeded in getting his agenda rolling, but something happened after he left office, namely on the watch of his vice-president and successor, George H. W. Bush; actually, a couple of somethings.
Number one: the reversals of New Deal programs such as Social Security, or War on Poverty legacies such as Medicare, were shown to be such hot potatoes that even Reagan had to be heard saying he didn't want to kill them, only "fix" them.
Number two: Congress and the people were not as quick as the Reaganauts hoped they would be in cutting "discretionary" spending by eliminating whole programs.
Number three: the Soviet Union (Reagan's "evil empire" whose existence justified his military budget increases) collapsed under its own weight.
The senior Mr. Bush scrambled to find something to replace this convenient enemy. Saddam Hussein worked as a monstrous military threat to U.S. "friends and allies" in the Persian Gulf, i.e., oil suppliers such as Kuwait and Saudi Arabia; but he was beaten to early and too easily to make him a sustainable target in opposition to which the American flag could be continuously waived (hmmm... yet does this explain why he was left in power? Just a thought). For a widespread, amorphous evil that could absorb a lot of emotion and justify more military dollars, the War on Drugs just turned out not to be sexy enough. So a weakened Bush, afflicted with peace (and its economic dividend) and enough prosperity that people were interested in seeing to it that their children not be saddled with the huge task of repaying the Reagan debt, was pushed into a corner and betrayed his mentor's cause, by agreeing to a bipartisan plan to limit spending and (gasp) adjust some tax rates.
After that, the worst possible thing happened. Building on the bipartisan agreement that Bush signed onto, his evil successor worked with a Republican congress to continue to improve the economy, reduce the deficits, and actually came to the point of beginning to pay down that massive debt -- all without eliminating federal programs that help poor people eat, find jobs, go to school, pay their rent etc. The Reagan agenda had been derailed. What this country needed (and fast) was a good crisis; a recession, or a war, or, preferably, both.
Enter the scion of the disgraced Bush dynasty, white-horsed, armor gleaming, ready to redeem the family name and institutionalize the Reagan Revolution. Acting according to script, he began in true Reaganite fashion by pushing through a tax cut, designed first of all to eliminate the surpluses; for unless the country is in a fiscal crisis, how can he argue how necessary it is to stop wasting money on helping the undeserving poor? Anyway, check that one off the list.
Next thing is to get a good juicy crisis. Bush tried to create an energy crisis, or the perception of one, but his timing was bad; crude oil supplies were high, and prices decreasing, even as he went on the road to tell the country how bad things were getting. For a short time California came to his rescue, with its rolling electricity blackouts; but it was not an unvarnished success. And he still needed a credible enemy, to fill the hole in the American soul left by the collapse of the Iron Curtain and the Cold War -- and to justify that massive military buildup which must displace, in real dollar terms, the disgusting tendency to want to use government funds to help humans.
Fortune smiled on him on a Tuesday in September. The rest is, so far, history.