[225] He had signed the Omnibus Budget Reconciliation Act of 1981 to cut funding for federal assistance such as food stamps, unemployment benefits, subsidized housing and the Aid to Families with Dependent Children,[226] and would discontinue the Comprehensive Employment and Training Act.[227] On the other side, defense spending doubled between 1981 and 1985.[228] To discover why the United States was unable to maintain its economic competitiveness, Project Socrates was initiated within the Defense Intelligence Agency. According to program director Michael Sekora, their findings helped the country exceed Soviet missile defense technology.[229] However, the incoming Bush administration strangled the program's philosophy.[230]

Deregulation
Reagan sought to loosen federal regulation of economic activities, and he appointed key officials who shared this agenda. William Leuchtenburg writes that by 1986, the Reagan administration eliminated almost half of the federal regulations that had existed in 1981.[231] The 1982 Garn–St. Germain Depository Institutions Act deregulated savings and loan associations by letting them make a variety of loans and investments outside of real estate.[232] After the bill's passage, savings and loans associations engaged in riskier activities, and the leaders of some institutions embezzled funds. 