In his first term, Reagan implemented "Reaganomics", which involved economic deregulation and cuts in both taxes and government spending during a period of stagflation. He escalated an arms race with the Soviet Union and transitioned Cold War policy from détente to rollback. He also survived an assassination attempt, fought public sector labor unions, spurred the war on drugs, and ordered the 1983 invasion of Grenada. In the 1984 presidential election, Reagan defeated former vice president Walter Mondale in another landslide victory. Foreign affairs dominated Reagan's second term, including the 1986 bombing of Libya, the Iran–Iraq War, the secret sale of arms to Iran to fund the Contras, and a more conciliatory approach in talks with Soviet leader Mikhail Gorbachev that culminated in the Intermediate-Range Nuclear Forces Treaty.
Reagan left the presidency in 1989 with the American economy having seen a significant reduction of inflation, the unemployment rate having fallen, and the United States having entered its then-longest peacetime expansion. The federal debt had nearly tripled since 1981 as a result of his cuts in taxes and increased military spending, despite cuts to domestic discretionary spending. Afterward, Alzheimer's disease hindered Reagan's physical and mental capacities. 