6.1 'Reaganomics' and taxation. Domestically, the Reagan administration enacted a major tax cut, sought to cut non-military spending, and eliminated federal regulations. The administration's economic policies, known as 'Reaganomics', were inspired by supply-side economics. The combination of tax cuts and an increase in defense spending led to budget deficits, and the federal debt increased significantly during Reagan's tenure. Reagan signed the Tax Reform Act of 1986 (which simplified the tax code by reducing rates and removing several tax breaks) and the Immigration Reform and Control Act of 1986 (which enacted sweeping changes to U.S. immigration law and granted amnesty to three million illegal immigrants). Reagan also appointed more federal judges than any other president, including four Supreme Court Justices. Outlining his plan for Tax Reduction Legislation from the Oval Office in a televised address, July 1981.