Supply side economists were mostly focused on stimulating the economy.

The Nobel prize winning economist Paul Krugman wrote a very good book about this time period and the rise of supply side economists called Peddling Prosperity. I would like to mention that Krugman has always been a more liberal economist and that a lot of people understandably find him controversial in modern politics, but he wasn’t as much of the political commentator back in the 90s when this book was written compared to how he is now. So the book is solid and data driven and shouldn’t be ignored for how people view Krugman today.

For a bit of background. The late 1970s had the economic phenomenon of Stagflation this is when you have high unemployment rates and high inflation rates at the same time. Generally you would expect these two variables to be inversely correlated. But some wonky stuff was happening.

Productivity in the US was really explosive after WW2. It started to decline in the 1970s. There is a lot of debate about what caused this.

Another factor was that was that there was less stability with currencies starting in this time. You start to see a lot of economies moving away from tying their currency to the value of gold or other currencies after WW2 up to this time period.

There were other factors to, but the biggest factor by far was that the price of oil was drastically increased by opec. This caused the drastic cost push inflation in the economy. Everything became more expensive because everything needs oil to be transported.

The federal reserve responded to these things by increasing the money supply. Typically this is a good idea when productivity is down. This involves lowering interest rates and putting more money in the economy to be spent. For example, If it’s suddenly cheaper for more people to get a car loan, you can expect more people to buy cars. As a result, GDP goes up and the money multiplies through the economy. Car salesmen have more income to go out to dinner, waitresses and cooks have more money to buy clothes, clothing salesmen have more money…..

The problem is that when more people are spending money, they often increase competition and cause prices to increase. Look at the current housing market for example. So many people are trying to by houses that you see bidding wars and prices explode as a result of demand pull inflation.

So this further cause the inflation problem to get worse and productivity was still not great.

During this time, the Federal Reserve changed their primary focus to their famous dual mandate. They decided to focus on keeping unemployment and inflation at healthy levels.

The Fed Chairman, Paul Volcker realized that inflation and unemployment are typically negatively correlated. So he increased interest rates above 19 percent in 1979. This caused a recession and brought inflation in check. Basically did a system reboot. Other factors also played a role like oil prices going back down etc.

So with all this in mind, we get to your question. It was at about this time that supply side economics became main stream. Here is some background on this.

Ronald Reagan wanted to be president. He ran as a Republican. But what most people don’t realize today is that he was a political outsider. He was looking for an edge over establishment republicans candidates like George H.W. Bush. He met an economist named Arthur Laffer who showed him a concept he was working on called the Laffer Curve.

Basically the idea was that if you cut taxes, the windfall money would be invested back into the economy and productivity would increase. Laffer claimed that productivity would increase to the point that there would be a lot more tax revenue collected even though the rates were lower. He reportedly drew this on a napkin to show Reagan.

So Reagan took this idea and ran with it. Remember, the economy has just had the equivalent of a factory reset by volcker. There was a recession on and people wanted help. Reagan offered them this with supply side economics.

The thing is, there was no evidence to show that this economic concept worked. There was no peer reviewed research on this at the time. It was all purely theoretical.

This economic policy was so outlandish that in the presidential debates, Bush labeled this Voodoo economics.

Reagan won and supply side economics became the backbone of his fiscal policy strategy. Taxes were cut. Jobs were gained, and the recession ended. This strategy has been championed by conservatives since.

This was not all sunshine and rainbows though. Although productivity did increase, Krugman points out that it was largely just a return to pre recession levels and that it didn’t create all the new growth that Laffer and Reagan had anticipated. Deficits exploded. Krugman has a bunch of data and info to look at this and evaluate supply side economics and is worth reading.

The American people loved it though and re elected Reagan and even his VP Bush after him. Ironically bush raised taxes to alleviate the deficits and lost to Clinton.

So long story short, the answer to your question is that the goal of the supply side economists was to stimulate the economy because inflation had been dealt with by the time Reagan used it as a campaign tool.