Reagan Signs Omnibus Budget Reconciliation Act Cutting Federal Social Spending by $35 Billion

President Ronald Reagan signed the Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35) on August 13, 1981, cutting roughly $35 billion in projected fiscal year 1982 spending and about $130 billion over three years. Office of Management and Budget Director David Stockman drove the cuts, and Rep. Phil Gramm of Texas co-sponsored the substitute Gramm-Latta II package that bypassed House Democratic leadership. The law tightened AFDC eligibility, cut food stamps, reduced Medicaid grants to states, and eliminated CETA public service jobs.