He embarked upon a course of cutting taxes and Government expenditures, refusing to deviate from it when the strengthening of defense forces led to a large deficit. A renewal of national self-confidence by 1984 helped Reagan and Bush win a second term with an unprecedented number of electoral votes. Their victory turned away Democratic challengers Walter F. Mondale and Geraldine Ferraro. In 1986 Reagan obtained an overhaul of the income tax code, which eliminated many deductions and exempted millions of people with low incomes. At the end of his administration, the Nation was enjoying its longest recorded period of peacetime prosperity without recession or depression. In foreign policy, Reagan sought to achieve "peace through strength." During his two terms he increased defense spending 35 percent, but sought to improve relations with the Soviet Union. In dramatic meetings with Soviet leader Mikhail Gorbachev, he negotiated a treaty that would eliminate intermediate-range nuclear missiles. Reagan declared war against international terrorism, sending American bombers against Libya after evidence came out that Libya was involved in an attack on American soldiers in a West Berlin nightclub. By ordering naval escorts in the Persian Gulf, he maintained the free flow of oil during the Iran-Iraq war. In keeping with the Reagan Doctrine, he gave support to anti- Communist insurgencies in Central America, Asia, and Africa. Overall, the Reagan years saw a restoration of prosperity, and the goal of peace through strength seemed to be within grasp. --------------------------------------------------------------------------------.