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Chapter 30: The Conservative Ascendancy, 1974–1991
Chapter Review
I. AMERICAN COMMUNITIES Grass Roots Conservatism in Orange County,
Orange County’s 800 square miles lie at the geographic center of Southern California and
citrus farming dominated the economy until the 1940s, when defense spending created
thousands of new manufacturing jobs. Goldwater’s 1964 campaign had ignited great
enthusiasm in Orange County, but his defeat forced conservatives to consider ways to shed
the “extremism” label. Elected California governor in 1966, Ronald Reagan sought to limit
state support for welfare and other social services, while expanding state power to enforce
law and order.
Reagan’s success in California and Nixon’s election in 1968 signaled a new turn for
American conservatives, fueling a California tax revolt that led to Proposition 13 that
slashed property taxes and strictly limited future tax increases. Orange County also supported
the spectacular growth of “born again” evangelical Christianity. As president, Reagan
introduced a new economic program—“Reaganomics”—that reduced income taxes for
wealthy Americans but funded the largest military buildup in American history, redirecting
the focus of government in response to the activism and voting of conservatives from Orange
County and across the nation.
Post-war prosperity had kept conservatives at bay. Then, in the 1970s, economic growth
ground to a halt and Americans faced an unfamiliar combination of inflation and rising
unemployment. Economists termed this novel condition “stagflation.”
After emerging from World War II as the most prosperous nation in the world and retaining
this status through the 1960s, the country suddenly found itself falling behind Western
Europe and Japan. Meanwhile, presidents Gerald Ford and Jimmy Carter promised little and,
as far as many voters were concerned, delivered less.
a. A Troubled Economy
The OPEC oil embargo of 1973 made Americans painfully aware of their dependence on
Middle East oil supplies. Although Nixon responded by appointing an “energy czar” and
promoting conservation, energy prices climbed, raising rents and food bills with them. At
the same time, the United States lost ground to Asian and European producers of cheaper
and more efficient cars, televisions, radios, tape players, cameras, and computers. The
United States had lost its dominance in the global economy. An AFL-CIO leader
complained that the United States was becoming “a nation of hamburger stands . . . a
country stripped of industrial capacity and meaningful work.” Industrial unions shrank,
Copyright © 2012 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
although growth in service industries made up some of the losses. The slump also hurt
working women; between 1955 and 1980 the wage gap worsened, with women falling
from 64 percent of men’s earnings to 59 percent, and women clustered in occupations
where the lowest wages prevailed. African American women made some gains. By 1980,
northern black women’s median earnings were about 95 percent of white women’s
earnings. Hispanic women flooded into the workforce, but mainly in low wage jobs with
few prospects for advancement.
b. The Endangered Environment
The environmental downside of the post-World War II economic boom was becoming
painfully evident. The first Earth Day was celebrated in 1973, and pollution and climate
change became political issues. Activists succeeded in blocking some massive
construction projects, such as nuclear energy plants; more often they halted small-scale
destruction of a natural habitat or historic urban district. At Love Canal near Buffalo,
toxic wastes dumped by the Hooker Chemical Laboratory had oozed into basements and
backyards, and in 1978 homemaker Lois Gibbs organized her neighbors to draw attention
to the grim situation. Eventually New York State bought up all the houses and relocated
Congress responded to pressure by creating the EPA in 1970 and passing scores of bills
to protect endangered species, reduce automobile pollution, limit and ban the use of some
pesticides, and control strip-mining practices. City leaders, both Democratic and
Republican, resisted congressional mandates for reduction in air pollution, stalling
compliance. George Meany, president of the AFL-CIO, denounced “tree hugger”
environmentalists as enemies of economic growth, and United Auto Workers lobbyists
joined automakers in resisting emission and gas mileage rules. Environmentalists lost a
key campaign with the approval of the Alaskan Pipeline, 800 miles of pipe often leaking
into an endangered environment, connecting oil fields with refining facilities in the
Lower 48.
c. “Lean Years Presidents”: Ford and Carter
Ford and Carter presided over a depressed economy and a nation of disillusioned citizens
increasingly open to conservative appeals. The pardon of Richard Nixon reinforced
public cynicism toward government and Ford in particular. Ford’s nomination of Nelson
Rockefeller annoyed conservatives and his WIN program was ridiculed. First Lady Betty
Ford broke ranks with conservatives to champion gun control, the Equal Rights
Amendment, and abortion rights.
Ford banked on his incumbency for the 1976 election, and, dumping Rockefeller, picked
Kansas Senator Robert Dole as his running mate, and narrowly won renomination. After
a fight with Teddy Kennedy, Jimmy Carter, a former Navy officer and governor of
Georgia as well as a born-again Christian, who presented himself as a political outsider,
won the Democratic nod.
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Counting on support from both conservative and southern voters who would ordinarily
vote Republican, he defended existing entitlement programs while opposing Kennedy’s
call for comprehensive health coverage. Capitalizing on Ford’s unpopular Nixon pardon,
Carter got just over 50 percent of the popular vote and a 297-to-240 margin in the
Electoral College. In office, Carter seemed to many observers enigmatic, even
uninterested in the presidency, more conservative than liberal. Although he carried out
reforms of airline regulation and improved efficiency of some programs, his lack of a
clear energy policy was ridiculed and stagflation raged on. His defeat in 1980 left
liberalism and the Democratic Party discredited and in disarray.
MHL document: Jimmy Carter, The “Crisis of Confidence” Speech (1979) at
d. The Limits of Global Power
In April 1975, the North Vietnamese captured Saigon as the South Vietnamese Army,
now without U.S. assistance, fell apart. All fighting stopped within a few weeks, and
Saigon was renamed Ho Chi Minh City. Vietnam was reunited under a Communist
government. The limits of American global power were clear for all to see.
Announcing a “new morality” in foreign policy, Carter reversed decades of support for
repressive right wing regimes in Latin America and sought to reign in the CIA. In the
Middle East, Carter brought together Israeli leader Menachem Begin and Egypt’s Anwar
Sadat at Camp David in 1978, and mediated a peace treaty signed in Washington in 1979.
Despite the accord, the status of Palestinians remained unresolved. Carter’s foreign
policy morality led to a controversial agreement to return the Panama Canal to
Panamanian control with a treaty narrowly ratified by the Senate in 1978. In 1979, the
U.S. finally granted diplomatic recognition to Communist China, but Carter angered
conservatives by severing ties with Nationalist Taiwan. Human rights and national
interest collided as Carter continued to support repressive regimes in South Korea, El
Salvador, and the Philippines, and he refused to recognize the leftist Sandinistas in
Nicaragua, despite pleas for humanitarian aid. Détente continued with the signing of the
SALT II treaty in 1979, but a Soviet invasion of Afghanistan the same year reversed the
trend, and Carter sent covert military aid to Afghan fighters while cutting off grain
shipments to Russia and blocking American participation in the 1980 Moscow Olympics.
e. The Iran Hostage Crisis
This event made President Carter’s previous problems seem small by comparison. U.S.
foreign policy in the Middle East had long depended on a friendly government in Iran.
After the CIA helped restore the shah in 1953, millions of dollars of U.S. military and
economic aid had poured in to prop up the shah. In a state visit, Carter toasted the shah
for his “great leadership” and overlooked the rampant corruption in government and a
well-organized opposition. In 1979 Ayatollah Khomeni’s Islamic revolutionaries
overthrew the shah. When Carter let the shah come to the United States for medical
treatment, some of Khomeini’s followers retaliated, storming the U.S. embassy and
Copyright © 2012 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
taking the American staff as hostages. After more than a year of indecision and as oil
prices soared Carter ordered U.S. military forces to stage a disastrous nighttime helicopter
rescue mission. The political and economic fallout destroyed what was left of Carter’s
credibility as his energy policy and human rights based foreign policy lay in ruins.
Economic and foreign policy failures mobilized “the politics of resentment.” Many whites
resented higher taxes to fund programs for minorities and the poor while slowing economic
development, and doing nothing for middle class and poor whites. In 1978, a California
“taxpayers’ revolt” led to Proposition 13 that cut property taxes and government revenues
for social programs and education. Old-style conservatives lined up behind these initiatives,
as did the New Right. By far the largest component, evangelical or “born again” Protestants
took shape as a larger and more powerful political force.
a. Neoconservatism
“Neocons,” many of them former liberal Democrats who had lost faith in the New Deal
and Great Society sought to repeal Johnson’s affirmative action programs and dismantle
the antipoverty programs, believing that equality of opportunity had been replaced by an
unfair quest for equality of outcomes.
The heart of neoconservatism was foreign policy. Angered over failure in Vietnam,
neoconservatives called for a stronger national defense against communism. They
opposed détente and accused Carter of allowing communists to advance in third world
countries and responding to Soviet occupation of Afghanistan too timidly.
Neoconservatives played an important role in building the institutional foundation for the
rightward turn in American politics. Well-funded think tanks such as the Heritage
Foundation, the American Enterprise Institute, the Hoover Institution, and the Scaife
Foundations offered opportunities to individuals and institutions agreeable to their views.
The surge rightward gained intellectual respectability from neoconservatives and
prepared the way for broader popular support.
b. The Religious Right
During the 1970s evangelical Protestants, who grew to include more than 50 million
Americans, became the backbone of the New Right as fundraisers and recruiters for
conservative PACs and community-based organizations. Members of the Religious Right
generally supported the neoconservatives on foreign and domestic policy, including a
balanced budget amendment and, returning prayer to the public schools, and Supreme
Court reinstatement of the death penalty in 1977. As grassroots activists, they provided
the political muscle that carried Orange County conservatism from the margins to the
center of the Republican Party.
TV ministers such as Pat Robertson, Jimmy Swaggart, and Jim and Tammy Faye Baker
reinforced the message. Jerry Falwell’s Old-Time Gospel Hour was broadcast over 200
television stations and 300 radio stations each week, and in 1979, Falwell formed the
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Moral Majority, that quickly claimed a membership of 2 to 3 million, and lobbied for
tough laws against homosexuality and pornography, cuts in welfare spending and
increased defense spending. The Moral Majority also waged well-publicized campaigns
against school integration and busing.
MHL video: Evangelical Religion and Politics, Then and Now at
c. The Pro-Family Movement
The defeat of the Equal Rights Amendment (ERA) stood at the top of the New Right
agenda. Nearly all mainstream women’s organizations and both political parties endorsed
the ERA after it was approved by Congress in 1972. In response, the New Right swung
into action. STOP-ERA and the Eagle Forum, both founded by Phyllis Schlafly, mounted
large, expensive campaigns in each swing state and overwhelmed pro-ERA resources.
Although 35 states had ratified the ERA by 1979, the amendment remained three votes
short of passage and died in 1982. The “pro-family” movement also attacked Roe v.
Wade, the 1973 Supreme Court ruling restricting state bans on abortion on grounds of
women’s privacy rights. Opponents of Roe rallied for a constitutional amendment
defining conception as the beginning of life and arguing that the “rights of the unborn”
supersede a woman’s right to control her own body. By 1980 the National Right to Life
Committee had 11 million members. Groups such as the Orange County Pro-Life
Political Action Committee rallied against sex education programs in public schools.
Activists picketed Planned Parenthood counseling centers, intimidating potential clients
and extremists bombed dozens of abortion clinics.
MHL document: Roe v. Wade (1973) at
d. The 1980 Election
Carter’s prospects for reelection appeared to rest on the hopes of an improved economy
and resolution of the Iran hostage crisis. Democrats unenthusiastically endorsed Carter
along with his running mate, Walter Mondale.
Former California governor Ronald Reagan had been building his Republican campaign
since his near nomination in 1976. Former CIA director and Texas oil executive George
H. W. Bush, more moderate than Reagan, became the Republican candidate for vice
While Carter implored Americans to tighten their belts, Reagan assured them that
“America’s best days lay ahead” and promised to cut taxes. Reagan’s platform embraced
the conservative agenda calling for less government and a return to family values.
Reagan’s victory marked a resounding defeat of liberalism. Carter won only 41.2 percent
of the popular vote to Reagan’s 50.9 percent, 49 votes in the electoral college to Reagan’s
489. Orange County gave Reagan a whopping 68 percent of the vote. White working
people, the traditional supporters of the Democratic Party, had defected to the
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Republicans in large numbers, although both women and African Americans voted for
Reagan in far fewer numbers. And barely half of the eligible voters had turned out,
bringing Reagan into office with a slim mandate of 25 percent. In a final cruel twist, the
Iranians released the hostages on Inauguration Day, humiliating Carter and boosting
Reagan’s popularity.
MHL document: Ronald Reagan Presidential Campaign Ad: A Bear in the Woods at
Reagan would become the most influential president since FDR as he reshaped politics.
Ironically, Reagan had begun as a New Deal Democrat who admired Roosevelt as an
inspirational leader. But by the time he entered the White House in 1981, shortly before his
seventieth birthday, Reagan had rejected the activist welfare state legacy of the New Deal
era. “In the present crisis . . . ,” he declared, “government is not the solution to our problem,
government is the problem.” Reagan and his allies proceeded to reshape the political and
social landscape of the nation along conservative lines.
a. The Great Communicator
Americans knew Ronald Reagan mainly from his Hollywood movies and television
appearances. Although never a big star, on screen he appeared tall, handsome, and
affable, appealing qualities than continued through his presidency. As president of the
Screen Actors Guild, Reagan had cooperated with investigations of Hollywood
communists. In the 1950s, he hosted General Electric Theater on TV and shifted toward
pro-business conservatism. After he played a leading role in Republican Barry
Goldwater’s 1964 presidential campaign, wealthy conservatives convinced Reagan to run
for governor of California. In 1966, he defeated Democratic governor Edmund G. Brown,
winning 72 percent of the vote in Orange County. He won reelection in 1970. As
governor, Reagan cut the state welfare rolls, placed limits on the number of state
employees, and funneled a large share of state tax revenues back to local governments.
He vigorously attacked student protesters and black militants, tapping into the
conservative backlash against 1960s activism. When Reagan entered the White House
in January 1981, his supporters confidently predicted that the “Reagan Revolution”
would usher in a new age in American political life.
MHL document: Ronald Reagan, First Inaugural Address (1981) at
b. Reaganomics
A supply-side economic theory, dubbed “Reaganomics,” dominated the administration’s
planning and helped redirect the American economy. Keynesians traditionally favored
moderate tax cuts and increases in government spending to stimulate the economy and
reduce unemployment during recessions. Supply-siders called for simultaneous tax cuts
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and reductions in public spending, a plan they claimed would stimulate consumption and
employment through new investment. To put more disposable income in the pockets of
the rich, 1981 tax reform cut the maximum income tax from 70 percent to 50 percent,
lowered the maximum capital gains tax from 28 percent to 20 percent, and eliminated the
distinction between earned and unearned income, a boon to renters and investors. A
companion Omnibus Reconciliation Act cut spending for more than 200 social and
cultural programs, from housing and food stamps to the arts. At the same time, Reagan
greatly increased the defense budget. Organized labor faced new hostility. Reagan fired
13,000 air traffic controllers in response to what he considered an illegal strike.
Conservative appointees to the National Labor Relations Board and the federal courts
toughened their antiunion position. In the quest for deregulation, Reagan appointed
conservatives to head the Environmental Protection Agency, the Occupational Safety and
Health Administration, and the Consumer Product Safety Commission, who favored
business over consumers, abolishing or weakening hundreds of rules. Wall Street also
benefited as the Justice Department, the Securities and Exchange Commission and other
agencies all gave business a freer hand. Fed Chairman Alan Greenspan encouraged these
trends, and a wave of market speculation and a series of financial scandals ensured.
MHL document: Paul Craig Robert, The Supply-Side Revolution (1984) at
c. The Election of 1984
Hoping to win back disgruntled voters, Democrats chose Carter’s liberal vice president,
Walter Mondale, as their nominee. Mondale named Representative Geraldine Ferraro of
New York as his running mate, a first for women in American politics. Initially Mondale
ran even with Reagan, but the president’s enormous personal popularity and the booming
economy, overwhelmed the Democratic ticket. While Mondale emphasized the growing
deficit, called attention to Americans who were left out of prosperity, and promised to
raise taxes, Reagan cruised above it all. It was “morning again in America,” his campaign
ads claimed. In one of the biggest landslides in American history, Reagan won 59 percent
of the popular vote—nearly 75 percent in Orange County—and carried every state but
Minnesota and the District of Columbia. A majority of blue-collar voters cast their ballots
for the president, as did 54 percent of women, despite Ferraro’s presence on the
Democratic ticket.
d. Recession, Recovery, and Fiscal Crisis
Supply-side economics benefited the rich, but when a severe recession hit in 1982, the
unemployment rate reached nearly 11 percent, or more than 11.5 million people, with
another 3 million simply not looking for work. By 1983, unemployment dropped to about
8 percent while inflation fell below 5 percent. The Dow Jones industrial average rose
from 776 in August 1982 to an all-time high of 2,722 in August 1987. The administration
took credit for the turnaround, hailing the supply-side fiscal policies that had drastically
cut taxes and domestic spending, ignoring the Fed’s tight money policy, lower energy
prices and huge defense spending, while critics pointed to growing fiscal problems.
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Reagan had promised to balance the federal budget, but his policies had the opposite
effect as the national debt tripled and debt service costs soared, creating structural
problems with profound and long-lasting implications for the American economy.
Foreign investors, attracted by high interest rates on government securities, pushed up the
value of the dollar in relation to foreign currencies, making it difficult for foreigners to
buy American products, while making overseas goods cheaper to American consumers,
sparking a persistent trade deficit. The bull market collapsed in October 1987 with a
stock market crash, perhaps a response to the raging deficit.
Reagan set the tone for the era when he responded to a reporter’s question asking him what
was best about America by saying “someone can always get rich.” Ivan Boesky, later
indicted for criminal trading, echoed Reagan, saying “greed is healthy.” Grimmer realities
lay under the surface as the nation moved toward greater inequality, with the middle class
shrinking, and poverty on the rise. After eight years of tax cuts, defense buildup, growing
budget deficits, and record trade imbalances, the economic future looked uncertain at best,
especially for the middle class.
a. A Two-Tiered Society
The Reagan Revolution benefited the very rich and hurt almost everyone else. While the
top 1 percent’s share of income and wealth soared, real wages fell and poverty rates
climbed. Job creation was mostly concentrated in low wage jobs.
The effects were worse for minorities. By 1992, 33 percent of all African Americans
lived in poverty, as did 29 percent of Hispanics (the rate was especially high among
Puerto Ricans, yet low among Cuban Americans). In 1954, the year of the Brown v.
Board of Education decision, black families earned about 53 percent of the income of
white families. This figure rose to 60 percent in 1969 and peaked at 62 percent in 1975.
Meanwhile, affirmative action was weakened by the 1978 Bakke case and the courts
backed away from busing to achieve racial balance in schools, allowing white flight to
the suburbs as the poor and minorities stayed behind in decaying inner cities.
b. The Feminization of Poverty
An increasingly imbalanced economy also hit working women who faced shrinking job
opportunities and stagnant pay. To stay above the poverty level, a woman depended on
the financial support of an adult male breadwinner. Yet divorce rates left more women
and their children in poverty. New no-fault divorce laws lowered or eradicated alimony,
pushing even many middle-class women into poverty. Moreover, the majority of men
defaulted on child-support payments within one year after separation. Whereas divorced
men enjoyed a sizable increase in their standard of living, divorced women suffered a
formidable decline. A sharp rise in teenage pregnancy reinforced this trend. Even with
Aid to Families with Dependent Children (AFDC) payments and food stamps, it was
impossible for unemployed single mothers to keep their families above the poverty line.
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Among black women, the number of female-headed families increased in just one decade
from 30 percent in 1970 to 47 percent in 1980. More than half of all black babies were
now born to unmarried mothers.
c. Sunbelt/Rustbelt Communities
Population shifts mirrored other trends in the Reagan era. As the Sunbelt (from Florida to
California) benefited from federal defense spending and retirees’ Social Security checks,
cities like Phoenix, Houston, and Las Vegas, as well as most in California, boomed.
Even so, income in the new urban areas followed national patterns, with Hispanics in the
Southwest especially falling behind. Sunbelt states spent state and federal funds on
police, roads, and services to new suburbs. Meanwhile Rustbelt states suffered sharp
declines in heavy manufacturing like cars and steel, shedding jobs and population. As
farm income fell, family farms in the Midwest disappeared as well. By 1984 rural
poverty rates were twice that of urban areas.
d Epidemics: Drugs, AIDS, Homelessness
Drug addiction and drug trafficking took on frightening new dimensions in the early
1980s. As crack addiction spread, the drug trade assumed alarming new proportions both
domestically and internationally. While the Reagan administration launched a highly
publicized “war on drugs” and Nancy Reagan advised “Just Say No,” critics charged that
drug addiction was primarily a health problem, not a law enforcement issue, and certainly
not a threat to national security.
In the early 1980s, doctors began encountering a puzzling syndrome of unusual infections
and pneumonia in young gay men. After researchers at the Centers for Disease Control
(CDC) in Atlanta identified a virus as the cause, they called the new disease Acquired
Immune Deficiency Syndrome (AIDS). Many Americans perceived AIDS as a disease of
homosexuals. But other victims became infected through intravenous drug use, blood
transfusions, heterosexual transmission, or birth to AIDS-carrying mothers.
AIDS provoked fear, anguish, and anger. In city after city, the gay community responded
to the AIDS crisis with energy and determination. Reagan, playing to conservative
antigay prejudices, ignored the epidemic, which had affected thousands and killed half of
those infected. Reagan also refused to respond to a growing problem of homelessness
among the urban poor, Homeless people wandered city sidewalks panhandling and
struggling to find scraps of food, with Vietnam vets, addicts, the mentally ill, and the
simply poor and unfortunate among the estimated 3 million on the streets by the early
1980s, all victims of declines in public funding for drug and mental health treatment
programs and affordable housing, or so critics charged
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Reagan campaigned to restore America’s world leadership, reviving Cold War patriotism and
championing American interventionism in the Third World, especially in the Caribbean and
Central America. His infusion of funds into national security programs would have enormous
consequences for the domestic economy as well as for America’s position as a global power,
even while internal changes within the Soviet Union made the entire Cold War framework of
U.S. foreign policy largely irrelevant by the late 1980s.
a. The Evil Empire
In a sharp turn from President Nixon’s pursuit of détente and President Carter’s focus on
human rights, Reagan made anticommunism central to foreign policy. In 1983 he
described the Soviet Union as “an evil empire . . . the focus of evil in the modern world.”
Administration officials argued that during the 1970s the nation’s military strength had
fallen dangerously behind that of the Soviet Union. Critics pointed out that the Soviet
advantage in ICBMs was offset by U.S. superiority in submarine-based forces and
strategic aircraft. Polls showed 70 percent of Americans wanted détente, not an arms
race, and in June 1982, three-quarters of a million people—the largest political rally in
American history—demonstrated in New York City for a halt to spending on and
deployment of nuclear weapons.
Far from being swayed, Reagan continued to increase military spending. In 1983, he
further unsettled superpower relations with a five year, $26 billion Strategic Defense
Initiative (SDI) plan for a space-based ballistic-missile defense system, dubbed “Star
Wars,” after the popular films. Despite criticism that plan was unworkable, expensive,
and destabilizing Reagan pressed ahead, spending $17 billion in research before he left
office—without achieving any convincing results. The prospect of meaningful arms
control dimmed in this atmosphere, and U.S.-Soviet relations deteriorated.
MHL document: Ronald Reagan, Address to the National Association of Evangelicals
(1983) at
b. The Reagan Doctrine
Declaring the “Vietnam syndrome” over, Reagan reasserted America’s right to intervene
anywhere in the world to “roll back” communism by overt and covert aid to anticommunist resistant movements, what became known as the “Reagan Doctrine.”
Increased U.S. aid helped armed mujahedeen (many of whom later supported the Taliban
and Al Qaeda) who drove the Soviets out of Afghanistan in the doctrine’s greatest
success. Blaming Castro for all problems throughout Central America, from 1980 and
1983 the United States poured more military aid into Central America than it had during
the previous 30 years. A 1983 operation to save the tiny island of Grenada from Marxist
threats was condemned by the U.N., but Reagan claimed “we got there just in time.” In El
Salvador, the Administration continued to support the pro-American but repressive
regime with $5 billion in aid, funding right-wing death squads and failing to stop a
bloody civil war. In Nicaragua, Reagan claimed the Sandinista government posed “an
Copyright © 2012 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
unusual and extraordinary threat to the national security” and approved a CIA plan to arm
and organize Nicaraguan exiles, known as Contras, to fight the Sandinistas, who,
predictably were only driven closer to Cuba and the Soviets. Scores of U.S. churches
offered sanctuary to political refugees from Central America in protest, and in 1984
Congress passed the Boland Amendment, forbidding support to the Contra. Reagan
turned to the National Security Council to find a way to keep the Contra war going,
setting the stage for the enormously damaging Iran-Contra affair.
c. The Middle East and the Iran-Contra Scandal
The Iran Contra scandal was a direct result of the contradictions of Reagan’s policies
and revealed a dangerous disdain for the rule of law in his administration. The threat of
terrorism in the Middle East, Reagan insisted, loomed as one of the most serious threats
to U.S. national security. Refusing to admit that pro-Israel American policy had
alienated many in the Middle East, Reagan insisted that terrorism was funded by the
Soviets. In 1986, Reagan launched bombing raids against Libya to show his antiterrorist
resolve. As a fierce war between Iran and Iraq escalated, the administration tilted
publicly toward Iraq and its unsavory dictator, Saddam Hussein, to please the Arab
states around the Persian Gulf. Reagan then secretly changed course and offered to
supply Iran with weapons in exchange for help in freeing hostages held by Islamic
radicals in Lebanon.
Subsequent disclosures elevated the arms-for-hostages deal into a major scandal. To
escape congressional oversight, Reagan and CIA director William Casey turned the
National Security Council into a covert agency, using profits from arms sales to Iran to
fund the Contras. In televised hearings, NSC staffer Oliver North defiantly defended his
actions in the name of patriotism. Ultimately, the Iran-Contra investigation raised more
questions than it answered. The full role of CIA director Casey, who died in 1987,
particularly his relationships with Oliver North and the president, remained murky. But
by shredding documents and lying to Congress, North and NSC director John Poindexter
kept the scandal from reaching Reagan, who was able to maintain “plausible deniability.”
In December 1992, following his reelection defeat and six years after the scandal broke,
President George H. W. Bush granted pardons to six key players in the Iran-Contra affair.
d. The Collapse of Communism
Meanwhile the Soviet Union moved toward collapse. In 1985 Mikhail Gorbachev became
the new Soviet leader. Although a lifelong Communist, Gorbachev represented a new
generation of disenchanted party members who wanted to end the Cold War and promote
economic and political reform at home.
In Gorbachev’s view, revival of the Soviet economy depended on halting the arms race.
In four summit meetings with Reagan, Gorbachev moved haltingly toward disarmament.
But political and economic reforms in the Soviet Union proved disruptive, with
drastically reduced living standards and political uncertainty. In March 1989, the Soviet
Union held its first open elections since 1917, and a new Congress of People’s Deputies
Copyright © 2012 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
replaced the old Communist Party-dominated Supreme Soviet. After Gorbachev
announced that satellite nations would no longer be kept in line by force, prodemocracy
movements broke out from Poland to Bulgaria. After dissidents tore down the Berlin
Wall in November 1989, unimpeded by East German security police, the DDR collapsed
and Germany moved quickly to reunification One by one socialist regimes collapsed
across Eastern Europe. By Christmas Day, 1991, the Soviet Union itself was dissolved,
ending 50 years of Cold War superpower rivalry in what George H. W. Bush later called
an event of “biblical proportions.”
In 1988, Republican candidate George Herbert Walker Bush hoped to ride on Reagan’s
coattails and also made strong pledge to voters: “Read my lips: no new taxes.” Winning the
general election handily over Massachusetts governor Michael Dukakis with 40 out of 50
states and 56 percent of the popular vote, he began to move away from Reagan. In his
inaugural address, Bush, promising a “kinder, gentler nation.” In international affairs, Bush
had prepared well to provide leadership in a dramatically changing world, having served as
vice president, UN ambassador, envoy to China, and CIA director. However, he soon found
himself facing a host of problems complicated, rather than resolved, by the end of the Cold
War as well as a Democratic Congress.
a. Reagan’s Successor: George H. W. Bush
Bush carried over several Reagan policies, such as the war on illegal drugs. With William
Bennett as the new “drug czar” Bush planned increased funding for more police and
construction of more prisons. He also fortified the border patrols in an attempt to stem the
flow of drugs from Latin America. In December 1989, Bush sent U.S. troops to Panama
to capture General Manuel Noriega, an international drug-dealer formerly on the CIA
payroll. Thousands of Panamanians died but Noriega was brought to the United States
and tried on drug-trafficking and racketeering charges. During the Bush presidency, the
federal budget for drug-control tripled.
As a “compassionate” conservative, and despite business opposition, Bush signed the
Americans with Disabilities Act penalizing workplace discrimination against the disabled
and requiring businesses and local governments to provide access to their facilities. Yet
he vetoed a bill that would have provided six months of unpaid family leave for workers
with new children or family emergencies. Strengthened environmental laws pleased
some, as did federal support for higher educational standards, but Bush angered
conservatives when he broke his tax pledge and signed an increase on the wealthy.
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b. The Persian Gulf War
As the Cold War ended, Bush faced new challenges in the Middle East. On August 2,
1990, Iraqi troops swept into neighboring Kuwait to seize control of its rich oil fields.
Saddam Hussein, Iraq’s military dictator, claimed Kuwait was a ancient province of Iraq,
but he also coveted Kuwait’s Persian Gulf ports and sought to punish Kuwait for
exceeding OPEC quotas, driving down oil prices. The United States responded swiftly.
On August 15, President Bush launched Operation Desert Shield and ordered U.S. forces
to Saudi Arabia and the Persian Gulf. After Hussein ignored UN sanctions and demands
that he withdraw from Kuwait, Bush denounced him as another Hitler, and, with
Congressional support, launched Operation Desert Storm on February 24. It took only
100 hours to force Saddam Hussein’s troops out of Kuwait, but the war failed to dislodge
Saddam Hussein, who remained in power despite CIA attempts to overthrow him and
repeated bombings of Iraqi military positions. The repercussions of the Gulf War were
long-lasting. American soldiers in Saudi Arabia enraged Islamic militants who swore
revenge, among them Saudi millionaire Osama bin Laden, a veteran of the Afghan war.
Bin Laden’s Al Qaeda organization began planning terror operations against Western
interests in the Middle East, a harbinger of more terrible events to come.
MHL document: George H. W. Bush, Gulf War Address (1990) at
MHL map: The Middle East in the 1980s and 1990s at
c. The Economy and the Election of 1992
The Gulf War marked the high point of Bush’s popularity, with his approval rating
nearing 90 percent, higher than FDR’s during World War II. Faced with a costly savings
and loan crisis and a stagnant economy, Bush reneged on his campaign promise and
worked with Democrats in Congress to raise taxes. In the 1992 campaign, Bush faced a
formidable opponent, William Jefferson Clinton, a young articulate and intelligent New
Democrat who made “It’s the economy, stupid,” the centerpiece of his campaign. Clinton
promised deficit reduction and a tax cut for the middle class, taking advantage of Bush’s
betrayal of his own campaign promise not to raise taxes. Clinton also struck a
conservative note by calling for “responsibility” by welfare recipients and pledging
support for families, while also promising a business-friendly administration to promote
job growth.
Economic issues also fueled the independent campaign of Texas billionaire H. Ross Perot,
who, with his folksy East Texas twang, argued that a successful businessman such as
himself was better qualified to solve the nation’s economic woes than Washington insiders.
Although failing to carry a single state, Perot scored 19 percent of the popular vote.
Clinton, with only 43 percent, carried 32 states to win the presidency.
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Building on the trauma of Vietnam and deepening anxiety over social and cultural change,
Ronald Reagan led an ideologically-charged conservative resurgence that rejected much of
the legacy of the 1960s and turned to Christian fundamentalism, family values, and economic
individualism. Despite pledges to shrink government, Reagan’s military expenditures had the
opposite effect. While conservatives celebrated Reagan as a return to what was best in
America, economically and culturally, the breakdown of the safety net left many less secure.
Learning Objectives:
Students should be able to answer the following questions after studying Chapter 30:
1. What explains the weakness in the U.S. economy in the 1970s?
2. What did Ford and Carter accomplish as presidents?
3. What were the factors behind the rise of the New Right?
4. What economic assumptions underlay “Reaganomics”?
5. Why did the gap between the rich and the poor grow in the 1980s?
6. How did the Cold War end?
Discussion Suggestions and Possible Answers
1. Why did the sudden increase in energy costs affect the American economy so severely?
Could anything have been done to prevent it?
Answer: America’s dependence on foreign sources of energy, particularly oil, had been
growing since the 1950s. The economy was shocked when Middle East countries refused to
sell oil to the United States and Western Europe for its support of Israel in the 1973 ArabIsraeli War. By the 1970s, Americans had been used to cheap energy and had therefore not
emphasized conservation by consumers or by business. Coupled with the inefficiency of
many U.S. industries compared with foreign rivals in Europe and Japan, the energy crisis of
the 1970s shocked the nation’s economy. Although long-term planning and a national energy
policy may have helped alleviate the worst conditions, there had been no need for such
planning until it was too late.
2. Why were people in the 1970s leaving the cities and moving to small towns? Why were they
going to the “Sunbelt”? Do you think they found what they were looking for?
Answer: The growth of the sublet resulted from the decline in manufacturing jobs in
northern “Rustbelt cities” as well as a perceived better quality of life as air conditioning and
federal water policy aided the “Sunbelt.” Many communities in the South and Southwest
spent less on education and public services, emphasizing instead police and security forces
and suburban expansion. The economic prosperity was more cyclical and some groups,
especially minorities, lagged behind the white population in terms of income and prosperity.
3. What led to the rise of what the text calls the “new conservatism?” Has it had a positive or
negative impact on the country?
Copyright © 2012 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
Answer: New conservatism emphasized moral character and so-called traditional values.
This agenda was largely driven by frustration with the economic stagnation of the 1970s, as
white taxpayers complained about social programs that seemed to disproportionately benefit
minorities. For example, Proposition 13 in California severely limited property tax increases,
limiting government funds for education and social programs. The impetus for many in the
New Right was their evangelical religion. Other groups targeted hot button social issues,
protesting against the Roe v. Wade decision, which secured a women’s right to an abortion,
and the growing visibility of homosexuals.
4. Carter is generally considered to have been a failure as president. What were the reasons he
didn’t get reelected? How could he have avoided the problems that brought him down?
Answer: Jimmy Carter’s reelection campaign depended on his conduct of foreign policy,
and here he suffered more defeats than victories. Chief among his problems was the Iran
Hostage Crisis. Fifty-five Americans were held for more than a year when the U.S.
Embassy in Tehran was occupied by student radicals in the Iran Revolution. Carter’s
inability to free the hostages, including a disastrous rescue attempt, seemed to highlight
American impotence after a quarter century of unrivaled power. In other areas, Carter
emphasized human rights and moral principles in foreign affairs. Turning over the Panama
Canal to Panama and successful treaty negotiations with the Soviet Union made him an
easy target for conservatives who claimed he was soft on communism. His greatest
triumph, a peace treaty between Egypt and Israel, was overshadowed by these difficulties.
Compared with Ronald Reagan, who preached an easy return to American power, Carter
was easily defeated for re-election.
5. What were the economic assumptions of the Reagan administration? Were they valid?
Answer: The foundation of Reaganomics was supply-side economics. Supply-siders argued
that lowering taxes would increase productivity and earnings, generating more government
revenue even though tax rates were lower. At the same time, supply siders urged cutting
government spending. Reagan followed this in terms of domestic spending, but he
dramatically increased defense spending. The result was a skyrocketing federal deficit and an
increasing disparity between rich and poor, as the wealthy benefited far more from the lower
tax policies, and fewer benefits trickled down to those at the lower socio-economic levels.
6. What were the foreign policy assumptions of the Reagan administration? Were they valid?
Answer: Reagan reignited the Cold War, championing patriotism at home and challenging
the Soviet Union at every turn around the globe. The Reagan era saw American intervention
throughout the Third World, especially in Latin America where the United States propped up
right-wing governments and supported rebel groups in leftist countries such as Nicaragua.
While pro-Reagan experts claimed that his defense buildup and determination led to the
collapse of the Soviet Union, others believe that the Soviet Union failed because of internal
issues unrelated to the American defense buildup and the far reaching reform measures
initiated under Mikhail Gorbachev.
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Lecture Outline
American Communities: Grassroots Conservatism in Orange County, California
The Overextended Society
A Troubled Economy
The Endangered Environment
“Lean Years Presidents”: Ford and Carter
The Limits of Global Power
The Iran Hostage Crisis
The New Right
The Religious Rights and the Moral Majority
The Pro-Family Movement
Election of 1980
The Reagan Revolution
The Great Communicator
Election of 1984
Recession, Recovery and Fiscal Crisis
Best of Times, Worst of Times
Economic Disparity in a Two-Tiered Society
The Feminization of Poverty
Sunbelt/Rustbelt Communities
AIDS, Homelessness, War on Drugs
Toward a New World Order
The “Evil Empire”
The Reagan Doctrine
The Middle East and the Iran Contra Scandal
The Collapse of Communism
“A Kinder, Gentler Nation”
Reagan’s Successor: George H. W. Bush
The Persian Gulf War
“It’s the Economy, Stupid”: the Election of 1992
Resources (Web, Films/Video)
Wall Street (125 minutes). Twentieth Century Fox, 1987. Film captures the “greed is good”
mentality of Wall Street and American business in the 1980s.
Copyright © 2012 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
One of the best sources for audio-visual materials on contemporary events is the Frontline video
series from PBS. Some of the better ones include:
Assault on Affirmative Action (60 minutes, color). 1968. Looks at the difficult issue as it
unfolded in the Memphis fire department.
War on Nicaragua (60 minutes, color). 1987. Examines how American foreign policy was made
with regard to Nicaragua.
Primary Colors (143 minutes). Universal Studios, 1998. Mike Nichols’ adaption of Joe Klein’s
thinly veiled fictional account of the 1992 Clinton campaign.
My History Lab Connections
Reinforce what you learned in this chapter by studying the many documents, images, maps,
review tools, and videos available at
Read and Review
Read the Documents
Jimmy Carter, The “Crisis of Confidence” Speech (1979)
Roe v. Wade (1973)
Ronald Reagan, First Inaugural Address (1981)
Paul Craig Robert, The Supply-Side Revolution (1984)
Ronald Reagan, Address to the National Association of Evangelicals (1983)
George H. W. Bush, Gulf War Address (1990)
Read the Maps
The Middle East in the 1980s and 1990s
Research and Explore
Read the Documents
Exploring America: Growing Inequality
The Berlin Wall
President George Bush’s Early Response in the Persian Gulf War
President Bush on the Gulf War
Read the Biographies
Jimmy Carter
Jerry Falwell
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See the Videos
Evangelical Religion and Politics, Then and Now
Ronald Reagan Presidential Campaign Ad: A Bear in the Woods
Ronald Reagan on the Wisdom of Tax Cuts
Critical Thinking Exercises
Most regions have communities that have lost industries. Students might examine the impact of
industrial decline on their own or nearby communities. They might interview people who went
from high-wage industrial jobs to low-wage service jobs. They might look at Michael
Harrington’s The New American Poverty (Holt, 1984), Barry Bluestone’s Deindustrialization of
America (Basic Books, 1982), or Barbara Ehrenreich’s Nickel and Dimed: On (Not) Getting By
in America (Metropolitan Books, 2001).
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