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9. From the JFK’s arrival to the twenty-first century
UNIT 9. FROM THE J.F. KENNEDY’S ARRIVAL TO
THE TWENTY-FIRST CENTURY
CHRONOLOGICAL TABLE
1960
1961
1962
1963
1964
1965
1966
1967
1968
1971
1972
1973
1974
1974
1976
1977
1978
John F. Kennedy elected president in a narrow victory over Richard Nixon
California surpassed New York as the nation's most populous state
U. S. supported Bay of Pigs invasion. It was crushed by the Cubans
James Meredith was the first African American to enrol at the University of
Mississippi
Martin Luther King told a rally in Washington, D. C., of his dream for a united
America
U.S., Great Britain and USSR signed the Limited Nuclear Test Ban Treaty
President John F. Kennedy was assassinated
Lyndon B. Johnson was sworn in as president
President Johnson declared war on poverty
Democrat Lyndon B. Johnson defeated Republican Barry Goldwater in landslide
Victory
Medicare legislation provided the aged with medical care
Elementary and Secondary Education Act passed
Congress passed the Gulf of Tonkin Resolution
Voting Rights Act passed
Lyndon B. Johnson committed fifty thousand American troops to combat in
Vietnam
National Organisation for Women (NOW) is founded
Riots in Detroit filled forty-three, injured two thousand and left 5,000 homeless
President Johnson announced that he will not seek re-election
Martin Luther King Jr. was assassinated in Memphis, Tennessee
Robert F. Kennedy was assassinated in Los Angeles, California
Republican Richard Nixon was elected nation's thirty-seventh president
A secret tape recording system was installed in the White House. Nixon
authorised establishment of a plumbers unit to “stop security leaks and
investigate other sensitive matters”
Nixon was reelected to second term, winning every southern and western state
Five burglars arrested breaking into democratic national headquarters at
Washington's Watergate office complex.
President Nixon took part in summit in China
Televised Senate hearing on Watergate began
War Powers Act
Federal grand jury indicted Nixon aides for perjury and obstruction of justice and
named the president as an indicted co-conspirator
House Judiciary Committee adopted three articles of impeachment against
President Nixon. Nixon became the first president to resign from office
Richard Ford became thirty-eighth president
Microsoft Corporation founded
Vietnam War ends
Jimmy Carter was elected thirty-ninth president
Apple Computer Company founded
Treaties to return of the waterway to Panama were signed
California voters approved Proposition 13, which called for a 57% reduction in
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9. From the JFK’s arrival to the twenty-first century
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1998
1999
2000
2001
2002
2003
state property taxes
President Carter mediated Egyptian-Israeli peace settlement
Treaties transferring control of Canal Zone to Panama ratified
United States formally recognised China
Accident at Three Mile Island nuclear plant
Ronald Reagan was elected fortieth president
President Ronald Reagan was shot in assassination attempt
Reagan approved covert training of anti-Sandinista contras
Reagan tax cuts are approved
Sandra Day O'Connor appointed to the Supreme Court
President Reagan fired two-thirds of air-traffic controller's union
Congress deregulated banking industry and lifts controls on airfares
Reagan proposed "Star Wars" missile defence system
241 U. S. marines filled by suicide bomb in Beirut
Ronald Reagan was reelected to second term
Congress ordered an end to all covert aid to Nicaraguan contras
United States began secret arms-for-hostages negotiations with Iran
Profits from Iranian arms sales are diverted to Nicaraguan contras
Space shuttle Challenger exploded
Reagan and Gorbachev signed INF Treaty
George Bush, Reagan's vice president was elected forty-first president
Exxon Valdez oil spilt in Prince William Sound, Alaska
Iraqi troops invaded and occupied Kuwait
Gulf War. I. S., Western, and Arab forces ejected Iraq from Kuwait by force
Democrat William J. Clinton defeated Bush to become nation's forty-second
president
Congress passed North American Free Trade Agreement (NAFTA), eliminating
trade barriers between Canada, Mexico, and the United States.
World Trade Centre bombed
General Agreement on Trade and Tariffs (GATT) passed, reducing global trading
Barriers
Democrats suffered overwhelming defeats in congressional elections.
Republican victory in Congress; Contract with America
Congress defeated Clinton's healthcare plan
Timothy McVeigh bombed a federal building in Oklahoma City
William Clinton reelected president
Clinton eliminated Aid to Families with Dependent Children
House of Represents voted to impeach President William J. Clinton
United States embassies in Kenya and Tanzania bombed
Protests against the World Trade Organisation
Shooting at Columbine High School in Littleton, Colorado
George W. Bush, Jr. elected forty-third president
Al Qaeda terrorists attacked World Trade Center in New York
Operation Enduring Freedom
USA Patriotic Act conferred unprecedented powers on law-enforcement
agencies
President George Bush includes Iraq, Iran and North Korea in an "Axis of Evil"
Telecoms giant WorldCom's multi-billion dollar accounting fraud is revealed
President Bush signs into law a bill creating a Department of Homeland Security
United States and United Kingdom forces invaded Iraq without United Nations
approval
Supreme Court upheld affirmative action
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9. From the JFK’s arrival to the twenty-first century
2004
2005
2006
2007
2008
2009
Supreme Court ruled making homosexual acts a crime unconstitutional
Operation Iraqi Freedom
President Saddam Hussein captured
George W. Bush, Jr. won a second term as president
The U.S. returns sovereignty to an interim government in Iraq, but maintains
roughly 135,000 troops in the country to fight a growing insurgency
The U.S. engagement in Iraq continues amid that country's escalating violence
and fragile political stability.
Hurricane Katrina wreaks catastrophic damage on Mississippi and Louisiana.
80% of New Orleans is flooded. The government was criticized
The U.S. Census Bureau estimates that the population of the United States has
reached 300 million
Democrat Nancy Pelosi becomes the first U.S. Speaker of the House of
Representatives
President Bush announces a new Iraq strategy. Thousands more US troops will
be dispatched to shore up security in Baghdad
Lehman Brother’s collapse. Global financial crisis and recession
Senator Barack H. Obama won the Democratic Party's nomination to run for US
president, becoming the first black candidate.
Leaders from the world's biggest economies (the G20) meet in Washington
Barack Obama defeats John McCain to become the president of the US
Barack H. Obama sworn in as 44th president of the US
President Obama unveils a record $3.6 trillion dollar budget for 2010
House of Representatives passes its version of health care reform
Hillary Rodham Clinton is appointed Secretary of State
1. THE SIXTIES
The 1960s were years of extraordinary turbulence and innovation in public affairs, as well
as tragedy and trauma. The deeply entrenched assumptions of cold war ideology led the
country into the longest, most controversial, and least successful war in its history.
The sixties were a decade of social changes and political activism.
1.1 John F. Kennedy Presidency
On Monday evening, September 26, 1960, Senator John F. Kennedy and Vice President
Richard M. Nixon faced each other in the nation's first debate between two presidential
candidates.
During his campaign for the Democratic nomination, however, Kennedy had shown that he
had energy, grace, and ambition and charisma. In his acceptance speech at the
democratic Convention, Kennedy found the stirring rhetoric that would stamp the rest of
his campaign and his presidency: “We stand today on the edge of a New Frontier, the
frontier of unknown opportunities and perils, a frontier of unfulfilled hopes and threats.”
John F. Kennedy was the youngest person ever elected president, and his cabinet
appointments highlighted youth. The election of Kennedy marked the arrival of a new
generation of leaders born in the twentieth century, who had entered political life after
World War II and were in charge of national affairs. The Democratic victory led a political
shift. In contrast to Eisenhower, the previous president, Kennedy symbolised youth,
energy and ambition. His mastery of the television reflected his sensibility to the changes
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taking place in American life. He came to office promising reform at home and advanced
abroad.
Kennedy was primarily concerned with foreign affairs. His presidency was further assisted
by his wife, Jacqueline Bouvier Kennedy, a stylish and beautiful woman who gave the
administration a special cultured air.
Kennedy's administration included growth-oriented investment bankers, efficiency-minded
management experts, professors and intellectuals. At his father's insistence, he appointed
as attorney general his brother Robert F. Kennedy, who had entered public life as a staff
member for Joseph McCarthy's senate investigations. He also permitted live television
broadcasts of his press conferences, the first in American history, and a practice that
allowed him to shape opinion by speaking to the public directly. As a member of the new
generation, Kennedy's attitudes had been formed by the realities of the Cold War.
Kennedy's arrival in the White House opened an era of profound social changes. After the
dissatisfactions that appeared in the late 1950s, Kennedy accelerated the transformations
with a call for self-sacrifice. Thousands of young Americans worked for civil rights at home
or signed up for the new Peace Corps, which offered an opportunity, at low pay, to assist
people in the Third World. Yet the movement for change was also accompanied by
resistance, turmoil, and often-deadly violence.
1.1.1. Kennedy’s Foreign and Domestic Policies
President Kennedy was eager to foster pro-democratic sympathies in Third World
countries by helping their economic development. He established warm relations with
leaders in postcolonial Africa, including some who leaned toward socialism. But the
Democratic administration was also determined to resist pro-Soviet uprisings while
democracy took root.
In the first weeks of his administration, Kennedy focused his attention on Cuba. There was
a Communist enclave just ninety miles from the Florida coast, which constituted as a
threat as a potential exporter of revolution to the rest of Latin America. A plan was
launched to invade Cuba and assassinate Fidel Castro, but the Cuban armed forces, who
had been trained by the Soviets, routed the invaders.
Meanwhile, Kennedy decided to curb the spread of Communism in Latin America by
pressing for social reform in the area. In March 1961, he declared the inauguration of the
Alliance for Progress, a $20 billion program of loans for the economic development of
Southern American countries. During the 1960s, some of the aid went to train Latin
American armed forces trying to maintain internal security.
At the same time, instability was growing in the former French Indochina. Kennedy refused
to intervene militarily in Laos, but he considered that it was vital to American interests to
defend the anti-Communist government of Ngo Dinh Diem in South Vietnam, assuming
that the Soviets and Chinese were backing Ho Chi Minh's drive to "liberate" the South.
The problems abroad continued. Berlin was an island of western capitalism deep in East
Germany, and a magnet for the East Germans fleeing to the West. Khrushchev wanted the
West out of Berlin he was determined to stop the torrent of refugees. In 1961, the East
Germans cut off the refugee flow by building a wall of concrete and barbed wire along the
line dividing East and West in Berlin.
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The Cuban Missile Crisis was another problem that Kennedy had to deal with. Khrushchev
wanted to bolster Cuba's defences against a second invasion. Even as the Soviets
installed their offensive missiles, Khrushchev assured Kennedy that they were not doing
so, but on October 16, 1962, surveillance data obtained from a U-2 over-flight, showed
that he had lied. Kennedy resolved on a naval blockade that would prevent Soviet ships
from bringing additional military shipments to Cuba, a policy that would demonstrate the
United State's refusal to tolerate the missiles and, at the same time, give Khrushchev time
to withdraw.
Khrushchev proposed a trade of the Soviet missiles in Cuba for the American missiles in
Turkey. Robert Kennedy, the Attorney General assured the Soviet ambassador that the
“Jupiters” would be gone from Turkey soon after the crisis ended. The next day, October
28, Khrushchev agreed to withdraw the missiles from Cuba.
Kennedy gave a higher priority to the sluggish American economy. He was determined to
recover quickly from the recession he had inherited, and to stimulate the economy to
achieve a much higher rate of long-term growth.
Rejecting the idea of massive spending on public works, Kennedy sided with the experts
who claimed that the problem was essentially technological and urged training and
redevelopment programs to modernise American industry. The stimulation of the
economy, however, came not from social programs but from greatly increased
appropriations for defence and space. Aircraft and computer companies in the South and
West benefited, but unemployment remained uncomfortably high in the older industrial
areas or the Northeast and Midwest.
Kennedy's desire to keep the inflation rate low led to a serious confrontation with the
businessmen. He relied on informal wage and price guidelines to hold down the cost of
living. Troubled by his strained relations with business and by the continued lag in
economic growth, he decided to adopt a more orthodox approach in 1963. He passed a
major cut in taxes to stimulate consumer spending and give the economy the jolt it
needed. When enacted by Congress in 1964, the massive tax cut ($13.5 billion) led to the
longest sustained economic advanced in American history.
Kennedy's economic policy was successful. Although the rate of economic growth doubled
to 4.5% by the end of 1963 and unemployment was reduced substantially, the cost of
living rose by only 1.3% per year. Personal income went up 213% in the early 1960s, but
the greater gains came in corporate profits, which rose by 67% in this period. Critics
pointed out that the Democratic administration failed to redistribute the national wealth to
help those at the bottom. The public sector remained neglected, and ecological and social
problems continued to grow at an alarming rate.
1.2. Lyndon B. Johnson Years
John F. Kennedy’s New Frontier ended suddenly on November 22, 1963, when he was
assassinated by Lee Harvey Oswald in Dallas. Just hours after Kennedy's assassination,
Lyndon B. Johnson was sworn in to succeed.
Lyndon B. Johnson grew up in one of the poorest parts of the United States, the Central
Texas hill country. By the 1950s, he had risen to become majority leader of the United
States Senate. He had an intimate knowledge of Congress and incredible determination to
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succeed. Johnson possessed far greater ability than Kennedy in dealing with Congress.
He had more than thirty years experience in Washington as a legislative congressman and
senator. Above all, Johnson sought consensus. He was able to work with equally well with
southern conservatives and liberals. Five days after the tragedy, Johnson spoke to a
special joint session of Congress, asking Congress to enact Kennedy's tax and civil rights
bills as a tribute to the fallen leader, and declaring, “Let us here highly resolve that John F.
Kennedy did not live or die in vain.”
The tax cut bill came first. In February 1964, after skilful manoeuvring by Johnson,
Congress reduced personal income taxes by more than $10 billion, setting off a sustained
economic boom. Consumer spending increased by $43 billion in the next eighteen months,
and new jobs opened up at the rate of one million a year. He was even more influential in
passing the Kennedy civil rights measure. Johnson encouraged liberal amendments that
strengthened the bill in the House and, by using growing public pressure; he squeezed
northern Republicans to abandon their traditional alliance with conservative southern
Democrats.
President Johnson took over proposals that Kennedy had been developing and made
them his own. He designed a complete poverty program and created the Office of
Economic Opportunity (OEO) to set up a wide variety of goals.
Johnson promoted two traditional Democratic reforms, health care and education. Johnson
settled Medicare, which gave a mandate to health insurance under the Social Security
program for Americans over age 65, with a supplementary Medicaid program for indigents.
In education, he supported a child benefit approach, allocating federal money to advance
the education of students in parish as well as state schools.
The Civil Rights issue was one of the most difficult tests of Johnson's presidency. For the
first time since Reconstruction, African-Americans were playing an active role in southern
politics. He had accomplished more than any president since Franklin D. Roosevelt.
However, Johnson had failed to win the public adulation and, when foreign problems soon
eroded his popularity, few remembered his remarkable legislative achievement at home.
President Johnson continued Kennedy's policy in Vietnam. Full-scale American
involvement in Vietnam began in 1965, to prevent a North Vietnamese victory.
For the next three years, Americans waged an intensive war in Vietnam to prevent a
Communist victory. Bombing of North Vietnam proved ineffective because they had an
agrarian economy. In fact, the American air attacks supplied North Vietnam with a
powerful propaganda weapon, which it used effectively to sway world opinion against the
United States.
Johnson came to the conclusion that the war would end in a stalemate. Three years of
inconclusive fighting and a steadily mounting loss of American lives had disillusioned the
American people and finally cost Lyndon Johnson the presidency.
1.3. The Nixon Presidency
The main beneficiary of the Democratic debacle was Richard Nixon. Politically dead after
his unsuccessful race for governor of California in 1962, he resurrected himself politically;
he was a new Nixon in the foreign and domestic fires of the mid-sixties. Positioning himself
squarely in the centre, he quickly became the front-runner for the Republican nomination.
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9. From the JFK’s arrival to the twenty-first century
In the campaign, Nixon played the peace card, appearing to advocate an end to the
Vietnam conflict. The new Nixon was more judicious in his anti-Communism; he was a
realist rather than a moraliser in world affairs. He envisioned himself a statesman. Nixon
was prepared to exploit the plan that the Communist world was no longer monolithic and
he developed a "strategy of détente," trying to reduce tensions with the Communist world,
slowing the nuclear arms race, and refraining from armed intervention where the United
States' vital interests were not at risk. Above all, he chose the role of reconciler for a nation
torn by emotion, he promised to bring a divided country together again.
On January 26, 1969, Richard Nixon took office as the thirty-sixth president. He presented
himself as a high-minded centrist, but with the aid of his running mate, Governor Spiro
Agnew of Maryland, a former moderate who had turned rightward with the backlash. Nixon
stressed the need for a restoration of “law and order.” He proclaimed himself a spokesman
for the “silent Americans.” On the Vietnam issue, he said only that he had a “secret plan”
to end the war. Nixon won the presidency by a very narrow margin over the Democratic
candidate Humphrey.
Nixon’s policy was to return to the politics of accommodation that had characterised the
Eisenhower Era. Nixon focused on making federal bureaucracy function more efficiently.
He shifted responsibility for social problems from Washington to state and local authorities.
Federal funds were dispersed to state, county, and city agencies to meet local needs.
President Nixon concentrated control of foreign policy in the White House, relying heavily
on his national adviser, Henry Kissinger, who in 1973 became Secretary of State.
Nixon and Kissinger played the China card as their first step toward achieving détente,
relaxing the tension, with the Soviet Union. Nixon travelled to China in February 1972. He
met with the Communist leaders and ended more than two decades of Chino-American
hostility. The Soviets viewed China as a dangerous adversary and responded by agreeing
to negotiate an arms control pact with the Untied States.
Nixon was determined to stop the war, and soon. He had a three-part plan, known as
“Vietnamisation”, to end the conflict: renewed bombing, a hard line in negotiations with
Hanoi, and the gradual withdrawal of American soldiers.
The second tactic, negotiation with Hanoi, finally proved successful.
President Nixon inherited a rising inflation rate. He opposed the idea of federal controls
and opted for a reduction in government spending while encouraging the Federal Reserve
Board to curtail the money supply, forcing up interest rates and slowing the rate of
business expansion. The result was disastrous. At the same time, the economy underwent
its first major recession since 1958. The stock market tumbled, the sharpest drop in thirty
years; unemployment rose; business failures jumped alarmingly.
In 1971, the inflation was even worse. The nation's balance of trade became negative, as
imports exceeded exports. In mid-August, Nixon acted to stop the economic decline. He
announced a ninety-day-freeze on wages and prices, to be followed by federally
guidelines. He ordered a devaluation of the dollar, which led to a greatly improved balance
of trade. The Nixon economic reversal quickly ended the recession.
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1.3.1. The election of 1972 and the Watergate Scandal
Operating under a siege mentality that justified any measure necessary to defeat its
opponents, the White House went to extreme lengths to guarantee Richard M. Nixon's reelection in 1972.
In the campaign, a Committee to re-elect the President (CREEP) was formed, headed by
Attorney General John Mitchell. Specialists in dirty tricks harassed democratic contenders,
while a group of "plumbers" developed an elaborated plan to spy on the opposition. The
plan included bugging the Democratic national headquarters in the Watergate complex in
Washington. In the early morning hours of June 17, James McCord and four other men
working under the direction of Gordon Liddy and Howard Hunt, were caught by police
during a break-in at Watergate. The continuing abuse of power had finally culminated in an
illegal act that threatened to bring down the entire Nixon administration.
The President was deeply implicated in the attempt to cover up the involvement of White
House aides in the original burglary. He ordered the CIA to keep the FBI off the case, on
the specious grounds that it involved national security, and he urged his aides to lie under
oath if necessary. Finally, the first threat appeared when federal judge John Sirica
sentenced the burglars to long jail terms. One of them, James McCord informed Sirica hat
he had received money from the White House and had been promised a future pardon in
return for his silence. John Dean, the White House adviser, revealed Nixon's personal
involvement in the cover up. The existence of tapes of conversation in the Oval Office,
recorded regularly since 1970, finally brought Nixon down.
The House Judiciary Committee, acting on evidence uncovered by the Senate committee,
voted three articles of impeachment, charging Nixon with obstruction of Justice, abuse of
power, and contempt of Congress. The tapes implicated him in the cover-up, and then, on
August 9 1974, Nixon finally chose to resign.
Ford tried to restore public confidence in the presidency when he replaced Nixon in August
1974. As his vice president, Ford appointed Nelson Rockefeller, former governor of New
York.
On September 8, 1974, President Ford shocked the nation by announcing he had granted
Richard Nixon a full and unconditional pardon for all federal crimes he "had committed or
may have committed or taken part in" during his presidency. Ford's plan was to end the
Watergate scandal, but his gesture eroded public confidence and made him to seem
complicit in the scandal. Ford had to fight to re-establish the CIA’s prestige because it had
been involved in plot to assassinate foreign leaders. Then, he appointed a respected
former congressman, George Bush, as the new CIA director and issued an executive
order outlawing assassination as an instrument of American foreign policy. Congress also
increased its own surveillance of the CIA. Gerard Ford had opposed every Great Society
measure, and he proved to be far more conservative than Nixon in the Presidency. In a
year, he vetoed thirty-nine separate bills. He supported the maximum freedom for private
enterprise.
2. JIMMY CARTER AND HUMAN RIGHTS
James E. Carter was a virtually unknown former Georgia governor who quickly became
the front-runner in the 1976 contest for the presidency. Carter ran as an outsider because
he was aware of the voters' disgust with politicians of both parties. He appeared candid
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and honest and won the Democratic nomination easily. In November 1976, Carter won an
extremely narrow victory.
President Carter was more successful than President Gerard Ford in adjusting to the
growing nationalism in the world, particularly in Central America, where the United States
had imposed order for most of the twentieth century by backing reactionary regimes.
During Jimmy Carter's presidency, the United States began to show a growing regard for
the human rights practices of its allies. Carter was convinced that American foreign policy
should embody the country's basic moral beliefs. In 1977, Congress started requiring
reports on human rights conditions in countries receiving American aid.
In the 1970s, America's political position in the world declined sharply. In part, the reason
was internal. The Vietnam War left Americans convinced that the nation should never
again intervene abroad, and Watergate discredited strong presidential leadership, shifting
power over foreign policy to Congress. The new national consensus was symbolised by
the War Power Act of 1973, which required the president to consult with Congress before
sending troops into action overseas.
The policy of détente was already in trouble when Carter took office in 1977. The Soviet
repression of the dissident movement and its policy restricting the emigration of Soviet
Jews had caused Americans to doubt the wisdom of seeking accommodation with the
Soviet Union. Carter's emphasis on human rights struck the Soviets as a direct repudiation
of détente. Carter's absolute commitment to human rights was difficult to accomplish.
On January 1, 1979, the United States and China exchanged ambassadors, completing
the reconciliation that Nixon had begun in 1971. The new relationship between China and
the United States presented the Soviet Union with the problem of defending itself against
two different enemies. The Cold War, in abeyance for nearly a decade, resumed with full
fury in December 1979 when the Soviet Union invaded Afghanistan. This was the
beginning of a Soviet advance towards the Indian Ocean and the Persian Gulf. Carter
responded to this aggression with a number of measures. The United States banned the
sale of high technology to the Soviets, embargoed the export of grain, resumed draft
registration, and even boycotted the 1980 Moscow Olympics. These actions doomed
détente and renewed the Cold War.
3. THE REAGAN-BUSH ERA
Republican Ronald Reagan capitalised on the citizens' frustration. When he ran for the
presidency against Jimmy Carter in 1980, he asked Americans, "Are you better off than
you were four years ago?" On Election Day, Americans answered with a resounding “no”.
Reagan won a landslide victory.
Ronald Reagan was already well known to the American people as a movie actor and
radio and television announcer, when he was elected president in 1980. In politics, he
started out as a liberal, supporting Franklin D. Roosevelt and the New Deal. Reagan was
catapulted into the national political scene in 1964 when he gave an emotional television
speech in support of republican presidential nominee Barry Goldwater, denouncing
welfare, urban renewal, foreign aid, big government and high taxes. Two years later,
Reagan successfully ran for governor of California, promising to cut state spending and
crack down on students’ protests.
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When President Reagan took office he promised to cut inflation, rebuild the nation's
defences, restore economic growth and decrease the size of the federal government by
limiting its role in welfare, education and housing. He pledge to end exorbitant union
contracts to make American goods competitive again, to cut taxes to stimulate investment
and purchasing power, and to decontrol business, strangled by federal regulation, in order
to restore competition. The President embraced the concept of supply-side economics as
the proper remedy for the nation's economic problems. Reagan favoured a reduction in
both federal expenditure and revenue. Reagan promised to increase national wealth, not
just redistribute the existing wealth. Reagan won his fight in the Senate to reduce the
budget. He was equally successful in reducing taxes.
Reagan limited the role of Government. He wanted to restrict government activity and
reduce federal regulation of the economy. The limitation of the federal agencies’ impact on
American business was the main purpose of the President's political philosophy. The
sweeping reductions in domestic spending and income taxes that Reagan achieved in
1981, gave rise to conflicting economic expectations. Over the next seven years, the
nation experienced both recession and rapid growth, deficits as well as prosperity, and
best of all, an unexpected easing of inflation. Even through Reagan was unable to achieve
all of his goals, the combination of lowered inflation and renewed economic growth gave
him an enormous political advantage.
Reagan’s laissez-faire principles could also be seen in his administration's approach to
social programs. He was convinced that federal welfare programs promoted laziness and
moral decay. He limited benefits to those he considered the “truly needy.” His
administration cut spending on a variety of social welfare programs. He also eliminated
cash welfare assistance for the working poor and reduced federal subsidies for child-care
services and for low-income families.
A problem emerged in the mid-1980s to cloud Reagan's claims of economic recovery: the
growing federal budget deficit. The 1982 recession undercut the rosy assumptions of the
supply-siders. As the economy weakened and unemployment insurance increased, tax
revenues fell below projections while government spending on unemployment insurance
and other social programs climbed.
Ronald Reagan was even more determined to reverse the course of American policy
abroad than at home. Under his administration, the Pentagon flourished. By 1985 the
defence budget grew to over $300 billion; at the same time the administration was cutting
back on domestic spending.
By the end of 1987, Reagan made a remarkable recovery by reversing the course of
Soviet-American relations. The change in leadership in the Soviet Union proved fortunate.
Mikhail Gorbachev was a young Soviet leader who had a new vision for his country. He
wanted to improve relations with the United States as part of his new policy of perestroika,
which meant a restructuring of the Soviet economy, and glasnost, political openness. The
Soviet economy was in a bad way and Gorbachev needed a breathing spell in the arms
race and a reduction in Cold War tensions to carry out his domestic changes.
In 1988 George H. W. Bush was elected president. His victory reflected the continuing
Republic dominance of the elections.
Most of Bush's time was taken up with two pressing domestic problems. First, the nation's
savings and loan industry, based on U. S. government- insured deposits, was in grave
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trouble as a result of lax regulation and unwise, even possibly fraudulent, loan policies.
The continuing budget deficit provided an even greater challenge. The nation simply spent
beyond its means, with deficits still running at more than $150 billion a year. Finally, the
president and Congress reached agreement on both issues.
In 1990, Bush faced a deficit of over $200 billion. He finally agreed to break his “no new
taxes” pledge and support a budget that included both new taxes on the wealthy and
substantial spending cuts, mainly for the military. The resulting agreement projected a
savings of $500 billion over five years, half from reduced spending and half from new
taxes. Unfortunately for the president, the budget change coincided with the beginning of a
slow but painful recession that ended the republican prosperity of the 1980s.
The Bush administration faced an unprecedented year of change abroad that marked the
end of the post-World War II era. In several countries, communism gave way to freedom.
The first attempt at internal liberation proved tragically abortive. In May 1989, students in
China began a month-long demonstration for freedom in Peking’s Tiananmen Square. But
on the evening of June 4, the Chinese leaders imposed martial law. A far more promising
trend toward freedom began in Europe in mid-1989. In June, Lech Walesa and his
Solidarity movement came to power in free elections in Poland. One by one, the
repressive governments of Hungary, East Germany, Czechoslovakia, Bulgaria, and
Romania fell. In early November, in East Germany the Communist leaders suddenly
announced the dismantling of the Berlin Wall.
On August 2, 1990, Bush faced a much more difficult challenge, when Saddam Hussein,
the dictator ruler of Iraq, invaded Kuwait, threatening Saudi Arabia and the oil-rich Persian
Gulf region. Bush responded firmly.
In 1992, a presidential election year, the persistence of the recession that had started two
years earlier became the dominant political issue. Economists warned that the interest
payments on the debt would become the largest single budget expenditure by the end of
the 1990s, thereby threatening the United States' economic future.
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