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9. From the JFK’s arrival to the twenty-first century



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 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

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

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. 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 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.
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 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. 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.

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 re-election 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.
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 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.
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.
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 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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