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History of the United States (1980-present)

 This article is part of the
History of the United States series.
 Colonial America
 History of the United States (1776-1865)
 The coming of the Civil War
 The Civil War
 History of the United States (1865-1918)
 History of the United States (1918-1945)
 History of the United States (1945-1964)
 History of the United States (1964-1980)
 History of the United States (1980-present)
 Demographic history of the United States
 Military history of the United States

Table of contents
1 The Reagan Revolution
2 The post-Cold War era
3 Related Topics

The Reagan Revolution

Changing demographics and the growth of the Sunbelt

The most widely discussed demographic phenomenon of the 1970s was the rise of the "Sunbelt," the Southwest, Southeast, and especially Florida and California (surpassing New York as the nation's most populous state in 1964). By 1980, the population of the Sunbelt had risen to exceed that of the industrial regions of the Northeast and Midwest, which were experiencing not only a relative but in some cases an absolute decline in their numbers. The rise of the Sunbelt continued a trend in the growth of suburbs since the 1950s, due in large measure to ever-increasing mobility brought by the growing popularity of automobiles. In addition, the rise of the service sector, at the expense of industry and manufacturing, facilited demographic shifts to the "frontiers" from the more industrialized states in the Northeast and Midwest.

The rise of the Sunbelt has been producing a change in the nation's political climate strengthening conservatism. Always more conservative than many other regions of the country, the boom mentality in this growing region conflicted sharply with the concerns of the so-called Rustbelt, a region saddled with a declining economic base, highly congested, and home to large, impoverished minority groups. The Northeast and Midwest have remained far more committed to social programs and far more interested in regulated growth than the wide-open, sprawling areas of the South and West. Electoral trends in the regions reflect this divergence; the Northeast and Midwest have been increasingly voting for Democratic candidates in federal, state and local elections while the South and West are now the solid base for the Republican Party. As an aside, California has reemerged as a bright sport for the Democratic Party in the late 1990s, due to a backlash against the GOP's anti-immigrant, anti-affirmative action stances. Non-Hispanic whites are now a minority in the nation's most populated state.

As more and more industries moved their plants and headquarters from the inner cities and urban centers to the suburbs, many saw a contraction of their economic base as municipalities lost the revenues from the enterprises that had departed. In the nation's major urban areas unemployment increased, expanding demand for social services, while tax bases declined. New York City barely averted bankruptcy in 1975.

Thus, the liberal leaders of the 1960s, characteristic of the era of the Great Society and civil rights movement, gave way to conservative urban politicians in the 1970s across the country, such as New York Mayor Ed Koch, a conservative Democrat who was openly disinterested in the plight of minorities and the poor, subordinating those concerns to fiscal stability and the interests of the white middle class. Conservatives railed against the "failures" of liberal social programs, conveniently ignoring the broader demographic shift in the country that really contributed to the fiscal problems of the nation's major urban centers.

Since the 1980s, many old urban centers have been making a sort of comeback in a wave of "gentrification." Downtown areas began attracting investment once again, contributing to a return of affluent, upper middle class urbanites, especially in New York in recent years. While this has increased commercial growth and improved the tax bases of urban areas, housing prices have been driven up, displacing poor residents. The processes of "gentrification" and stratification between rich and poor have been greatly intertwined since the decline of the liberal welfare state of the 1960s. The increasing scarcity of low-income housing in the 1980s thus contributed to one of the most widely discussed phenomena of the mid-1980s: homelessness. And despite the achievements of the civil rights movement of the 1960s, inner-city, working class African Americans have grown far more marginalized from the mainstream of US society than their counterparts two decades ago. Stores and businesses have been abandoning the ghettos while the decline of social services and effective affirmative action over the past two decades had reduced prospects for advancement.

The growth of conservatism, the assault on Détente, and the elections of 1980

The 1970s inflicted damaging blows to the American confidence characteristic of the 1950s and early 1960s. The War in Vietnam and the Watergate crisis shattered confidence in the presidency. International frustrations, including the fall of South Vietnam in 1975, the hostage crisis in Iran in 1979, the Soviet invasion of Afghanistan, the growth of international terrorism, and the acceleration of the arms race raised fears over the country's ability to control international affairs. The energy crisis, unemployment, and inflation, derided as "stagflation," raised fundamental questions over the future of American prosperity.

American "malaise," a term that caught on following Carter's 1979 "malaise speech," in the late 1970s and early 1980s was not unfounded. During the same period of time, the Soviet Union improved living standards by doubling urban wages and raising rural wages by around 75%, building millions of one-family apartments, and manufacturing large quantities of consumer goods and home appliances. Soviet industrial output increased by 75%, and the Soviet Union became the world's largest producer of oil and steel.

Even abroad, the tide of history appeared to be turning in favor of the Soviet Union. While the United States was mired in recession and the Vietnam quagmire, pro-Soviet governments were making great strives abroad, especially in the Third World. Vietnam had defeated the United States, becoming a united, independent state under a Communist government. Other Communist governments and pro-Soviet insurgencies were spreading rapidly across Africa, Southeast Asia, and Latin America. And the Soviet Union seemed committed to the Brezhnev Doctrine, sending troops to Afghanistan at the request of its Communist government. The Afghan invasion in 1979 marked the first time that the Soviet Union sent troops outside the Warsaw Pact since the inception of the Eastern counterpart of NATO.

Reacting to all these perceptions of American decline internationally and domestically, a group of academics, journalists, politicians, and policymakers, labeled by many as "new conservatives" or "neoconservatives", since many of whom were still Democrats, rebelled against the Democratic Party's leftward drift on defense issues in the 1970s, especially after the nomination of George McGovern in 1972, harped on America's geo-political decline, blaming liberal democrats. Many clustered around Sen. Henry "Scoop" Jackson, a Democrat, but then they aligned themselves with Ronald Reagan and the Republicans, who promised to confront charges of Soviet expansionism.

Generally they supported a militant anticommunism, minimal social welfare, and sympathy with a traditionalist agenda. But their main targets were the old policies of "containment" of Communism (rather than "rollback"). Détente with the Soviet Union was their immediate target, with its aims of peace through negotiations, diplomacy, and arms control.

Led by Norman Podhoretz, these "neoconservatives" used charges of "appeasement", alluding to Neville Chamberlain at Munich, to attack the foreign policy orthodoxy in the Cold War. They Compared negotiations with relatively weak enemies of the United States as appeasement of "evil," these increasingly influential circles attacked Détente, most-favored nation trade status for the Soviet Union, and supported unilateral American intervention in the Third World to stem the rise of governments whose aims did not coincide with those of the United States. Before the election of Reagan, the neoconservatives sought to stem the antiwar sentiments caused by the US defeats in Vietnam and the massive casualties in Southeast Asia that the war induced.

During the 1970s Jeanne Kirkpatrick, a prominent political scientist and later US ambassador to the United Nations under Ronald Reagan, a position she held for four years, increasingly criticized the Democratic Party, of which she was still a member since the nomination of the antiwar George McGovern. Kirkpatrick became a convert to the ideas of the new conservatism of once liberal Democratic academics.

In addition to the growing appeal of such rightwing sentiment, President Carter's prospects for reelection in the U.S. presidential election of 1980 were weakened by a primary challenge by liberal icon Senator Edward Kennedy of Massachusetts. Kennedy, although a far more magnetic personality than Carter and beloved by the Democratic base, could not transcend personal controversies, most notably a 1969 automobile accident at Chappaquiddick Island in Massachusetts that had left a young woman dead. Carter easily won the nomination at the Democratic convention. The party also renominated Walter Mondale for vice president.

Against the backdrop of inflation and American "weakness" abroad, Ronald Reagan, former governor of California, received the Republican nomination in 1980, and his chief challenger, George Bush, became the vice-presidential nominee. During his successful 1980 campaign, he hired Kirkpatrick as his foreign policy adviser to exploit Carter's "weakness" on foreign policy.

Reagan promised an end to the drift in post-Vietnam and post-Iran hostage US foreign policy and a restoration of the nation's military strength. Reagan also promised an end to "big government" and to restore economic health by an experiment known as "supply-side" economics. However, all these aims were not reconcilable through a coherent economic policy.

Supply-side economists led the assault on the welfare state built up by the New Deal and Great Society. They assumed that the woes of the US economic were in large part a result of excessive taxation (conveniently de-emphasizing the role of high foreign policy, the rise of overseas competition, and massive expenditures on Vietnam), which "crowded out" money away from private investors and thus stifled economic growth. The solution, they argued, was to offer generous benefits to corporations and wealthy taxpayers in order to encourage new investments and to cut benefits geared toward the poor.

Apparently the public, specifically the white middle class, agreed. Critics charged that Reagan's attacks on the welfare state were merely demagogic, appealing to a white middle class insensitive to the continued plights to victims of socio-economic injustice and with little understanding of the international forces creating the economic problems plaguing the country since the end of the Vietnam War.

The presidential election of 1980 was a key turning point in American politics. It signaled the new electoral power of the suburbs and the Sunbelt; moreover, it was a watershed ushering out the commitment to social justice characteristic of the 1960s civil rights movement and Great Society. It also signaled a commitment to a militaristic, aggressive foreign policy.

Although Reagan's candidacy was burden by Representative John B. Anderson of Illinois, a moderate Republican and primary opponent who ran as an independent, the two major issues of the campaign were far greater threats to Carter's prospects for reelection: the economy, national security, and the Iranian hostage crisis. Carter seemed unable to control inflation and had not succeeded in obtaining the release of US hostages in Tehran before the election.

Reagan won a landslide victory, and Republicanss also gained control of the Senate for the first time in twenty-five years. Reagan received 43,904,153 votes in the election (50.7 percent of total votes cast), and Carter, 35,483,883 (41.0 percent). Reagan won 489 votes in the electoral college to Carter's 49. John Anderson won no electoral votes, but got 5,720,060 popular votes. Anderson's share of the popular, totaling 6.6 percent, was moderately impressive for a third party candidate in the United States, demonstrating that a sizable share of moderate voters, while disenchanted with Carter, did not forget that only several years earlier Reagan was regarded as a dangerous far-right reactionary.

Supply-side economics and the fiscal crisis

Reagan promised an economic revival that would affect all sectors of the population. But since cutting taxes would reduce government revenues, it would also be necessary to target "big government." Otherwise, large federal deficits might negate the effects of the tax cut by requiring the government to borrow in the marketplace, thus raising interest rates and drying up capital for investment once again. Thus, Reagan promised a drastic cut in "big government," which he pledged would produce a balanced budget for the first time since 1969.

Regan's 1981 economic legislation, however, was a concoction of rival programs to appease of all Reagan's conservative constituencies (monetarists, cold warriors, middle class swing voters, and the affluent). Monetarists were placated by tight controls of the money supply; cold warriors, especially neoconservatives like Kirkpatrick, won large increases in the defense budget; wealthy taxpayers won sweeping three-year tax rate reductions on both individual and corporate taxes; and the middle class saw that its pensions and entitlements would not be targeted. Reagan declared spending cuts for the social security budget, which accounted for almost half of government spending, off limits due to fears over an electoral backlash, but the administration was hard pressed to explain how his program of sweeping tax cuts and bloated defense spending would not increase the deficit.

Advocates of "trickle down economics," however, argued that low taxes encouraged extra enterprise, which generated extra revenue. Even if this were true, spending cuts would be needed. Budget Director David Stockman had to race to force this economic legislation down the throat of Congress within the administration's deadline of forty days. Stockman had no doubt that spending cuts were needed, and almost arbitrarily slashed expenditures across the board (non-defense, of course) by some $40 billion; and when figures did not add up, he resorted to the "magic asterisk"—which signified "future savings to be identified." Impassioned pleas by constituencies threatened by the loss of social services, hallmarks of the Great Society, were futile. And the new budget cuts passed through the Congress with relative ease.

By early 1982 Reagan's hodgepodge, politicized economic program was beset with difficulties. The nation had entered the most severe recession since the Great Depression. In the short term, the effect of Reganomics was a soaring budget deficits. The consequence was soaring interest rates (briefly hovering around 20 percent) and a serious recession with 10 percent unemployment in 1982. Some regions of the "Rust Belt" (the industrial Midwest and Northeast) descended into virtual depression conditions. The Reagan economic program, however, was not entirely to blame; the recession stretched well back into 1970s. But a growing number of critics charged that the administration's policies had only worsened the situation.

Reagan often presided unknowingly over fiscal and economic crisis, content with telling stories about his movie days, appearance, sound bites, and slogans. By 1982, former Budget Director David Stockman wrote, "I knew the Reagan Revolution was impossible—it was a metaphor with no anchor in political and economic reality."

In effect, Reagan combined the tight-money regime of the Federal Reserve with an expansionary fiscal policy. Instead of monetarism or supply-side economics, Reagan was actually practicing Keynesianism on a scale not seen since the sixties, but this time the spending not on welfare but defense. Thereafter, fiscal stimulation (high government spending), the supposed target of Reganomics, was what actually started to produce steady growth (4.2 percent per year in the period 1982-1988), which compared favorably to Margaret Thatcher's Britain, which had been consistent in its application of a monetarist regime (a tight monetary policy and a tight fiscal policy, which resulted in deflation in the midst of depression). By the middle of 1983, unemployment fell from 11 percent in 1982 to 8.2 percent in the middle of 1983. GDP growth was 3.3 percent, the highest since the mid-1970s. Inflation was below 5 percent. The recovery from the worst periods of 1982-83 also occurred because of a radical drop in oil prices, which ended inflationary pressures of spiraling fuel prices. The virtual collapse of the OPEC cartel enabled the administration alter its tight money policies, to the consternation of conservative monetarist economists, and began pressing for a reduction of interest rates and an expansion of the money supply, in effect subordinating concern about inflation (which now seemed under control) to concern about unemployment and declining investment.

Following the mild recovery (timely considering Reagan's 1984 reelection bid), the medium-term effect of Reganomics was a soaring budget deficit as spending exceeded revenue year after year due to tax cuts and increased defense spending. The deficit rose from $60 billion in 1980 to a peak of $220 billion in 1986 (well over 5 percent of GDP). Over this period, national debt more than doubled from $749 billion to $1,746 billion. While deficit spending has value as an economic stimulus, the dimension of the budget shortfalls of the 1980s was alarming. The deficits were keeping interest rates, although lower than the 20 percent peak levels earlier in the administration due to a respite in the administration's tight money policies, high and threatening to push them higher. The government was thus forced to borrow so much money to pay its bills that it was crowing out investment and driving up the price of borrowing, once again drying up investment and slowing down the economy. In addition, deficits were keeping the US dollar overvalued. With such a high demand for dollars (due in large measure to government borrowing), the dollar achieved an alarming strength against other major currencies. As the dollar soared in value, so American exports became increasingly uncompetitive, with Japan as the leading beneficiary. The high value of the dollar made it difficult for foreigners to buy American goods and encouraged Americans to buy imports.

Since US saving rates were very low (roughly one-third of Japan's), the deficit was mostly covered by borrowing from abroad, turning the United States within a few years from the world's greatest creditor nation to the world's greatest debtor. Not only was this damaging to America's status, it was also a profound shift in the postwar international financial system, which had relied on the export of US capital. The US balance of trade grew increasingly unfavorable; the trade deficit grew from $20 billion to well over $100 billion. Thus, American industries such as automobiles and steel, faced renewed competition abroad and within the domestic market as well.

The enormous deficits were in large measure holdovers from spending on the Vietnam War; but the most important causes stemmed from the polices of the Reagan administration. The 1981 tax cuts, the largest in US history, eroded the revenue base of the federal government. The massive increase in military spending (about $1.6 trillion over five years) far exceeded cuts in social spending, despite the pernicious, wrenching impact of such cuts spending geared toward some of the poorest, most vulnerable segments of society. By the end of 1985, funding for domestic programs had been cut nearly as far as Congress could tolerate.

Reagan and the world

With Reagan's promises to restore the nation's military strength, the Reagan years saw massive increases in military spending, amounting to about $1.6 trillion over five years. Combined with his massive tax cuts, the nation paid a high price for his defense policies. Enormous deficits to pay for the bloated defense budgets, inducing high levels of government borrowing, resulted in high interest rates and an overvalued dollar, which stifled economic growth, resulted in a very unfavorable balance of trade, and depressed the US steel and automotive sectors. However, the Soviet Union paid a far higher price for Reagan's commitment to the Cold War.

The neoconservative movement was a strong influence on Reagan's foreign policy adventures. The Kirkpatrick Doctrine was an especially strong influence. Jeanne Kirkpatrick, known for her anticommunist stance and for her enthusiasm of rightwing dictatorships, argued that Third World social revolutions favoring the poor, dispossessed, or underclasses are illegitimate, and thus argued that the overthrow of leftist governments (such as the democratically elected government of Salvador Allende in Chile) and the installation of rightwing dictatorships was acceptable and essential. Under this doctrine, the Reagan administration actively supported the dictatorships of Augusto Pinochet, Ferdinand Marcos and the racist apartheid regime in South Africa.

The Reagan administration was committed to stemming the advance of socialism in the Third World. Reagan, however, did not move toward protracted, long-term interventions like the Vietnam War to stem social revolution in the Third World. Instead, he favored quick campaigns to attack or overthrow leftist governments, favoring small, quick interventions that heightened a sense of military triumphalism among Americans, such as the attacks on Grenada and Libya, disastrous interventions in the multisided Lebanese civil war, and the arming rightwing militias in Central America seeking to overthrow leftist governments like the Sandinistas.

In 1985 Reagan authorized the sale of arms in Iran in an unsuccessful effort to free US hostages in Lebanon; he has since claimed to not know that subordinates were illegally diverting the proceeds to rightwing death-squads in Central America. Perhaps the president, well into his seventies, and well known to be on the intellectually lazy side (being infamous for groundless assertions that made for good sound bites), was truthful; after all, he favored articulating broad themes espousing America's "glory" and lambasting "big government," rather than the day-to-day drudgery of executive governance, which he delegated among subordinates. It has since been revealed that his wife, Nancy, choreographed the president's schedules, after consultation with her astrologer. Former Chief of Staff Donald Regan was even obliged to keep a color-coded calendar on his desk predictions of "good days," "bad days," and "iffy days." At worse, he deliberately deceived the public. Charges of an executive 'power vacuum' and a low presidential attention span were probably not entirely partisan in nature.

Moreover, the Reagan administration's hostile stance toward the Soviet Union, the so-called "evil empire" (despite significant changes since the Stalin-era), would contribute to the dangerous tensions between the two superpowers since the Cuban Missile Crisis in the early 1980s before the rise of Mikhail Gorbachev in the Soviet Union.

But while the Soviets enjoyed achievements in Southeast Asia, Latin America, and Africa before Reagan came in office, its economy was mired in far worse structural problems. Reform stalled between 1964-1982 and supply shortages were notorious.

But the generational shift in the 1980s under Mikhail Gorbachev gave new momentum for reform. However, cold warriors have since argued that the pressures from increased US defense spending was and additional impetus for reform.

While it was Carter who officially ended the policy of Détente following Soviet intervention in Afghanistan, the Reagan years marked a new high in tensions between the two nuclear-armed superpowers, which probably strained the Soviet economy to the point of the union's undoing. Long before the Cold War, long-standing disparities in the productive capacities, developmental levels, and geopolitical strength existed between East and West. The "East", in many respects, had been behind the "West" for centuries. As a result, reciprocating Western military build-ups during the Cold War placed an uneven burden on the Soviet economy. The Soviet Union faced a disproportionate burden in the arms race, having to devote a much relatively higher segment of its economy to military expenditures to reciprocate those of the West. Especially amid the Reagan administration's talk of "star wars" missile defense, Soviet policymakers increasingly accepted Reagan administration warnings that the arms race was one that they could not win.

The result in the Soviet Union was a dual approach of concessions to the United States and economic restructuring (perestroika) and democratization (glasnost) domestically. But instead the Soviet Union collapsed and broke up into fifteen constituent parts and the Cold War was over. Today, over half the population in the former Soviet Union is now impoverished in a country where poverty had been largely non-existent; life expectancy has dropped drastically; and GDP has halved. Reaganite hawks relished in post-Cold War "triumphalism," idea of the "end of history," and a "new world order" based on American-style liberal democracy, while the "liberated" population of the former Soviet Union is mired in misery.

The post-Cold War era

Campaign '88 and the first Bush administration

See U.S. presidential election, 1988

The Persian Gulf War

The Persian Gulf War was perhaps the first major test of the post-Cold War world order. Iraq, left bankrupt by the Iran-Iraq War, which Iraqi President Saddam Hussein felt had positioned Iraq as a bulwark against the expansion of Iran's 1979 Islamic Revolution. Faced with rebuilding its infrastructure destroyed in the war, Iraq needed money. Although Iraq had borrowed a tremendous amount of money from other Arab states, including Kuwait, during the 1980s to fight its war with Iran, no country would lend it money except the United States, which left Saddam's regime a virtual client state of the US.

Saddam felt that the war had been fought for the benefit of the other Gulf Arab states and even the United States and argued that all debts should be forgiven. Kuwait, however, did not forgive its debt and further provoked Iraq by slant drilling oil out of wells that Iraq considered within its disputed border with Kuwait.

In 1990 Iraq complained to the United States Department of State about Kuwaiti slant drilling. This had continued for years, but now Iraq needed oil revenues to pay off its debts and avert an economic crisis. Saddam ordered troops to the Iraq-Kuwait border, creating alarm over the prospect of an invasion. April Glaspie, the United States ambassador to Iraq, met with Hussein in an emergency meeting, where Hussein stated his intention to continue talks. Iraq and Kuwait then met for a final negotiation session, which failed. Saddam then sent his troops into Kuwait.

The US and Britain, two of the five permanent members of the United Nations Security Council, convinced the Security Council to give Iraq a deadline to leave Kuwait. Eventually a reluctant Security Council declared war on Iraq, which President George Bush declared was "for the New World Order." Saddam, shocked and apparently misled, ignored the deadline and by the end of the Gulf War, Iraq had lost an estimated 20,000 troops and had been expelled from Kuwait. Other sources speak of more than 100,000 on Iraqi side.

Prior to that point, however, Iraq's stances in the international community had alarmed Western powers. Iraq was the leading country in forming the Arab League similar to the European Economic Community, an alliance of European countries. All oil nations would share and work together and plan their own army that would include no Europeans. Iraq at the time had compiled a huge foreign debt and was striving to pay off the debts accumulated during the Iraq-Iran War. Perhaps in response, Saddam was pushing oil-exporting countries to raise oil prices and cutback production. Westerners, however, remember the very destabilizing effects of the Arab oil embargo of the 1970s.

The election of 1992

Riding high on the success of the Gulf War, Bush enjoyed very high approval ratings for his job as president. However, economic problems dogged Bush, and with the entry of H. Ross Perot into the race, Bush found himself losing a three-way race between himself, independent candidate Perot, and Democratic nominee Bill Clinton. See U.S. presidential election, 1992 for more.

The Clinton years

(not close to finished)

The years 1994-2000 witnessed solid increases in real output, low inflation rates, and a drop in unemployment to below 5%. The year 2001 witnessed the end of the boom psychology and performance, with output increasing only 0.3% and unemployment and business failures rising substantially. The response to the terrorist attacks of September 11 showed the remarkable resilience of the economy. Moderate recovery is expected in 2002, with the GDP growth rate rising to 2.5% or more. A major short-term problem in first half 2002 was a sharp decline in the stock market, fueled in part by the exposure of dubious accounting practices in some major corporations.

Welfare reform legislation enacted in 1996 under President Bill Clinton (1993-2001) requires people to work as a condition of receiving benefits and imposes limits on how long individuals may receive payments.

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