Chapter 30 Running On Empty 1975-1991 PDF

The American Nation A History of the United States Fourteenth Edition Chapter 30 Runni...

The American Nation A History of the United States Fourteenth Edition Chapter 30 Running on Empty: 1975-1991 The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Running on Empty: 1975-1991 The Oil Crisis Ford as President The Fall of South Vietnam Ford versus Carter The Carter Presidency A National Malaise Stagflation: The Weird Economy “Constant Decency” in Action The Iran Crisis: Origins The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Running on Empty: 1975-1991 The Iran Crisis: Carter’s Dilemma The Election of 1980 Reagan as President Four More Years “The Reagan Revolution” The New Merger Movement “A Job for Life”: Layoffs Hit Home Corporate Restructuring Rogue Foreign Policy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Running on Empty: 1975-1991 Assessing the Reagan Revolution The Election of 1988 George H. W. Bush as President The Collapse of Communism in Eastern Europe The War in the Persian Gulf Deficits The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A closed Arco gas station The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis October 6, 1973: on the eve of Yom Kippur, Egypt, and Syria attacked Israel  Six years earlier Israel had trounced the Egyptians with humiliating ease and taken the Sinai Peninsula and the West Bank of the Jordan River  Now Egypt threatened to slice Israel in half  Syrian troops advanced against Israel farther north The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) October 6, 1973: on the eve of Yom Kippur, Egypt, and Syria attacked Israel  Israeli Prime Minister Golda Meir pleaded with Nixon for additional arms and aircraft  Nixon airlifted scores of fighter planes and other needed supplies  Israelis recrossed the Suez Canal, cut Egyptian supply lines and forced Egyptian president, Anwar Sadat, to capitulate Arab states cut off oil to U.S. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) Deprived of Middle Eastern oil, American economy sputtered  Price of oil rose to $12 a barrel from $3  Sent prices soaring for everything else  Homes were heated with oil; factories were powered by it; utility plants used it to generate electricity; nylon and other synthetic fibers, paints, insecticides, fertilizers and many plastic products were made from it; and it made gasoline for cars and trucks The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) By time of Yom Kippur War, Americans were driving more than a trillion miles a year  U.S., formerly a major oil exporter, imported one-third of its oil Oil embargo pushed up gasoline prices  Service stations ran out of gas  Long lines formed The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) In spring of 1974, Henry Kissinger negotiated an agreement that required Israel’s withdrawal from some territory occupied since the 1967 war  Arab nations lifted the oil embargo  Principle oil exporting nations—Venezuela, Saudi Arabia, Kuwait, Iraq and Iran—had learned a valuable lesson: if they limited production they could drive up the price of oil The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) In spring of 1974, Henry Kissinger negotiated an agreement that required Israel’s withdrawal from some territory occupied since the 1967 war  After the end of the embargo the Organization of Petroleum Exporting Countries (OPEC) announced another price increase and gasoline prices doubled overnight The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) American car makers who had scoffed at VW Beetles and tiny Japanese cars, now suffered as these competitors claimed the new market for small, fuel-efficient, front- wheel drive cars  American automakers could not respond to challenge because their contract with the United Auto Workers (UAW) linked wages to consumer prices The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) American car makers who had scoffed at VW Beetles and tiny Japanese cars, now suffered as these competitors claimed the new market for small, fuel-efficient, front- wheel drive cars  As production costs rose, manufacturers needed to sell more of their behemoth models, loaded with expensive options  Could not profitably sell small cars The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Oil Crisis (cont'd) Organization of Petroleum Exporting Countries (OPEC)  A cartel of oil-producing nations in Asia, Africa, and Latin America that gained substantial power over the world economy in the mid- to late-1970s. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  To long lines at the pumps. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford as President The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford as President Ford was hard working and untouched by scandal Ford identified inflation as the chief economic culprit and asked patriotic citizens to signify their willingness to fight it by wearing WIN (Whip Inflation Now) buttons  Almost immediately economy suffered big slump The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford as President (cont'd) Ford identified inflation as the chief economic culprit and asked patriotic citizens to signify their willingness to fight it by wearing WIN (Whip Inflation Now) buttons  Production fell and unemployment rate rose above 9 percent (twice postwar average)  President was forced to ask for tax cuts and other measures aimed at stimulating business activity The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford as President (cont'd) Ford identified inflation as the chief economic culprit and asked patriotic citizens to signify their willingness to fight it by wearing WIN (Whip Inflation Now) buttons  This made inflation worse and did little to promote employment The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Fall of South Vietnam The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Fall of South Vietnam January 1975: after two years of a bloody “cease fire”  Hanoi charged Saigon with 301,000 violations and Saigon charged Hanoi with 35,673  North Vietnam initiated a two-year plan to conquer South Vietnam by striking across the 17th parallel  South Vietnamese army fell back then fled and finally dissolved The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The Fall of South Vietnam (cont'd) January 1975: after two years of a bloody “cease fire”  As military situation deteriorated, Ford urged Congress to send arms to South Vietnam  Legislators refused to do so  May 1, 1975: North Vietnamese and Viet Cong entered Saigon (renamed Ho Chi Minh City) and Vietnam War was over The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Evacuees form a line on the roof of the U.S. embassy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter Ford’s record on the economy and foreign policy made him vulnerable in the 1976 campaign Democrats chose Jimmy Carter to run in 1976  Rise was made possible by television, the democratization of the delegate-selection process, and the absence of a dominant leader among the Democrats The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter (cont'd) Democrats chose Jimmy Carter to run in 1976  Had been a naval officer, peanut farmer, and businessman  As governor of Georgia, Carter had a reputation for treating blacks fairly  Emphasized his lack of connections with Washington establishment  Called attention to his integrity and deep religious faith The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter (cont'd) Sought to make election a referendum on morality and signal a shift away from Washington’s atmosphere of scandals The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter (cont'd) Nixon’s and Kissinger’s actions in Chile were a sign of what not to do  Tried to prevent the election of Marxist Salvador Allende in 1970  After his election, had the CIA work to destabilize regime  1973: Allende was murdered in a military coup The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Jimmy Carter and President Gerald Ford The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter (cont'd) Ford was opposed in the Republican campaign by former California governor, Ronald Reagan  Reagan and the Republican platform denounced the secret machinations of Kissinger The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter (cont'd) Ford defeated Reagan but it was close and damaged him for the November election The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ford versus Carter (cont'd) Carter won with 297 electoral votes to 241  Carried most of South, including Texas, and a few large industrial states  Also ran well in districts dominated by labor unions  Desire by some to punish the party of Richard Nixon probably also helped The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The British Colonial System The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Carter Presidency Tried to give a tone of democratic simplicity and moral fervor to his administration Put so many Georgians in important posts that administration took on parochial character  Developed a reputation for putting important proposals before Congress then failing to follow up on them The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A National Malaise The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A National Malaise Carter believed a “moral and spiritual” crisis had sapped people’s energies and undermined civic pride Economic downturn had more fundamental causes than the energy shortage  Many companies had become big and complacent The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A National Malaise (cont'd) Economic downturn had more fundamental causes than the energy shortage  Worker boredom lowered productivity and increased absenteeism - Doubled at Ford and GM in 1960s - On average day at GM in 1970, 5 percent of workforce was absent without an explanation and on Mondays and Fridays figure rose to 10 percent The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  This unused Pittsburgh steel mill was demolished in 1982. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A National Malaise (cont'd) In 1972, worker discontent boiled over at the GM assembly division in Lordstown, Ohio, where GM had installed robotic welding machines, streamlined the workforce and accelerated the assembly line to 100 cars an hour rather than 60  Without authorization from the UAW, younger workers refused to work at the faster pace The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A National Malaise (cont'd) Younger workers were dissatisfied with aging union leaders and a system that tied wage increases to seniority  1950s: One in three non-agricultural workers were in unions  1978: One in four  1990: One in six The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A National Malaise (cont'd) Younger workers were dissatisfied with aging union leaders and a system that tied wage increases to seniority  By 1978, unions were losing three-fourths of their campaigns to represent workers and many workers who belonged were opting to get out  Every year 800 more union shops voted to rescind their affiliation The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. Stagflation: The Weird Economy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy For the first time in the nation’s history, rising unemployment did not prevent inflation—anomaly was called stagflation  1971: Inflation was 5 percent  1975: 11 percent  1979: Peaked at 13 percent  Unemployment ranged from 6 to 10 percent The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy (cont'd) Carter had promised to fight inflation by reducing government spending and balancing the budget and to stimulate the economy by cutting taxes The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy (cont'd) Carter advanced a plan for conserving energy and reducing dependence on foreign oil  Raise tax on gasoline and impose a new tax on “gas guzzlers,” cars that got relatively few miles per gallon  In typical fashion, did not press hard for these measures The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Three Mile Island nuclear reactor The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy (cont'd) Congress raised the minimum wage and pegged social security payments at the cost of living index  Helped the poor and pensioners but made it difficult to balance the budget  Increased spending power of recipients pushed prices up further The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy (cont'd) Federal government made matters worse  Wages and salaries rose in response to inflation but taxes went up more rapidly because higher incomes put people in higher tax brackets - Caused taxpayer revolts  Federal borrowing to cover the deficit pushed up interest rates and increased the costs of all businesses that had to borrow The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy (cont'd) Soaring mortgage rates made it difficult to sell homes  Housing slump meant unemployment for construction workers and bankruptcy for many builders The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy (cont'd) Double-digit interest rates made it difficult for small businesses looking to expand Savings and Loans were especially hard hit as they had large number of low interest mortgages they were holding and they had to pay much more to hold deposits and offer even higher rates to attract new money The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stagflation: The Weird Economy (cont'd) Inflation became worse in 1979 when further instability in the Middle East nearly tripled the price of oil and sent gasoline prices skyrocketing  Gas prices had ripple effect of badly damaging the automobile industry, hitting Ford and Chrysler particularly hard - stagflation: A term coined in the 1970s to describe the period’s economic downturn and simultaneous deflation in prices. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “Constant Decency” in Action The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “Constant Decency” in Action Carter aimed to conduct a foreign policy based on “constant decency” where defense of “basic human rights” would be top priority  Cut off aid to Chile and Argentina because of human rights violations  Treaty to transfer the Panama Canal to Panama and guaranteed canal’s neutrality  However, Carter said little about other nations where citizens’ rights were repressed The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “Constant Decency” in Action (cont'd) Carter also intended to maintain policy of détente; in 1979 another Strategic Arms Limitation Treaty (SALT II) was signed with the Soviet Union The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “Constant Decency” in Action (cont'd) But in 1980, the Soviets sent troops into Afghanistan to overthrow government  Carter denounced invasion and warned Soviets that he would use force if they invaded any of the countries bordering the Persian Gulf  Withdrew the SALT treaty  Refused to allow Americans to compete in the 1980 Olympic games in Moscow The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “Constant Decency” in Action (cont'd) Carter’s one striking diplomatic achievement was the Camp David Accords between Israel and Egypt  Israel promised to withdraw from territory captured from Egypt during 1967 war  Egypt recognized Israel as a nation, the first Arab country to do so Peace ensured uninterrupted supply of Arab oil to the U.S. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “Constant Decency” in Action (cont'd) Camp David Accords  A 1978 peace treaty between Egypt and Israel, mediated by President Jimmy Carter, signed at Camp David, a presidential retreat near Washington, DC. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Origins The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Origins November 4, 1979: 400 armed Muslim militants broke into the American embassy in Tehran, Iran, and took everyone hostage The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Origins (cont'd) During WWII, Great Britain, the Soviet Union and the U.S. occupied Iran  Forced the pro-German shah into exile, replacing him with his 22-year-old son, Muhammad Reza Pahlavi  Early 1950s, power shifted to leftist Prime Minister Muhammad Mossadegh who nationalized the Anglo-Iranian Oil Company in order to finance social reform The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Origins (cont'd) During WWII, Great Britain, the Soviet Union and the U.S. occupied Iran  In 1953, the Iranian army, backed by the CIA, arrested Mossadegh and returned Pahlavi to power The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Origins (cont'd) The shah’s unpopularity with his own people led him to purchase enormous amounts of American arms  Iran became the most powerful military force in the region  Shah’s secret police, the Savak, brutally suppressed liberal opponents  Muslim religious leaders were offended by the shah’s attempts to introduce Western ideas and technology The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Origins (cont'd) Opponents hated the U.S., whom they saw as maintaining the shah’s power, almost as much as they hated the shah Throughout 1977, riots and demonstrations convulsed Iran  When soldiers fired on protestors, caused more unrest which caused further violence  Over 10,000 civilians were killed and many more were wounded The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Origins (cont'd) 1978: The whole country seemed to rise against the shah January 1979, shah fled and a revolutionary, Islamic government headed by Ayatollah Ruhollah Khomeini came to power  Khomeini denounced the U.S.  When Carter allowed the shah into the country for cancer treatment, militants seized the U.S. embassy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The Iran Crisis: Carter’s Dilemma The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Carter’s Dilemma Militants announced the hostages would be held until the U.S. returned the shah to Iran for trial as a traitor  Demanded shah’s vast wealth be confiscated and surrendered to the Iranian government The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Carter’s Dilemma (cont'd) Carter rejected demands, froze Iranian assets in U.S. and banned trade with Iran until the hostages were released  Stalemate lasted for months, even after the terminally ill shah went to Panama  April 1980: Carter ordered a rescue operation that turned into a fiasco and had to be called off but not before 8 commandos were killed The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  In 1979 Islamic militants hold an American embassy worker in Tehran. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Mahmoud Ahmadinejad, President of the Islamic Republic of Iran The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Carter’s Dilemma (cont'd) Carter rejected demands, froze Iranian assets in U.S. and banned trade with Iran until the hostages were released  Even after the shah died in Egypt in July 1980, no move was made to free the hostages The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Iran Crisis: Carter’s Dilemma (cont'd) Iranian hostage crisis  Protracted crisis that began in 1979 when Islamic militants seized the American embassy in Tehran, Iran, and held scores of its employees hostage. The militants had been enraged by American support for the deposed Shah of Iran. The crisis, which lasted over a year, contributed to President Jimmy Carter’s defeat in his reelection campaign in 1980. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1980 The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1980 Carter was the Democratic nominee in 1980 The Republicans nominated 69-year-old Ronald Reagan (the oldest person ever nominated by a major party) Carter and Reagan spent most of their time attacking each other The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1980 (cont'd) Reagan denounced criminals, drug addicts, all varieties of immorality and spoke in support of patriotism, religion, family life and other “old-fashioned” virtues  Called for increased defense spending and promised to transfer some functions of the federal government to the states and cut taxes while still balancing the budget and reducing inflation The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1980 (cont'd) Reagan won with 8 million more votes than Carter  Republicans gained control of the Senate and cut deeply in to the Democratic majority in the House The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1980 (cont'd) In September, war had erupted between Iran and Iraq  Early Iraqi victories prompted the Iranians to free the hostages in return for the release of Iranian assets  52 hostages were freed on January 20, 1981, the day of Reagan’s inauguration, after 444 days in captivity The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President Reagan  Demanded steep reductions in federal spending and the deficit to be accomplished by cutting social welfare expenditures such as welfare, food stamps and student loans and by turning many functions of the federal government over to the states  Asked Congress to lower income taxes by 30 percent The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Ronald Reagan rides a horse The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President (cont'd) Reagan  Explained that would not increase deficit because lower taxes would give people more money which they would invest in productive ways generating more goods and jobs and thus more taxes—labeled by opponents as “Reaganomics” Budget Reconciliation Act reduced government expenditures on domestic programs by $39 billion The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President (cont'd) Congress enacted most of tax cuts, lowering most taxes by 25% over three years Reagan revived the containment policy and insisted on a military build up to check the “evil empire”  Sought to expand and improve nation’s nuclear arsenal The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President (cont'd) In Central America, Reagan sought the overthrow of the left-wing government of Nicaragua and the defeat of communist rebels in El Salvador  Used American troops to overthrow a Cuban- backed regime in the tiny Caribbean island of Grenada The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President (cont'd) 1982: Israel had invaded Lebanon to destroy Palestine Liberation Organization (PLO) units that were raiding northern Israeli settlements  Lebanese government disintegrated  Reagan sent U.S. troops to participate in international peace keeping force  October 1983: Fanatical Muslims crashed a truck loaded with explosives into the Marine barracks, killing 239 Marines The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President (cont'd) 1982: Israel had invaded Lebanon to destroy Palestine Liberation Organization (PLO) units that were raiding northern Israeli settlements  Reagan removed the entire force from Lebanon The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Reagan as President (cont'd) Reaganomics  A label pinned on President Ronald Reagan’s policies of tax cuts, social welfare cuts, and increased military spending; it generated huge federal deficits, but also promoted the reorganization of large corporations. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Four More Years The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Four More Years Reagan was nominated for a second term in 1984 Democratic nomination went to Walter Mondale of Minnesota  Chose Geraldine Ferraro as running mate The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Four More Years (cont'd) Reagan appealed to religious fundamentalists and other social conservatives, all of whom were increasingly vocal  Reverend Jerry Falwell founded the Moral Majority and set out to create a new political movement - Was against drugs, the “coddling” of criminals, homosexuality, communism, abortion and disapproved of forced busing to integrate schools The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Four More Years (cont'd) Reagan also appealed to working people and an enormous percentage of white Southerners, many of whom had previously voted for the Democrats  Also helped by a rise in economy as unemployment fell to 7 percent, investment picked up and inflation remained low while interest rates started to fall The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Success of the Republican “Southern Strategy” The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Four More Years (cont'd) Reagan got 60 percent of the vote and won by 523 electoral votes to 13  Only blacks continued to vote overwhelmingly Democratic The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Four More Years (cont'd) Reagan got 60 percent of the vote and won by 523 electoral votes to 13  Republicans made only minor gains in the House of Representatives and actually lost two seats in the Senate The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Four More Years (cont'd) Moral Majority  A term associated with the organization by that name, founded in 1979 by the Reverend Jerry Falwell to combat “amoral liberals,” drug abuse, “coddling” of criminals, homosexuality, communism, and abortion. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “The Reagan Revolution” The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “The Reagan Revolution” March 1985: Mikhail Gorbachev became Soviet premier  Seemed more moderate and flexible than predecessors  Began to encourage political debate and criticism in the Soviet Union (glasnost) and he sought to stimulate the stagnant Soviet economy by decentralizing administration and rewarding individual enterprise (perestroika) The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “The Reagan Revolution” (cont'd) March 1985: Mikhail Gorbachev became Soviet premier  Announced he would continue to honor the unratified SALT II agreement even as Reagan pushed ahead with expansion and modernization of U.S. nuclear weapons - Reagan pushed for the Strategic Defense Initiative (SDI, more commonly called Star Wars) which was to consist of a network of computer controlled space stations that would supposedly detect oncoming enemy missiles and destroy them The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “The Reagan Revolution” (cont'd) October 1986: Reagan met with Gorbachev in Iceland regarding arms control but talks were undermined by SDI The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “The Reagan Revolution” (cont'd) NASA had sent six Apollo expeditions to the moon between 1969 and 1972 and created the Skylab orbiting space station (1973–1974)  Launched the space shuttle Columbia shortly after the beginning of Reagan’s first term, starting the successful space shuttle program  Congress balked at enormous cost of SDI The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “The Reagan Revolution” (cont'd) NASA had sent six Apollo expeditions to the moon between 1969 and 1972 and created the Skylab orbiting space station (1973–1974)  Explosion of space shuttle Challenger in 1986 further undermined confidence in space based weaponry and grounded the shuttles until 1989 The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “The Reagan Revolution” (cont'd) Income Tax Act of 1986  Reduced the top levy on personal incomes from 50 to 28 percent and the tax on corporate profits from 46 to 34 percent By 1988, Reagan had appointed three Supreme Court judges, including Sandra Day O’Connor, the first woman  Had also appointed well over half the members of the federal judiciary The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  “The Reagan Revolution” (cont'd) Strategic Defense Initiative (SDI)  The concept of a space-based missile defense system—popularly known as “Star Wars,” after the movie by that name— proposed by President Ronald Reagan in 1983. Controversial and costly, the concept was never fully realized. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The New Merger Movement The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The New Merger Movement The Reagan years witnessed a mad frenzy of corporate mergers Michael Milken was the man most responsible  Sold “junk bonds”—debt offerings of companies whose existing debts were already high The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The New Merger Movement (cont'd) Michael Milken was the man most responsible  Persuaded hundreds of savings and loan associations, insurance companies, pension funds and other big investors to buy these bonds which offered unusually high interest rates The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The New Merger Movement (cont'd) Michael Milken was the man most responsible  Initial success led him to approach smaller firms, invite them to issue large numbers of junk bonds and use the proceeds to acquire larger firms The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The New Merger Movement (cont'd) 1985: Ronald Perelman  Had obtained control of Pantry Pride, a small supermarket chain worth $145 million, and sought to acquire Revlon, worth $2 billion  With Milken’s help, sold $1.5 billion in Pantry Pride bonds and used the capital to buy Revlon  Then paid off Pantry Pride bonds by selling huge chunks of Revlon and amalgamated the remainder of the company into Pantry Pride The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The New Merger Movement (cont'd) 1985: Ronald Perelman  Bond purchasers profited handsomely from high return on bonds and Perelman made a fortune on the acquisition and reorganization of Revlon The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The New Merger Movement (cont'd) The same year R.J. Reynolds Tobacco Company purchased the food conglomerate Nabisco for $4.9 billion  Three years later RJR Nabisco was taken over by Kohlberg, Kravis, Roberts and Company for $24.9 billion The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The New Merger Movement (cont'd) During 1980s, one-fifth of the Fortune 500 companies were taken over, merged or forced to go private  25,000 mergers and acquisitions were successfully undertaken, with a total value of some half-trillion dollars  To make themselves less attractive to raiders, many companies took on huge debt or acquired unprofitable companies The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The New Merger Movement (cont'd) During 1980s, one-fifth of the Fortune 500 companies were taken over, merged or forced to go private  By the late 1980s, many American corporations were wallowing in red ink  Debt payments were gobbling up 50 percent of the nation’s corporate pretax earnings The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “A Job for Life”: Layoffs Hit Home The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “A Job for Life”: Layoffs Hit Home Most corporations coped with debt in two ways:  Sold assets such as factories, offices and warehouses  Cut costs through layoffs - U.S. Steel, instead of revamping its aging steel mills, spent $5 billion to acquire Marathon Oil of Ohio and had to cut 100,000 steel jobs - IBM cut 80,000 jobs, one-third of its work force, between 1986 and 1995 The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “A Job for Life”: Layoffs Hit Home (cont'd) During the 1980s, the total number of employees who worked for the Fortune 500 companies declined by three million  Nearly one-third of all positions in middle management were eliminated The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “A Job for Life”: Layoffs Hit Home (cont'd) Many jobs went abroad where labor costs were lower and unions nonexistent  1980: Xerox transferred contracts to Japan and laid off tens of thousands of American workers  1984: Nike moved sewing operations to Indonesia where it could hire female workers for 14 cents an hour  1986: The chassis for the Mustang was built by Mazda in Hiroshima, Japan The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Workers at a Nike factory in Indonesia insert soles into sneakers. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. “A Job for Life”: Layoffs Hit Home (cont'd) Public debt skyrocketed  Total federal debt was $900 million when Reagan took office in 1981  1989 it exceeded $2.5 trillion The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Corporate Restructuring The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Corporate Restructuring U.S. economy was undergoing transformation of historic dimensions  Economic upheavals after 1973 generated new opportunities and efficiencies  New technology industries sprouted in Silicon Valley in California, along Route 128 outside of Boston, and cities such as Seattle and Austin The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  A worker studies a lighted diagram of an integrated circuit at a California computer factory. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Corporate Restructuring (cont'd) By the end of the Reagan era, economy consisted of:  A battered sector of traditional heavy industry  An advancing high-tech and service sector Older corporations that survived were leaner and better equipped to compete in expanding global markets The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Corporate Restructuring (cont'd) Yet American society was becoming as fractured:  The Reagan tax cuts and booming stock market had disproportionately benefited the wealthy  Low- or semiskilled wage earners were hit hardest The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Corporate Restructuring (cont'd) Yet American society was becoming as fractured:  At end of Reagan’s 2nd term the standard of living of the poorest fifth of the population was 9% lower than in 1979, while the wealthiest fifth had risen 20% The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Bill Gates as a young CEO at Microsoft. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy In 1979, leftist rebels in Nicaragua had overthrown the dictatorial regime of Anastasio Somoza The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy (cont'd) Because the Sandinista rebels were backed by communist Cuba and the Soviet Union, Reagan was determined to force them from power  Backed anti-Sandinista elements in Nicaragua known as the Contras and in 1981 persuaded Congress to provide them with arms The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy (cont'd) Contras made little progress; in 1984 Congress banned further military aid Reagan sought to persuade other countries and private American groups to help the Contras The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy (cont'd) Marine Col. Oliver North devised scheme to indirectly funnel federal money to the Contras  Inflated the price of U.S. weapons, sold them to Iran, and secretly transferred the profits to the Contras  Plainly violated congressional ban on such aid The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy (cont'd) When North’s stratagem came to light in November 1986, he was fired from his job with the security council Reagan insisted that he knew nothing about the aid to the Contras Meanwhile, the Soviet invasion of Afghanistan in 1980 enraged Charles Wilson, a Democratic congressman from Texas The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy (cont'd) Wilson persuaded colleagues to allocate money for the mujahideen, Muslim warriors trying to drive the Soviets out of their country The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy (cont'd) Within several years the Afghan tribes, especially Islamist radicals known as the Taliban, were covertly receiving hundreds of millions of dollars in weapons  Stinger missiles were effective at shooting down Soviet helicopters  Muslim insurgents ambushed convoys, mined roads, and engaged in terrorism The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Stand on top of a Soviet helicopter The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Rogue Foreign Policy (cont'd) Soviet casualties increased, as did the cost of the war; opposition mounted to communist leaders in the Soviet Union In 1989 the Soviets pulled out; in 1996 the Taliban took over Afghanistan and instituted a radical Islamic state The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. Assessing the Reagan Revolution The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Assessing the Reagan Revolution Reagan was not an able administrator; Iran-Contra and financial scandals did not stick to him because he was not close enough to the action Reagan articulated, simply and persuasively, a handful of concepts  “Evil” character of Soviet communism  The need to get government off people’s backs The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Assessing the Reagan Revolution (cont'd) Created a political climate conducive to change Reagan indisputably influenced the great transformations of the late 20th century— the restructuring of American corporations and the collapse of the Soviet Union The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Assessing the Reagan Revolution (cont'd) Reagan’s strategy to increase military spending and undertake the fantastically expensive SDI forced Gorbachev to seek accommodation with U.S. Tax cuts generated booming growth but also contributed to federal deficits Deregulation policies brought both benefits and unforeseen problems The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Assessing the Reagan Revolution (cont'd) Corporations that survived the Darwinian chaos were strengthened to prevail in emerging global markets The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Assessing the Reagan Revolution (cont'd) Iran-Contra affair  Scandal involving high officials in the Reagan administration accused of funding the Contra rebels in Nicaragua in violation of 1984 Congressional laws explicitly prohibiting such aid. The Contra funding came from the secret sale of arms to Iran. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1988 The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1988 Issues that had dominated American politics for a decade were gone and election initially lacked focus Republicans nominated Vice President George H.W. Bush Democrats nominated Massachusetts governor Michael Dukakis The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Election of 1988 (cont'd) Dukakis was portrayed as liberal governor who was soft on crime Bush won 54 percent of the vote  426 to 112 electoral votes The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. George H. W. Bush as President The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  George H. W. Bush as President In 1989, Bush named a “drug czar” to coordinate various bureaucracies, increased federal funding of local police, and spent $2.5 billion to stop the flow of illegal drugs into the nation  Had little overall effect Opposed gun control and abortion and called for a constitutional amendment to ban flag burning The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The Collapse of Communism in Eastern Europe The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe Reforms instituted by Gorbachev in Soviet Union led to demands from Eastern European satellites for similar liberalization  Gorbachev announced Soviet Union would not use force to keep communist governments in power in these nations The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) Reforms instituted by Gorbachev in Soviet Union led to demands from Eastern European satellites for similar liberalization  Swiftly the people of Poland, Hungary, Czechoslovakia, Bulgaria, Romania, East Germany and the Baltics did away with the repressive regimes - Changes were peaceful except in Romania where the former dictator Nicolae Ceausescu was executed The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) Soviet-style communism had been discredited, Warsaw Pact no longer existed and Cold War was over The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) Bush expressed moral support for new governments and provided modest financial support in some instances  June 1990: Bush and Gorbachev signed agreements reducing American and Russian stockpiles of long-range nuclear missiles by 30 percent and eliminating chemical weapons The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) 1989: Bush sent troops to Panama to overthrow General Manuel Noriega  Noriega refused to yield power when his figurehead presidential candidate lost the election  Noriega was under indictment in U.S. for drug trafficking The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) 1989: Bush sent troops to Panama to overthrow General Manuel Noriega  After temporarily taking refuge in the Vatican embassy, he surrendered and was taken to the U.S. where he was tried, convicted and imprisoned The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) In the Soviet Union, nationalist and anticommunist groups demanded more local control over their affairs Gorbachev sought compromise, backing a treaty that would increase local autonomy and further privatize the Soviet economy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) Hardline communists attempted a coup and arrested Gorbachev, ordering tanks into Moscow Boris Yeltsin defied the rebels and roused the people of Moscow The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Collapse of Communism in Eastern Europe (cont'd) The coup collapsed, its leaders were arrested, and the communist party was disbanded The Soviet Union was replaced by a federation of states, with Russia led by Yeltsin The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Berliners tore down the wall themselves The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The War in the Persian Gulf The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The War in the Persian Gulf Despite earlier aid to him, few in administration were fond of Iraqi dictator Saddam Hussein  For years had been crushing the Kurds, an ethnic minority in northern Iraq that sought independence  March 1988: After Kurds assisted an Iranian advance, Saddam used chemical weapons on them, killing over 5,000 civilians The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) August 1990: Iraq invaded Kuwait hoping to add its oil reserves to those of Iraq, thereby controlling about 25 percent of world total  Soldiers overran Kuwait swiftly and carried off everything not nailed down  Saddam annexed Kuwait and troops massed on the border with Saudi Arabia The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) August 1990: Iraq invaded Kuwait hoping to add its oil reserves to those of Iraq, thereby controlling about 25 percent of world total  Saudis and Kuwaitis turned to U.S. and the UN for help - UN applied trade sanctions - The U.S., along with Great Britain, France, Italy, Egypt and Syria, at the invitation of Saudi Arabia, moved troops to Saudi bases The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  The Middle East The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) By November, Bush had increased the American troops in the area from 180,000 to 500,000 January 17: Americans unleashed massive air attack which lasted for a month and reduced much of Iraq to rubble  Iraqis fired a few missiles at Israel and Saudi Arabia and set the Kuwaiti oil wells on fire The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) February 23: Bush issued an ultimatum to pull out of Kuwait or face invasion  When Saddam ignored the deadline, more than 200,000 UN troops attacked in “Desert Storm”  Between February 24 and 27 they retook Kuwait, killing tens of thousands of Iraqis and capturing even more The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) February 23: Bush issued an ultimatum to pull out of Kuwait or face invasion  Bush then stopped the attack and Saddam agreed to UN terms - Reparations to Kuwait - UN inspectors to determine whether Iraq was developing atomic and biological weapons - “No-fly” zones over Kurdish territory and other strategic areas The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) Polls showed 90 percent of Americans approved Bush’s handling of war and overall performance as chief executive Bush and others expected Saddam to be driven from power  When Kurds in north and pro-Iranian Muslims in south tried, Saddam used the remnants of the army to crush them The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) Bush and others expected Saddam to be driven from power  He refused repeatedly to carry out terms of UN agreement, particularly by hindering arms inspection The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  American soldiers advance past a burning oil well The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved. The War in the Persian Gulf (cont'd) Persian Gulf War  The 1991 war following Iraq’s takeover of Kuwait; the United States and a coalition of allies defeated the army of Iraqi leader Saddam Hussein but failed to drive him from power. The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits War only worsened deficit Congress refused to close local military bases or cut funding for favored defense contractors Also nearly impossible to reduce nonmilitary expenditures, especially Medicare and Social Security The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits (cont'd) Deficit for 1992 hit $290 billion  Bush, who had promised “no new taxes,” was forced to raise the top tax rate from 28 percent to 31 percent and levy higher taxes on gasoline, liquor, expensive automobiles and other luxuries The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits (cont'd) Another drain on the federal treasury resulted from demise of hundreds of federally insured savings and loan (S&L) institutions.  Traditionally played an important role in nearly every community by providing home mortgages The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits (cont'd) 1980s: Congress permitted S&Ls to enter the more lucrative but riskier business of commercial loans and stock investments  Attracted swarm of aggressive investors who acquired S&Ls and invested company assets in high yield junk bonds and real estate deals The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits (cont'd) October 1987: The stock market crashed and hundreds of S&Ls were plunged into bankruptcy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits (cont'd) In 1988, Michael Milken was indicted on 98 charges of fraud, stock manipulation, and insider trading  Pled guilty, agreed to pay $1.3 billion in compensation, and went to jail  His investment firm filed for bankruptcy The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits (cont'd) Still more S&Ls went under and the government—the taxpayers—were forced to cover their losses because they were federally insured  $5 billion reserve fund was quickly exhausted  Junk bond market collapsed  1991: Congress allocated $70 billion to close the failing S&Ls, liquidate their assets and pay off depositors (may have cost taxpayers as much as $500 billion) The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Deficits (cont'd) Still more S&Ls went under and the government—the taxpayers—were forced to cover their losses because they were federally insured  Justice Department charged nearly 1,000 people The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.  Chapter Review The American Nation: A History of the United States, Fourteenth Edition Copyright ©2012, ©2008 by Pearson Education, Inc. Mark C. Carnes John A. Garraty All rights reserved.