First inauguration Reagan was inaugurated as the 40th president of the United States on January 20, 1981.
Chief Justice Warren E. Burger administered the
presidential oath of office. In , Reagan commented on the country's economic malaise, arguing, "In this present crisis, government is not the solution to our problem, government is the problem". As a final insult to President Carter, Iran waited until Reagan had been sworn in before announcing the release of their American hostages.
"Reaganomics" and the economy Reagan advocated a
laissez-faire philosophy, and promoted a set of
neoliberal reforms dubbed "Reaganomics", which included
monetarism and
supply-side economics.
Taxation Reagan worked with the
boll weevil Democrats to pass tax and budget legislation in a Congress led by
Tip O'Neill, a liberal who strongly criticized Reaganomics. He lifted federal oil and gasoline price controls on January 28, 1981, and in August, he signed the
Economic Recovery Tax Act of 1981 to dramatically lower federal
income tax rates and require exemptions and brackets to be indexed for inflation starting in 1985. Amid growing concerns about
the mounting federal debt, Reagan signed the
Tax Equity and Fiscal Responsibility Act of 1982, one of the eleven times Reagan raised taxes. The bill doubled
the federal cigarette tax, rescinded a portion of the corporate tax cuts from the 1981 tax bill, and according to
Paul Krugman, "a third of the 1981 cut" overall. Many of his supporters condemned the bill, but Reagan defended his preservation of cuts on individual income tax rates. By 1983, the amount of federal tax had fallen for all or most taxpayers, with taxes for higher-income people decreasing the most. The
Tax Reform Act of 1986 reduced the number of tax brackets and top tax rate, and almost doubled
personal exemptions. Reagan believed
the tax cuts would not have increased the deficit as long as there was enough economic growth and spending cuts. His policies proposed that economic growth would occur when the tax cuts spurred investments. This theoretical relationship has been illustrated by some with the controversial
Laffer curve. Critics labeled this "
trickle-down economics", the belief that tax policies that benefit the wealthy will spread to the poor.
Milton Friedman and
Robert Mundell argued that these policies invigorated America's economy and contributed to the
economic boom of the 1990s.
Inflation and unemployment Reagan took office in the midst of
stagflation. The economy briefly experienced growth before plunging into a recession in July 1981. As Federal Reserve chairman,
Paul Volcker fought inflation by pursuing
a tight money policy of high interest rates, which restricted lending and investment, raised unemployment, and temporarily reduced economic growth. In December 1982, the
Bureau of Labor Statistics (BLS) measured the unemployment rate at 10.8 percent. Around the same time, economic activity
began to rise until its end in 1990, setting the record for the (then) longest peacetime expansion. In 1983, the recession ended and Reagan nominated Volcker to a second term in fear of damaging confidence in the economic recovery. Reagan appointed
Alan Greenspan to succeed Volcker in 1987. Greenspan raised interest rates in another attempt to curb inflation, setting off the
Black Monday stock market crash, although the markets eventually recovered. By 1989, the BLS measured unemployment at 5.3 percent. The inflation rate dropped from 12 percent during the 1980 election to under 5 percent in 1989. Likewise, the interest rate dropped from 15 percent to under 10 percent. Yet, not all shared equally in the economic recovery, and both
economic inequality and the number of
homeless individuals increased during the 1980s. Critics have contended that a majority of the jobs created during this decade paid the minimum wage.
Government spending In 1981, in an effort to keep it solvent, Reagan approved a plan for cuts to Social Security. He later backed off due to public backlash. He then created the
Greenspan Commission to keep Social Security financially secure, and in 1983 he signed amendments to raise both the program's payroll taxes and retirement age for benefits. He had signed the
Omnibus Budget Reconciliation Act of 1981 to cut funding for
federal assistance such as food stamps,
unemployment benefits,
subsidized housing and the
Aid to Families with Dependent Children, and would discontinue the
Comprehensive Employment and Training Act. On the other side, defense spending doubled between 1981 and 1985. During Reagan's presidency,
Project Socrates operated within the
Defense Intelligence Agency to discover why the United States was unable to maintain its economic competitiveness. According to program director Michael Sekora, their findings helped the country surpass the Soviets in terms of missile defense technology.
Deregulation Reagan sought to loosen federal regulation of economic activities, and he appointed key officials who shared this agenda.
William Leuchtenburg writes that by 1986, the Reagan administration eliminated almost half of the federal regulations that had existed in 1981. The 1982
Garn–St. Germain Depository Institutions Act deregulated
savings and loan associations by letting them make a variety of loans and investments outside of real estate. After the bill's passage, savings and loans associations engaged in riskier activities, and the leaders of some institutions embezzled funds. The administration's inattentiveness toward the industry contributed to the
savings and loan crisis and costly bailouts.
Deficits The deficits were exacerbated by the early 1980s recession, which cut into federal revenue. The national debt tripled between the fiscal years of 1980 and 1989, and the national debt as a percentage of the gross domestic product rose from 33 percent in 1981 to 53 percent by 1989. During his time in office, Reagan never fulfilled his 1980 campaign promise of submitting a
balanced budget. The United States borrowed heavily to cover newly spawned federal budget deficits. Reagan described the tripled debt the "greatest disappointment of his presidency".
Jeffrey Frankel opined that the deficits were a major reason why Reagan's successor, Bush, reneged on
his campaign promise by raising taxes through the
Budget Enforcement Act of 1990.
Assassination attempt On March 30, 1981, Reagan was shot by
John Hinckley Jr. outside the
Washington Hilton. Although "right on the margin of death" upon arrival at
George Washington University Hospital, Reagan underwent surgery and recovered quickly from a broken rib, punctured lung, and internal bleeding. Later, Reagan came to believe that God had spared his life "for a chosen mission".
Supreme Court appointments Reagan appointed three Associate Justices to the
Supreme Court of the United States:
Sandra Day O'Connor in 1981, which fulfilled a campaign promise to name the first female justice to the Court,
Antonin Scalia in 1986, and
Anthony Kennedy in 1988. He also elevated
William Rehnquist from Associate Justice to Chief Justice in 1986. The direction of the Supreme Court's reshaping has been described as conservative.
Public sector labor union fights Early in August 1981, the
Professional Air Traffic Controllers Organization (PATCO)
went on strike, violating a federal law prohibiting government unions from striking. On August 3, Reagan said that he would fire air traffic controllers if they did not return to work within 48 hours; according to him, 38 percent did not return. On August 13, Reagan fired roughly 12,000 striking air traffic controllers who ignored his order. He used military controllers and supervisors to handle the nation's commercial air traffic until new controllers could be hired and trained. The breaking of the PATCO strike demoralized organized labor, and the number of strikes fell greatly in the 1980s. With the assent of Reagan's sympathetic
National Labor Relations Board appointees, many companies also won wage and benefit cutbacks from unions, especially in the manufacturing sector. During Reagan's presidency, the share of employees who were part of a labor union dropped from approximately one-fourth of the total workforce to approximately one-sixth of the total workforce.
Civil rights Despite Reagan having opposed the
Voting Rights Act of 1965, which he long-deemed "humiliating to the South", the bill was extended for 25 years in 1982. He initially opposed the establishment of Martin Luther King Jr. Day, believing that the momentum for establishing the holiday was "based on an image, not reality," but signed
a bill to create the holiday in 1983 after it passed both houses of Congress with veto-proof margins. In 1984, he signed legislation intended to impose fines for
fair housing discrimination offenses. In March 1988, Reagan vetoed the
Civil Rights Restoration Act of 1987, but Congress overrode his veto. He had argued that the bill unreasonably increased the federal government's power and undermined the rights of churches and business owners. In doing so, Reagan was the first US president to veto civil rights legislation since
Andrew Johnson vetoed the
Civil Rights Act of 1866, which was also overridden by Congress. Later in September, legislation was passed to correct loopholes in the
Fair Housing Act of 1968. Early in his presidency, Reagan appointed
Clarence M. Pendleton Jr., known for his opposition to affirmative action and equal pay for men and women, as chair of the
United States Commission on Civil Rights. Pendleton and Reagan's subsequent appointees greatly eroded the enforcement of civil rights law, arousing the ire of civil rights advocates. In 1987, Reagan unsuccessfully
nominated Robert Bork to the Supreme Court as a way to achieve his civil rights policy that could not be fulfilled during his presidency; his administration had opposed
affirmative action, particularly in education, federal assistance programs, housing and employment, but Reagan reluctantly continued these policies. In housing, Reagan's administration saw considerably fewer fair housing cases filed than the three previous administrations.
War on drugs In response to concerns about the increasing
crack epidemic, Reagan intensified the war on drugs in 1982. While the American public did not see drugs as an important issue then, the FBI,
Drug Enforcement Administration and the
United States Department of Defense all increased their
anti-drug funding immensely. Reagan's administration publicized the campaign to gain support after crack became widespread in 1985. Reagan signed the
Anti-Drug Abuse Act of 1986 and
1988 to specify penalties for drug offenses. Both bills have been criticized in the years since for promoting
racial disparities. Nancy Reagan founded the "
Just Say No" campaign to discourage others from engaging in
recreational drug use and raise awareness about the dangers of drugs. A 1988 study showed 39 percent of high school seniors using illegal drugs compared to 53 percent in 1980, but
Scott Lilienfeld and Hal Arkowitz say that the success of these types of campaigns has not been affirmatively proven.
Escalation of the Cold War leaders, 1983 Reagan ordered a massive defense buildup; he revived the
B-1 Lancer program that had been rejected by the
Carter administration, and deployed the
MX missile. In response to Soviet deployment of the
SS-20, he oversaw
NATO's deployment of the
Pershing missile in Western Europe. In 1982, Reagan tried to cut off the Soviet Union's access to
hard currency by impeding its proposed gas line to Western Europe. This hurt the Soviet economy, but also caused ill will among American allies in Europe who counted on the resulting revenue; he later retreated on this issue. In March 1983, Reagan introduced the
Strategic Defense Initiative (SDI) to protect the United States from space intercontinental ballistic missiles. He believed that this defense shield could protect the country from nuclear destruction in a hypothetical nuclear war with the Soviet Union. There was much disbelief among the scientific community surrounding the program's scientific feasibility, leading opponents to dub the SDI "Star Wars", although Soviet leader
Yuri Andropov said it would lead to "an extremely dangerous path". , 1982 In a 1982 address to the
British Parliament, Reagan said, "the march of freedom and democracy... will leave
Marxism–Leninism on the
ash heap of history". Dismissed by the American press as "wishful thinking",
Margaret Thatcher called the address a "triumph".
David Cannadine says of Thatcher that "Reagan had been grateful for her interest in him at a time when the British establishment refused to take him seriously", with the two agreeing on "building up stronger defenses against Soviet Russia" and both believing in outfacing "what Reagan would later call '
the evil empire, in reference to the Soviet Union, during a speech to the
National Association of Evangelicals in March 1983. After Soviet fighters downed
Korean Air Lines Flight 007 in September, which included Congressman
Larry McDonald and 61 other Americans, Reagan expressed outrage towards the Soviet Union. The next day, reports suggested that the Soviets had fired on the plane by mistake. In spite of the harsh, discordant rhetoric, Reagan's administration continued discussions with the Soviet Union on START I|. in the
Oval Office, September 1983 Although the Reagan administration agreed with the communist government in China to
reduce the sale of arms to Taiwan in 1982, Reagan was the first US president to explicitly reject
containment and
détente, instead advancing the idea that the Soviet Union could be defeated rather than managed through negotiation. as well as
mass killings in
Chad.
Invasion of Grenada On October 19, 1983,
Maurice Bishop was overthrown and murdered by one of his colleagues. Several days later, Reagan ordered American forces to invade Grenada. Reagan cited a regional threat posed by a Soviet-Cuban military build-up and concern for the safety of hundreds of American medical students at
St. George's University. Two days of fighting commenced, resulting in an American victory. While the invasion enjoyed public support in the United States, it was criticized internationally, with the
United Nations General Assembly voting to censure the American government. Cannon later noted that throughout Reagan's 1984 presidential campaign, the invasion overshadowed the
1983 Beirut barracks bombings, which killed 241 Americans taking part in
an international peacekeeping operation during the
Lebanese Civil War.
1984 election Reagan announced his reelection campaign on January 29, 1984, declaring, "America is back and standing tall". In February, his administration reversed the unpopular decision to send the
United States Marine Corps to Lebanon, thus eliminating a political liability for him. Reagan faced minimal opposition in the Republican primaries, and he and Bush accepted the nomination at
the Dallas convention in August. In the general election, his campaign ran the commercial, "
Morning in America". At a time when the American economy was already recovering, former vice president
Walter Mondale was attacked by Reagan's campaign as a "tax-and-spend Democrat", while Mondale criticized the deficit, the SDI, and Reagan's civil rights policy. However, Reagan's age induced his campaign managers to minimize his public appearances. Mondale's campaign believed that Reagan's age and mental health were issues before
the October presidential debates. Following Reagan's performance in the first debate where he struggled to recall statistics, his age was brought up by the media in negative fashion. Reagan's campaign changed his tactics for the second debate where he quipped, "I will not make age an issue of this campaign. I am not going to exploit, for political purposes, my opponent's youth and inexperience". This remark generated applause and laughter, even from Mondale. At that point, Broder suggested that age was no longer a liability for Reagan, and Mondale's campaign felt that "the election was over". In November, Reagan won a landslide reelection victory with 59 percent of the popular vote and 525 electoral votes from 49 states. Mondale won 41 percent of the popular vote and 13 electoral votes from the District of Columbia and his home state of Minnesota.
Response to the AIDS epidemic quotes Reagan on AIDS with a blank slate, representing total silence. The
AIDS epidemic began to unfold in 1981, and AIDS was initially difficult to understand for physicians and the public. As the epidemic advanced, according to White House physician and later physician to the president, brigadier general John Hutton, Reagan thought of AIDS as though "it was the measles and would go away". The October1985 death of the President's friend and Hollywood celebrity,
Rock Hudson affected Reagan's view; Reagan approached Hutton for more information on the disease. Still, between , and , Reagan did not mention AIDS in public. In 1986, Reagan asked
C. Everett Koop to develop a report on AIDS. Koop angered many evangelical conservatives, both in and out of the Reagan administration, by stressing the importance of sex education including condom usage in schools. A year later, Reagan, who reportedly had not read the report, gave his first speech on the epidemic when 36,058Americans had been diagnosed with AIDS, and 20,849 had died of it. Reagan called for increased testing (including routine testing for marriage applicants) and mandatory testing of select groups (including federal prisoners). Even after this speech, however, Reagan remained reluctant to publicly address AIDS. Scholars and AIDS activists have argued that the Reagan administration largely ignored the
AIDS crisis.
Randy Shilts and
Michael Bronski said that AIDS research was chronically underfunded during Reagan's administration, and Bronski added that requests for more funding by doctors at the
Centers for Disease Control and Prevention were routinely denied. In a September1985 press conference (shortly before Hudson publicly announced his AIDS diagnosis) Reagan called a government AIDS research program a "top priority", but also cited budgetary constraints. Between the fiscal years of 1984 and 1989, federal spending on AIDS totaled $5.6billion. The Reagan administration had proposed $2.8billion during this time period, but pressure from congressional Democrats resulted in the larger amount.
Addressing apartheid in the Oval Office, December 1984 Popular opposition to
apartheid increased during Reagan's first term in office and the
disinvestment from South Africa movement achieved critical mass after decades of growing momentum. Criticism of apartheid was particularly strong on college campuses and among
mainline Protestant denominations. President Reagan was opposed to divestiture because he personally thought, as he wrote in a letter to
Sammy Davis Jr., it "would hurt the very people we are trying to help and would leave us no contact within South Africa to try and bring influence to bear on the government". He also noted the fact that the "American-owned industries there employ more than 80,000 blacks" and that their employment practices were "very different from the normal South African customs". The Reagan administration developed
constructive engagement with the South African government as a means of encouraging it to gradually move away from apartheid and to give up its nuclear weapons
program. It was part of a larger initiative designed to foster peaceful economic development and political change throughout southern Africa. This policy, however, engendered much public criticism, and renewed calls for the imposition of stringent sanctions.
Desmond Tutu described Reagan administration as "an unmitigated disaster for us blacks", and Reagan himself as "a racist pure and simple". In response, Reagan announced the imposition of new sanctions on the South African government, including an
arms embargo in late 1985. These sanctions were seen as weak by anti-apartheid activists and as insufficient by the president's opponents in Congress.
Libya bombing Contentious relations between Libya and the United States under President Reagan were revived in the
West Berlin discotheque bombing that killed two American soldiers and injured dozens of others on April 5, 1986. Stating that there was irrefutable evidence that Libya had a direct role in the bombing, Reagan authorized the use of force against the country. On April 14, the United States launched a series of
airstrikes on ground targets in Libya. Thatcher allowed the
United States Air Force to use Britain's air bases to launch the attack, on the justification that the United Kingdom was supporting America's right to self-defense under Article 51 of the
Charter of the United Nations. The attack was, according to Reagan, designed to halt
Muammar Gaddafi's "ability to export terrorism", offering him "incentives and reasons to alter his criminal behavior". The attack was condemned by many countries; by an overwhelming vote, the United Nations General Assembly adopted a resolution to condemn the attack and deem it a violation of the Charter and international law.
Iran–Contra affair on the
Iran–Contra affair, 1987 Reagan authorized
William J. Casey to arm the
Contras, fearing that Communists would take over Nicaragua if it remained under the leadership of the
Sandinistas. Congress passed the 1982
Boland Amendment, prohibiting the CIA and Department of Defense from using their budgets to provide aid to the Contras. Still, the Reagan administration raised funds for the Contras from private donors and foreign governments. When Congress learned that the CIA had secretly placed
naval mines in Nicaraguan harbors, Congress passed a second Boland Amendment that barred granting any assistance to the Contras. By mid-1985,
Hezbollah began to
take American hostages in Lebanon, holding seven of them in reaction to the United States' support of Israel. Reagan procured the release of seven American hostages held by Hezbollah by selling American arms to Iran, then engaged in the Iran–Iraq War, in hopes that Iran would pressure Hezbollah to release the hostages. The Reagan administration sold over 2,000 missiles to Iran without informing Congress; Hezbollah released four hostages but captured an additional six Americans. On
Oliver North's initiative, the administration redirected the proceeds from the missile sales to the Contras. The transactions were exposed by
Ash-Shiraa in early November 1986. Reagan initially denied any wrongdoing, but on November 25, he announced that
John Poindexter and North had left the administration and that he would form the
Tower Commission to investigate the transactions. A few weeks later, Reagan asked a panel of federal judges to appoint
a special prosecutor who would conduct a separate investigation. The Tower Commission released a report in February 1987 confirming that the administration had traded arms for hostages and sent the proceeds of the weapons sales to the Contras. The report laid most of the blame on North, Poindexter, and
Robert McFarlane, but it was also critical of
Donald Regan and other White House staffers. Investigators did not find conclusive proof that Reagan had known about the aid provided to the Contras, but the report noted that Reagan had "created the conditions which made possible the crimes committed by others" and had "knowingly participated or acquiesced in covering up the scandal". The affair damaged the administration and raised questions about Reagan's competency and the wisdom of conservative policies. The administration's credibility was also badly damaged on the international stage as it had violated its own arms embargo on Iran.
USS Stark incident In the context of the
Tanker War on , an Iraqi fighter jet hit the with two
Exocet missiles, killing 37 sailors. Three days later, Reagan declared a "policy of self-defense" would now be ordered, as he accepted Iraq's official apology: Our ships are deployed in the Persian Gulf in order to protect U.S. interests and maintain free access and maintain
freedom of navigation and access to the area's oil supplies. It is a vital mission, but our ships need to protect themselves and they will. [From now on] if aircraft approach any of our ships in a way that appears hostile, there is one order of battle. Defend yourselves. Defend American lives.. We're going to do what has to be done to keep the Persian Gulf open. It's international waters. No country there has a right to try and close it off and take it for itself. And the villain in the piece really is Iran. And so they're delighted with what has just happened.
Soviet decline and thaw in relations , 1987 Although the Soviets did not accelerate military spending in response to Reagan's military buildup, their enormous military expenses, in combination with
collectivized agriculture and inefficient
planned manufacturing, were a heavy burden for the
Soviet economy. At the same time, the prices of oil, the primary source of Soviet export revenues, fell to one third of the previous level in 1985. These factors contributed to a stagnant economy during the tenure of
Mikhail Gorbachev as Soviet leader. in the
USSR, 1988 Reagan's foreign policy towards the Soviets wavered between
brinkmanship and cooperation. Reagan appreciated Gorbachev's revolutionary change in the direction of the Soviet policy and shifted to diplomacy, intending to encourage him to pursue substantial arms agreements. They held
four summit conferences between 1985 and 1988. Reagan believed that if he could persuade the Soviets to allow for more democracy and free speech, this would lead to reform and the end of communism. The critical summit was in
Reykjavík in 1986, where they agreed to abolish all nuclear weapons. However, Gorbachev added the condition that SDI research must be confined to laboratories during the ten-year period when disarmament would take place. Reagan refused, stating that it was defensive only and that he would share the secrets with the Soviets, thus failing to reach a deal. In June 1987, Reagan addressed Gorbachev during a speech at the
Berlin Wall, demanding that he "
tear down this wall". The remark was ignored at the time, but after the wall
fell in November 1989, it was retroactively recast as a soaring achievement. In December, Reagan and Gorbachev met again at
the Washington Summit to sign the
Intermediate-Range Nuclear Forces Treaty, committing to the total abolition of their respective short-range and medium-range missile stockpiles. The treaty established an inspections regime designed to ensure that both parties honored the agreement. In May 1988, the US Senate overwhelmingly voted in favor of ratifying the treaty, providing a major boost to Reagan's popularity in the aftermath of the Iran–Contra affair. A new era of trade and openness between the two powers commenced, and the United States and Soviet Union cooperated on international issues such as the Iran–Iraq War. == Post-presidency (1989–2004) ==