22 - Decline and Rebirth (1968-1988)

Summary: Some historians claim that the accomplishments of the presidency of Richard Nixon are often overlooked. Nixon opened diplomatic relations with China, improved relations with the Soviet Union, and began to break the Democratic stranglehold on politics in the South that had existed since the New Deal. Despite these developments, Richard Nixon will always be associated with the Watergate scandal. Watergate began a period when faith in the national government sharply declined; this lasted through the presidencies of Gerald Ford and Jimmy Carter. With the election of Ronald Reagan, many Americans began to "have faith in America again." Just as Nixon began a new relationship with China, under Reagan, America entered into a more positive relationship with its formal rival, the Soviet Union.

Keywords

Southern Strategy: political strategy implemented by President Richard Nixon to win over Southern whites to the Republican Party; the strategy succeeded through administration policies such as delaying school desegregation plans

Detente: foreign policy of decreasing tensions with the Soviet Union; began in the first term of the Nixon administration

Watergate: the series of events beginning with the break-in at the Democratic Party headquarters in the Watergate complex in Washington, DC, that led to the downfall of President Richard Nixon; Nixon resigned as the House of Representatives was preparing for an impeachment hearing.

OPEC: Organization of Petroleum Exporting Countries; the group of twelve countries that produce most of the world's oil and, by determining production quantities, influence worldwide oil prices.

Camp David Accords (1978): peace agreement between Israel and Egypt that was mediated by President Jimmy Carter; many consider this the highlight of the Carter presidency.

Iranian Hostage Crisis: diplomatic crisis triggered on November 4, 1979, when Iranian protesters seized the U.S. embassy in Tehran and held 66 American diplomats hostage for 444 days. President Carter was unable to free the hostages despite several attempts; to many this event symbolized the paralysis of American power in the late 1970s.

Religious right: right-leaning evangelical Christians who increasingly supported Republican candidates beginning with Ronald Reagan.

Iran-Contra Affair: scandal that erupted during the Reagan administration when it was revealed that U.S. government agents had secretly sold arms to Iran in order to raise money to fund anti-Communist "Contra" forces in Nicaragua. Those acts directly contravened an ongoing U.S. trade embargo with Iran as well as federal legislation limiting aid to the Contras. Several Reagan administration officials were convicted of federal crimes as a result.

THE PRESIDENCY OF RICHARD NIXON

Richard Nixon's election to the presidency in 1968 capped one of the greatest comeback stories in American political history. Nixon's political obituary had been written after successive defeats in 1960 (when he was defeated by John Kennedy for the presidency) and in 1962 (after being defeated by Pat Brown for governor of California; he informed the press on election night that "you won't have Nixon to kick around anymore," as he was resigning from politics).

Nixon was one of the most interesting men to be elected to the presidency in the twentieth century. He was never comfortable with large groups of people, and even in staged photo events sometimes appeared uncomfortable and out of place (such as the time he was pictured walking "informally" along the beach in dress shoes). Nixon was convinced that large numbers of the news media and many members of Congress were his enemies. He relied on a small group of close-knit advisors, including H. R. Haldeman, his chief of staff, and John Ehrlichman, his advisor for domestic affairs.

Nixon's Domestic Policies

As mentioned in the previous chapter, the Vietnam War took up large amounts of Nixon's time and energies. However, other potentially crucial crises also existed. As Nixon entered office in 1969, inflation was growing rapidly, unemployment was rising, the gross national product was exhibiting a lack of growth, and the United States had a rather substantial trade deficit. Some of these economic problems can be attributed to the administration of Lyndon Johnson; paying for Great Society programs and the Vietnam War at the same time created serious strains on the federal budget.

At first, Nixon tried to raise taxes and cut government spending; this policy only worsened the economy. The president then imposed a 90-day freeze on prices and wages; after these measures, he also established mandatory guidelines for wage and price increases. By 1971, Nixon also directed that a program of deficit spending begin. This was somewhat similar to the approach utilized by Franklin Roosevelt in attacking the economic problems of the Great Depression.

The "Southern Strategy" of Richard Nixon

Southern whites had voted firmly Democratic since the Reconstruction era. In the 1968 presidential election, cracks in this relationship between the Democratic party and the South began to show. George Wallace, former governor of Alabama, broke from the party and ran for president as a candidate of the American Independence Party in 1968. He picked up 13.5 percent of the popular vote (a large percentage of these from the South); this aided Richard Nixon in his victory over Hubert Humphrey.

Richard Nixon decided to take decisive measures to appeal to these Southern whites and win them over to the Republican party. Nixon's "Southern Strategy" included delaying school desegregation plans (that had been ordered by a federal court) in Mississippi and attempting to block an extension of the Voting Rights Act of 1965. Nixon also attempted to block school integration by busing after the Supreme Court had endorsed busing as a method to achieve integration. Under Nixon, the Supreme Court also became much more conservative, especially with Warren Burger as the new Chief Justice (nevertheless, it should be remembered that in Roe v. Wade this court outlawed state legislation opposing abortion).

Nixon's Foreign Policy

The greatest achievements of the Nixon presidency were undoubtedly in the area of foreign affairs. In formulating foreign policy, Nixon was aided by former Harvard professor Henry Kissinger, his national security advisor and, beginning in 1973, his secretary of state. Kissinger had conducted many of the negotiations with the North Vietnamese that allowed American troops to leave Vietnam in 1973. Nixon greatly trusted the judgment of Kissinger on foreign policy affairs.

Nixon's greatest accomplishments included better relationships with both the Soviet Union and China. Nixon had been a fierce anticommunist in the 1950s, but during his first term in office, he instituted a policy of "détente" with the Soviet Union. The reduced tensions that this policy created were a welcome relief from the fierce anticommunist rhetoric that had existed through most of the Kennedy and Johnson administrations.

In addition, Nixon realized the foolishness of continued nuclear proliferation. He visited the Soviet Union in 1972 and, during discussions with Soviet Premier Leonid Brezhnev, agreed to halt the continued buildup of nuclear weapons. The SALT I treaty (Strategic Arms Limitation Talks) was historic, as for the first time the two superpowers agreed not to produce any more nuclear ballistic missiles and to reduce their arsenals of antiballistic missiles to 200 per side.

A journey that Nixon took earlier in 1972 was even more significant. During much of the 1950s and 1960s, Nixon spoke about the need to support Nationalist China (the noncommunist state established on the island of Taiwan) and the need to be vigilant against the expansion of "Red" China (the Communist state on the Chinese mainland). Henry Kissinger was an admirer of realpolitik and convinced Nixon that a new approach to Communist China was necessary. Kissinger maintained that it was foolish to think that the Communist Chinese would ever be overthrown, and that it would be to America's advantage to recognize that fact. In addition, Nixon felt that a friendlier China could be used as a wedge to get future concessions from the Soviet Union.

In February 1972, Nixon and Kissinger made a historic trip to Communist China. Meetings were held with Chinese leader Mao Zedong and other officials. At these meetings, it was decided that trade talks between the two countries would begin, and that cultural exchanges would start almost immediately. Most importantly, Nixon agreed to support the admission of Communist China to the United Nations (going against what had been traditional U.S. policy for the entire cold war period).

THE WATERGATE AFFAIR

As a result of his foreign policy successes, Nixon's ratings in public opinion polls were extremely high as the presidential election of 1972 approached. Nixon's opponent was Democrat George McGovern, who campaigned for a faster pullout from Vietnam. Nixon's victory in 1972 was truly staggering; in the Electoral College he won 521 to 17.

The one-sided nature of the 1972 election makes the desires of Richard Nixon and his campaign associates for the events leading up to the Watergate Affair difficult to understand. Nixon's paranoid view of the American political system colored the decisions that he and his aides made in the months leading up to the 1972 campaign. In 1971, Nixon created an "enemies list" and suggested various forms of harassment that could be used on everyone on the list (wiretaps, investigating income tax records, etc.). On this list were politicians (Senator Edward Kennedy), newsmen (Daniel Schorr of CBS News), and even sports personalities (New York Jets quarterback Joe Namath).

After the Pentagon Papers were released in the spring of 1971 by Daniel Ellsburg, a former employee of the State Department, a special unit to "plug" leaks was formed by the White House. This unit was known as the Plumbers, and included Howard Hunt, a former member of the CIA, and Gordon Liddy, a former agent of the FBI. One of the first actions of the Plumbers was to break into Daniel Ellsburg's psychiatrist's office to try to find incriminating information about Ellsburg. Other aides working for CREEP (the Committee to Reelect the President) performed various "dirty tricks" on political opponents. In the 1972 Democratic primaries, CREEP operatives on two occasions ordered 200 pizzas delivered to an opposing campaign office unannounced, "canceled" political rallies for opponents without the opponents knowing it, and, with no basis whatsoever, charged that Democratic Senator Edmund Muskie had made negative remarks about French Canadians living in New Hampshire.

On the night of June 16, 1972, James McCord, an assistant in the office of security of CREEP, led four other men into Democratic National Committee headquarters at the Watergate Hotel in Washington, DC. The goal of this group was to photocopy important files and to install electronic surveillance devices in the Democratic offices. The five were caught and arrested; money they had on their person could be traced back to CREEP. This was the beginning of the chain of events that came to be called Watergate or the Watergate scandal.

Five days later, Nixon became part of the illegal cover-up of the Watergate break-in. On that day, he publicly announced that the White House had absolutely nothing to do with the break-in. More importantly, on the same day Nixon contacted friendly CIA officials and tried to convince them to call the FBI and tell the FBI to cease its investigation of Watergate. This was the first illegal action taken by Nixon in the Watergate Affair.

In the months before the 1972 presidential election, "hush money" was paid to the Watergate burglars, and several officials of CREEP committed perjury by denying under oath that Nixon had any knowledge of the break-in.

The Watergate story most assuredly would have died if not for the efforts of reporters Carl Bernstein and Bob Woodward of the Washington Post. Despite threats from the White House and other political operatives, the two reporters continued to follow the story. They were aided by a secret source named "Deep Throat," who provided them with valuable background information about the case. It was revealed in 2005 that "Deep Throat" was Mark Felt, former associate director of the FBI.

James McCord and the other Watergate burglars were found guilty in their January 1973 trial; no mention of White House involvement was made by any of the defendants. It later became known that Nixon personally approved the payment of hush money to one of the defendants during the trial. In February, the Senate Select Committee on Presidential Campaign Activities began to investigate the Watergate Affair. During these hearings, White House attorney John Dean testified that Nixon was involved in the cover-up and another aide revealed the existence of a taping system in the Oval Office that recorded all conversations held by the president. H. R. Haldeman, John Erlichman, and Attorney General Richard Kleindienst all resigned in an attempt to save the presidency of Richard Nixon. Nixon's public approval ratings began to fall.

In an effort to quell the firestorm building around him, Nixon appointed a special prosecutor to investigate the Watergate Affair. Almost immediately after being appointed, Archibald Cox demanded that the White House hand over the tapes of all taped conversations.

After losing a court argument that the tapes should be exclusive property of the president, Nixon ordered the new Attorney General to fire Cox. Richardson refused, as did his assistant, William Ruckelhaus, and both resigned. Solicitor General Robert Bork (who would later be an unsuccessful Supreme Court nominee) finally fired Cox. All of these events took place on October 20, 1973, and are referred to as the "Saturday Night Massacre."

After these events, the president's approval rating dipped dramatically. The Judiciary Committee of the House of Representatives began to discuss the formal procedures for impeaching a president. Nixon turned over heavily edited transcripts of most of the tapes to Leon Jaworski, Cox's replacement; many of the vulgar comments made by Nixon on the tapes shocked both opponents and supporters. Also, during this period, it was revealed that Spiro Agnew, Nixon's vice president, had taken bribes as an elected official in Maryland before he was vice president. Agnew resigned in October 1973, and it was two months before his appointed successor, Congressman Gerald Ford of Michigan, was approved as the new vice president.

During the following months, the calls for Nixon's resignation increased. In April 1974, Nixon released more, but not all, of the tapes requested by the special prosecutor. In July, the House Judiciary Committee formally approved three articles of impeachment, stating that the president had ignored their subpoenas, had misused presidential power, and had obstructed justice. Debate was to begin in the full House on impeachment; Nixon's supporters admitted that Nixon would have been impeached.

Before House hearings could begin, the White House finally complied with a Supreme Court order to release all remaining tapes. One had an 18 1/2-minute gap on it; another was the "smoking gun" that Nixon's opponents had been looking for. Nixon had always denied that he had known about the cover-up, yet a tape made one week after the break-in demonstrated that Nixon was actually participating in the cover-up at that point.

With no support left, Nixon finally resigned on August 9, 1974. Gerald Ford took over as president and announced that "our long national nightmare is over." In retrospect, the Watergate Affair was one of the low points of American political history in the twentieth century, rivaled only by the scandals of the presidency of Warren G. Harding.

THE PRESIDENCY OF GERALD FORD

As described previously, Gerald Ford came to the presidency under the worst of circumstances. To his advantage, he was incredibly well liked in Washington and totally free of any hint of scandal. However, during his time in office, Ford seemed to lack a grand "plan" for what he wanted to accomplish. Several historians note that Ford's presidency was doomed from September 8, 1974, when he pardoned Richard Nixon for any crimes that he might have committed. This soured many Americans on Ford; his later explanation was that up until that point virtually his entire time in office was spent dealing with Watergate-related affairs, and that the only way to move past that was to pardon the former president. The public expressed their opinion in the fall congressional elections, when many Democrats were swept into office.

Ford became the second American president to visit China, and the first to visit Japan. It should be remembered it was during the Ford administration that South Vietnam fell to the North Vietnamese and the Vietcong. The last American troops had left in 1973; by 1975, the North Vietnamese army began to occupy several major South Vietnamese cities. Ford toyed with the idea of sending in troops to aid the South Vietnamese, but ended up asking Congress for a major aid package to the South Vietnamese. By this point, the vast majority of Americans wanted nothing to do with the situation in Southeast Asia, and Congress defeated Ford's request. In late April, the North Vietnamese were closing in on Saigon; some of the most gripping photographs of the era were photos of American helicopters evacuating Americans and Vietnamese who had worked for them from the roof of the American embassy in Saigon one day before the city was captured by the North Vietnamese.

The major problem that Ford's presidency faced was the economy. During the Ford administration, the economy suffered from both unemployment and inflation. This economic situation was termed stagflation. Critics of Ford claimed that his tactics were no different from those of Herbert Hoover, as he tried to restore confidence in the economy by asking people to wear "WIN" buttons ("Whip Inflation Now") and to voluntarily spend less to lessen the effects of inflation. Ford pushed for tax cuts and for less government spending; despite these various approaches, by 1975, unemployment in America stood near 10 percent and inflation remained a problem. On several occasions, Ford fell or tripped in public settings, which did not improve the image of the presidency.

In the race for the Republican presidential nomination, in 1976, President Ford was able to fend off the campaign of former governor of California and actor Ronald Reagan. In the election, Ford faced the former governor of Georgia, Jimmy Carter. During the campaign, Carter continually stressed that he would be an outsider in Washington, and not tied to any of the messes that had gone on in Washington since 1968; to many in a post-Watergate America, this message sold perfectly. In addition, Ford did not help himself in the campaign by making several misstatements, such as claiming in one debate that Eastern Europe was not controlled by the Soviet Union. Carter won the presidency by a fairly narrow margin by keeping the New Deal Democratic coalition together. Some Southerners who had voted for Nixon in 1968 and 1972 returned to vote Democrat in 1976 because of Carter's southern roots.

THE PRESIDENCY OF JIMMY CARTER

Jimmy Carter discovered that coming into the presidency as an outsider had some advantages but also some definite drawbacks. One of the weaknesses of the Carter presidency was his inability to find "insiders" in Congress with whom he could successfully work to get legislation passed. Carter hired many women and minorities for his White House staff and did away with some of the pomp and circumstance traditionally associated with the presidency (he sometimes wore sweaters when giving addresses to the nation). To Carter's critics, these were signs that he was not really up to the responsibilities of the presidency.

Domestic problems continued to exist in the Carter presidency. Unemployment and inflation remained as major problems. As Ford had done, Carter asked the American people to voluntarily refrain from spending and excessive energy use to bring down inflation. He then tried to cut government spending to cool the economy, and angered many liberal Democrats by cutting social programs. Another approach tried by the administration was to have the Federal Reserve Board tighten the money supply, hoping this would stop inflation; the resulting high interest rates served to depress the economy. Unfortunately, none of these policies worked, and confidence in Carter's abilities to solve economic problems began to wane; by the end of his term, unemployment still stood near 8 percent, with inflation over 12 percent.

Other domestic measures undertaken by Carter included the granting of amnesty to those who had left America to avoid the draft during the Vietnam era and measures for the federal cleanup of chemical waste dumps. Pressures from OPEC drove the price of gasoline higher during the Carter presidency; in 1978, the National Energy Act was passed, which taxed cars that were not energy efficient and deregulated the prices of domestic oil and gasoline. During the Carter administration, a cabinet-level Department of Energy was created.

In foreign policy, Carter's early speeches stated that the goal of America should be the spreading of basic human rights around the world. Critics maintained that Carter's idealism blinded him to the real interests of America at the time. Conservatives were very critical of his treaty that gave the Panama Canal back to Panama (this would not actually take place until 1999). Critics also attacked his decision to officially recognize the People's Republic of China as the government of China (thus reducing America's support of Taiwan) and his continued negotiations with the Soviets to limit nuclear weapons (critics stated that America's military might should not be limited). Conservatives were cheered by his response to the 1979 Soviet invasion of Afghanistan. Carter cut aid programs to the Soviet Union and refused to allow the athletes to compete in the 1980 Moscow Summer Olympics.

One of the high points of the Carter presidency was the September 1978 negotiations between Menachem Begin of Israel and Anwar Sadat of Egypt, which produced the Camp David Accords. These negotiations were mediated by Carter; as a result of these talks, Israel promised to return occupied land to Egypt in return for official recognition of Israel's right to exist by Egypt. Carter was unable to negotiate a solution to the problem of Palestinian refugees (a problem that still exists today).

The nadir of the Carter presidency was the Iranian Hostage Crisis. Iran had been governed by the repressive Shah of Iran, who was propped up by arms and economic aid from the United States. In 1978, a revolution of fundamentalist Muslims forced the Shah to leave the country; the Ayatollah Khomeini, a fundamentalist Muslim leader, became leader of Iran. In October 1979, the exiled Shah was suffering from cancer, and Carter allowed him into the United States for treatment. This outraged the Iranians; on November 4, protesters stoned and then seized the American embassy in Tehran, Iran, taking 66 Americans who worked there hostage.

The Americans were kept hostage for 444 days. Some were kept in solitary confinement, while others were not; most were moved around on a regular basis to discourage rescue attempts. Carter tried various attempts to win the release of the hostages, including freezing Iranian assets in America, stopping trade with Iran, and negotiating through third parties. A 1980 attempt to rescue the hostages ended in a military embarrassment when helicopters sent to rescue them either crashed or could not fly because of heavy sand. Carter had been criticized for being ineffectual in the diplomatic sphere as well. The hostages were finally released in January 1981, but only after Carter had left office and Ronald Reagan was sworn in as president.

THE ELECTION OF 1980

Carter was able to win the 1980 Democratic nomination for president despite a challenge from Edward Kennedy. Ronald Reagan, portraying himself as the spokesperson for the conservatives of America, won the Republican nomination. Carter was forced to campaign on his record, which was a very difficult thing to do. Reagan promised while campaigning to build up the military; at the same time, he promised to cut taxes. He promised strong leadership from Washington and also pledged to take power from Washington and give it to the states. Reagan also pledged support for a renewed emphasis on family and patriotism. Reagan won the election by a decisive margin.

The 1980 election was the first totally successful assault on the New Deal Democratic coalition. Social issues of the era, such as the increasing rights of women, sexual freedom, and affirmative action, drew many blue-collar workers away from the Democrats and into the Republican camp. (Conservatives successfully convinced many Americans that the Democrats were the cause of the declining image of America abroad and the reason for the decline in traditional morality at home.) Members of the religious right supported the Republicans in large numbers (and would continue this pattern in elections that followed). Many Southerners saw the Republicans and Reagan representing their interests more than Jimmy Carter; others perceived Carter to be "soft on communism." As a result of these factors, the New Right had become a major force in American politics; besides electing Reagan, they had also pushed the Republicans to the majority in the Senate in 1980.

THE PRESIDENCY OF RONALD REAGAN

Admirers and detractors of Ronald Reagan both agree that he was a true master of politics (Bill Clinton studied the techniques Reagan used to achieve political success). Reagan used his previously honed skills as an actor to set the right tone and present the right messages at meetings and speeches throughout his presidency. Reagan also used his staff well; on many occasions, he would set the general policy and allow staff people to set up the details.

Upon becoming president, Reagan instituted traditional conservative economic practices. In 1981, federal taxes were cut by 5 percent, and then cut by another 10 percent in 1982 and 1983. Reagan and his economic staff believed in "supply-side economics," which stated that if more money was put in the hands of wealthy Americans by cutting taxes, they would invest it in the economy, thus creating more jobs and additional growth (and eventually additional tax revenue). Capital gains taxes were reduced, also with the intent of encouraging investment.

Political battle lines were drawn early in the Reagan administration. As a result of the tax cuts, the government was taking in less money, causing many domestic programs to be cut, including aid to education, to urban housing programs, and to the arts and the humanities. Liberals were outraged over the fact that, at the same time that social programs were being cut, Reagan increased the defense budget by nearly $13 billion. Reagan also pushed for funding for a Strategic Defense Initiative (SDI: nicknamed "Star Wars") program. As envisioned, this system could shoot down enemy missiles from outer space. Reagan also pushed to give more power back to the states at the expense of the federal government. Reagan called this plan the New Federalism. Under this program, how federal money was spent by states was determined by the states and not by the federal government. During the Reagan administration, the policy of deregulation was intensified; industries such as the energy industry and the transportation industry were freed from "cumbersome" regulations imposed by previous administrations (supporters of these regulations would maintain that they were in the interest of the consumers). In addition, funding for the Environmental Protection Agency was greatly reduced during the Reagan presidency. Many perceived the Reagan administration to be anti-union as well; in 1981, the government actively destroyed the union for the air traffic controllers, and striking controllers were fired.

In response to the perceived foreign policy weakness of America in the Carter years, Reagan worked hard to build up America's image in the world. On a small scale, the American army successfully invaded the island of Grenada in 1983. On a much larger scale, Reagan ended the friendlier relations between the United States and the Soviet Union of the détente era. He put new cruise missiles in Europe and referred to the Soviet Union as the "evil empire." Reagan's harsh rhetoric won him much support in the United States. Reagan's popularity also had gone up after the attempt on his life by John Hinckley in 1981.

Reagan ran for reelection in 1984 against Walter Mondale (Mondale's running mate was Geraldine Ferraro, a congresswoman from New York). Mondale criticized Reagan on economic issues; the supply-side approach had not produced as much growth, and as much income from taxes, as its proponents had said it would. However, Reagan's tough cold war rhetoric and support of conservative social issues allowed him to continue to break up the Democratic New Deal coalition; Reagan got nearly 60 percent of the popular vote in 1984. Critics who said that the major beneficiaries of Reagan's economic policies were the very rich were still very much in the minority.

Reagan continued to practice conservative policies during his second term. The Tax Reform Act of 1986 dramatically reduced federal tax rates; the tax the wealthiest Americans had to pay on their income, for example, was reduced from 50 percent to 28 percent. In 1986 and 1987, both unemployment and inflation declined. Under Reagan, the Supreme Court also became more conservative, as William Rehnquist became chief justice and Antonin Scalia was one of the new justices on the court. Reagan also nominated Sandra Day O'Connor to be the first woman to serve on the Supreme Court. Most women's groups, however, strongly disapproved of the Reagan administration, citing actions such as efforts during Reagan's second term to cut food stamps and the federal school lunch program.

During Reagan's second term, serious economic problems also developed. On October 19, 1987, known as "Black Monday," the average price for a share of stock fell nearly 20 percent. During Reagan's second term, federal government deficits grew drastically; this occurred because less income was coming into the government because of the previously enacted tax cuts and because of a large increase in defense spending. In addition, for the first time since World War I the United States began to import more than it exported.

Nevertheless, Reagan's foreign policy remained incredibly popular. In April 1986, the United States bombed Libyan air bases after Muammar al-Gadhafi, the leader of Libya, ordered Libyan gunboats to challenge American ships sailing close to Libya. Reagan and the new leader of the Soviet Union, Mikhail Gorbachev, established a close personal relationship and held meaningful negotiations on the reduction of nuclear weapons. Reagan also supported anti-communist forces fighting in Nicaragua and El Salvador.

Many critics of Reagan had claimed since 1980 that he was unaware of what was being done by others working for him. This view seemed to be validated by the Iran-Contra Affair of 1986 and 1987. Apparently without the knowledge of the president, National Security Advisor John Poindexter, Lieutenant Colonel Oliver North, and several others devised an "arms for hostages plan." By this plan, the United States sold arms to Iran, hoping that it could use Irani influence to help free American hostages held in Lebanon. The problem with this plan was that at this point America had an official trade embargo with Iran and had persuaded several European countries to support this. The money for this sale was to be used to fund anti-Communist fighters in Nicaragua, called the "Contras." Again, a problem existed: Congress had passed legislation carefully regulating how much funding could go to the Contras. Congressional and legal hearings were held on the Iran-Contra Affair; as a result, nearly a dozen officials of the Reagan administration were forced to resign.

Many Americans felt (and continue to feel) that the political hero of the modern era was Ronald Reagan. Many supporters felt he restored pride to America, stood up to our enemies abroad, restored the economy of America, and reasserted "traditional" American values. Critics of Reagan maintain that the economic policies of the Reagan administration only benefitted the wealthiest Americans; they point out that the gap between the richest Americans and the poorest Americans dramatically increased under Reagan, with the real income of middle- and lower-class Americans actually receding. Critics stated that the Iran-Contra Affair proved the fact that Reagan was dangerously out of touch on many policy decisions. Nevertheless, Reagan's vice president, George H. Bush, would certainly have a tough act to follow as he ran for president on his own in 1988.

CHAPTER REVIEW

To achieve the perfect 5, you should be able to explain the following:

• • One of the low points of American political life in the twentieth century was the Watergate Affair.

  • Richard Nixon's greatest accomplishments were in the field of foreign policy, as he crafted new relationships with both China and the Soviet Union.

  • The Watergate Affair developed from the paranoid view of American politics held by Richard Nixon and several of his top aides.

  • Gerald Ford's presidency was tainted from the beginning by his pardoning of Richard Nixon.

  • Ford faced huge economic problems as president; during his presidency, America suffered from both inflation and unemployment.

  • Jimmy Carter and many politicians of the post-Watergate era emerged victorious by campaigning as outsiders.

  • President Carter's outsider status hurt him, especially in terms of getting legislation passed in Congress.

  • Carter demonstrated his diplomatic skills by helping Egypt and Israel bridge their differences through the Camp David Accords; he was unable to negotiate a release of the American hostages in Iran, and this may have cost him the presidency.

  • Ronald Reagan was elected as a conservative and restored the pride of many Americans in America.

  • Reagan practiced "supply-side" economics, which benefited the American economy but which also helped create large deficits.

  • Under Reagan, the gap between the wealthiest Americans and the poorest Americans increased.

  • Reagan reinstituted cold war rhetoric, but later created cordial relations with leaders of the Soviet Union.

  • Reagan's lack of direct control over the implementation of presidential policies was demonstrated by the Iran-Contra Affair.

Time Line

1968: Richard Nixon elected president

1971: Nixon imposes wage and price controls / Pentagon Papers released

1972: Nixon visits China and Soviet Union / Nixon reelected / SALT I signed / Watergate break-in

1973: Watergate hearings in Congress / Spiro Agnew resigns as vice president / "Saturday Night Massacre"

1974: Inflation peaks at 11 percent / Nixon resigns; Gerald Ford becomes president / Ford pardons Richard Nixon / WIN economic program introduced

1975: South Vietnam falls to North Vietnam, ending Vietnam War

1976: Jimmy Carter elected president

1977: Carter signs Panama Canal treaty / Carter issues Vietnam-era draft amnesty

1978: Camp David Accords

1979: Americans taken hostage in Iran

1980: Ronald Reagan elected president

1981-1982: Major recession / Assassination attempt on Reagan

1981-1983: Major tax cuts instituted

1983: Reagan produces "Star Wars" / Americans victorious in Grenada

1984: Reagan reelected

1985: Gorbachev assumes power in Soviet Union

1986: Additional tax reform measures passed / Iran-Contra Affair

1987: "Black Monday"

1988: George Bush elected president