Carter Years

In July 1976 Jimmy Carter, a former governor of Georgia and a newcomer to national politics, gained the Democratic presidential nomination.

In the November elections Carter and his running mate, Senator Walter F. Mondale of Minnesota, narrowly defeated the Republican candidates, President Ford and Senator Robert J. Dole of Kansas.

The Democrats maintained their strong majorities in the U.S. Senate and House of Representatives.

Following his inauguration in January 1977, Carter drew up a wide-ranging legislative program, much of which received severe criticism in Congress.

In April the president offered a package of complicated legislation designed to reduce the nation’s consumption of petroleum by encouraging the use of power sources such as coal and solar energy.

The Senate altered much of the package, which was finally passed in November 1978. Carter had some success in his effort to streamline the federal bureaucracy, however, and in October 1977 a new Department of Energy began operations.

The national unemployment rate fell, but the rate of inflation increased.

As prices increased, so did taxes. California voters responded by passing Proposition 13, a legislative initiative that sharply reduced property taxes in the state, and people in other parts of the nation also called for lower taxes.
In foreign affairs, Carter strongly criticized the governments of the USSR and other countries for violating the human rights of their citizens.

In September 1977 the president signed treaties giving Panama control of the Panama Canal by the year 2000. After heated debate, the treaties were ratified by the Senate in early 1978.

The administration also attempted to mediate a peace settlement in the Middle East. In September 1978 Carter hosted a conference at Camp David, near Washington, D.C., with the leaders of Egypt and Israel.

The meeting produced a framework for negotiations that resulted in a peace treaty between Israel and Egypt in March 1979. On another front, by January 1979 the United States had established full diplomatic relations with the People’s Republic of China.

The Hostage Crisis

In November 1979, after Carter had allowed the deposed shah of Iran to enter the United States for medical treatment, a group of Iranian revolutionists stormed the U.S. embassy in Tehrân and held 53 staff members as hostages.

When the United States refused the captors’ demand for the shah’s extradition, a stalemate ensued. In April 1980 Carter ordered an airborne rescue attempt that failed.

Secretary of State Cyrus Vance, who had opposed the rescue mission, subsequently resigned. Meanwhile, in January 1980, the United States had restricted trade with the USSR in protest against the Soviet invasion of Afghanistan. Also in protest, the United States refused to ratify the U.S.-Soviet strategic arms limitation treaty (SALT II).

The Economy

In 1979 and 1980 the economic situation deteriorated.

As U.S. imports continued to exceed exports, the dollar declined. The annual inflation rate rose to more than 10 percent.

The automotive industry, for decades a mainstay of the economy, suffered losses due to foreign imports, and the Chrysler Corporation needed federal loan guarantees to forestall bankruptcy.

1980 Election 

President Carter defeated a challenge from Senator Edward M. Kennedy of Massachusetts and won his party’s nomination to run for reelection in 1980.

The Republicans nominated a conservative, former screen actor and governor of California Ronald W. Reagan. Republican Congressman John B. Anderson of Illinois ran as an independent.

The Democrats, blamed by many for the declining economy and the Iranian hostage crisis—which was not resolved until January 1981—lost in every section of the country.

Reagan and his running mate, George Herbert Walker Bush, won 51 percent of the popular vote to 41 percent for Carter and 7 percent for Anderson.

The Republicans won control of the Senate for the first time in nearly 30 years, and Jimmy Carter became the first elected president to lose his bid for reelection since Herbert Hoover in 1932.

 Reagan Administration

President Reagan’s announced intentions were to lower taxes, to reduce government spending and regulations, and to strengthen the defense establishment. Reagan recovered fully from a March 1981 assassination attempt, and his program maintained momentum.

In the following months, Congress enacted the largest tax cut in U.S. history, reduced spending by sharply curtailing aid to the poor and to state and local governments, and increased the defense budget.

At the same time the Federal Reserve Board kept interest rates high in an attempt to reduce the money supply and thus curb inflation. This policy slowed economic activity, which lowered government tax revenues.

This lower tax yield, combined with the high interest rates the government itself had to pay to borrow money, frustrated Reagan’s plan to bring spending under control.

The federal deficit mounted.

The recession of 1981-1982 drove the national unemployment rate above 10 percent for the first time since 1940, and the number of business failures reached its highest level since 1932. The poor economy helped Democrats to gain seats in the 1982 congressional election.

In foreign relations, President Reagan and his secretary of state, Alexander M. Haig, Jr., continued to move away from détente with the USSR. In mid-1982, George P. Shultz replaced Haig.

American peacekeeping forces in Lebanon suffered heavy casualties in terrorist bombings in 1983, and Reagan withdrew the marines in February 1984.

Reagan ordered a surprise invasion of the island of Grenada in October 1983.

The immediate purpose was the rescue of U.S. medical students from political turmoil, but the administration also cited requests for help from Grenada’s Caribbean neighbors.

In Central America, Reagan backed government forces in El Salvador but supported guerrillas against the Nicaraguan government. Relations with the USSR worsened in 1983 after Reagan announced an antiballistic missile defense system against nuclear attack.

This Strategic Defense Initiative (SDI), which became known as "Star Wars," was based on the concept of deterrence through the threat of retaliation. Although many experts believed SDI was impractical, the program would linger and garner financing until 1993.

Economic issues dominated the 1984 presidential campaign.

On the Democratic side, former Vice President Mondale won a bruising primary battle.

He defeated Senator Gary Hart of Colorado, who had stressed the need for "new ideas," and the Reverend Jesse Jackson, the first black to win a party presidential primary.

Mondale selected as his vice-presidential running mate Representative Geraldine A. Ferraro, the first woman to run for such high office on a major party ticket.

Reagan and Bush captured 59 percent of the vote, carrying 49 states and 525 electoral votes.

Just before the elections, the Soviets had signaled their desire for a new opening on arms control.

Two summits were held, in November 1985 and October 1986, between Reagan and Soviet leader Mikhail Gorbachev.

The U.S. space program suffered a severe setback when the space shuttle Challenger exploded after lift-off on January 28, 1986, killing the seven crew members on board (see Challenger Disaster).

In April the United States launched a major air strike against Libya in retaliation for terrorist attacks against Americans elsewhere. In June, Chief Justice Burger announced his retirement, and Associate Justice William H. Rehnquist replaced him in September.

Interim elections in November returned control of the Senate to the Democrats.

The Reagan administration was further weakened during 1987 by continued budget and trade deficits and by a congressional investigation into the U.S. sale of arms to Iran and the diversion of profits from the sale to support the Nicaraguan rebels

 This affair represented the worst political scandal in the United States since Watergate in the early 1970s.

On October 19, 1987, the stock market suffered its worst one-day loss in history, as the Dow Jones Industrial Average plummeted 508 points, or 22.6 percent (see Black Monday).

The nation’s budget and trade deficits continued to exceed $100 billion annually.

In December Reagan and Gorbachev signed a treaty to eliminate the two nations’ medium-range and certain shorter-range missiles.

During 1988 Congress ratified the treaty, toughened civil rights laws, and authorized reparations for Japanese Americans interned during World War II.

1988 Election 

 Vice President Bush defeated several challengers, notably Senator Robert Dole, to win the Republican presidential nomination.

In the Democratic primary campaign, Governor Michael S. Dukakis of Massachusetts outlasted civil rights leader Jesse Jackson.

Bush and his vice-presidential choice, Senator Dan Quayle of Indiana, were able to capitalize on the peace-and-prosperity issue.

With a popular-vote majority of 54 to 46 percent, Bush became the first incumbent vice president since Martin Van Buren in 1836 to be elected president. In the Senate and House, however, the Democrats increased their majorities.


Among the challenges facing President Bush when he took office on January 20, 1989, were the federal trade and budget deficits, the insolvent savings and loan system, and the Soviet diplomatic offensive in Europe.

One of the worst environmental disasters in U.S. history took place on March 24, when the tanker Exxon Valdez ran aground in Alaska’s Prince William Sound, spilling nearly 11 million gallons of oil. In June, Jim Wright became the first Speaker of the House to resign because of ethical misconduct charges.

A measure to bail out the ailing savings institutions was enacted in August. Responding to rapid political changes in Eastern Europe, Bush offered aid to Poland and Hungary during his visits there in July.

In December more than 24,000 troops invaded Panama to oust the regime of General Manuel Antonio Noriega, wanted in the United States on drug trafficking charges.

During summit meetings in December 1989 and late May and early June 1990, Bush and Gorbachev agreed to end production of chemical weapons and reduce existing stockpiles.

In mid-1990 the U.S. economy entered a recession. Bush reneged on his pledge of "no new taxes" in accepting a five-year deficit-reduction package passed by Congress in October.

Two new Supreme Court justices, David H. Souter, appointed in 1990, and Clarence Thomas, appointed in 1991, solidified the conservative majority.

In August 1990 Iraq, led by President Saddam Hussein, invaded and annexed Kuwait. During 1990 and 1991, the United States took the lead in ousting Iraq from Kuwait. More than 500,000 U.S. troops served with allied forces during the Persian Gulf War of 1991, suffering remarkably few casualties while crushing Iraqi resistance.

In April, U.S. troops intervened in northern Iraq to protect Kurdish refugees from Iraqi government reprisals. U.S. diplomatic activity then centered on a joint effort with the USSR toward peace in the Middle East. After the USSR and Yugoslavia disintegrated in 1991-1992, the United States recognized nearly all their former constituent republics.

One of the worst riots in U.S. history erupted in Los Angeles in April 1992 after the acquittal of four white police officers charged with the videotaped beating 13 months earlier of a black suspect, Rodney King.

Fifty-eight people died in the rioting, and property damage exceeded $750 million.

In a second Rodney King trial (April 17), two of the four police officers were found guilty. In May a 203-year-old measure restricting the power of Congress to raise the salaries of its members became the 27th Amendment to the Constitution.

A devastating hurricane struck south Florida in August; 41 people died and property damage totaled about $20 billion.

 1992 and 1996 Elections

In the 1992 presidential race, Governor Bill Clinton of Arkansas emerged as the Democratic nominee.

In the general election campaign, Bush and Vice President Quayle attacked Clinton as untrustworthy and inexperienced, while Clinton and his vice-presidential running mate, Al Gore, accused Bush of mishandling the economy and neglecting other domestic problems.

Clinton became the first Democrat to win a presidential election since 1976, garnering a popular-vote plurality of about 43 percent; Bush received 38 percent; and independent candidate H(enry) Ross Perot, running as a fiscal reformer, received 19 percent.

During the 1996 presidential campaign, Clinton ran for reelection against Robert Dole, a longtime senator from Kansas.

Clinton campaigned on the need to control the federal budget deficit and reform campaign financing. He also proposed plans for additional environmental programs, tax credits for college tuition, and a capital gains tax cut. Dole, the Republican nominee, ran on the issue of a 15 percent tax cut.

In the November 1996 Clinton defeated Dole with 49.2 percent of the popular vote, compared to Dole’s 40.8 percent. Ross Perot ran as a candidate of the Reform Party but only won 8.5 percent of the vote. In the electoral college votes, Clinton received 379 to Dole’s 159.

During President Clinton’s first months in office, he launched many initiatives for domestic change.

He sought to end the ban on the rights of homosexuals to serve in the military, but his plan was modified when it met strong opposition in Congress and the Department of Defense.

In addition, he appointed First Lady Hillary Rodham Clinton to head a task force on health care reform. However, the health care package met strong resistance in Congress and did not pass.

A few of Clinton’s domestic programs that were enacted during his first term included a family-leave bill for employees and a national service program called Americorps.

Americorps provided students with money for college or technical training in return for community service work.

A major anticrime bill was also passed in December 1994 that authorized expenditures for law enforcement, prisons, and prevention programs, and banned assault weapons.

In addition, Clinton appointed two new Supreme Court justices, Ruth Bader Ginsburg and Stephen Breyer.
Amid a decline in popularity for Clinton and Democrats in general, the Republicans recorded a victory in the midterm elections of November 1994.

The Republican Party gained control of both the House and the Senate for the first time since 1954.

During the campaign, the Republicans advocated the "Contract with America," a conservative platform that called for tax cuts, welfare reform, term limits for federal legislators, a balanced-budget amendment, and increases in defense spending.

As the 104th session of Congress began in 1995, Republican Newt Gingrich of Georgia became Speaker of the House, and Republican Robert Dole of Kansas became majority leader of the Senate.

The Republican congressional majorities and Clinton had difficulty reaching consensus during 1995 and 1996.

For example, Clinton and the Republicans in Congress were unable to agree on a 1996 budget for the federal government, and, as a result, government operations were partially shutdown on two occasions.

In April 1996 Clinton and Congress agreed on a federal budget that included Republican budget cuts, especially in housing, labor, and arts programs, but preserved some of Clinton’s programs such as Americorps.

Two pieces of major legislation that were passed with the support of both Congress and the president were the presidential line-item veto and telecommunications bill.

The line-item veto would have allowed the president to veto individual items in appropriations bills but the U.S. Supreme Court ruled it unconstitutional in June 1998.

The telecommunications bill restructured the television and telephone industries by allowing for more competition. The bill also outlawed pornography on the Internet.

In 1996 Clinton and Congress also agreed on the passage of a terrorism bill, after the Clinton administration supported the passage of a bill designed to help law enforcement officials fight terrorism.

The bill increased funding for antiterrorism activities and made it easier to deport aliens suspected of terrorism.

The bill was passed partly in response to the deadliest terrorist bombing in the history of the United States.

In April 1995 a bomb exploded in front of the Alfred P. Murrah Federal Building in downtown Oklahoma City, largely destroying the building and causing at least 168 deaths.

In June 1997 Timothy McVeigh, a former U.S. Army sergeant, was found guilty of the Oklahoma City bombing.

In August 1996 Clinton signed three bills that Congress had approved earlier. The new laws included an increase in the minimum wage from $4.25 to $5.15; a measure making it easier for workers to transfer their health insurance between employers; and a controversial welfare bill.

Clinton had vetoed two previous welfare bills passed by Congress. The bill that he signed included provisions to limit benefits to five years, require adult recipients to work after two years, and limit some welfare programs and food stamps to legal immigrants.

After the 1996 elections, the Republicans retained their control of both houses of Congress. As a result, Clinton and Congress again disagreed about the federal budget and how to reduce the budget deficit.

In May 1997 they reached an agreement on how to balance the federal budget in five years.

In August 1997 Clinton signed bipartisan bills to balance the federal budget. The agreement to balance the budget, the first since 1969, held out the possibility that the federal deficit could be eliminated by the year 2002 if the economy continues to perform strongly.

During its first and second terms, the Clinton administration had to contend with multiple investigations of the president, the first lady, cabinet members, and others in the administration. The investigations resulted in seven independent counsels—a nongovernment lawyer appointed to investigate high-level government officials. .

 O11b Foreign Affairs  Before Clinton took office in January 1993, he supported President Bush’s signing of the START II nuclear disarmament treaty with Russian President Boris Yeltsin.

Also in 1993, the United States sent troops to Somalia to help protect food and supplies that were intended for starving civilians. However, when U.S. soldiers came under attack from the various factions in the civil war, the U.S. involvement became unpopular among Americans.

The troops were withdrawn by March 1994, and the United Nations (UN) took control of the peacekeeping operation. The operation was ended in March 1995 when U.S. troops returned to Somalia to aid in the withdrawal of the remaining UN forces.

Both in the Middle East and the former Yugoslavia, the United States was instrumental in helping negotiate peace agreements.

At the White House in September 1993, Clinton hosted the signing of a historic peace agreement between Israel and the Palestine Liberation Organization (PLO), with Israeli Prime Minister Yitzhak Rabin and PLO Chairman Yasir Arafat in attendance.

He also oversaw the signing of an agreement between Israel and Jordan at the White House in July 1994.

In addition, in November 1995 the United States led peace talks between the Bosnian Muslims, Serbs, and Croats in Dayton, Ohio, in hopes of resolving the war in Bosnia and Herzegovina.

The talks led to the Dayton peace accord signed by all parties.

As part of the agreement, Clinton pledged to send American soldiers to Bosnia and Herzegovina to help lead the North Atlantic Treaty Organization (NATO) in providing humanitarian aid and policing a zone between the factions.

In Asia, trade relations between the United States and China became strained during the 1990s because of disagreements over human rights practices and copyright privacy.

The United States threatened to suspend China’s most-favored-nation trading status, but it was repeatedly renewed. In November 1997 Chinese President Jiang Zemin visited the United States.

Some observers said the visit was the most significant step toward closer U.S.-China relations since 1989 when China’s crackdown on prodemocracy demonstrators cooled relations.

In 1994 Clinton announced the end of a 19-year trade embargo against Vietnam, and in July 1995, more than 20 years after the end of the Vietnam War, the United States extended full diplomatic recognition to Vietnam. In May 1997 the United States appointed its first ambassador to Vietnam since 1975.

In Africa, Clinton and the First Lady made a six-nation tour in April 1998.

It was the most extensive visit to Africa made by a sitting president, and the first time a U.S. president visited South Africa. Clinton’s journey was intended to showcase African success stories and promote trade and investment.

In the Americas, the United States worked to aid both Haiti and Mexico.

In September 1994 the United States was prepared to launch a military invasion of Haiti to restore to power Haiti’s elected president, Jean-Bertrand Aristide, who had been ousted in a military coup in 1991.

Military confrontation was averted at the last minute, largely due to the diplomatic efforts of former president Jimmy Carter, who negotiated Aristide’s peaceful return.

The UN then assumed control of the situation in Haiti.

The United States also came to the support of Mexico when the currency of Mexico, the peso, began to drop in value in early 1995.

Clinton created a $20 billion loan package for Mexico to help restore the Mexican economy.

In January 1997 Mexico announced that it had completed its loan payments to the United States, three years early.

In contrast to the U.S. support in Mexico and Haiti, relations between the United States and Cuba worsened during the Clinton administration.

In February 1996 Cuba shot down two civilian planes from the United States, claiming that they were violating Cuban air space.

The United States tightened its sanctions against Cuba through such measures as prohibiting all flights from the United States to Cuba in an effort to hurt Cuba’s tourist industry.

The U.S. Congress also passed the Helms-Burton Act, named after its two sponsors, Senator Jesse Helms and Representative Dan Burton.

This act allowed American citizens to sue foreign companies investing in properties that had been seized from Americans during the Cuban Revolution.

Other countries, including Mexico, Canada, and members of the European Union (EU) protested. As a result, Clinton suspended the right for U.S. citizens to sue.

International trade agreements became important issues during the Clinton administration. Clinton successfully pressed Congress to ratify the North American Free Trade Agreement (NAFTA).

The agreement was a plan for tariff cuts and the elimination of other trade barriers between the United States, Mexico, and Canada over 15 years. NAFTA officially took effect on January 1, 1994.

Then in December 1994 Congress passed the Uruguay Round provisions of the General Agreement on Tariffs and Trade (GATT), a global tariff-cutting pact that created the World Trade Organization in 1995.

Clinton signed GATT later that month. In November 1997 Congress postponed voting on a bill to restore what was known as "fast-track" negotiating.

The bill, which lapsed in 1994, would have restored presidential authority to negotiate trade agreements that Congress can not alter but can only approve or reject.