Splash Screen

Section 2 Domestic Policies Believing that government was part of the problem, President Reagan cut social service programs, sponsored tax cuts, and deregulated industry.

Section 2 Reagan’s first priority was the economy, which was suffering from stagflation, a combination of high unemployment and high inflation. The monetarists argued that inflation was caused by too much money in circulation. They believed the best solution was to raise interest rates. Another group supported supply-side economics.supply-side economics Domestic Policies (cont.)

Section 2 They argued that the economy was weak because taxes were too high. Reagan combined monetarism and supply- side economics—critics called his approach Reaganomics, or “trickle-down economics.” He encouraged the Federal Reserve to keep interest rates high and asked Congress to pass a massive tax cut. Domestic Policies (cont.)

Section 2 Cutting tax rates meant that the government would receive less money, which would increase the budget deficit.budget deficit To keep the deficit under control, Reagan proposed cuts to social programs such as food stamps, student loans, and Medicare. Reagan believed that excessive government regulation was another cause of the economy’s problems. Domestic Policies (cont.)

Section 2 His first act as president was to sign an executive order to end price controls on oil and gasoline, which caused prices to fall. Other deregulation soon followed. In 1983 the economy began to recover. By 1984, the United States had begun the biggest economic expansion in its history up to that time. Domestic Policies (cont.)

Section 2 Reagan brought his strict constructionist outlook to the federal judiciary. He also nominated the first woman to the Supreme Court, Sandra Day O’Connor. Domestic Policies (cont.)

Section 2 Reagan Oversees a Military Buildup President Reagan began a massive military buildup to weaken the Soviet economy and deter Soviet aggression.

Section 2 Reagan rejected both containment and détente when dealing with the Soviet Union. The military buildup Reagan launched was the largest peacetime buildup in American history. Reagan believed that if the Soviets tried to match the buildup, it might put so much pressure on their economy that they would be forced to reform their system to avoid collapse. Reagan Oversees a Military Buildup (cont.)

Section 2 Reagan believed that the United States should support guerrilla groups who were fighting to overthrow Communist or pro-Soviet governments. This became known as the Reagan Doctrine. Reagan supported the following guerrilla groups: Reagan Oversees a Military Buildup (cont.) –The mujahadeen in Afghanistan –The contras in Nicaragua

Section 2 Although Congress had prohibited aid to the Nicaraguan contras, individuals in Reagan’s administration continued to illegally support the rebels. One of the chief figures in the Iran-Contra scandal was Marine Colonel Oliver North, an aide to the National Security Council (NSC). As part of the military buildup, Reagan decided to place nuclear missiles in Western Europe to counter Soviet missiles in Eastern Europe. Reagan Oversees a Military Buildup (cont.)

Section 2 Despite his decision to deploy missiles in Europe, Reagan generally disagreed with the military strategy known as nuclear deterrence, sometimes called “mutual assured destruction.”“mutual assured destruction.” In March 1983 he proposed the Strategic Defense Initiative (SDI), nicknamed “Star Wars.” Reagan Oversees a Military Buildup (cont.)

Section 2 In 1985 Mikhail Gorbachev became leader of the Soviet Union and agreed to resume arms talks. In December 1987 the two leaders signed the Intermediate Range Nuclear Forces (INF) Treaty. Reagan Oversees a Military Buildup (cont.)

Section 2 No one realized it at the time, but the treaty marked the beginning of the end of the Cold War. Gorbachev pushed ahead with economic and political reforms that eventually led to the collapse of communism in Eastern Europe and in the Soviet Union. Reagan Oversees a Military Buildup (cont.)

Section 4 The Soviet Union Collapses The Soviet Union’s attempts at reforming its social and economic systems failed, leading to the collapse of the Communist eastern bloc.

Section 4 In the 1988 campaign, Republican George H. W. Bush easily defeated Democrat Michael Dukakis. As president, Bush continued Reagan’s policy of cooperation with Soviet leader Mikhail Gorbachev. To save the Soviet economy, Gorbachev instituted perestroika, or “restructuring,” and allowed some private enterprise and profit- making.perestroika The Soviet Union Collapses (cont.)

Section 4 The other principle of Gorbachev’s plan was glasnost, or “openness.” glasnost In 1989 revolutions replaced Communist rulers with democratic governments in Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. At midnight on November 9, 1989, guards at the Berlin Wall opened its gates. The Soviet Union Collapses (cont.) Revolutions in Eastern Europe

Section 4 Within a year, East and West Germany had reunited to form one nation—the Federal Republic of Germany. In late December 1991 Gorbachev announced the end of the Soviet Union. The Soviet Union Collapses (cont.)

Section 4 A “New World Order” Bush used his foreign policy experience to deal with crises in China, Panama, and the Persian Gulf.

Section 4 Despite the collapse of communism in Eastern Europe and the Soviet Union, China’s Communist leaders were determined to stay in power. In May 1989, Chinese students and workers held demonstrations for democracy at Tiananmen Square in Beijing. Government tanks and soldiers crushed the protests, resulting in many deaths and arrests. A “New World Order” (cont.)

Section 4 The U.S. and several European countries halted arms sales and reduced their diplomatic contacts with China. By 1989, Panama’s dictator, General Manuel Noriega, had stopped cooperating with the U.S. In December 1989, Bush ordered American troops to invade Panama. A “New World Order” (cont.)

Section 4 Noriega was arrested and sent to the U.S. to stand trial on drug charges. In August 1990, Iraq’s dictator, Saddam Hussein, sent his army to invade oil-rich Kuwait. Fearing that Hussein would capture Saudi Arabia and its vast oil reserves, American troops rushed to the Middle East. A “New World Order” (cont.)

Section 4 On January 16, 1991, the coalition forces launched Operation Desert Storm. Just 100 hours after the ground war began, Bush declared Kuwait to be liberated. Iraq accepted the coalition’s cease-fire terms, and American troops returned home to cheering crowds. A “New World Order” (cont.) The Persian Gulf War, 1991

Section 4 Domestic Challenges To reduce the deficit, President Bush raised taxes, but lost the election to Bill Clinton.

Section 4 The recession that began in 1990 was partly caused by the end of the Cold War. Thousands of soldiers and defense industry workers were laid off. Other companies also began downsizing.downsizing The nation’s high level of debt made the recession worse. Domestic Challenges (cont.)

Section 4 In addition, the huge deficit forced the government to borrow money to pay for its programs. As the economy slowed, hundreds of savings-and-loans institutions collapsed. Bush called for a cut in the capital gains tax in order to improve the economy.capital gains tax Democrats in Congress defeated it. Domestic Challenges (cont.)

Section 4 Bush broke his “no new taxes” campaign pledge and agreed to a tax increase in exchange for cuts in spending. Democrat William Jefferson Clinton beat Bush in the 1992 election. A grassroots movement put independent H. Ross Perot on the ballot in all 50 states.grassroots movement Domestic Challenges (cont.) The Election of 1992

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