Return to Hegemony

The conservative trend continued in the 1980s. The election of Ronald Reagan changed the direction of American policy on several fronts. Reversing decades of the expanding welfare state, Reagan cut spending on food stamps, school lunch programs, and job programs. At the same time, his administration fostered the largest peacetime military buildup in American history. Total federal spending rose from $631 billion in 1981 to more than $1 trillion by 1986. But instead of raising taxes to pay for the new expenditures, which far outweighed the budget cuts in social areas, Reagan convinced Congress to support supply-side economics. Massive tax cuts were designed to stimulate rapid economic growth and produce new revenues. Much of the tax cut went to the wealthy. Between 1980 and 1986, the income of the lowest 40 percent of the workforce fell 9 percent, while the income of the highest 20 percent rose by 5 percent. Reagan’s policies seemed to work in the short run, and the United States experienced an economic upturn that lasted until the end of the 1980s. But the spending policies of the Reagan administration also produced record government deficits, which loomed as an obstacle to long-term growth. In the 1970s, the total deficit was $420 billion; between 1981 and 1987, Reagan budget deficits were three times that amount. The inability of George H.W. Bush (b. 1924), Reagan’s successor, to deal with the deficit problem or with the continuing economic downslide led to the election of a Democrat, Bill Clinton (b. 1946), in November 1992. The new president was a southerner who claimed to be a new Democrat—one who favored fiscal responsibility and a more conservative social agenda—a clear indication that the rightward drift in American politics had not been ended by his victory. During his first term in office, Clinton reduced the budget deficit and signed a bill turning the welfare program back to the states while pushing measures to strengthen the educational system and provide job opportunities for those Americans removed from the welfare rolls. By seizing the center of the American political agenda, Clinton was able to win reelection in 1996, although the Republican Party now held a majority in both houses of Congress. President Clinton’s political fortunes were helped considerably by a lengthy economic revival. Thanks to downsizing, major U.S. corporations began to recover the competitive edge they had lost to Japanese and European firms in previous years. At the same time, a steady reduction in the annual government budget deficit strengthened confidence in the performance of the national economy. Although wage increases were modest, inflation was securely in check, and public confidence in the future was on the rise. Many of the country’s social problems, however, remained unresolved. Although crime rates were down, drug use, smoking, and alcoholism among young people were on the rise, and the specter of rising medical costs loomed as a generation of baby boomers neared retirement age. Americans remained bitterly divided over such issues as abortion and affirmative action programs to rectify past discrimination on the basis of gender, race, or sexual orientation. President Clinton contributed to the national sense of unease by becoming the focus of a series of financial and sexual scandals that aroused concerns among many Americans that the moral fiber of the country had been severely undermined. Accused of lying under oath in a judicial hearing, he was impeached by the Republican-led majority in Congress. Although the effort to remove Clinton from office failed, his administration was tarnished, and in 2000, Republican candidate George W. Bush (b. 1946), the son of Clinton’s predecessor, narrowly defeated Clinton’s vice president, Albert Gore, in the race for the presidency. Bush too sought to occupy the center of the political spectrum while heeding the concerns of his conservative base.