Republican Roland Reagan was elected President as part of a conservative revolution. Reagan’s domestic policy—called the New Federalism—called for addressing economic problems facing the country. Reagan and the Republican party believed in supply-side economics—the belief that by giving tax cuts to the wealthy business, along with less government regulation, the economy would grow.
To fund these tax cuts, however, Reagan also had to cut government spending on social programs created in the 1960’s and 1970’s, like welfare and education. At the same time, Reagan also believed in increased military spending to combat the Soviet Union. While this would cost the government money, it also stimulated the economy, creating jobs to supply these military goods. Part of this spending was the Strategic Defense Initiative—called “Star Wars.” This was a plan to develop a missile defense system to stop the Soviets ability to deliver a nuclear payload to the United States by detecting the attack en route and destroying the missile in space. This spending was only possible through deficit spending—when the government spends more money than it has, going into debt. As a result of this arms build-up, the national debt was doubled in the 1980’s. The economy, after a brief recession at the beginning of the 1980’s, rebounded and a period of sustained economic growth lasted through the Reagan years. Reagan, much like FDR, instilled a confidence in American and often used the media to speak directly to the American people. He gave more prime-time Presidential television addresses than any other President.
Reagan’s foreign policy was set on re-establishing America’s image as a strong nation in international politics. The turmoil of the 1960’s and 1970’s had damaged America’s stature in the world. Reagan’s stance on the Cold War was more aggressive than the previous Presidents. He readopted the idea of containment with the Reagan Doctrine. The United States was willing to fund rebels fighting against communism anywhere in the world. Two places we sent weapons two were Nicaragua and Afghanistan, for instance.
International terrorism had become a huge problem by the 1980’s. The taking of Americans as hostages, hijacking of planes and bombings—including bombing of United States installations in other countries—happened many times. Reagan took a tough stance against terrorism. When he was elected President, the hostages in Iran were freed after 444 days because of fear of Reagan’s possible response.
A scandal called the Iran-Contra Affair erupted during Reagan’s second term when illegal arms sales to Iran were uncovered. Congress had enacted an embargo on the sale of weapons to Iran. In order to get American hostages back from Lebanon, weapons were traded and the money made from the sale were then used to fund anti-communist rebels in Nicaragua called the Contras, despite Congress previously forbidding any further aid to them. The Congressional investigation cleared the President from involvement—though many were skeptical that he wasn’t involved.
Despite Reagan’s tough stance against communism, he forged a good relationship with Soviet leader Mikhail Gorbachev. Problems within the Soviet Union brought him to power as a reformer. Improving relations with the United States was one of his goals. This led to several summits—or major meeting between world powers—between the two leaders.
Reagan’s policies are credited with ending the Cold War, when the Soviet Union collapsed in the years after he left office. The Soviet economy could not keep up with America in the arms race and their attempts to do so caused severe economic problems in their country that led to the people demanding a change. Just a couple years after the symbolic fall of the Berlin Wall, the Soviet Union broke apart and the new, democratic and capitalist Russian republic began.