1986: United States

THE PRESIDENCY

President Ronald Reagan continued to ride a wave of immense personal popularity in 1986 even though many of his policies seemed to go against the grain of Congress and public opinion. He battled Congress over taxes, international trade, and his policies on Central America and South Africa, among other issues. He won a number of victories — most notably when his revolutionary tax overhaul proposal, left for dead by many in 1985, was enacted (albeit in modified form). But he could not preserve the Republican majority in the Senate in the November elections and was left with a Democratic Congress for the last two years of his term.

In foreign affairs, a new chill entered U.S.-Soviet relations after the mutual warmth generated by the 'fireside summit' between Reagan and Soviet leader Mikhail Gorbachev in November 1985. The two leaders met again in Iceland in October, but the meeting ended amid disagreement over the president's Strategic Defense Initiative ('Star Wars'). Libyan leader Muammar al-Qaddafi — whom Reagan called the prime sponsor of international terrorism — felt the sting of the president's anger, as Reagan ordered air raids in April against what the administration termed terrorism-related targets in two major Libyan cities. In November, however, the credibility of Reagan's staunch antiterrorism policy was damaged by revelations that he had approved secret shipments of military equipment to Iran. Serious questions about foreign policy — and the president's control over it as well — were also raised when it was revealed that money from the Iranian arms sales had been diverted, apparently without Reagan's knowledge, to the Nicaraguan rebels battling the Sandinista regime.

The President's Health.

In January, Reagan received his first comprehensive medical examination since he had undergone surgery for colon cancer in July 1985. Following the examination, at the Bethesda Naval Hospital in suburban Washington, the White House announced that three small growths, or polyps, all described as benign, had been removed from Reagan's colon. The White House provided little additional information. However, physicians not associated with the president's case said that such growths, nothing new to Reagan, tended to come in crops and were not dangerous if discovered and removed early. Doctors also removed tissue from a pimple, or papule, on the right side of the president's face. This, too, was said to be benign. Reagan had twice in 1985 had a basal cell carcinoma — the most common and easily curable form of skin cancer — removed from his nose.

Another full-scale examination, in June, yielded similar results. This time two small polyps, both benign, were snipped from his colon; no other problems were reported. In August, the president underwent what was called a precautionary urological tract examination unrelated to the cancer surgery. Dr. T. Burton Smith, Reagan's physician, said afterward that the tests revealed no abnormalities, tumors, or other evidence of disease and that no further urological exams were anticipated.

Foreign Policy.

U.S.-Soviet Relations.

The year began on a positive note, as the president and Gorbachev extended televised New Year's greetings to each other's nations, but the concrete results anticipated after the November 1985 Geneva summit were slow to materialize. Instead, relations took on a roller-coaster quality that threatened to derail prospects for the summit that the leaders had agreed to hold in the United States in 1986.

Despite new Soviet and U.S. proposals early in the year, there was little discernible movement in the Geneva arms talks during the first part of 1986. In late May, moreover, the president — citing persistent Soviet violations — said that the United States, when making decisions about the deployment of strategic weapons, would no longer be bound by provisions of the 1979 Strategic Arms Limitation Treaty, known as SALT II, a major accord that had never been ratified by the U.S. Senate but that both the United States and the Soviet Union had said they would adhere to. Reagan did keep the United States in compliance with the treaty for a time (and hinted that violation of the pact could be forestalled by Soviet accommodations on arms control), but a key SALT II weapons ceiling was exceeded in late November.

In June the Soviets tabled a new strategic arms proposal. The president reacted by saying that the Soviets finally appeared to be serious about arms control and that a 'turning point' in the superpower relationship might be at hand.

The two sides seemed to work toward a summit, and possibly an arms accord, through most of the summer. A major snag developed in late August, however, when the Soviets arrested and jailed on espionage charges a veteran American correspondent in Moscow, Nicholas S. Daniloff of U.S. News & World Report. The Daniloff seizure was denounced by U.S. officials as retaliation for the arrest in New York a week earlier of Gennadi Zakharov, a Soviet employee of the United Nations, on spying charges. After intensive negotiations, an agreement was reached in late September under which both men were permitted to return home; in addition, prominent Soviet dissident Yuri Orlov and his wife were allowed to emigrate. The president denied that a 'trade' had been made, despite appearances to the contrary.

On the same day, September 30, that Zakharov was released, the two superpowers stunned the world by announcing a Reagan-Gorbachev meeting in the Icelandic capital of Reykjavik in less than two weeks. The administration, seeking to downplay expectations, said the meeting October 11 and 12 should be called a pre-summit since it was merely a prelude to the full-fledged summit still planned for the United States. But in two days of talks, sweeping tentative agreements were reached in major arms control areas, including strategic (long-range) and intermediate-range nuclear weapons. The talks collapsed, however, after Gorbachev essentially demanded severe limits on the Strategic Defense Initiative as the price for the other accords and Reagan rejected the deal.

In the days that followed, the president and his top aides tried to salvage agreements held hostage to SDI, saying they intended to press the Soviets, at the ongoing Geneva arms talks, to break the linkage between Star Wars and the other arms control issues. For Reagan's part, he found himself in a new controversy when the Kremlin reported that he had agreed in Iceland to the complete elimination of all nuclear forces within ten years, an action that could greatly magnify the importance of the Soviets' superiority in conventional forces and jeopardize Western Europe. The White House brushed aside the report, saying that while such action had been discussed in general terms, the president had agreed only to a scrapping of ballistic missiles. Even that seriously concerned the Europeans, and after Reagan met with British Prime Minister Margaret Thatcher in November, the administration indicated that the goal of total elimination of ballistic missiles would be deemphasized in future U.S.-Soviet talks.

South Africa.

The president's policy of 'constructive engagement' — an effort to stay on friendly terms with the South African government in order to press for reforms in its system of apartheid — was dealt a severe blow when the Senate voted on October 2 to override Reagan's veto of a tough South African sanctions bill. The House had voted to override the veto on September 29. Earlier in the year, key Republican leaders had urged the president to move forcefully in the direction of stiff sanctions, but Reagan rejected the advice. He claimed in September that the bill he vetoed would hurt blacks more than whites. But the South African government's racial policies infuriated Congress; significantly, many of Reagan's most loyal conservative allies broke with the president on this issue. The new legislation included a partial trade embargo, a ban on most new U.S. investment in South Africa, and cancellation of landing rights in the United States for South African Airways.

Nicaragua.

Despite congressional wariness, Reagan continued to demand that the United States support the 'contra' guerrillas fighting against Nicaragua's Sandinista government. In 1986, by virtue of intensive lobbying and a refusal to take no for an answer, the president pushed a $100 million aid package through both the House (where opposition was strongest) and the Senate. In addition to $30 million in non-lethal 'humanitarian' assistance, the package included $70 million in military aid, ending a two-year ban on funding for weapons and munitions.

Initially, the president seemed to have lost the fight over aid to the contras when the Democratic-controlled House voted against an aid package. Before that vote, critics charged that the administration's rhetoric bordered on red-baiting.

The Philippines.

Reagan administration support for the authoritarian regime of President Ferdinand E. Marcos in the Philippines melted away after national elections there on February 7 (officially won by Marcos) were marred by widespread fraud on the part of Marcos's supporters. At first, though, Reagan was reluctant to abandon Marcos, whom he saw as a staunch if flawed U.S. ally. But as years of simmering opposition to Marcos threatened to bubble over into civil war, the president decided to take action. First, he abandoned his initial position that there had been fraud on both sides, and laid the blame for election irregularities squarely on Marcos. Second, as Marcos's support quickly faded — highlighted by the rebellion of two key military leaders — and as violence in the streets of Manila and elsewhere appeared inevitable, the White House said that it would be 'futile' for Marcos to continue in office and that he should resign. Isolated, Marcos finally fled his island nation on February 25, aboard a U.S. military aircraft.

With Marcos's departure, the United States quickly recognized the new government of Corazon Aquino, who had run against Marcos in the disputed elections. The Reagan administration also sent to Congress an emergency aid package (which was enacted), but Aquino said much more was needed and journeyed to the United States in September to lobby for increased assistance and to meet with Reagan for the first time. By October both houses of Congress and the president had approved $200 million in increased economic aid to the Philippines for fiscal 1987.

Terrorism.

The sequence of events that led to the U.S. bombing of Libya began in late December 1985, when attacks by Palestinian terrorists at the Rome and Vienna airports left several Americans dead and a number injured. (A total of 20 people died in the attacks, and more than 100 were wounded.) Reagan accused Libyan leader Qaddafi of aiding the attackers, ordered Americans to leave Libya, and imposed economic sanctions against Libya. However, the sanctions' effects were seriously diluted when major U.S. allies refused to follow suit. In March, U.S. naval ships and aircraft clashed with Libyan forces in the area of the Gulf of Sidra, off the Libyan coast. After Libya fired several Soviet-supplied missiles at U.S. warplanes, U.S. Navy planes attacked Libyan patrol boats and a missile site. Administration officials said the Libyan attacks were unprovoked and denied reports that the United States was hoping to goad Qaddafi into just such an assault by holding naval maneuvers near Libya.

A mood of impending action swept Washington in the wake of an April 5 bombing of a West Berlin nightclub that killed two American servicemen (and one other person); dozens of U.S. servicemen (and over 200 people all told) were wounded. Reagan promised retaliation if the identity of those behind the blast could be determined. Ten days later (at about 2 A.M. Libyan time on April 15), American warplanes from bases in Britain and carriers in the Mediterranean attacked targets in two major Libyan coastal cities, Tripoli and Benghazi. In an address to the nation on the evening of the raid (April 14 in Washington), Reagan — asserting that the 'evidence is now conclusive' of a Libyan connection to the Berlin bombing — said, 'We have done what we had to do. If necessary, we shall do it again.' Officials said the raid was not just punitive, but was also designed to head off other Qaddafi-inspired attacks on Americans that might have been in the works.

Arms Shipments to Iran.

In light of his tough public antiterrorist stance, Reagan was severely embarrassed in November by reports that the United States had been secretly sending military supplies to Iran in an effort to gain the release of several Americans being held hostage in Lebanon by pro-Iranian groups. The operation, which apparently had involved a complex web of air and sea shipments, some reportedly carried out with Israeli assistance, had been directed by a group of White House officials; it had been authorized by Reagan over the opposition of Secretary of State George Shultz and Secretary of Defense Caspar Weinberger. A week after the arms sales came to light, Reagan admitted their existence. But he said they had been made with the objective of improving relations with Iran generally, not as 'ransom' for hostages. He later declared at a press conference that no further shipments would be made. U.S. allies, anti-Iranian Middle East governments, and congressional leaders of both parties expressed shock at the administration's actions, which had been taken without informing Congress and in the face of a State Department effort to coordinate an international arms embargo against Iran.

Soon after, an even more startling revelation was made: millions of dollars in profits from the Iranian arms sales had been diverted to the Nicaraguan contras (at a time when Congress had not authorized military aid). President Reagan, stating that he had not known of the arrangement, announced that National Security Adviser John Poindexter had resigned his post and that a member of Poindexter's staff, Oliver North, had been dismissed. North — who was said to be the key figure in the scheme to divert the funds — reportedly destroyed National Security Council files relating to the arms dealings prior to his dismissal. Reagan appointed a three-man bipartisan panel to investigate the operations of the National Security Council; the Justice Department was also conducting an inquiry to determine if any laws had been broken.

Domestic Affairs.

Supreme Court Changes.

The president moved in June to continue the Supreme Court's conservative cast well beyond his term. When Warren Burger informed Reagan that he was retiring after 17 years as chief justice, the president nominated Associate Justice William Rehnquist, the Court's most conservative member, to replace Burger. At the same time, Reagan named a respected conservative jurist, federal appeals judge Antonin Scalia, to fill the new associate justice vacancy on the Court. After lengthy debate, the Republican-controlled Senate confirmed Rehnquist in September by a vote of 65 to 33 — the 'nays' were the most drawn by any justice or chief justice confirmed in this century. Scalia won easy confirmation, 98 to 0.

Politics.

The president, faced with the prospect of spending his final two years in office with the Senate, as well as the House, controlled by the opposition Democrats, campaigned vigorously in the fall for GOP Senate candidates. With no riveting national issues to rouse voters, Reagan leaned on his popularity, warning that loss of the Senate could transform him into a lame duck, a title he had so far managed to avoid. But the voters evidently paid him no heed, rejecting many of the candidates for whom he'd campaigned and transforming a 53-47 Republican edge in the Senate into a surprisingly large 55-45 Democratic majority.

The Economy.

Low oil prices, low interest rates, and continuing low inflation were expected to spur substantial economic growth, but it was slow to materialize. Instead, the economy seemed to be responding more to a record budget deficit (of $220.7 billion for fiscal 1986) and an anticipated record trade deficit (of $165 billion for 1986). As the economy continued to grow at a sluggish pace well into 1986, the White House said the economy remained strong and projected 'brisk' growth ahead.

On the trade front, the administration negotiated a number of binational agreements to reduce the import-export imbalance. Congress remained frustrated, however, with Reagan's essentially anti-protectionist policies. In August the president narrowly beat back a House effort to override his veto of a bill that would have sharply limited textile imports.

Tax Reform.

In September, Congress approved sweeping legislation overhauling the nation's tax code. The action was called the crowning achievement of the president's second term and was all the more remarkable because for much of 1985 (the year Reagan proposed a tax reform bill) he had appeared to be one of the few true believers in tax reform. But Reagan won the support early on of Representative Dan Rostenkowski (D, Ill.), chairman of the House Ways and Means Committee, and later of Senator Bob Packwood (R, Ore.), the Senate Finance Committee chairman. With the leaders of the tax-writing panels spearheading the battle, Reagan's initial proposal was reshaped time and again but eventually made its tortuous way through Congress. When Reagan signed the measure in October at a White House ceremony, he characterized it as 'less a reform than a revolution.'

The final product shifted a portion of the tax burden from individuals to business ($120 billion over five years), and it eliminated hundreds of deductions and other tax breaks. Most dramatically, it scrapped the complex schedule of 15 tax brackets for individuals, essentially replacing it with just two brackets — 15 and 28 percent.

Drug 'Crusade.'

On September 14 the president and the First Lady, in a rare joint television address (and the first by the Reagans), advocated a 'national crusade' against drug abuse aimed at creating a 'drug-free America.' Their statement came amid rising national concern over drug trafficking and drug abuse — and particularly over the rising popularity of crack, a potent and highly addictive form of cocaine. A day after the address, Reagan proposed a $900 million antidrug program that included increased efforts to intercept drug smugglers, stiffer penalties for drug-related offenses, and funding for drug education and treatment. As part of his program, Reagan issued an executive order mandating widespread drug testing of federal employees. In August the president underwent a voluntary drug test and said that such tests do not violate constitutional rights, as many critics of testing have contended. In October, Congress passed a $1.7 billion antidrug program that was more sweeping than the president's plan. Reagan signed that legislation late in the month.

POLITICAL PARTIES

Beset by a shortage of cash and an excess of ideological confusion, the Democratic Party nevertheless managed to recapture control of the Senate in the November elections. Both financially and ideologically the Republicans found themselves more comfortably settled, but the GOP also faced uncertainties as the Reagan presidency entered its twilight era with a Democratic-controlled Congress.

Democratic Party.

Democratic leaders had much to be worried about. Several major urban areas, notably New York City and Washington, D.C., were wracked by scandals that brought little credit to the cities' Democratic mayors. The March 18 victory in the Illinois Democratic Party primary of two followers of the rightwing extremist Lyndon LaRouche was a rude shock to the party. It was also a personal embarrassment to Democratic gubernatorial candidate Adlai E. Stevenson III, whose handpicked running mates for the offices of lieutenant governor and secretary of state were defeated by the LaRouchians. In subsequent months, national party leaders became increasingly aware of the LaRouchians' growing influence at the precinct level and moved to counter the rightwing threat.

For Democrats the fund-raising picture was, as usual, bleak. Reports in April revealed that the 1984 Democratic presidential candidates were still more than $6 million in debt. The leading debtor was Senator Gary Hart (Colo.), who declined to stand for reelection to the Senate in 1986 and was widely regarded as the front-runner for the Democratic presidential nomination in 1988. According to the Federal Election Commission, from January 1, 1985, through the first nine months of 1986, Democratic fund-raising efforts netted a total of only $34.9 million, compared with $178.9 million for the Republicans.

With a rare show of unity, the Democratic National Committee (DNC), headed by Paul G. Kirk, Jr., approved in March a series of changes in the rules for the 1988 presidential nomination. The number of officially unpledged delegates was increased, and seats at the convention were reserved for all 378 members of the DNC, 80 percent of Democratic members of the House of Representatives and Senate, and all Democratic governors. The committee also lowered the threshold for winning a proportional share of a state's convention delegates from 20 percent for states with caucuses and 25 percent for states with primaries to 15 percent, despite the opposition of black members, who favored the elimination of the threshold rule entirely.

Evidence that the Democratic Party was drifting rightward came in September, with the release of a statement prepared under the auspices of the Democratic Policy Committee. The report, called 'New Choices in a Changing America,' ventured some unusually tough talk about the Soviet Union, stressed the values of family life and private entrepreneurship, and stepped back from previous Democratic statements on such controversial issues as abortion and aid to the contras fighting the Sandinista regime in Nicaragua.

Republican Party.

The first Republican officially to declare himself a candidate for the 1988 presidential nomination was Pierre S. du Pont IV, who made his announcement on September 16, seven weeks before the close of the 1986 campaign. In the race for the presidency, however, the former Delaware governor was not only a dark horse but a latecomer. Vice President George Bush, Senate Majority Leader Robert Dole (Kan.), Representative Jack F. Kemp (N.Y.), and former Senator Howard H. Baker, Jr. (Tenn.), had all been unofficially off and running for more than a year. By June, Bush's political action committee, the Fund for America's Future, had raised more than $8.2 million; Kemp's Campaign for Prosperity, nearly $2.3 million; Dole's Campaign America, almost $1.9 million; and Baker's Republican Majority Fund, $1.2 million.

Michigan, the site of the first face-off among the major contenders, produced the first big surprise of the 1988 campaign. Signing up people willing to run for precinct delegate was the initial step in the state's cumbersome national convention delegate selection process. Predictably, Bush and Kemp finished among the leaders in the delegate sign-up race, but so did the Reverend Marion G. 'Pat' Robertson, the millionaire founder of the Christian Broadcasting Network and host (until late 1986) of its popular 700 Club program. Robertson announced in September that he was willing to make the presidential race, but only if 3 million voters signed petitions pledging to support his candidacy with prayers and money.

At a meeting of party leaders in June, Republican National Committee (RNC) Chairman Frank J. Fahrenkopf, Jr., pledged that the party would not 'turn its back on black America, its history, or its problems.' Earlier, a group of blacks calling themselves Freedom Republicans had demanded that the party change its rules to end what they alleged was discrimination against minorities and the large industrial states. At the time the 153-member RNC had only two blacks, both representing the Virgin Islands.

CONGRESS

As the second session of the 99th Congress drew to a close in October, most of the nation's legislators had one eye on the upcoming November elections and another on President Ronald Reagan, who remained personally popular despite lukewarm public support for some of his policies. Two of the president's main initiatives — an overhaul of the federal tax system and aid to antigovernment rebels in Nicaragua — received congressional backing, but neither victory came easily, as both Democrats and Republicans were wary of the political repercussions of backing the administration. Congress balked at Reagan's defense spending request, and legislators over-rode a presidential veto of a bill imposing strong economic and political sanctions against South Africa. Congress also found itself at odds with the White House over funding for major environmental programs.

Dominating much of the session's debate was continued concern about the huge federal deficit. Hopes that the Gramm-Rudman balanced-budget law (passed in December 1985) would force Congress to get the problem under control were dashed by a Supreme Court ruling that a key provision of the legislation was unconstitutional. Without that mechanism — which triggered automatic across-the-board spending cuts if Congress failed to trim the deficit sufficiently — the law had no teeth. Left to their own devices, legislators made little more than a perfunctory stab at reducing the fiscal 1987 deficit before heading home to campaign for reelection.

The midterm elections were a crucial factor in several of the year's debates, especially in the Senate. With 22 Republican seats up for election, there was the possibility that the Democrats, who already controlled the House, would gain a majority in the Senate for the first time since the Republicans won control in 1980. (In fact, the Democrats did win a majority.) Another wrinkle for the president was the increasing independence of Senate Republicans, once his staunchest supporters on Capitol Hill.

Budget.

When Congress passed the Gramm-Rudman bill — named after its Senate sponsors, Phil Gramm (R, Texas) and Warren Rudman (R, N.H.) — legislators thought they finally had devised a way to bring the federal deficit under control. The law established progressively lower federal deficit ceiling targets year by year through fiscal 1991, by which time the budget was to be balanced. If Congress failed to cut enough spending to meet each year's targeted level, the measure required automatic spending reductions that would fall equally on military and nonmilitary programs. Exemptions from the cuts included social security, interest on the national debt, some long-term defense contracts, and certain programs for the poor. Fearing that parts of the new budget procedure would be ruled unconstitutional, legislators included in the bill a 'fallback' provision that required Congress to use its normal legislative process to enact the spending reductions. For fiscal 1986, already under way at the time of the bill's passing, a cut of $11.7 billion was mandated; for each of the next five years a reduction of $36 billion was seen as necessary to meet required targets.

On February 5, President Reagan submitted his fiscal 1987 budget request, which he claimed met the Gramm-Rudman requirement for a $144 billion deficit in the upcoming fiscal year. (The budget law actually permits the prescribed deficit ceiling to be exceeded by $10 billion.) The president's budget called for $994 billion in outlays and $850.4 billion in revenues, for a deficit of $143.6 billion. Members of both parties balked at the president's proposal to raise overall defense spending authority to $320.3 billion ($311.6 billion of which was to be strictly for military functions of the Defense Department), a 12 percent increase over the previous year, while dramatically cutting back domestic programs. In June both houses essentially ignored the White House and approved a fiscal 1987 budget resolution that would hold overall defense spending authority to some $292 billion.

Over the following months, Congress struggled with little success to achieve the savings called for in its non-binding budget blueprint and to meet the requirements of Gramm-Rudman. In early July those efforts were made more complicated when the Supreme Court ruled that a key provision of the budget law violated the Constitution's doctrine of separation of powers. Gramm-Rudman had assigned executive power to make the automatic budget cuts to the comptroller general, who, by law, is subject to removal only by Congress. The Court ruled this assignment unconstitutional but left intact the fallback provision. Later in the month, Congress ratified the $11.7 billion in fiscal 1986 reductions it had already made in March under the now-unconstitutional spending-cut mechanism, but analysts expressed doubts that Congress would continue to stay within the 'spirit' of the budget-balancing law, which would most likely require cutting back popular programs.

On July 30 the Senate voted to revise Gramm-Rudman so as to meet the objections of the Supreme Court. They proposed allowing the Office of Management and Budget (which is part of the executive branch), instead of the General Accounting Office (headed by the comptroller general), to determine how the across-the-board cuts should be made. The proposal was attached in August to a bill to raise the public debt limit from $2.079 trillion to $2.323 trillion, enough to carry the government through September 1987. But the House, led by Democrats who were said to prefer the budget law's fallback provision to granting more power to the president, steadfastly opposed the Gramm-Rudman revision. Their opposition also stalled the debt ceiling bill, and thus Congress was forced to pass a stopgap measure raising the limit enough to tide the government over through mid-October. Finally, on October 17, Congress passed legislation raising the debt limit — but only until May 15, 1987, rather than September 30, 1987, the end of the fiscal year. Discussion of a new mechanism for making the automatic spending cuts under the Gramm-Rudman law was put off until the next session.

Congress did agree on an $11.7 billion deficit-reduction package that was needed as part of overall efforts to stay within the ceiling set by the budget law for fiscal 1987. The collection of 'savings' — which even House and Senate conferees were said to consider questionable — included beefing up tax collection efforts and moving some expenses so that they would be charged against the previous fiscal year. The package was also approved on October 17, 11 days after the deadline set by Gramm-Rudman, but like every other budget deadline during the year, this one was missed with little mention.

Meanwhile, legislators and the White House haggled over an omnibus spending bill, the largest of its kind in history, which was needed because Congress had failed to approve any of the 13 regular appropriations bills before the start of the 1987 fiscal year on October 1. Several short-term funding measures had to be approved to prevent a government shutdown while the two houses and the administration worked out their differences. On October 17, Congress ratified a $576 billion spending bill, which the president signed the next day. It provided for a deficit of $154 billion. The administration had ordered a partial government shutdown on the 17th in order to put pressure on Congress to approve the bill.

Tax Reform.