1987: United States

THE PRESIDENCY

President Ronald Reagan had his most turbulent year in the White House in 1987, seeing his credibility and political standing tumble as a result of the Iran/contra affair. But Reagan rebounded after the announcement in September of a historic 'agreement in principle' to eliminate all U.S. and Soviet intermediate-range nuclear missiles and an agreement to hold his third summit with Soviet leader Mikhail Gorbachev. The president's popularity ratings also received a boost after U.S. and Iranian military forces began clashes in the Persian Gulf, where Navy warships were escorting Kuwaiti oil tankers outfitted with American flags.

For the first time in his presidency, Reagan faced a Congress with both houses controlled by Democrats. He battled with Congress over his Persian Gulf policy, aid to the Nicaraguan contra rebels, the federal budget, and his controversial nominees to the Supreme Court. The president addressed the volatile issue of the deadly disease AIDS by naming a commission to study the problem, but criticism of his response to the AIDS epidemic intensified.

Domestic Affairs.

The Iran/contra Scandal.

Reagan's presidency had been clouded by the Iran/contra scandal since it was first revealed in early November 1986 that the administration had sold arms to Iran while negotiating with Iranian officials to free Americans held hostage by pro-Iranian Shiite Muslims in Lebanon. The controversy intensified when Attorney General Edwin Meese announced on November 25 that some profits from the arms sales to Iran had been delivered to the contra rebels fighting Nicaragua's leftist Sandinista regime. The revelations led to the resignation of Reagan's national security adviser, Vice Admiral John Poindexter, and the dismissal of another National Security Council staff member, Marine Lieutenant Colonel Oliver North, who had channeled the arms profits to the contras. Meese said the president had no knowledge of the diversion, a position Reagan would maintain from then on.

Within days of Meese's announcement, Reagan established a board of inquiry headed by former Senator John Tower of Texas to investigate the role of the NSC staff in the affair; he also called for an independent counsel to investigate possible violations of criminal law. The president was also faced with investigations by the Senate Select Committee on Intelligence and later by special House and Senate investigative committees. Over the next few months, the White House gave congressional investigators more than 230,000 pages of documents, including entries from Reagan's personal diary.

On February 26, the Tower board issued a report severely criticizing the president for a lax 'hands-off' management style that it said had allowed him to be deceived by dishonest staff members. The House and Senate committees, which held months of joint public hearings during the spring and summer, issued their report on November 18; it said that Reagan had failed to carry out his constitutional responsibilities to uphold the law, had not properly supervised the 'cabal of the zealots' on his staff, and had 'created or at least tolerated' the atmosphere in which the diversion of funds to the contras could take place. Although the hearings failed to uncover any evidence that Reagan knew of the diversion, public opinion polls showed that most Americans did not believe Reagan's denial of such knowledge. Moreover, the hearings had revealed that in the Reagan White House key government documents had been destroyed, officials had lied to Congress about covert operations, the president had misled the American people about the arms sales to Iran, and extensive efforts had been made to aid the contras at a time when Congress had prohibited U.S. military aid to the rebels.

Partly as a result of the scandal, Reagan held only three formal news conferences through the first ten months of the year, his lowest total since coming to the office. In March and August, after the Tower board's report and the House and Senate committees' public hearings, Reagan delivered two nationally televised speeches on the Iran/contra affair. He did not apologize for either the decision to sell arms to Iran or the effort to aid the contras. But he did assume personal responsibility for the scandal and admitted that 'mistakes were made' that allowed the dealings with Iran to become an arms-for-hostages swap. As a result of the Tower board's report, the president ordered his new national security adviser, Frank Carlucci, to undertake reforms of the National Security Council that would restore accountability procedures and prohibit the NSC staff from conducting covert operations.

The Supreme Court.

For the second year in a row, Reagan moved to ensure that the Supreme Court would retain a conservative cast well beyond the end of his presidency. Reagan got his chance to tilt the high court's ideological balance with the unexpected retirement in June of Justice Lewis Powell, who had often provided the 'swing vote' in the court's 5-4 decisions. On July 1, Reagan acted to fill the crucial vacancy by nominating conservative U.S. Appeals Court Judge Robert Bork, a former Yale University law professor.

Liberal Democrats in Congress and an array of private groups immediately vowed an all-out campaign to prevent Bork's confirmation by the Senate, arguing that his legal views on such matters as the rights of minorities and women were those of a right-wing ideologue who was outside the mainstream of American jurisprudence. Opponents also questioned Bork's role in the 1973 'Saturday night massacre' during the Watergate Scandal, when as U.S. solicitor general he followed President Richard Nixon's order to fire Watergate special prosecutor Archibald Cox. The administration portrayed Bork as a moderate whose philosophy of judicial restraint placed him in the tradition of a long line of distinguished legal scholars.

Supporters and critics alike mounted unprecedented lobbying campaigns to influence the Senate on Bork's nomination, enlisting politicians, legal scholars, present and former jurists, and even Hollywood actors in their cause. Despite Reagan's efforts to sway Southern Democrats and moderate Republicans, the Senate Judiciary Committee recommended against Bork's confirmation by a 9-5 vote, and more than 50 senators announced their opposition. But Reagan and Bork decided to carry the fight on to the Senate floor, where the nomination was rejected by a 58-42 margin.

The president told a Republican gathering that his next nominee would upset Democrats 'just as much' as Bork had. A week after the Bork defeat, he nominated another U.S. appeals court judge, Douglas H. Ginsburg, who had been a Harvard Law School professor and held three positions within the Reagan administration before being named to the bench in November 1986. Only 41 years old, he was known for his strongly conservative, free-market economic views. Within days, however, Ginsburg's admission that he had used marijuana in the 1960s and 1970s forced him to withdraw from consideration after Reagan, who had campaigned against drug use, was put in the awkward position of having to defend him. Reagan then turned to a third appeals court judge, Anthony Kennedy, a longtime California associate of the president, who was thought to be less conservative than Reagan's earlier choices but more likely to win confirmation.

Budget Deficit and Legislative Proposals.

Reagan continued to struggle with Congress throughout 1987 over the best way to close the federal budget deficit. Insisting that the Democrats could obtain a tax hike only 'over my dead body,' Reagan in September reluctantly signed legislation that could instead reduce the deficit through equal cuts in domestic and defense spending. The law, passed overwhelmingly by Congress, restored a mechanism for automatic across-the-board spending cuts for each of the next six fiscal years if the president and Congress fail to reach deficit-reduction goals. In its first phase, the law called for a reduction of $23 billion in projected spending for fiscal 1988.

Congress was still trying to meet the fiscal 1988 target primarily through some form of tax increase combined with slashes in defense spending when the stock market plunged in mid-October, partly as a result of growing concern about the effect of the deficit on the U.S. and world economies. Reagan was slow to react to the market's fall. Within a few days, however, he yielded to intense pressure from various sources and agreed to negotiate with congressional leaders on ways to reduce the fiscal 1988 deficit by at least $23 billion. After a month of sometimes contentious bargaining, congressional and administration negotiators agreed on the outline of a plan to reduce the deficit by $30 billion, in part through $9 billion in increases in various taxes.

Early in the year, Congress overrode Reagan's vetoes of two major bills, one providing $20 billion for water pollution control projects and the other allocating $88 billion for highways and mass transit. Reagan had little more success in his own new legislative initiatives during 1987, partly because the Democrats controlled Congress and partly because he was widely perceived as having entered the 'lame-duck' phase of his presidency. In his State of the Union address on January 27, Reagan unveiled 'new competitiveness' proposals that he asserted would help the nation improve its productivity, strengthen its educational system, and regain its competitive edge in world trade. The legislative package generated little enthusiasm in Congress, however. Reagan's proposals to reform some aspects of the nation's welfare system spent most of the year bogged down on Capitol Hill.

On July 3, Reagan announced a new 'Economic Bill of Rights' proposal that would curtail the power of Congress to tax and spend. The president used the measure to renew his long-standing calls for a constitutional amendment requiring a balanced federal budget and for presidential line-item veto power. He also urged Congress to detail funding sources through 'truth-in-spending' provisions on all budget legislation. Despite Reagan's traveling around the country to promote it, the Economic Bill of Rights was never considered seriously on Capitol Hill.

Cabinet and Staff Changes.

Major changes occurred in Reagan's cabinet and staff as he began what he termed his 'last quarter' in office. Frank Carlucci, a former ambassador to Portugal, deputy director of the Central Intelligence Agency, and assistant secretary of defense, became Reagan's fifth national security adviser after Poindexter resigned. Another key figure in the Iran/contra affair, CIA Director William Casey, fell ill in December 1986 and underwent surgery for removal of two cancerous brain tumors. Still confined to the hospital, he resigned in January 1987 and died in May. At first Reagan picked Casey's deputy at the CIA, Robert Gates, to succeed him as the agency's director. But Gates withdrew from consideration in March after Senate critics questioned his role in the Iran/contra affair. Reagan then named William Webster, the veteran director of the Federal Bureau of Investigation, to succeed Casey. This time the Senate confirmed the nomination. Webster, in turn, was succeeded at the FBI by U.S. District Court Judge William Sessions of Texas.

In February, White House chief of staff Donald Regan resigned under fire after the Tower board accused him of being responsible for the 'chaos' that enveloped the White House after the Iran/contra scandal broke into public view. Reagan replaced him with former Senate Majority Leader Howard Baker, who had to temporarily abandon his own presidential ambitions. Baker quickly brought in a new team of aides, marking the third complete overhaul of the White House staff since Reagan took office.

In July, Commerce Secretary Malcolm Baldrige was killed in a riding accident. Reagan replaced him with businessman C. William Verity, Jr. In the fall, two cabinet members resigned to join the presidential campaign of Senator Robert Dole. Transportation Secretary Elizabeth Dole resigned October 1 to campaign full-time for her husband, and two weeks later Labor Secretary William Brock announced he was leaving to become chairman of the campaign. Deputy Transportation Secretary James H. Burnley IV was nominated to succeed Dole, and Ann Dore McLaughlin, who had held a number of public-relations and other posts in the Nixon and Reagan administrations, was nominated to replace Brock.

Also in early November, Caspar Weinberger, who had served as defense secretary during Reagan's entire period in office, announced his resignation for personal reasons. Carlucci was named to replace Weinberger, and Carlucci's deputy, Lieutenant General Colin Powell, was chosen as national security adviser (the first black to hold the post).

AIDS.

For the first time in his presidency, Reagan addressed the issue of the still-growing AIDS (acquired immune deficiency syndrome) epidemic. His actions came after several years of calls by gay rights organizations and a growing number of healthcare professionals for presidential leadership in efforts to curb the illness and care for its victims. The president responded this year by advocating abstinence from nonmarital sex as the main way to halt the spread of the disease and by creating a special presidential commission to explore ways for the nation to fight and cope with AIDS. Reagan later bowed to pressure from various sources and named an openly gay medical researcher to the 13-member panel. The commission was plagued by charges that some of its members were unqualified and ideologically extreme, and by October its chairman, vice chairman, chief medical officer, and executive secretary had resigned amid factional disputes. But the new chairman said in mid-November that the panel would complete its work on schedule.

In May, Reagan was booed at an international conference of health experts in Washington when he proposed that blood tests for antibodies to the AIDS virus be required for federal prisoners, couples seeking marriage licenses, and foreigners seeking to become immigrants to the United States. In July he visited child AIDS patients and urged all Americans to show compassion for victims of the disease. In September, however, the administration announced its opposition to a congressional bill to ban discrimination against people with AIDS.

Foreign Policy.

U.S.-Soviet Affairs.

In the aftermath of the October 1986 summit between Reagan and Soviet leader Mikhail Gorbachev in Reykjavík, Iceland, during which the two had narrowly failed to reach a major arms control accord, there was little sign of change in U.S.-Soviet relations in early 1987. But the mood changed after intensive negotiations in Geneva and a trip by Secretary of State George Shultz to Moscow in April. Shultz returned from his meetings with Gorbachev and Soviet Foreign Minister Eduard Shevardnadze reporting new hopes for an agreement to reduce both sides' arsenals of intermediate-range nuclear-force (INF) missiles in Europe and Asia.

Serious obstacles remained, however. The Soviets eliminated one of them when they dropped their previous insistence that both sides retain 100 medium-range missiles and instead agreed to the U.S. 'zero-zero' proposal to eliminate all INF weapons. West German Chancellor Helmut Kohl appeared to remove another barrier in August when he announced that if an INF agreement was reached, his nation would dismantle 72 aging Pershing 1A missiles that contained nuclear warheads controlled by the United States. The Soviets for months insisted that the missiles be included in a formal INF treaty, but the Reagan administration refused, arguing that they belonged to West Germany and thus were not subject to U.S.-Soviet negotiations.

The impasse appeared to ease in mid-September when Shevardnadze came to Washington for three days of talks with Shultz and Reagan. The Soviet foreign minister dropped his government's demand about the West German Pershings, and the Reagan administration responded with its own concessions, including an agreement to dismantle all INF missiles and not replace their nuclear warheads with conventional explosives. Despite remaining differences over the precise timing for dismantling the weapons and over verification procedures, on September 18 both sides announced a historic 'agreement in principle' to eliminate all INF missiles. Reagan also announced that he and Gorbachev would hold their third summit later in the fall. Reagan dispatched Shultz to Moscow in October to arrange dates and a site for the meeting, but Gorbachev then stunned the administration by refusing to schedule a summit because of continuing differences over Reagan's Strategic Defense Initiative, the space-based antimissile defense system popularly known as Star Wars. A few days later, however, Shevardnadze returned to Washington with a letter from Gorbachev agreeing to sign the INF treaty at a summit there beginning December 7.

Persian Gulf.

Reagan oversaw the deployment of the biggest U.S. naval fleet since the Vietnam war era as he ordered the Navy to escort Kuwaiti tankers 'reflagged' with American colors through the Persian Gulf, a bitter battleground in the seven-year-old war between Iran and Iraq. The president ordered the escort operation in response to requests from Kuwait for protection of its ships against Iranian attacks and threats. Noting that Kuwait had asked the Soviet Union for similar protection, Reagan said he had little choice but to grant the request lest the Soviets assume control of the vital waterway 'by default.'

Although the request moved quietly through U.S. government channels in the early months of 1987, Congress did not seem to pay much attention until an Iraqi warplane launched what was later described as an accidental missile attack against the Navy frigate Stark in the Persian Gulf in May, killing 37 crewmen. Democratic and Republican congressional critics of the Kuwaiti reflagging plan then began to register their opposition by calling for Reagan to officially notify Congress, as required by the War Powers Act, that U.S. forces were being sent into an area where hostilities were 'imminent.' But the president succeeded in defusing opposition, and the escort operation got under way in July.

Controversy increased shortly afterward, however, when one of the reflagged Kuwaiti vessels, the U.S.S. Bridgeton, hit a mine in international waters of the gulf. The United States responded by beefing up its fleet, at one point concentrating more than 40 Navy warships in the area. After initially expressing some reluctance, U.S. allies such as France, Britain, and Italy stepped up their military cooperation with the American effort in the gulf. New calls for Reagan to invoke the War Powers Act arose in September and October after U.S. helicopters sank or damaged several Iranian vessels, Iranian missiles damaged several tankers, and U.S. forces shelled and raided Iranian offshore oil platforms.

Central America.

Reagan faced a formidable fight with Congress as he sought new aid for the Nicaraguan contras for the sixth straight year. Prospects for renewed aid at first appeared doomed because of the Iran/contra scandal, rose for a time when Oliver North testified on Capitol Hill in July, then sagged again after public support for North waned shortly after he left the spotlight. Fearing that Congress would reject a straight up-or-down vote for new contra aid once $100 million in fiscal 1987 U.S. assistance expired on September 30, Reagan in August struck a deal with Democratic House Speaker Jim Wright that called for a 'two-track' policy for peace negotiations and military pressure in Central America. Under the Reagan-Wright plan, the administration would forgo any future request for contra funding if Nicaragua's government would accept a cease-fire and implement fundamental political reforms by September 30.

Three days after Reagan and Wright announced their plan, however, the presidents of five Central American nations, including Nicaragua, agreed on their own regional peace plan, which imposed less stringent terms on Nicaragua. Wright immediately expressed his support for the Central American initiative. But Reagan, pressured by conservative supporters who feared the plan would lead to U.S. abandonment of the contras, called it 'fatally flawed,' and, Secretary of State Shultz announced in early September that the administration would request $270 million in new aid for the rebels over 18 months. Congress approved two extensions of nonlethal aid through a period ending in mid-December, and after urging from several Central American presidents and indications that the $270 million request would be defeated, the administration decided to delay it until early 1988. In the meantime, the administration seemed to be losing control of U.S. policy in Central America to Wright, who was also feuding with Reagan over the budget and other issues.

POLITICAL PARTIES

For both the Republican and the Democratic parties, 1987 marked a painful period of adjustment. The Republicans had to face the reality that their 1980 and 1984 standard-bearer, President Ronald Reagan, was now a lame duck, that for the first time in six years the opposition controlled both houses of Congress, and that the Iran/contra affair and other Reagan administration problems had put the GOP on the defensive. The Democrats, reeling from the collapse of the candidacies of former Colorado Senator Gary Hart and Senate Judiciary Committee Chairman Joseph R. Biden, Jr. (Del.), looked toward 1988 without any clear front-runner and with some popular potential candidates still sitting on the sidelines.

Republican Party.

A poll conducted for Time magazine in September showed that when Republicans were asked to name their top choice among declared or likely presidential candidates, Vice President George Bush emerged as the clear leader, with 45 percent; the runner-up was Senate Minority Leader Robert Dole (Kan.), with 21 percent. Trailing with 10 percent or less were former Secretary of State Alexander M. Haig, Jr., Representative Jack F. Kemp (N.Y.), the Reverend Marion G. (Pat) Robertson, and former Delaware Governor Pierre S. du Pont IV.

Asked to assess the candidates' character and competence, Republicans gave generally high marks to Bush and Dole, although the vice president was seen by many political analysts as handicapped by an image as a not very forceful leader (an image problem harshly dubbed by some the 'wimp factor'). Those polled by Time offered strikingly downbeat opinions of Robertson, who resigned his ordination as a Southern Baptist minister just before formally declaring his candidacy October 1.

Such negative ratings did not deter Robertson loyalists. In October his campaign reported having already raised and spent over $11 million and announced that it would apply for federal matching funds, which it had previously scorned. With their strong showings in caucus votes and straw polls in Iowa, Michigan, and South Carolina, Robertson supporters, sometimes working in tandem with backers of Dole and Kemp, exposed some weaknesses in the Bush organization. Nonetheless, Bush won a key straw poll in November, receiving 57 percent of the nonbinding vote among delegates to Florida's Republican state convention, to only 37 percent for Robertson.

According to documents filed with the Federal Election Commission, Bush had raised $12.7 million in campaign funds by October; Dole ranked third (after Robertson) with $7.9 million, and Kemp fourth with $6.3 million. Although Bush is a statutory member of the National Security Council, he emerged relatively unscathed from the Iran/contra investigations. Dole's candidacy received a boost when his wife, Secretary of Transportation Elizabeth Hanford Dole, left her cabinet post, effective October 1, to join her husband's campaign. The next month, however, turmoil in the Dole organization led to a shake-up of the staff, with William E. Brock — who had resigned as labor secretary to become Dole's campaign chairman — dismissing a number of top aides.

Several prominent Republicans known to harbor presidential ambitions made public their decision not to run. On February 27 former Senator Howard H. Baker, Jr. (Tenn.), accepted an appointment as White House chief of staff, replacing the embattled Donald T. Regan. One of Reagan's closest political allies, former Senator Paul Laxalt (Nev.), withdrew in August because of fund-raising problems. Three other potential candidates, former Defense Secretary Donald Rumsfeld, White House Communications Director Patrick J. Buchanan, and former UN ambassador Jeane Kirkpatrick, also took themselves out of consideration.

In January the GOP selected New Orleans as its 1988 national convention site. That same month, the president's daughter Maureen Reagan assumed the cochairmanship of the Republican National Committee, headed by Frank J. Fahrenkopf, Jr. The GOP suffered considerable embarrassment early in the year when it was reported that the National Republican Senatorial Committee had paid bonuses totaling more than $225,000 to staff members and consultants. The payments — some of which were later justified as contractual commitments — came shortly after the Republicans lost control of the Senate in November 1986, at a time when the committee was over $2 million in debt.

The Democrats.

Front-runner Gary Hart withdrew from the Democratic presidential race May 8, brought down by allegations of 'womanizing.' Hart's political fortunes changed abruptly after the Miami Herald reported at the beginning of May that he had apparently spent part of a weekend at his Washington home with actress-model Donna Rice, while his wife, Lee, was in Colorado.

Following Hart's withdrawal, seven candidates remained in the Democratic field: Biden, the Reverend Jesse Jackson, Representative Richard A. Gephardt (Mo.), Governor Michael S. Dukakis (Mass.), Senators Albert Gore, Jr. (Tenn.), and Paul Simon (Ill.), and former Governor Bruce Babbitt (Ariz.). (Another candidate, Ohio Representative James A. Traficant, Jr., entered the race in the fall.) Of the 'seven dwarfs,' as critics dubbed them, Jackson was the only one who consistently rose above 20 percent in the polls, but few party professionals believed the civil rights activist could actually win the nomination. The heir to much of Hart's liberal constituency was Dukakis, the leading Democratic fundraiser with $7.6 million by October. Gephardt, with $3.2 million, appeared to have a strong organization and substantial labor support. A new wrinkle was added to the Democratic situation in November, when — in the wake of Supreme Court nominee Douglas Ginsburg's revelation that he had smoked marijuana in the past — Gore and Babbitt admitted that they had as well.

A potential contender, Representative Patricia Schroeder (Colo.), who had cochaired Hart's campaign, seemed ready to make the race if pledges of financial support materialized. But having raised less than half of her $2 million target, Schroeder announced in September that she would not run.

Biden's campaign was already faltering in September when the week the senator's supporters had seen as his major opportunity became his undoing. Even as Biden was gaining wide public exposure by presiding over the confirmation hearings of Robert H. Bork for Supreme Court justice, a series of news stories revealed that he had quoted the speeches of other politicians without proper attribution, plagiarized parts of a law school paper, and exaggerated his academic record. On September 23, Biden dropped out of the race.

Biden's demise had an unanticipated impact on the Dukakis campaign. Campaign manager John Sasso resigned at the end of September after admitting he had given journalists the videotape that started the news stories about borrowed passages in Biden speeches. At the same time, another key campaign official resigned for having lied to Time magazine about the Dukakis campaign's role in providing the tape.

If the Democratic presidential field seemed weak, one reason may have been that several popular Democrats had declined to make the race. Conspicuous among them were Senator Bill Bradley (N.J.), Governor Mario Cuomo (N.Y.), and Senator Sam Nunn (Ga.).

In February, Democratic National Chairman Paul G. Kirk, Jr., announced that the party would hold its 1988 national convention in Atlanta. The party, generally strapped for funds, received its largest single donation ever in 1987 — a $1 million gift from Joan B. Kroc, the widow of McDonald's fast-food magnate Ray A. Kroc.

CONGRESS

In control of both houses of Congress for the first time since 1980, Democrats were optimistic that they would direct the legislative agenda for the 100th Congress. But after a few initial victories over the administration of President Ronald Reagan — including veto overrides on highway and clean water legislation — it became clear that a majority did not always mean being in charge. In the Senate, especially, Republicans used the filibuster to block or hinder a number of Democratic initiatives, including a bill to overhaul the way congressional campaigns were funded. They also stalled consideration of the defense authorization bill for four months because of arms control and other provisions strongly opposed by the administration. While Democrats held a 54-46 majority in the Senate, they fell short of the 60 votes needed to end a filibuster and the 67 needed to override a veto. Without Republican support, Democratic hands were tied.

But on several issues, Republican support was not hard to find. The nomination of Robert Bork to the Supreme Court was opposed by a number of key Republicans, and certain pieces of legislation, such as bills on highway funds and homeless aid, were popular on both sides of the aisle.

The legislators of the 100th Congress convened under new leadership. Senator Robert C. Byrd (D, W.Va.) became the new majority leader, replacing Robert Dole (R, Kan.). Representative Jim Wright (D, Texas) took over as House speaker, filling the spot left by the 1986 retirement of Massachusetts Representative Thomas P. ('Tip') O'Neill, Jr.

Iran/Contra Affair.

By far the most dominant issue for most of the session was the administration's involvement in the Iran/contra scandal. Two select committees investigating the affair held nearly 12 weeks of hearings and listened to dozens of witnesses about the situation that came to light in late 1986 regarding the diversion of funds from U.S. sales of arms to Iran to the contra rebels battling the Sandinista regime in Nicaragua. They also heard a great deal about the inner workings of the Reagan White House, especially the president's National Security Council. In November the congressional committees issued their report on the affair, sharply criticizing the president for his failure to 'take care that the laws be faithfully executed' and holding him responsible for the misdeeds of his subordinates.

While there was little thought that the scandal might force the president out of office, it did diminish his stature on Capitol Hill and divert congressional and administration attention from other issues. It also led to renewed demands for legislation requiring the president to consult with Congress about his covert operations. To deflect some critics, Reagan sent a letter to committee leaders on August 7 announcing his intention to inform Congress in writing of covert actions within 48 hours of approving them and to make other changes in his handling of such activities.

Budget.

As was the case for the previous six years, legislators and the White House were split for most of the year over how to deal with the federal deficit. Initially, Reagan showed no signs of yielding on his stance against raising taxes and cutting defense spending. But when the stock market crashed October 19, Reagan and congressional leaders decided to try to put their differences behind them and work together on a deficit-reduction package that would calm investors.

The budget the president submitted to Congress in January, for fiscal year 1988 (beginning October 1, 1987), called for expenditures of $1.02 trillion and revenues of $916.6 billion, for a deficit of $107.8 billion. Congressional critics quickly claimed that the deficit had been underestimated and would run closer to $160 billion. In June, Congress voted in favor of a trillion-dollar budget that projected a deficit of $133.9 billion; it included over $19 billion in tax increases and no increase in military spending.

Unable at the time to draw the administration into serious budget negotiations, Congress on September 23 passed legislation that required automatic spending cuts — with equal amounts to come from domestic and defense programs — if other deficit-reduction legislation could not be approved by November 20. (Certain programs, like social security, would be exempt.) The measure was a rewrite of the 1985 Gramm-Rudman balanced-budget law, a major part of which — the system for automatic spending cuts — was declared unconstitutional by the Supreme Court in 1986. Congress tried to address the Court's concerns by requiring the president's Office of Management and Budget, not an arm of the legislative branch as mandated by the original law, to implement the automatic cuts. The new law also called for the budget to be balanced in fiscal 1993, instead of fiscal 1991, and required reducing the deficit by $23 billion in fiscal 1988.

Reagan reluctantly signed the measure, attached to legislation raising the federal debt ceiling, but he vowed to fight any tax increases or cuts in defense spending. Then, with the stock market crash, the situation changed. Administration and congressional negotiators agreed to work together to try to calm the market frenzy — by putting together a package of tax increases and spending cuts that would lower the deficit by at least $23 billion.

A quick agreement proved elusive. Finally, on November 20 the outline of a $30 billion deficit-reduction plan was announced. It called for raising $11 billion in new revenue, mostly through various tax increases (not including any hikes in personal or corporate income tax rates), and for making $11.6 billion in spending cuts, of which $5 billion would be taken from the defense budget. The balance of the $30 billion was to come from one-time and miscellaneous savings (seen by some as largely budget gimmickry). Congressional committees still had to decide on what taxes to raise and where to make some of the spending cuts. The final package then had to be passed by Congress and signed by the president before it could go into effect. In the meantime, as required by law, Reagan put the Gramm-Rudman mandatory spending cuts into effect at least temporarily, pending final action on the $30 billion deficit-reduction package.

Defense.

While they squabbled over the level of spending needed for the nation's defense, Congress and the president were headed for war over the issues of arms control and nuclear testing. Both the House and the Senate passed defense authorization bills that would require compliance with certain limits in the unratified 1979 Strategic Arms Limitation Treaty (SALT) with the Soviet Union. The bills also included provisions to prevent the administration from broadly interpreting the 1972 U.S.-Soviet antiballistic missile treaty such that it would permit testing in space as part of the Strategic Defense Initiative (SDI), or 'Star Wars.' Reagan charged that such provisions would undermine U.S. security and vowed to veto any bill containing the language.

The House bill, passed May 20, would provide $289 billion for defense in fiscal 1988, $23 billion below Reagan's request. It also would only allow $3.1 billion, instead of the $5.7 billion requested, for SDI. The Senate measure, which was blocked for four months by a Republican filibuster, was not approved until October 2. It would allow $303 billion for defense, including $4.5 billion for SDI. Congressional leaders and the White House reached a compromise in November under which the administration agreed not to act on its broad interpretation of the antiballistic missile treaty during fiscal 1988 and to take steps to comply with the 1979 SALT limits. As for funding, defense spending would be $296 billion if efforts to reduce the deficit were successful, $289 billion if they were not. SDI received $3.9 billion. The House approved the measure, 264-158, on November 18, and the Senate approved it the next day, 86-9. The bill then went to the president.

Central America.

Despite the furor over the diversion to the Nicaraguan contras of profits from arms sales to Iran, President Reagan vowed to press forward in his support for the rebels in their effort to oust the leftist Sandinista government. In 1986, after bitter partisan debate, Congress had approved $70 million in military aid and $30 million in nonlethal 'humanitarian' assistance. This year the president planned to request $270 million in new aid, but he delayed his request as a result of the August 7 signing of a peace plan by the heads of Nicaragua and four other Central American countries. Democrats charged that contra aid would undermine the peace process, while conservatives warned that the administration's not outright rejecting the peace plan would undermine the contras. The administration tried to steer a middle course by arguing that more aid was needed to put pressure on the Sandinistas to comply with the peace plan and to start introducing democratic practices in the war-torn country. As a temporary measure, Congress in September approved $3.5 million in humanitarian aid for the contras to tide them over past November 5, the day implementation of a region-wide cease-fire was scheduled to begin under the Central American peace plan. Shortly after the plan went into effect, Congress approved an additional $3.2 million in nonmilitary aid through mid-December.

Embassy Security.

Irate at the discovery that the new U.S. embassy in Moscow had been bugged by the Soviets, both the House and Senate adopted largely symbolic retaliatory measures. The House voted, 414-0, on June 16 to prohibit the Soviets from moving into their new embassy complex in Washington until the president certified that the U.S. embassy was secure and that the Soviets were not using the site of their embassy for espionage. Critics had charged that the Soviets had built their new embassy on a hill overlooking the nation's capital to facilitate eavesdropping on secret U.S. communications. On July 30 the Senate approved a nonbinding resolution urging President Reagan to negotiate an embassy agreement that would require the Soviets to replace their new Washington embassy complex with a structure at a different location.

Supreme Court.

Like the Iran/contra hearings, the hearings on the nomination of conservative Judge Robert Bork to the Supreme Court, to fill the vacancy left by the retirement of Justice Lewis F. Powell, Jr., gave the public a rare glimpse at the strains and links among the different branches of government. With only 1½ years left in the Reagan administration at the time of the Bork nomination, many members of Congress were reluctant to let the president make the lifetime appointment to the high court of a conservative — a right-wing extremist, to his opponents.

During an unprecedented five-day appearance before the 14-member Senate Judiciary Committee, Bork was questioned extensively about his legal philosophy and controversial writings as a law professor on such issues as an individual's right to privacy. With five committee members in his support and five strongly opposed, the nomination rested with four undecided members of the panel: Arlen Specter (R, Pa.), Robert C. Byrd (D, W.Va.), Dennis DeConcini (D, Ariz.), and Howell Heflin (D, Ala.). After several more days of testimony from dozens of witnesses for and against Bork, and strong lobbying from both sides, the tide appeared to turn against the nominee. When Republican Specter finally announced on the Senate floor that he would oppose Bork, a number of other undecideds — both Democrats and Republicans — followed suit. The Judiciary Committee ultimately voted, 9-5, against Bork. The full Senate on October 23 voted, 42-58, to reject the nomination. Reagan then nominated a little-known conservative federal appeals court judge, Douglas Ginsburg, for the post. Ginsburg withdrew days later, following revelations that he had smoked marijuana in the past. The president then nominated Judge Anthony Kennedy on November 11.

Highways and Mass Transit.

Under intense pressure from state officials and the construction industry, Congress in April overrode President Reagan's veto of a bill the legislators had easily passed to provide $88 billion in highway and mass transit aid over the next five years. The president had personally come to Capitol Hill to lobby against the measure and to show that he had not been weakened politically by the Iran/contra scandal. The bill, which had strong bipartisan backing, also provided funds for some 120 special 'demonstration' projects in individual congressional districts. And it allowed the states to raise the speed limit on rural interstate highways from 55 to 65 miles per hour. The veto was overridden by an overwhelming 350-73 vote in the House. The president lost narrowly in the Senate, which voted 67-33 to override — exactly the two-thirds majority vote required to enact the measure.

Financial Institutions.

Amid warnings that the insurance fund for the nation's thrift institutions had insufficient money to back depositors, Congress in August approved a plan to provide $10.8 billion in new borrowing authority over three years for the troubled Federal Savings and Loan Insurance Corporation. The administration had wanted at least $15 billion for the FSLIC — to enable it to pay off depositors in insolvent savings and loans that would be closed — but accepted the lower figure when it became apparent that a threatened veto could not be sustained and further delay could undermine confidence in savings and loans. The legislation, which Reagan signed into law, also resolved a number of banking issues members of Congress had wrestled with for years. It included provisions to prevent the creation of new 'nonbank banks,' or limited-service institutions that had avoided federal banking regulations by taking deposits or offering loans but not both. It also placed a moratorium on banks' expansion into insurance, real estate, and securities underwriting and provided for faster clearance of depositors' checks.

Clean Water.

Congress began the year on a confrontational note, quickly reenacting a $20 billion water pollution control bill and overriding President Reagan's veto of the measure. Reagan had pocket-vetoed an identical bill after the 99th Congress had adjourned, saying it was too expensive, but the measure was extremely popular with members, largely because it provided funds to state and local governments to build much-needed sewage plants. While the veto fight gave the new Democratic-controlled Congress a chance to flex its political muscles, support for the bill was strongly bipartisan. The House agreed to override by a vote of 401-26 and the Senate by a vote of 86-14.

Airlines.

Amid widespread complaints about air traffic safety and flight delays, the House and Senate both passed legislation that would require airlines to make public their performance records, listing information such as actual flight arrival and departure times. The House bill also would require airlines to compensate customers for lost baggage and would limit the volume of traffic at major airports; the Senate bill included a provision requiring drug and alcohol testing of transportation workers whose jobs affected safety. The bills were to be reconciled in a conference committee. Both houses also worked on legislation to reauthorize federal programs to expand the nation's airports and to modernize the air traffic control system. The House passed a five-year $29 billion reauthorization bill and the Senate, a $15.6 billion three-year plan. The bills went to a conference committee.

Homeless Aid.

Encouraged by new House Speaker Jim Wright, who made the issue a top priority, the 100th Congress quickly approved two bills to aid the nation's homeless. The first was a $50 million measure, signed into law by President Reagan on February 12, to provide emergency food and shelter during the waning winter months. The second, a $1 billion plan ($443 million for fiscal 1987 and $616 million for fiscal 1988), was expected to provide the homeless with housing, health, food, and other assistance. President Reagan signed it into law in July. Both measures were approved by wide margins in Congress, despite a few objections to the costs and some GOP grumbling that the issue of homelessness had been blown out of proportion by Democrats seeking to embarrass the Reagan administration.

Housing.