1989: United States

THE PRESIDENCY

Although he served as Ronald Reagan's understudy for two terms and ran for office on the Reagan record, George Bush's first year as the nation's 41st president differed considerably in style and substance from the administration of his predecessor. Bush was low-key and even conciliatory, whether in dealing with the Democratic-controlled Congress, ending the long battle over aid to the Nicaraguan contras, or lowering the decibel level of U.S. rhetoric about Iran. Unlike Reagan, who had swept into office determined to change the direction of government, Bush ran a low-risk presidency. Having promised to put a 'kinder, gentler' face on Republican policies, he proposed new programs in areas neglected in the Reagan years, such as child care and the environment. But the programs themselves were mostly modest in scope. He moved carefully in foreign affairs, and in the early months of his administration slowed the pace of dealings with the Soviet Union, after the dramatic strides of Reagan's second term. That pace quickened, however, and December saw Bush's first meeting as president with Soviet leader Mikhail Gorbachev.

Democrats complained that Bush's domestic proposals were too limited and that his foreign policy was too cautious. But generally the critics found Bush a hard target to pin down. After eight years of the 'Reagan Revolution,' his issue-by-issue, pragmatic approach to the presidency seemed to be what many Americans wanted, a judgment supported by his high standings in the polls through much of 1989. Late in the year the president's approval rating was in the area of 70 percent.

Setting the Tone and the Team.

Bush was sworn in on January 20, 1989. His Inaugural address, short and lacking in specifics, was a reliable road map for his first year. Distancing himself from the Reagan era, Bush questioned whether the nation was becoming 'enthralled with material things' and spoke of the need to help the homeless and the poor. Using the theme 'a new breeze is blowing,' he called for better relations between the White House and Congress. 'I'm putting out my hand to you,' he told Democratic leaders. He called on the nation to 'rise up united' against drugs and vowed, 'This scourge will stop.' While he spoke of making 'kinder the face of the nation,' Bush warned against expecting expensive federal programs to deal with its problems. 'We have more will than wallet,' he said.

Bush had pledged to 'bring in a brand new team of people from across the country,' but most of his top appointees were familiar faces in Washington. Half of his cabinet had held high Reagan administration posts. Choices like Secretary of State James Baker and Treasury Secretary Nicholas Brady, along with veterans of government service like Budget Director Richard Darman and National Security Adviser Brent Scowcroft, made clear Bush's preference for an administration that was pragmatic rather than ideological in approach. Conservative activists counted among their sympathizers Vice President Dan Quayle, White House Chief of Staff John Sununu, Housing and Urban Development Secretary Jack Kemp, and 'drug czar' William Bennett, but these men tempered their styles to fit Bush's.

The Senate rejected two major early Bush nominations, those of John Tower for defense secretary and William Lucas for assistant attorney general in charge of civil rights enforcement. Senate opponents said evidence that Tower had been a heavy drinker raised questions about the wisdom of putting him in the nation's chain of command. They also argued that $763,777 in fees the former Texas senator had earned as a defense consultant between 1986 and 1988 posed a conflict of interest. However, even after the Senate Armed Services Committee voted against Tower's confirmation, in an 11-9 party-line vote in February, Bush carried the fight to the Senate floor, and Tower publicly pledged that if confirmed he would abstain from alcohol while in the cabinet. The nomination was nonetheless defeated on a 53-47 vote in March — the first time since 1959 that a president's nominee to a cabinet post had been rejected. Bush then nominated Republican Representative Richard Cheney of Wyoming, who was quickly confirmed. In the case of Lucas, the fact that Bush had chosen a black as his civil rights enforcer was overshadowed by the nominee's lack of experience and his political and legal views. Lucas surprised senators at his confirmation hearing by asserting that a recent series of Supreme Court decisions narrowing anti-discrimination laws would not have a 'significant impact' on civil rights issues. The nomination was killed in the Senate Judiciary Committee in August.

Foreign Affairs.

The Soviet Union and Europe.

Bush had a tough act to follow in dealing with the Kremlin, given the dramatic thaw in relations achieved by Reagan and Gorbachev and their success in concluding a major treaty eliminating medium-range nuclear missiles. Instead of taking up where Reagan had left off, Bush ordered a review of U.S.-Soviet policy and delayed until June the resumption of talks on reducing long-range nuclear weapons. He put off his first full-scale summit with the Soviet president until 1990. Whereas Reagan had left office saying the 'Soviet menace' was 'relenting,' Bush initially sounded more skeptical about Soviet intentions and proposals. Politicians at home and in Europe expressed concern that Bush was losing the initiative to Gorbachev, particularly during the spring when the Soviet leader unveiled a series of arms control proposals. Bush acknowledged that 'some are resentful of the pace that I have set for dealing with the Soviet Union' but insisted it was the 'proper pace.'

A crisis within NATO forced Bush to quicken that pace. West German Chancellor Helmut Kohl, under political pressure at home, demanded that the United States enter into talks with Moscow on reducing battlefield nuclear weapons, which, if ever used, would land almost exclusively on German soil. The Bush administration opposed beginning such talks while the Soviet bloc retained a large advantage in nonnuclear forces in Europe. Facing the prospect of a divided alliance at NATO's 40th anniversary summit in Brussels, Bush scored a coup in late May with a proposal for sweeping cuts in conventional forces in Europe. He called for a quick reduction of troops on the continent to about 275,000 for each superpower, a move that would mean withdrawal of about 30,000 American and 325,000 Soviet soldiers. The proposal paved the way for a compromise within NATO on the issue of short-range nuclear missiles. NATO leaders agreed that the United States would not enter into talks with the Soviets on missile reductions until there was a superpower pact on conventional force cuts. The summit appeared to restore confidence in Bush as the leader of the Western alliance.

Although Bush repeatedly denied that he was in competition with Gorbachev, he followed a Gorbachev trip to France in July with his own foray to Eastern Europe. Visiting Poland soon after relatively free elections had resulted in a major victory for Solidarity, Bush said, 'The moment is right ... for Poland to walk its own path,' and he proposed a modest package of some $100 million to aid private enterprise in the economically stricken country. The amount of aid disappointed Polish officials, including Solidarity leader Lech Walesa, who had been talking about a $10 billion package of Western aid. Bush pursued the same message and offered a smaller aid package in Hungary, another country undergoing political and economic liberalization.

Bush ran into criticism at home for being too 'passive' in his response to the changes sweeping the Soviet Union and Eastern Europe. He was able to blunt some of the criticism in late September because of the apparent success of a meeting between Secretary of State Baker and Soviet Foreign Minister Eduard Shevardnadze in Jackson, Wyo. And by early October, Bush had increased his aid request for Poland to more than $400 million, at least in part in response to pressure from congressional Democrats. (Before adjourning in November, Congress approved a more generous package of $852 million over three years.) Also in October, Baker made a speech strongly endorsing Gorbachev's reforms and offering U.S. technical assistance to help restructure the Soviet economy. Then, at the end of the month, it was announced that Bush and Gorbachev would hold an informal meeting in the Mediterranean in December — a meeting prompted largely by the changes in Eastern Europe. In a Thanksgiving eve televised speech, Bush praised the new 'historic tide of freedom' (which by then included freedom of travel for East Germans through the Berlin Wall) and also praised Gorbachev as 'the dynamic architect of Soviet reform.'

When the informal two-day summit (held aboard ship off Malta) began December 2, Bush immediately sought to seize the initiative by presenting Gorbachev with a series of proposals in such areas as arms reduction, chemical weapons, and U.S.-Soviet trade. His spirits seemed undampened by a severe storm that forced cancellation of one discussion session and a Bush-Gorbachev dinner and caused the site of the talks to be changed from U.S. and Soviet naval vessels to a larger Soviet cruise ship. At a joint news conference at the close of the meeting, both leaders were optimistic about bilateral ties. 'We stand,' said Bush, 'at the threshold of a brand-new era of U.S.-Soviet relations.'

Hostages in Lebanon.

Bush faced a crisis at the end of July over the American hostages held by Muslim factions in Lebanon. The crisis began after Israeli commandos abducted, in southern Lebanon, Sheikh Abdul Karim Obeid, a leader of Hezbollah, a militant Shiite Muslim group with close ties to Iran. The Israeli government hoped to trade Obeid for three of its captured soldiers. But the immediate result was a threat from another Muslim group to kill American Lieutenant Colonel William Higgins, who had been kidnapped in February 1988 while serving as head of a United Nations observer group. When Israel refused to free Obeid, Higgins's captors released a videotape purportedly showing that he had been hanged. While expressing 'outrage' at Higgins's apparent death, Bush kept most of his statements low-key in an effort to avoid the public posturing and crisis atmosphere that had complicated past hostage situations. He coupled a show of U.S. military force in the waters off Iran, Lebanon, and Syria with intense diplomatic efforts aimed at enlisting the help of other governments in solving the problem of the remaining eight American captives. But Bush found himself voicing the same frustrations as Reagan had about the limits on military power to rescue hostages.

Central America.

Bush also met with the same difficulties as Reagan in trying to oust Panamanian strongman Manuel Noriega, who has been implicated in international drug trafficking. (He was indicted in the United States on drug-related charges in 1988.) Noriega ignored a chorus of international condemnation in May 1989 by annulling elections for a new president after the opposition appeared to have won. Bush denounced the 'massive irregularities' but could not do much other than recalling the American ambassador and sending 2,000 additional combat troops to Panama to ensure the security of American personnel there.

In early October the administration was embarrassed by an apparently hesitant and uncertain response to an attempted military coup against Noriega. Seemingly caught unprepared and unable to keep up with rapidly unfolding events, the White House left the impression with many that an opportunity had been missed when the coup failed. After initially denying any involvement, the administration admitted that U.S. troops in Panama had blocked two roads in an attempt to keep troops loyal to Noriega from rescuing him from the rebellious forces; the troops reached him by other, unblocked routes. Critics questioned whether the administration should have done more — or less; had communicated effectively with the coup leaders; and was receiving and analyzing information coming from Panama as well as it should have. Sununu launched a review of White House decision-making and crisis-management procedures.

Bush moved early to end the long political battle over U.S. support for the contra rebels fighting Nicaragua's leftist Sandinista regime. In March he reached agreement with congressional leaders of both parties to give about $45 million in nonmilitary aid to the contras through February 1990, when the Sandinistas promised to hold free elections. (The amount of aid later approved by Congress was actually slightly higher.) In return, Bush pledged to support the peace efforts of the presidents of five Central American countries. In August the Central American leaders agreed on a plan to dismantle contra bases in Honduras by December 5. The move was seen as a rebuff to the United States, which had urged a delay until after the Nicaraguan elections.

Late in the year, El Salvador was in the headlines again, as leftist rebels launched one of their largest offensives in the ten-year war against the U.S.-backed government. When rebels occupied part of a hotel in the capital in which U.S. military advisers were staying, Bush — perhaps seeking to appear more decisive than he had during the Panama coup attempt — dispatched commandos from the elite Delta Force to rescue the Americans (who were able to leave the hotel before the commandos arrived).

Domestic Affairs.

Antidrug Plan.

In his first nationally televised Oval Office speech, Bush declared on September 5 that illicit drugs were 'the gravest domestic threat facing our nation today' and outlined a $7.9 billion antidrug strategy drafted by William Bennett. Bush's plan, which emphasized law enforcement measures, set as its two-year goals a 10 percent reduction in the number of people using illegal drugs and a 10 percent reduction in the amount of such drugs entering the country. Major elements of his plan were $3.1 billion for various law enforcement efforts, $1.6 billion for construction and support of prisons, and extra money to help the three main coca-producing countries — Colombia, Bolivia, and Peru — tackle the drug trade.

Bush's package amounted to $2.2 billion more than the federal government was spending on antidrug efforts in the 1989 fiscal year, but after subtracting money that would not be spent right away, the proposed increased funding for fiscal 1990 amounted to only about $700 million. Senator Joseph Biden of Delaware, delivering the Democrats' response to Bush's speech, called Bush's antidrug campaign 'a limited war, fought on the cheap.' Congressional Democrats pressed for more spending, and in November, Congress approved measures that added $900 million to the president's initial request. Most of the extra money was to go for prevention, education, and treatment programs, which Democrats said had been shortchanged in the Bush plan.

Even before the speech, Bush had announced an emergency grant of $65 million in military aid to Colombia after gunmen from the Medellín drug cartel assassinated presidential candidate Luis Carlos Galan on August 18. The murder prompted a crackdown by President Virgilio Barco that in turn touched off a wave of violence by the cartels, which was aimed at intimidating government and law enforcement officials. Some U.S. military training personnel were also sent to Colombia.

Budget and Taxes.

Bush reached agreement with congressional leaders in April on the outlines of a fiscal 1990 budget that would meet a $100 billion deficit limit (mandated by the Gramm-Rudman budget balancing law) while honoring his campaign pledge not to raise taxes. Critics derided the pact because it was heavily dependent on one-time savings and accounting gimmicks and avoided key decisions on taxes and spending cuts until future years. Nevertheless, Congress failed to complete action on deficit-reduction legislation by the required deadline of October 16, and Bush signed an order imposing across-the-board spending cuts on numerous federal agencies, also as mandated by Gramm-Rudman. In late November, Congress finally enacted legislation to reduce the federal deficit by the necessary amount. This was to be achieved by continuing the across-the-board spending cuts through the first week in February 1990, by making other reductions in military and domestic programs, by closing some tax loopholes, and by imposing some special taxes — for example, on international airline and cruise ship tickets, on ozone-depleting chemicals, and on crude oil and oil products.

One battle between the administration and Congress centered on how to divide the defense budget, which was to shrink slightly under the April agreement. Defense Secretary Cheney proposed cutbacks or elimination of several weapons systems with strong support in Congress while pressing ahead with Bush priorities like the B-2 'Stealth' bomber, continued development of the Strategic Defense Initiative antimissile defense system ('Star Wars'), and development of both the Midgetman small mobile missile and a rail-mobile version of the larger MX missile. The House radically challenged the Bush plan, while the Senate's response was more moderate. Congressional negotiators agreed on a compromise package that would give the administration two of the three B-2 bombers it wanted for fiscal 1990 and would allow continued work on both the Midgetman and MX missiles. The House-Senate compromise, however, would, for the first time, force a cutback in spending on Star Wars. The $305 billion defense authorization bill was approved by the full Congress.

Bush's campaign to cut the capital gains tax on profits from the sale of stocks, bonds, real estate, and other assets was blasted as a tax break for the rich by the Democratic leadership, who offered a competing plan to raise taxes on the highest incomes and use the revenue to restore deductions for individual retirement accounts. Despite its overwhelming Democratic majority, the House went along with Bush's argument that the capital gains tax cut would boost the economy. The cut ran into stiffer opposition in the Senate, however, and was shelved for the year.

Other Issues.

One of Bush's major disagreements with Congress arose in June over a Democratic effort to raise the minimum wage from $3.35 to $4.55 an hour. Bush opposed a minimum wage greater than $4.25 an hour and used the first veto of his presidency to kill the legislation providing for the higher rate. In October, however, the president and congressional leaders agreed to a compromise package, under which the minimum wage would rise to $3.80 in 1990 and $4.25 in 1991, with a lower, 'training' wage for teenagers. The legislation was enacted in November.

In October, Bush vetoed a bill that would have slightly eased restrictions on the use of federal Medicaid funds to pay for abortions for poor women. The bill would have allowed such funding in cases of rape or incest, as well as when the mother's life was endangered by the pregnancy. Bush had said he favored using federal funds only in the last case, as existing law provided. An attempt to override the veto failed in the House.

Bush proposed and later signed into law a massive bill to bail out the ailing savings and loan industry. The measure, expected to cost at least $148 billion over ten years, enabled federal regulators to close or merge hundreds of insolvent thrift institutions while stiffening reserve requirements and oversight for surviving ones.

After Bush sent legislation to Congress to overhaul the nation's clean air laws, which had not been revamped since 1977, he initially drew praise from environmentalists and Democrats who considered his attitude an improvement over Reagan's. But when he disclosed the specifics of his strategy for cutting smog and acid rain, some critics charged that he had weakened his proposals and promised efforts to toughen them. Bush also made new proposals on child care and education, and in late September he summoned the nation's governors to a conference at the University of Virginia to discuss goals for improving American schools. He offered little, however, in the way of additional funds in these areas. When Bush called for committing the United States to an ambitious space program, including a manned mission to Mars, he did not make any specific funding proposals at all. Senate Democratic leader George Mitchell complained, 'The president wants to be the president to go to Mars, he wants to be the education president, he wants to be the environment president, he wants to be the drug-fighting president, and of course, at the same time, he wants to be the no-tax president. And all of those desires cannot be reconciled.'

The Iran/Contra Affair.

Questions about Bush's role in the Iran/contra affair, when he was vice president, resurfaced as a result of a government document made public during the trial of former National Security Council aide Oliver North. (North was a key figure in the scheme to sell arms to Iran and use the proceeds in a covert aid program for the contras at a time when Congress had barred U.S. funding for the rebels.) The document released at North's trial said that Bush had traveled to Honduras in 1985 with a promise of increased U.S. military and economic aid at a time when the Reagan administration was secretly trying to get that country to assist the contras. In May, Bush emphatically denied that he was seeking a 'quid pro quo' from Honduras as a way of getting around the congressional ban on direct U.S. aid.

CONGRESS

The first session of the 101st Congress may well be remembered more for the ethics scandal that toppled House Speaker Jim Wright (D, Texas) than for any of its legislative initiatives. Preoccupied as it was with Wright's resignation, a public uproar over a proposed 51 percent congressional pay raise, a change in the House Democratic leadership, and the Senate's battle over and ultimate rejection of President George Bush's initial choice for secretary of defense (John Tower), Congress enacted little legislation during the first half of the year. Before the August recess, however, Congress did manage to pass, and Bush signed, a bill to rescue the ailing savings and loan industry.

Unlike President Ronald Reagan, who steamrollered Congress with his agenda of budget and tax reforms during his first year in office, Bush was slow in setting his priorities. His status as a former member of Congress and a longtime Washington insider afforded him (apart from the Tower affair) a heavy dose of initial good will on Capitol Hill.

By the second half of 1989, Bush's honeymoon with Congress was over. Instead, there were confrontations over his proposals for cracking down on crime and drug abuse and his refusal to raise taxes. Lawmakers spent much of their time distracted by old problems — such as demands from the nation's elderly to repeal a surtax designed to finance expanded Medicare benefits — and newly discovered problems — such as influence peddling in Reagan's Department of Housing and Urban Development.

Ethics Scandals.

When the session began in January, there was no indication that House Speaker Wright was in any political danger, even though the House Ethics Committee had launched an investigation into his financial affairs in June 1988. But Wright's political support began to erode early in the year over his handling of the proposed 51 percent pay hike for members of Congress, judges, and top federal employees. The public was outraged over the size of the proposed pay hike and told their representatives and senators so in no uncertain terms. The Senate voted to reject the pay raise. Against the advice of other Democratic leaders, Wright scheduled a House vote on February 7 — one day before the pay raise was to take effect — angering many members who wanted the raise to take effect without a vote. The House defeated the proposal, which would have raised the salaries of most members of Congress from $89,500 to $135,000.

The torrent of public criticism over the pay raise left House Democrats feeling particularly vulnerable to political fallout if Wright's ethical troubles were not resolved. In March the political stakes were raised even higher when the Democratic-controlled Senate rejected the nomination of former Republican Senator John Tower to be defense secretary. Republicans began talking about revenge, and Wright was a likely target.

A third, devastating blow came in April when it became clear that the House Ethics Committee would press charges against Wright on a broad range of violations, including his acceptance of $145,000 in improper gifts and his wife's acceptance of an unearned $18,000 annual salary, both from a Fort Worth, Texas, developer, and Wright's bulk sales of copies of his book, Reflections of a Public Man, in lieu of speaking fees.

The final blow came in May, with news reports that in 1973, when he was a teenager, Wright's top aide, John P. Mack, had brutally assaulted a young woman — a crime for which he served a minimal sentence before being hired by Wright.

The pressure on Wright to resign intensified on May 26 when, following news reports that he had failed to report a $100,000 junk bond transaction on his financial disclosure forms, Representative Tony Coelho of California, the third-ranking Democrat in the House, announced his decision to resign from Congress. Saying he did not want to put himself, his party, or his family through more turmoil, Coelho announced he would resign on June 15 — his 47th birthday. In an emotional speech before the House on May 31, Wright, portraying himself as a victim of an obsession with ethics by 'self-appointed vigilantes,' announced that he would resign as speaker and begged his colleagues in both parties 'to bring this period of mindless cannibalism to an end.' Wright stepped down as speaker on June 6 — the first speaker ever to resign under a cloud of scandal in midterm — and resigned his House seat on June 30, ending a 34-year career in Congress.

While the Ethics Committee quietly dropped its charges against Wright in the wake of his resignation, the panel's work did not end there. It opened preliminary inquiries into allegations of sexual misconduct by four House members: Representatives Jim Bates (D, Calif.), Donald E. ('Buz') Lukens (R, Ohio), Gus Savage (D, Ill.), and Barney Frank (D, Mass.). In the first of what was expected to be a series of decisions, the panel issued a 'letter of reproval' to Bates, the mildest form of official punishment and one that does not require action by the House. Bates was chastized for sexually harassing female members of his staff — the first time a member of Congress had been disciplined for such an offense. The ethics panel also considered allegations concerning a book promotion deal of Representative Newt Gingrich (R, Ga.), the outspoken conservative who launched the investigation against Wright. And in the wake of the October conviction of Representative Robert Garcia (D, N.Y.) for extorting money from a defense contractor, the panel announced it had begun an inquiry into whether Garcia should be disciplined by the House.

A book promotion deal led to an investigation of Senator Dave Durenberger (R, Minn.) by the Senate Ethics Committee. Senators Alan Cranston (D, Calif.), Dennis DeConcini (D, Ariz.), Donald Riegle, Jr. (D, Mich.), John Glenn (D, Ohio), and John McCain (R, Ariz.) came under scrutiny for allegedly intervening with regulators on behalf of a failing savings and loan association, in exchange for campaign contributions. Senator Alfonse D'Amato (R, N.Y.) also came under scrutiny, for allegedly using improper influence in federal housing programs.

Late in the year Congress approved a plan that would increase the salaries of House members, top government officials, and federal judges by at least a third by 1991. At the same time the plan would tighten ethics rules — including a ban on outside speaking fees. Senators opted for a smaller raise while retaining the right to earn speaking fees.

New Leadership.

The vacancies left by Wright and Coelho led to a restructuring of the Democratic Party in the House as the torch was passed to a new generation of leaders. Thomas Foley of Washington, formerly the majority leader, was elected speaker, 1988 Democratic presidential aspirant Richard Gephardt of Missouri was named majority leader, and the race for Democratic whip was won by former Budget Committee Chairman William Gray III of Pennsylvania — the first black to hold a top leadership position in Congress. There were changes in the House GOP leadership as well. Gingrich, whose partisan tenacity earned him the dubious nickname of 'pitbull' of the Republican Party, was elected to the second-ranking GOP position in the House, succeeding Representative Richard Cheney (R, Wyo.), who had become secretary of defense.

In the Senate, George Mitchell (D, Maine) succeeded 12-year veteran Robert Byrd (D, W.Va.) as majority leader, with Cranston remaining in the number-two Democratic leadership slot. Robert Dole (R, Kan.) continued as Senate minority leader, and Alan Simpson (R, Wyo.) as Republican whip.

Tower Nomination.

Bush's first major defeat on Capitol Hill came early in the year when the Senate Armed Services Committee, in a party-line vote, rejected John Tower, his nominee for secretary of defense. While rejections of presidential cabinet nominees are rare, it was even more unusual given the fact that Tower was a former senator and former chairman of the same Armed Services committee. But Democrats, led by Chairman Sam Nunn of Georgia, questioned Tower's suitability for the sensitive position given his flamboyant lifestyle and reports of womanizing and excessive drinking. They also raised concerns about conflicts of interest, given his previous consulting work for a major defense contractor. Republicans, arguing that the president had a right to choose his own cabinet and claiming that allegations against Tower were more innuendo than fact, vowed to take their fight to the Senate floor. They lost, 47-53. Cheney, Bush's second choice, was confirmed by the Senate, 92-0, on March 17.

Defense.

Cheney had his work cut out for him. Both the House and Senate were aghast over the $500 million plus price tag of the B-2 Stealth bomber, a plane built to evade detection by enemy radar. A joint House-Senate conference committee ultimately approved two of the three B-2 bombers the administration wanted for fiscal year 1990 and components for another five planes in fiscal year 1991. The conferees approved $1.1 billion — only $150 million less than the administration requested — for two kinds of mobile intercontinental ballistic missiles, the rail-based MX and the truck-borne single-warhead Midgetman. And for the first time since the controversial Strategic Defense Initiative was begun by Reagan in 1983, Congress agreed to slash spending for the so-called Star Wars program. The conferees approved a total of $3.8 billion for the SDI program for fiscal 1990, down from $4.1 billion in fiscal 1989. The full House and Senate approved the $305 billion defense authorization bill in November.

Foreign Aid.

Revolutionary struggles in Communist countries around the globe were the impetus for some of the most striking differences between congressional and White House decisions on foreign aid.

China.

The Chinese government's June 4 massacre of student protesters in Beijing provoked only a mild reaction from Bush, a former U.S. emissary to China. He favored responding with measures such as suspension of U.S. arms sales to China, but Congress demanded more. In mid-November, Congress approved a bill that included a suspension of trade assistance and an end of insurance for U.S. companies doing business in China. The bill also froze exports of satellites and certain munitions and nuclear supplies for two years. The bill was vetoed by the president, however, because of a provision unrelated to China.

Poland and Hungary.

Following the election of Poland's first non-Communist government in over 40 years and moves by Hungary toward democracy and a free-market economy, the Senate Foreign Relations Committee approved a three-year economic aid package to those two countries. The $1.2 billion package was almost three times the amount that had been requested by the Bush administration. The House Foreign Affairs Committee unanimously endorsed legislation in October authorizing $837.5 million in U.S. aid to Poland and Hungary. The House and Senate eventually agreed on a $938 million package, of which $852 million was for Poland.

Contra Aid.

Bush and Congress agreed in March to continue nonmilitary aid to the contra rebels until after the Nicaraguan elections scheduled for February 1990, and in April, Congress approved a $49.75 million package. As part of the deal, Bush promised to use diplomatic rather than military means to pursue U.S. policy objectives in Central America. The aid was subject to congressional review and veto in November. In October Bush won House and Senate approval to send $9 million to assist opposition parties in Nicaragua's February elections.

Budget.

Congress and the White House agreed in April on the outlines of a $1.2 trillion budget for fiscal 1990 in an effort to hold the deficit to $100 billion, as mandated by the Gramm-Rudman antideficit law. But implementing the agreement proved difficult. When Congress could not agree on deficit-reduction steps by October 16, across-the-board spending cuts, as mandated by Gramm-Rudman, took effect. The deficit-reduction bill finally agreed on relied heavily on accounting gimmicks, various special taxes, and continuation of the spending cuts until February 1990.

Capital Gains Tax.

The capital gains tax proposal initially considered as part of the deficit reduction package was the subject of the first high-stakes showdown between the president and the new House Democratic leadership. The administration argued that the tax cut would actually raise revenue as investors rushed to sell assets to take advantage of the lower tax rate. The Democratic leadership argued that it was a giveaway to the rich. The House handed Bush a major victory — and the new leadership a stinging blow — when it voted a 30 percent cut in the tax rate until the end of 1991. But the Democrats fought back in the Senate, and in November, Senate Republicans gave up their attempts to attach a capital gains tax cut to major spending bills under consideration, thereby ending the chances of adopting a cut this year.

Disaster Relief.

A week after a major earthquake devastated parts of northern California on October 17, the House approved $4.15 billion in new federal disaster assistance. A portion of the funds were to go to relief efforts in South Carolina and other places designated as disaster areas after they were hit by Hurricane Hugo. The aid package was attached to a stopgap appropriations bill needed to keep the federal government running past October 25, assuring it quick consideration by the Senate. The Senate approved the measure, and it was signed into law on October 26.

Health and Welfare.

Catastrophic Health Care.

Senior citizens besieged Congress and the White House with complaints about the 1988 Medicare financing scheme to expand coverage for the nation's elderly against catastrophic health care costs. The lobbying was so intense that Congress agreed to take another look at the program.

The 1988 law required all of Medicare's 33 million beneficiaries to pay for the new benefits through a slightly higher monthly premium, and wealthier beneficiaries — those who owed at least $150 in federal income taxes — were required to pay a 15 percent surtax as well. It was the surtax that stirred so much controversy, although only about 40 percent of the seniors would pay any surtax, and only about 5 percent would pay the maximum of $800 in 1989. In October the House voted to repeal the program. The Senate first voted to lift the surtax and reduce benefits but eventually agreed to a total repeal.

Medicare Payments.

In an effort to reduce the emphasis on specialists and surgery and to aid primary care, Congress overhauled the fee system for doctors who treat Medicare patients. Specialists such as surgeons will be paid about 20 percent less, general practitioners about 40 percent more.

Federal Aid for Abortions.

In a significant shift in policy, Congress approved a bill to allow the federal government to pay for abortions for poor women whose pregnancies resulted from rape or incest. Existing laws permitted the use of federal funds only when the mother's life was in danger. The new bill specified that the incident of rape or incest must be 'reported promptly.' But Bush vetoed the bill, and the veto was sustained.

Minimum Wage.

Congress cleared legislation in May to increase the minimum wage from $3.35 an hour to $4.55 an hour — the first increase in eight years. And, in an act of compromise, Congress included Bush's proposal to create a subminimum or training wage for newly hired workers. But Bush said the increase was too high and vetoed the bill on June 13. An attempt to override the veto fell 37 votes short. A second version of the bill, which raised the minimum to $4.25 an hour over two years and allowed a training wage of 85 percent of the prevailing minimum for three months, became law in the fall.

Savings and Loan Bailout.

With uncharacteristic speed — six months from the date Bush proposed it — Congress passed a sweeping bill to restructure and refinance the nation's savings and loan industry and its deposit insurance system. The measure, which was expected to cost taxpayers almost $50 billion, would finance the immediate shutdown of hundreds of insolvent S&Ls. According to government projections, the law would cost at least $148 billion over the next decade, making it the biggest single bailout in history. Because many senators did not want to be associated with the costly legislation, the Senate approved the final compromise bill without a recorded vote. Within hours, the House approved it by a vote of 201 to 175, and sent it on to the president for his signature. In addition to bailing out the insolvent thrifts, the bill rewrote the rules under which the industry operates, limited the authority of S&Ls to make risky investments in real estate, and prohibited them from further investments in high-yielding, high-risk junk bonds. In what was called the most important safeguard, it would require S&Ls to maintain tangible capital (the excess of real assets over liabilities) equal to 1.5 percent of assets at once and 3 percent by the end of 1994.

Housing Scam.

No sooner had Congress wrapped up its work on the scandal-plagued thrift industry than a new scandal began to emerge, this one involving the Reagan administration's Department of Housing and Urban Development (HUD). Four congressional panels held hearings on the scandal, which involved influence peddling, political favoritism, embezzlement, and mismanagement of federal funds in the Section 8 public housing rehabilitation program. While the scandal served to highlight the desperate state of the nation's public housing program, the preoccupation with the abuses left little time for action on revising or replacing housing programs that expired on September 30.

Environment.

Oil Spill Liability.

When the tanker Exxon Valdez ran aground and spilled oil into Alaska's pristine Prince William Sound on March 24, the topic of oil spill liability rebounded to the top of the congressional environmental agenda — 14 years after Congress first began a series of vain attempts to agree on such a law. The main obstacle to a House-Senate agreement on a bill was whether federal law should preempt state oil spill laws. The House had traditionally favored some degree of preemption. The Senate had consistently opposed it, but after three more tanker spills occurred, the Senate reversed itself and passed an oil spill liability bill, 99-0, in August. The House passed similar legislation in the fall. Resolving the remaining differences between the two bills was left for 1990.

Clean Air.

Another area of traditionally deadlocked environmental concerns received a new lease on life in July when Bush introduced a comprehensive program to rewrite the 1970 Clean Air Act, reversing eight years of Reagan administration opposition. But a cornerstone of his proposal, promoting the use of alternative fuels, was defeated by the House Energy Subcommittee on Health and the Environment. The matter was then referred to the full Energy Committee.

Drugs.

After intense negotiations with the White House, Congress agreed to spend $8.8 billion on the nation's 'war' on drugs, $900 million more than Bush had requested for drug and related crime control efforts in fiscal year 1990. The plan would be largely financed by an across-the-board cut in government spending, except for entitlement programs like Social Security. One of the largest single allocations of new funds would be for prison construction. Funds were also provided for more law enforcement agents, antidrug programs in schools, and local treatment and rehabilitation programs. Congress gave its final approval to a $3.2 billion portion of the antidrug package, and the underlying transportation appropriations bill, in November. The legislation included a ban on smoking aboard almost all domestic airline flights starting in early 1990.

Civil Rights.

Flag Burning.

In the wake of the Supreme Court's controversial decision that burning the American flag was protected by the First Amendment's guarantee of freedom of speech, congressional Republicans joined Bush to introduce a constitutional amendment banning desecration of the flag. Democrats argued that it was wrong to tinker with the Bill of Rights and said any flag burning ban should be done by a change in federal law rather than in the Constitution. Congress approved a bill that would outlaw flag desecration, but House Republicans vowed to keep pressing for a constitutional amendment. The amendment issue was effectively killed on October 19 when a Senate vote fell short of the two-thirds approval needed such a proposal.

Arts Funding.

Another question of freedom of expression arose during the summer when conservative Senator Jesse Helms (R, N.C.) complained that federal funds were being used to underwrite pornographic art. He was referring to a planned exhibition of photographs by the late Robert Mapplethorpe at the Corcoran Gallery of Art in Washington, D.C., and to a photograph by artist Andres Serrano. The Mapplethorpe exhibition, which included photographs of a homoerotic nature, was financed in part by the National Endowment for the Arts (NEA). Serrano, whose photograph depicted Christ on a cross submerged in urine, had also received NEA money. Helms's campaign led to the cancellation of the Mapplethorpe show and to loud protests from arts patrons who decried what they called government censorship. After a drawn-out battle, Congress approved a stripped-down version of an amendment proposed by Helms that banned federal funding of 'obscene' art but left out Helms's original prohibition on funding art that is 'indecent' or potentially offensive.

Nominations.

Nearly half of full-time executive government positions remained unfilled nine months into the year, a situation that the Senate blamed on the administration's slowness to nominate and the administration blamed on the Senate's slowness to confirm. In August the Senate Judiciary Committee blocked Bush's nomination of William Lucas to be assistant attorney general in charge of the Justice Department's Civil Rights Division. Democrats charged that Lucas lacked legal experience and knowledge of civil rights law. Bush subsequently named Lucas to be director of the Justice Department's Office of Liaison Service, a post that does not require Senate confirmation.

Impeachment.

U.S. District Judge Alcee L. Hastings of Florida was removed from the bench on October 20 when the Senate convicted him on eight articles of impeachment. Among other things, he was found guilty of conspiring to obtain a $150,000 bribe. It was the first time a federal official was impeached for a crime which he had been acquitted of by a jury. On November 3 the Senate voted to oust convicted U.S. District Judge Walter L. Nixon, Jr., of Mississippi from office for twice lying under oath to a federal grand jury. On two articles of impeachment the Senate found Nixon guilty of perjury in testifying about his intervention in a drug-smuggling case against the son of a business partner.

POLITICAL PARTIES

Each of the two major U.S. political parties had a new chairman in 1989, but the challenge each party faced was a familiar one. For the Democrats, the problem was to frame a strategy that could break the Republicans' electoral lock on the White House in 1992; for the GOP, the problem was to improve its representation in the state legislatures and governors' mansions, so that Republicans would have a greater say in redrawing congressional district lines after the 1990 census.

Democratic Party.