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CHAPTER 14: THE NEW CONSERVATISM AND A NEW WORLD ORDEROUTLINE OF U.S. HISTORYpresidency, Reagan announced theStrategic Defense Initiative (SDI) researchprogram to explore advancedtechnologies, such as lasers andhigh-energy projectiles, to defendagainst intercontinental ballisticmissiles. Although many scientistsquestioned the technological feasibilityof SDI and economists pointedto the extraordinary sums of moneyinvolved, the administration pressedahead with the project.After re-election in 1984, Reagansoftened his position on armscontrol. Moscow was amenable toagreement, in part because its economyalready expended a far greaterproportion of national output on itsmilitary than did the United States.Further increases, Soviet leaderMikhail Gorbachev felt, wouldcripple his plans to liberalize theSoviet economy.In November 1985, Reagan andGorbachev agreed in principleto seek 50-percent reductions instrategic offensive nuclear arms aswell as an interim agreement onintermediate-range nuclear forces.In December 1987, they signed theIntermediate-Range Nuclear Forces(INF) Treaty providing for the destructionof that entire categoryof nuclear weapons. By then, theSoviet Union seemed a less menacingadversary. Reagan could takemuch of the credit for a greatly diminishedCold War, but as his administrationended, almost no onerealized just how shaky the USSRhad become.THE PRESIDENCY OFGEORGE H. W. BUSHPresident Reagan enjoyed unusuallyhigh popularity at the end ofhis second term in office, but underthe terms of the U.S. Constitutionhe could not run again in 1988. TheRepublican nomination went to VicePresident George Herbert WalkerBush, who was elected the 41st presidentof the United States.Bush campaigned by promisingvoters a continuation of theprosperity Reagan had brought. Inaddition, he argued that he wouldsupport a strong defense for theUnited States more reliably thanthe Democratic candidate, MichaelDukakis. He also promised to workfor “a kinder, gentler America.”Dukakis, the governor of Massachusetts,claimed that less fortunateAmericans were hurting economicallyand that the government hadto help them while simultaneouslybringing the federal debt and defensespending under control. Thepublic was much more engaged,however, by Bush’s economic message:No new taxes. In the balloting,Bush finished with a 54-to-46-percentpopular vote margin.During his first year in office,Bush followed a conservative fiscalprogram, pursuing policies on taxes,spending, and debt that were faithfulto the Reagan administration’s economicprogram. But the new presidentsoon found himself squeezedbetween a large budget deficit and adeficit-reduction law. Spending cutsseemed necessary, and Bush possessedlittle leeway to introduce newbudget items.The Bush administration advancednew policy initiatives in areasnot requiring major new federalexpenditures. Thus, in November1990, Bush signed sweeping legislationimposing new federal standardson urban smog, automobile exhaust,toxic air pollution, and acid rain,but with industrial polluters bearingmost of the costs. He acceptedlegislation requiring physical accessfor the disabled, but with no federalassumption of the expense ofmodifying buildings to accommodatewheelchairs and the like. Thepresident also launched a campaignto encourage volunteerism, whichhe called, in a memorable phrase, “athousand points of light.”BUDGETS AND DEFICITSBush administration efforts togain control over the federal budgetdeficit, however, were more problematic.One source of the difficulty wasthe savings and loan crisis. Savingsbanks — formerly tightly regulated,low-interest safe havens for ordinarypeople — had been deregulated, allowingthese institutions to competemore aggressively by paying higherinterest rates and by making riskierloans. Increases in the government’sdeposit insurance guaranteed reducedconsumer incentive to shunless-sound institutions. Fraud,mismanagement, and the choppyeconomy produced widespread insolvenciesamong these thrifts (theumbrella term for consumer-orientedinstitutions like savings and loanassociations and savings banks). By1993, the total cost of selling andshuttering failed thrifts was staggering,nearly $525,000-million.In January 1990, President Bushpresented his budget proposal toCongress. Democrats argued thatadministration budget projectionswere far too optimistic, and thatmeeting the deficit-reduction lawwould require tax increases andsharper cuts in defense spending.That June, after protracted negotiations,the president agreed to a taxincrease. All the same, the combinationof economic recession, lossesfrom the savings and loan industryrescue operation, and escalatinghealth care costs for Medicare andMedicaid offset all the deficit-reductionmeasures and produced ashortfall in 1991 at least as large asthe previous year’s.END TO THE COLD WARWhen Bush became president,the Soviet empire was on the vergeof collapse. Gorbachev’s efforts toopen up the USSR’s economy appearedto be floundering. In 1989,the Communist governments inone Eastern European country afteranother simply collapsed, afterit became clear that Russian troopswould not be sent to prop them up.In mid-1991, hard-liners attempteda coup d’etat, only to be foiled byGorbachev rival Boris Yeltsin, presi-314315