The George H.W. Bush Administration

The Election of 1988

The 1988 United States presidential election was defined by the victory of Republican George H.W. Bush over Democrat Michael Dukakis.

Learning Objectives

Describe the election of 1988

Key Takeaways

Key Points

  • In the election of 1988, Republican George H.W. Bush capitalized on a good economy and a stable international stage, while Democrat Michael Dukakis ‘ campaign suffered from several miscues. The result was a third consecutive Republican win.
  • After President Reagan’s image was tarnished in the Iran-Contra scandal, and with Democrats winning back control of the Senate in the 1986 congressional elections, Democratic leaders felt more optimistic about winning the presidency in 1988.
  • During the election year, the Bush campaign sought to portray Dukakis as an unreasonably left-wing liberal and critiqued him for opposing mandatory recitation of the Pledge of Allegiance in schools, and being a member of the ACLU. 
  • Bush adopted a largely Reaganesque style on matters of economic policy, promising to shrink government and keep taxes low. 
  • In the November 8 election, Bush won a majority of the popular vote and a lopsided majority of states in the Electoral College.

Key Terms

  • “Blue States”: A state in the United States voting Democratic in a given election, or tending to vote Democratic in general.
  • American Civil Liberties Union: A nonpartisan, nonprofit organization whose stated mission is “to defend and preserve the individual rights and liberties guaranteed to every person in this country by the Constitution and laws of the United States” through litigation, lobbying, and community empowerment.
  • George H. W. Bush: An American politician who served as the 41st President of the United States (1989-1993); also the 43rd Vice President of the United States (1981-1989), a congressman, an ambassador, and a Director of Central Intelligence.
  • Michael Dukakis: An American politician who served as the 65th and 67th Governor of Massachusetts from 1975-1979, and from 1983-1991, and was the Democratic presidential nominee in 1988.

Overview

The United States presidential election of 1988 featured no incumbent president, as President Ronald Reagan could not seek reelection after serving the maximum two terms allowed by the 22nd Amendment. Reagan’s Vice President, George H. W. Bush, won the Republican nomination, while the Democrats nominated Massachusetts Governor Michael Dukakis. Bush capitalized on a good economy, a stable international stage, and Reagan’s popularity, while Dukakis’s campaign suffered from several miscues. The result was a third consecutive Republican landslide victory. George H. W. Bush became the 41st president of the United States.

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Michael Dukakis, 1988: Michael Dukakis at a campaign rally at UCLA’s Pauley Pavilion on the eve of the 1988 election.

The Campaign

In the 1984 presidential election, the Democrats nominated Walter Mondale, a traditional New Deal-type liberal, as their candidate. When Mondale was defeated in a landslide, party leaders became eager to find a new approach to win the presidency. After Reagan’s image was tarnished in the Iran-Contra scandal, and with Democrats winning back control of the Senate in the 1986 congressional elections, Democratic leaders felt more optimistic about winning the presidency in 1988. Confident they could win back the White House, Democrats mounted a campaign focused on more effective and competent government under the leadership of Massachusetts Governor Michael Dukakis. 

When Bush found himself down in the polls, political advisor Lee Atwater launched an aggressively negative media campaign, accusing Dukakis of being soft on crime and connecting his liberal policies to a brutal murder in Massachusetts. The Bush campaign sought to portray Dukakis as unreasonably left-wing and critiqued him for such positions as opposing mandatory recitation of the Pledge of Allegiance in schools, and being a member of the American Civil Liberties Union (ACLU). More importantly, Bush adopted a largely Reaganesque style on matters of economic policy, promising to shrink government and keep taxes low. 

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President George H. W. Bush: Official portrait of George H. W. Bush, former President of the United States of America (1989).

Results

In the November 8 election, Bush won a majority of the popular vote and a lopsided majority of states in the Electoral College. Although his victory was not a landslide in the popular vote, Bush was the last Republican to carry certain states that have since gained a reputation as “blue states” favoring the Democratic party, including Vermont, Maine, Connecticut, New Jersey, Delaware, Maryland, Pennsylvania, Michigan, Illinois, and California. This, in fact, was the last election to date in which a Republican presidential nominee won a majority of northern electoral votes. Bush’s victory percentage of 53.4% has not yet been surpassed in any subsequent presidential election, and he was the last candidate to get a majority of the popular vote, until his son, George W. Bush, in the 2004 election. 

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The Inauguration of George H.W. Bush: Chief Justice William Rehnquist administering the oath of office to Bush during inaugural ceremonies at the United States Capitol on January 20, 1989.

The George H.W. Bush Administration

During George H. W. Bush’s presidency from 1989 to 1993, he negotiated the end of the Cold War, struggled with a large federal deficit, and signed several new laws.

Learning Objectives

Summarize the major achievements of the George H.W. Bush administration

Key Takeaways

Key Points

  • Although President Bush promised during his campaign to initiate no new taxes, the large federal deficit left by Reagan prevented him from following through.  
  • President Bush signed a number of major laws during his presidency, including the Americans with Disabilities Act of 1990, the Clean Air Act, and the Immigration Act of 1990. 
  • During a speech to commemorate the 20th anniversary of the Apollo 11 moon landing, Bush announced a vision to complete Space Station Freedom, resume exploration of the moon, and begin exploration of Mars.
  • In 1989, just after the fall of the Berlin Wall, Bush met with Soviet General Secretary Mikhail Gorbachev in a conference in Malta; the meeting was acknowledged as a very important step to the end of the Cold War.
  • In July of 1991, the Strategic Arms Reduction Treaty (START I) was signed by Bush and Gorbachev in Moscow. After the dissolution of the Soviet Union in 1991, Bush and Gorbachev declared a strategic partnership between the U.S. and Russia, marking the official end of the Cold War. 
  • Bush’s administration, along with the Conservative Canadian Prime Minister, Brian Mulroney, spearheaded the negotiations of the North American Free Trade Agreement ( NAFTA ), which would eliminate the majority of tariffs on products traded among the United States, Canada, and Mexico.

Key Terms

  • Strategic Arms Reduction Treaty (START I): A bilateral treaty signed on July 31, 1991 between the United States of America and the Union of Soviet Socialist Republics (USSR) on the reduction and limitation of certain weapons, including nuclear warheads and ballistic missiles.
  • Mikhail Gorbachev: Former General Secretary of the Communist Party of the Soviet Union from 1985 until 1991. 
  • North American Free Trade Agreement (NAFTA): An agreement signed by the governments of Canada, Mexico, and the United States that created a trilateral trade bloc in North America; the agreement came into effect on January 1, 1994. 

Overview

George H.W. Bush was inaugurated as President of the United States on January 20, 1989, succeeding Ronald Reagan. He assumed office during a period of great change in the world; the fall of the Berlin Wall and the collapse of Soviet Union came early in his presidency. He ordered military operations in Panama and the Persian Gulf and, at one point, was recorded as having a record-high approval rating of 89%. However, economic recession and Bush breaking his “no new taxes” pledge caused a sharp decline in his approval rating, and he was defeated in the 1992 election.

Domestic Policies

Taxes and the Federal Deficit 

Although he promised to carry on Reagan’s economic legacy, the problems Bush inherited made it difficult to do so. Reagan’s policies of cutting taxes and increasing defense spending had exploded the federal budget deficit, making it three times larger in 1989 than when Reagan took office in 1980. Bush was further constrained by the emphatic pledge he had made at the 1988 Republican Convention—”read my lips: no new taxes”—and found himself in the difficult position of trying to balance the budget and reduce the deficit without breaking his promise. However, he also faced a congress controlled by the Democrats, who wanted to raise taxes on the rich, while Republicans thought the government should drastically cut domestic spending. 

In October, after a brief government shutdown when Bush vetoed the budget that Congress delivered, he and Congress reached a compromise with the Omnibus Budget Reconciliation Act of 1990. The budget included measures to reduce the deficit by both cutting government expenditures and raising taxes, effectively reneging on the “no new taxes” pledge. These economic constraints are one reason why Bush supported a limited domestic agenda of education reform and anti-drug efforts, relying on private volunteers and community organizations, which he referred to as “a thousand points of light,” to address most social problems.

NASA

During a speech to commemorate the 20th anniversary of the Apollo 11 moon landing, Bush announced a vision to complete Space Station Freedom, resume exploration of the moon, and begin exploration of Mars. Although a space station was eventually constructed–work on the International Space Station began in 1998–other work has been confounded by budgetary issues within the National Aeronautics and Space Administration (NASA). In 1998, Bush received the Rotary National Award for Space Achievement’s National Space Trophy for his pioneering leadership of the U.S. space program.

New Laws

Bush signed a number of major laws in his presidency, including the Americans with Disabilities Act of 1990, which was one of the most pro-civil rights bills in decades. In dealing with the environment, Bush reauthorized the Clean Air Act, legislation requiring the use of cleaner burning fuels. He quarreled with Congress over, an eventually signed, a bill to aid police in capturing criminals. He also signed into law a measure to improve the nation’s highway system. Bush also signed the Immigration Act of 1990, which increased legal immigration to the United States by 40%.

NRA

Bush was a Life Member of the National Rifle Association (NRA) and had campaigned as a “pro-gun” candidate with the NRA’s endorsement in 1988. However, in March of 1989 he placed a temporary ban on the import of certain semiautomatic rifles. This action cost him endorsement from the NRA in 1992. Bush publicly resigned his life membership in the organization after losing the election and receiving a form letter from NRA depicting agents of the Bureau of Alcohol Tobacco and Firearms as jack-booted thugs. He called the NRA letter a “vicious slander on good people.”

International Policies

The Soviet Union and the End of the Cold War

In 1989, just after the fall of the Berlin Wall, President Bush met with Soviet General Secretary Mikhail Gorbachev in a conference on the Mediterranean island of Malta. The administration had been under intense pressure to meet with the Soviets, but not all of Bush’s advisers initially thought the Malta summit to be a step in the right direction. Though no agreements were signed, the meeting was acknowledged as a very important step to the end of the Cold War.

Another summit was held in July of 1991, when the Strategic Arms Reduction Treaty (START I) was signed by Bush and Gorbachev in Moscow. The treaty was nine years in the making and was the first major arms agreement since the signing of the Intermediate Ranged Nuclear Forces Treaty by Reagan and Gorbachev in 1987. The intention of START was to reduce the United States’ and Soviet Union’s strategic nuclear weapons by about 35% over seven years, as well as reduce the Soviet Union’s land-based intercontinental ballistic missiles by 50%. Bush described START as “a significant step forward in dispelling half a century of mistrust.” After the dissolution of the Soviet Union in 1991, President Bush and Gorbachev declared a strategic partnership between the U.S. and Russia, marking the official end of the Cold War.

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George H.W. Bush and Mikhail Gorbachev:  George H. W. Bush and Mikhail Gorbachev hold a press conference at the Helsinki Summit, Finland on September 9, 1990.

NAFTA

Bush’s administration, along with the Conservative Canadian Prime Minister Brian Mulroney, spearheaded the negotiations of the North American Free Trade Agreement (NAFTA)—which would eliminate the majority of tariffs on products traded among the United States, Canada, and Mexico—to encourage trade among the countries. The treaty also restricted patents, copyrights, and trademarks, and it outlined the removal of investment restrictions among the three countries.

The treaty has since been defended as well as criticized. The American economy has grown 54% since the adoption of NAFTA in 1993, with 25 million new jobs created; this has been seen by some as evidence of NAFTA being beneficial to the U.S. With talk in early 2008 regarding a possible American withdrawal from the treaty, Carlos M. Gutierrez, current United States Secretary of Commerce, wrote, “Quitting NAFTA would send economic shock waves throughout the world, and the damage would start here at home.” However, John Sweeney of The Boston Globe argued that “the U.S. trade deficit with Canada and Mexico ballooned to 12 times its pre-NAFTA size, reaching $111 billion in 2004.”

Gridlock in Government

Republican President Bush faced opposition for many of his initiatives by the Democratic Congress, resulting in a gridlocked government.

Learning Objectives

Examine the standoff between George H.W. Bush and the 101st U.S. Congress

Key Takeaways

Key Points

  • During the 101st U.S. Congress, the Democrats held a majority in both the House of Representatives and the Senate.
  • With Republicans believing that the best way to decrease the deficit was to cut government spending, and Democrats convinced that the only way would be to raise taxes, Bush faced problems when it came to consensus building.
  • Bush was forced by the Democratic majority to raise tax revenues; as a result, many Republicans felt betrayed because Bush had promised “no new taxes” in his 1988 campaign.
  • Near the end of the 101st Congress, the president and congressional members reached a compromise on a budget package that increased the marginal tax rate and phased out exemptions for high-income taxpayers.
  • This agreement with the Democratic leadership in Congress proved to be a turning point in the Bush presidency; his popularity among Republicans never fully recovered.

Key Terms

  • Omnibus Budget Reconciliation Act of 1990: A United States statute enacted to reduce the United States federal budget deficit, including the Budget Enforcement Act of 1990, which established the “pay-as-you-go” or “PAYGO” process for discretionary spending and taxes. 
  • gridlock: Figuratively and by extension, any paralysis of a complex system due to severe congestion, conflict, or deadlock.
  • 101st U.S. Congress: A meeting of the legislative branch of the United States federal government, composed of the United States Senate and the United States House of Representatives, from January 3, 1989 to January 3, 1991, during the first two years of the administration of U.S. President George H. W. Bush. 

Overview

During the 101st U.S. Congress (January 3, 1989 to January 3, 1991), the Democrats held a majority in both the House of Representatives and the Senate. Because of the Democratic party majority in both houses, Republican President George H. W. Bush faced opposition for many of his initiatives during his first two years of administration, leading to a “gridlocked government.”

In the 101st Congress, the following states had two Republican seats: New Hampshire, Pennsylvania, Indiana, Mississippi, Minnesota, Missouri, Kansas, Wyoming, Utah, Idaho, Oregon, and Alaska. The following states had one Democratic seat and one Republican seat: Maine, Rhode Island, Vermont, New York, Delaware, Virginia, North Carolina, South Carolina, Florida, Kentucky, Wisconsin, Iowa, South Dakota, Oklahoma, Texas, Montana, Colorado, New Mexico, Arizona, Washington, and California. And, finally, the following states had two Democratic seats: Massachusetts, Connecticut, New Jersey, Maryland, West Virginia, Ohio, Georgia, Michigan, Tennessee, Alabama, Illinois, Arkansas, Louisiana, North Dakota, Nebraska, and Nevada.

101st Congress – Senate Map: This chart illustrates the composition of the United States Senate during the 101st Congress. Red indicates two Republican seats, dark blue indicates two Democratic seats, and pink indicates one Republican and one Democratic seat.

The Federal Deficit  

Early in his term, Bush faced the problem of what to do with leftover deficits spawned by the Reagan years. Reagan’s policies of cutting taxes and increasing defense spending in relation to the Cold War had exploded the federal budget deficit, making it three times larger in 1989 than when Reagan took office in 1980. The deficit had reached a high of $220 billion in 1990. Bush was dedicated to curbing the deficit, believing that America could not continue to be a leader in the world without doing so. He began an effort to persuade the Democratic controlled Congress to act on the budget. However with Republicans believing that the best way was to cut government spending, and Democrats convinced that the only way would be to raise taxes (particularly on the rich), Bush faced problems when it came to consensus building. Bush was further constrained by the emphatic pledge he had made at the 1988 Republican Convention—”read my lips: no new taxes”—and found himself in the difficult position of trying to balance the budget and reduce the deficit without breaking his promise. 

Compromise and Taxes

In October of 1990, there was a brief government shutdown when Bush vetoed the budget that Congress delivered. In the wake of the struggle with Congress, Bush was forced by the Democratic majority to raise tax revenues; as a result, many Republicans felt betrayed because of Bush’s “no new taxes” pledge. Angered Republican congressmen defeated Bush’s proposal to enact spending cuts and tax increases that would reduce the deficit by $500 billion over five years. Scrambling, Bush accepted the Democrats’ demands for higher taxes and more spending, which alienated him from Republicans and gave way to a sharp decrease in popularity. 

Near the end of the 101st Congress, the president and congressional members reached a compromise on a budget package with the Omnibus Budget Reconciliation Act of 1990. The Act increased the marginal tax rate and phased out exemptions for high-income taxpayers. Despite demands for a reduction in the capital gains tax, Bush relented on this issue as well. This agreement with the Democratic leadership in Congress proved to be a turning point in the Bush presidency; his popularity among Republicans never fully recovered.

George H.W. Bush Abroad

Foreign policy during George H.W. Bush’s presidency was characterized by military operations in Panama, and the Gulf War.

Learning Objectives

Analyze U.S. military engagements under President George H.W. Bush

Key Takeaways

Key Points

  • In 1989, Guillermo Endara was elected Panama’s president; however, the current leader, Manuel Noriega, refused to acknowledge Endara’s victory or relinquish power. In addition to this dictatorial behavior, Noriega had been accused of spying on the U.S. and using Panama to traffic drugs into the U.S.
  • In December 1989, Bush sent 24,000 troops to invade Panama and overthrow Noriega during Operation Just Cause; while the operation was successful, former CIA connections between President Bush and Noriega, as well as U.S. economic interests prompted the United Nations (UN) to denounce the invasion as a power grab.
  • In August 1990, under the leadership of Saddam Hussein, Iraq invaded oil-rich Kuwait. Bush condemned the invasion and rallied opposition to Iraq from other leaders in the region, who were fearful that Iraq’s aggression meant their own borders were in danger.
  • The UN Security Council also disapproved of Iraq’s aggression; as a result, the UN and the U.S. Congress approved military action in the 1991 Persian Gulf War. In January and February 1991, international coalition forces successfully repelled Iraq from Kuwait.
  • The successful operation increased U.S. prestige and Bush’s approval ratings; it also energized Arab-Israeli peace efforts, which indirectly lead to the Madrid Conference of 1991.

Key Terms

  • Manuel Noriega: A former Panamanian politician and soldier, and military governor of Panama from 1983 to 1989.
  • Saddam Hussein: The fifth President of Iraq, serving from July 16, 1979 until April 9, 2003, and a leading member of the revolutionary Arab Socialist Ba’ath Party, which espoused a mix of Arab nationalism and Arab socialism. He played a key role in the 1968 coup, later referred to as the 17 July Revolution, which brought the party to long-term power of Iraq.

The Panama War

In December of 1989, the Bush administration announced a bold military intervention in Panama. Claiming to act on behalf of human rights, U.S. troops deposed the unpopular dictator and drug smuggler Manuel Noriega swiftly, but former CIA connections between President Bush and Noriega, as well as U.S. interests in maintaining control of the Canal Zone, prompted the United Nations and world public opinion to denounce the invasion as a power grab. In the 1980s, Panamanian leader Manuel Noriega, a once U.S.-supportive leader who was later accused of spying for Fidel Castro and using Panama to traffic drugs into the United States, was one of the most recognizable names in America and was constantly in the press. The struggle to remove him from power began in the Reagan administration, when economic sanctions were imposed on the country; this included prohibiting American companies and government from making payments to Panama, and freezing $56 million in Panamanian funds in American banks. Reagan sent more than 2,000 American troops to Panama as well. Unlike Reagan, Bush was able to remove Noriega from power, but his administration’s unsuccessful post-invasion planning hindered the needs of Panama during the establishment of the young democratic government.

In May 1989, Panama held democratic elections through which Guillermo Endara was elected president; the results were then annulled by Noriega’s government. In response, Bush sent 2,000 more troops to the country, where they began conducting regular military exercises in Panamanian territory (in violation of prior treaties). Bush then removed the U.S. ambassador from the country and dispatched additional troops to Panama to prepare for an upcoming invasion. Noriega suppressed an October military coup attempt and massive protests in Panama against him; however, after a U.S. serviceman was shot by Panamanian forces in December 1989, Bush ordered 24,000 troops into the country with an objective of removing Noriega from power. “Operation Just Cause” was a large-scale American military operation and the first in more than 40 years that was not related to the Cold War.

The mission was controversial, but American forces achieved control of the country and Endara assumed the presidency. Noriega surrendered to the U.S. and was convicted and imprisoned on racketeering and drug trafficking charges in April 1992. President Bush and First Lady Barbara Bush visited Panama in June 1992 to show support for the first post-invasion Panamanian government.

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“Operation Just Cause” in Panama: President George H.W. Bush sits at his desk in the Oval Office study, and talks on the telephone regarding Operation Just Cause in Panama. General Brent Scowcroft and Governor John Sununu stand nearby.

The Gulf War

As the Soviet Union was ceasing to be a threat, the Middle East became a source of increased concern. In the wake of its eight-year war with Iran from 1980 to 1988, Iraq had accumulated a significant amount of foreign debt. At the same time, other Arab states had increased their oil production, forcing oil prices down and further hurting Iraq’s economy. Iraq’s leader, Saddam Hussein, approached these oil-producing states for assistance, particularly Saudi Arabia and neighboring Kuwait, which Iraq felt directly benefited from its war with Iran. When talks with these countries broke down, and Iraq found itself politically and economically isolated, Hussein ordered the invasion of oil-rich Kuwait in August 1990. 

Bush faced his first full-scale international crisis. He condemned the invasion and began rallying opposition to Iraq in the U.S. and among European, Asian, and Middle Eastern allies. Secretary of Defense Dick Cheney traveled to Saudi Arabia to meet with King Fahd; Fahd requested U.S. military aid in the matter, fearing a possible invasion of his country as well. The planning of a ground operation by U.S.-led coalition forces began forming in September 1990, headed by General Norman Schwarzkopf.

Bush spoke before a joint session of Congress regarding the authorization of air and land attacks, laying out four immediate objectives: that Iraq withdraw from Kuwait, Kuwait’s legitimate government be restored, the security of the Persian Gulf be assured, and American citizens abroad be protected. He then outlined a fifth, long-term objective: “Out of these troubled times, our fifth objective, a new world order, can emerge: a new era—freer from the threat of terror, stronger in the pursuit of justice, and more secure in the quest for peace.” With the United Nations Security Council opposed to Iraq’s violence, Congress authorized the use of military force with set goals of returning control of Kuwait to the Kuwaiti government, and protecting America’s interests abroad.

Wary of not having sufficient domestic support for combat, Bush first deployed troops to the area to build up forces in the region and defend Saudi Arabia via Operation Desert Shield. On January 14, after Congress authorized the use of military force against Iraq, the U.S. orchestrated an effective air campaign, followed by Operation Desert Storm, a one-hundred-hour land war involving over 500,000 U.S. troops and another 200,000 from 27 other countries, which expelled Iraqi forces from Kuwait by the end of February.

Bush’s approval ratings skyrocketed after the successful offensive. Moreover, President Bush and Secretary of State James Baker concluded that the coalition victory had increased U.S. prestige abroad, and they believed there was a window of opportunity to use the political capital generated by the coalition victory to revitalize the Arab-Israeli peace process. The administration immediately returned to Arab-Israeli peacemaking following the end of the Gulf War; this resulted in the Madrid Conference later in 1991.

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First Gulf War: President George H.W. Bush greets U.S. troops in Saudi Arabia, 1990.

The Recession

Under George H.W. Bush’s administration in the early 1990s, the United States entered into a mild recession that lasted for six months.

Learning Objectives

Assess the state of the economy under George H.W. Bush

Key Takeaways

Key Points

  • On Black Monday of October 1987, a stock market collapse of unprecedented size caused the Dow Jones Industrial Average to fall by 22.6%. This collapse, larger than that of 1929, was handled well by the economy, and the stock market began to quickly recover.
  • The panic that followed, however, led to a sharp recession through financial contagion, which hit hardest in those countries most closely linked to the United States, including Canada, Australia, and the United Kingdom.
  • It soon turned out that the quick recovery was illusory, and by 1990, economic malaise had returned with the beginning of the Gulf War and the resulting 1990 spike in the price of oil, which increased inflation.
  • For the next several years, until late 1992, high unemployment, massive government budgetary deficits, and slow Gross Domestic Product (GDP) growth affected the United States. 
  • As the unemployment rate edged upward in 1991, Bush signed a bill providing additional benefits for unemployed workers. In September 1992, the Census Bureau reported that 14.2% of all Americans lived in poverty.
  • While Bush’s election campaign may have been aided by the brief economic recovery of 1988, he could not hold on to power through the last part of the recession.

Key Terms

  • Gross Domestic Product (GDP): The market value of all officially recognized final goods and services produced within a country in a given period; often considered an indicator of a country’s standard of living.
  • unemployment: The level of joblessness in an economy, often measured as a percentage of the workforce.
  • Black Monday: In finance, the date of October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short time; the crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already declined by a significant margin; the Dow Jones Industrial Average (DJIA) dropped by 508 points to 1738.74 (22.61%).

The Recession of the Early 90s

Coming at around the same time as President Bush’s budget deal with Congress, the United States entered into a mild recession that lasted for six months. As the unemployment rate edged upward in 1991, Bush signed a bill providing additional benefits for unemployed workers. By 1992, interest and inflation rates were the lowest in years, but by midyear the unemployment rate reached 7.8%, the highest since 1984. In September 1992, the Census Bureau reported that 14.2% of all Americans lived in poverty. 

Background

On Black Monday of October 1987, a stock collapse of unprecedented size caused the Dow Jones Industrial Average to fall by 22.6%. This collapse, larger than that of 1929, was handled well by the economy, and the stock market began to quickly recover. However, in North America, the lumbering savings and loans industry was beginning to collapse, leading to a savings and loan crisis, which put the financial well-being of millions of Americans in jeopardy.

The panic that followed led to a sharp recession through financial contagion, which hit hardest in those countries most closely linked to the United States, including Canada, Australia, and the United Kingdom. The economies of much of Europe and Japan were also hurt, but not as badly. The U.S. economy continued to grow as a whole, although certain sectors of the market, such as energy and real estate, slumped.

The first burst of the recession was short-lived, as fervent pre-election activity by the governments of the United States and Canada created what many economists at the time saw as an economic miracle—
a growing consumer confidence and increased consumer spending almost single-handedly lifted the North American economy out of recession.

The Gulf War and Oil

It soon turned out that the quick recovery was illusory, and by 1990, economic malaise had returned with the beginning of the Gulf War and the resulting 1990 spike in the price of oil, which increased inflation (albeit to less of a degree than did the oil crisis of ten years earlier). Nevertheless, for the next several years, high unemployment, massive government budgetary deficits, and slow Gross Domestic Product (GDP) growth affected the United States until late 1992, and Canada until 1995. The rest of the world was less affected by the downturn; Germany and Japan both grew rapidly. Some pundits guessed—wrongly, as it turned out—that this would be a permanent state of affairs, and that both the German and Japanese economies would grow to be larger than America’s.

Political Ramifications

While the election campaign of George H. W. Bush in the United States may have been aided by the brief recovery of 1988, he could not hold on to power through the last part of the recession. Bush’s 1992 re-election bid was particularly hampered by his 1990 decision to renege on his “no new taxes” pledge during his first campaign in 1988.

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Recession in the U.S., early 1990s: This graph illustrates the GDP growth (at annualized rates) in the United States between 1989 and 1992, showing the 1990-1991 recession.

The 1992 Election

The 1992 presidential election featured Republican President George H.W. Bush, Democratic candidate Bill Clinton, and independent candidate Ross Perot.

Learning Objectives

Summarize the significant events of the 1992 presidential election

Key Takeaways

Key Points

  • The U.S. presidential election of 1992 had three main candidates: incumbent Republican President George H. W. Bush, Democratic Governor of Arkansas Bill Clinton, and independent Texas businessman Ross Perot. 
  • By 1992, many had come to doubt that President Bush could solve America’s problems. He had alienated conservative Republicans by breaking his pledge not to raise taxes, and the country’s economic recession did not help matters.
  • Independent candidate Ross Perot’s campaign was relatively successful, as he addressed some of the public’s main concerns at this time—
    the federal deficit, professional politicians, and anti-NAFTA sentiments.
  • Clinton positioned himself as a New Democrat, or a centrist, during this election. He chose Senator Al Gore as his running mate, since Gore was perceived to be strong on family values and environmental issues.
  • On November 3, Bill Clinton won the election by a wide margin in the Electoral College, receiving 43% of the popular vote against Bush’s 37% and Perot’s 19%.
  • This election marked realignment in U.S. politics away from the Republican Party and towards the resurgence of the Democratic Party, as the previous three elections had been Republican landslides.

Key Terms

  • Ross Perot: A U.S. businessman best known for running for President of the United States in 1992 and 1996. He founded Electronic Data Systems (EDS) in 1962, sold the company to General Motors in 1984, and founded Perot Systems in 1988, which was later bought by Dell for $3.9 billion in 2009.
  • George H. W. Bush: An American politician who served as the 41st President of the United States (1989-1993), and previously as the 43rd Vice President of the United States (1981–1989). He was also a congressman, an ambassador, and a Director of Central Intelligence.
  • Bill Clinton: An American politician who served as the 42nd President of the United States from 1993 to 2001. He was inaugurated at age 46, making him the third-youngest president.

Overview

The 1992 United States presidential election had three major candidates: incumbent Republican President George H. W. Bush, Democratic Arkansas Governor William Jefferson “Bill” Clinton, and independent Texas businessman Ross Perot. In the election, Clinton won a plurality in the popular vote and a wide Electoral College margin. 

The Campaign

George Bush

By 1992, many had come to doubt that President George H. W. Bush could solve America’s problems. He had alienated conservative Republicans by breaking his pledge not to raise taxes, and some faulted him for failing to remove Saddam Hussein from power during Operation Desert Storm in the Gulf War. The economy was also in a recession, contributing to discontent among many Americans. Furthermore, despite living much of his adult life in Texas, he could not overcome the stereotypes associated with his privileged New England and Ivy League background, which hurt him among working-class Reagan Democrats. Bush’s perceived greatest strength—that of foreign policy—was considered much less important following the dissolution of the Soviet Union, and the relatively peaceful climate in the Middle East resulting from the defeat of Iraq in the Gulf War.

Conservative political columnist Pat Buchanan challenged Bush for the Republican nomination, and shocked political pundits by finishing second, with 37% of the vote, in the New Hampshire primary. Bush responded by adopting more conservative positions on issues in an attempt to undermine Buchanan’s base. Once he had secured the nomination, Bush faced his challenger, Democrat and Governor of Arkansas William Jefferson “Bill” Clinton. 

Bill Clinton

Clinton chose U.S. Senator Al Gore, a Democrat from Tennessee, as his running mate. Selecting fellow southerner Gore went against the popular strategy of balancing a southern candidate with a northern partner. Gore, however, did balance the ticket in other significant ways, as he was perceived to be strong on family values and environmental issues, while Clinton was not. Additionally, Gore’s similarities to Clinton allowed the latter to push some of his key campaign themes, such as centrism and generational change. During his campaign, Bill Clinton described himself as a New Democrat, a member of a faction of the Democratic Party that, like the Republicans, favored free trade and deregulation. He tried to appeal to the middle class by promising higher taxes on the rich and reform of the welfare system. 

Official White House photo of President Bill Clinton

William Jefferson Clinton, America’s 42nd President: Bill Clinton defeated George H.W. Bush in the 1992 presidential election.

Ross Perot 

In early 1992, the race took an unexpected twist when Texas billionaire H. Ross Perot launched a third party bid, claiming that neither Republicans nor Democrats could eliminate the deficit and make the government more efficient. His message appealed to voters across the political spectrum who were disappointed with both parties’ perceived fiscal irresponsibility. He addressed some of the public’s main concerns at the time, including the federal deficit, professional politicians, and anti-NAFTA (the North American Free Trade Agreement) sentiments. Perot later bowed out of the race for a short time, then reentered. Clinton originally led in the polls, until Perot reentered and tightened the race significantly. Nearing election day, polls suggested that the race was a dead-heat. 

A color portrait of Ross Perot

Ross Perot: In 1992, Ross Perot got the highest percentage of the popular vote of any third party candidate since Theodore Roosevelt in 1912.

Results

On November 3, Clinton won the election by a wide margin in the Electoral College, receiving 43% of the popular vote against Bush’s 37%. Perot won 19% of the popular vote—one of the highest totals for a third party candidate in U.S. history. His support drew equally from both major candidates, according to exit polls. Bush received 168 electoral votes to Clinton’s 370. It was the second largest electoral vote shift in American history (517 vote shift), after Jimmy Carter ‘s victory in 1976 (560 vote shift). It was also the first time since 1968 that a candidate won the presidency despite earning under 50% of the popular vote. In the entire country, only Washington, D.C. and Clinton’s home state of Arkansas gave the majority of its votes to a single candidate; the rest were won by pluralities of the vote. After three consecutive Republican landslides, the 1992 election’s results represented a momentous realignment in national politics, as the Democratic Party picked up new support in the northeast, the Great Lakes region, and California, while carrying only four states in Clinton’s native south. 

Bush’s 37.4% was the lowest percentage total for an incumbent president since William Howard Taft in 1912. (Taft won 23.2%; the 1912 election was also a three-way race between Taft, Woodrow Wilson, and Theodore Roosevelt.) It was also the lowest percentage for a major-party candidate since Alf Landon received only 36.5% of the vote in 1936. Meanwhile, Perot’s nearly 19% of the popular vote made him, in terms of the popular vote, the most successful third party presidential candidate since Theodore Roosevelt in the 1912 election.

The map shows that Clinton won 4 votes from Maine, 4 from New Hampshire, 3 from Vermont, 12 from Massachusetts, 4 from Rhode Island, 8 from Connecticut, 33 from New York, 15 from New Jersey, 3 from Delaware, 10 from Maryland, 3 from DC, 23 from Pennsylvania, 5 from West Virginia, 18 from Michigan, 21 from Ohio, 8 from Kentucky, 11 from Tennessee, 13 from Georgia, 11 from Wisconsin, 22 from Illinois, 10 from Minnesota, 7 from Iowa, 11 from Missouri, 6 from Arkansas, 9 from Louisiana, 3 from Montana, 8 from Colorado, 5 from New Mexico, 11 from Washington, 7 from Oregon, 4 from Nevada, 54 from California, and 4 from Hawaii. It shows that Bush won 13 votes from Virginia, 14 from North Carolina, 8 from South Carolina, 25 from Florida, 12 from Indiana, 9 from Alabama, 7 from Mississippi, 3 from North Dakota, 3 from South Dakota, 5 from Nebraska, 6 from Kansas, 7 from Oklahoma, 32 from Texas, 3 from Wyoming, 4 from Idaho, 6 from Utah, 8 from Arizona, and 3 from Alaska.

Electoral College results, 1992: Presidential election results map. Red denotes states won by Bush/Quayle, Blue denotes those won by Clinton/Gore.