The Second Term Curse: Ronald Reagan's Second Term
Ronald Reagan, the former B-movie star and two term Governor of California twice ran unsuccessfully for the Republican presidential nomination, in 1968 and 1976. The third time was the charm as four years later in 1980, he won the nomination, and then defeated incumbent president Jimmy Carter. At nearly 70 years of age at the time of his inauguration, he became the oldest president-elect to take the oath of office (a record that stood until the inauguration of Donald Trump in 2017).
Soon after taking office, Reagan began implementing sweeping new political and economic initiatives. His supply-side economic policies, called "Reaganomics" by his opponents, called for tax rate reduction to spur economic growth, economic deregulation, and reduction in government spending. He would prove successful only on the first two. In his first term he survived an assassination attempt, declared a "War on Drugs", and stood up to public sector labor. Over his two terms, the economy saw a reduction of inflation from 12.5% to 4.4%, and an average annual growth of real GDP of 3.4%. Reagan enacted cuts in domestic discretionary spending, cut taxes, and increased military spending which contributed to increased federal outlays overall, even after adjustment for inflation.
Foreign affairs dominated his second term, including ending the Cold War, the bombing of Libya, the Iran–Iraq War, and the Iran–Contra affair. In June 1987, four years after he publicly described the Soviet Union as an "evil empire", Reagan challenged Soviet General Secretary Mikhail Gorbachev to "tear down this wall!", during a speech at the Brandenburg Gate. He transitioned Cold War policy from détente to rollback by escalating an arms race with the USSR while engaging in talks with Gorbachev. The talks culminated in the INF Treaty, which shrank both countries' nuclear arsenals. Reagan began his presidency during the decline of the Soviet Union, and the Berlin Wall fell just ten months after the end of his term. Germany reunified the following year, and on December 26, 1991 (nearly three years after he left office), the Soviet Union collapsed.
The "curse" on his second term was a controversy known as "Iran-Contra". With some parallels to Watergate, contravention of the law was traced to the administration and the question was: how much did the President know? Reagan claimed to have no knowledge of what had occurred. That didn't turn out to be completely correct, but in the end, Reagan was not found to have committed any wrongdoing himself.
The United States had once been the largest seller of arms to Iran under Mohammad Reza Pahlavi, better known as the Shah. When the Shaw was overthrown, and the vast majority of the weapons that the Islamic Republic of Iran inherited were American-made. To maintain this arsenal, Iran required a steady supply of spare parts to replace those broken and worn out. But after Iranian students stormed the American embassy in Tehran in November 1979 and took 52 Americans hostage, U.S. President Jimmy Carter imposed an arms embargo on Iran. When Iraq invaded Iran in September 1980, Iran desperately needed weapons and spare parts for its current weapons. But when Ronald Reagan took office as President, he promised to continue Carter's policy of blocking arms sales to Iran.
In 1986 it was discovered that senior administration officials had secretly facilitated the sale of arms to Iran. In early July 1985, Michael Ledeen, a consultant of National Security Adviser Robert McFarlane, requested assistance from Israeli Prime Minister Shimon Peres for help in the sale of arms to Iran. McFarlane learned that the Iranians were prepared to have the terrorist organization Hezbollah release American hostages in Lebanon in exchange for the Israelis shipping American weapons to Iran. Iran was in the midst of the Iran–Iraq War and could find few Western nations willing to supply it with weapons. The plan was for Israel to ship weapons through an intermediary to Iran in order to aiding a moderate faction within the regime of Ayatollah Khomeini who was believed to be seeking a rapprochement with the United States. In a memo to Secretary of State George Shultz and Defense Secretary Casper Weinberger, McFarlane wrote: "The short term dimension concerns the seven hostages; the long term dimension involves the establishment of a private dialogue with Iranian officials on the broader relations. They sought specifically the delivery from Israel of 100 TOW missiles."
The plan was discussed with President Reagan on July 18, 1985 and again on August 6, 1985. Shultz counseled Reagan that "we were just falling into the arms-for-hostages business and we shouldn't do it."
McFarlane believed that there was a moderate faction in the Islamic republic headed by Akbar Hashemi Rafsanjani, who was a leading potential successor to Khomeini and who was alleged to want to reestablish relations with the United States. McFarlane believed that Rafsanjani had the power to order Hezbollah to free the American hostages. McFarlane convinced the Israelis that the U.S. government approved the sale, and Israel obliged by agreeing to sell the arms.
The official justification for the arms shipments was that they were part of an operation to free seven American hostages being held in Lebanon by Hezbollah, a paramilitary group with Iranian ties connected to the Islamic Revolutionary Guard Corps. The plan was for Israel to ship weapons to Iran, for the United States to resupply Israel, and for Israel to pay the United States. The Iranian recipients promised to do everything in their power to achieve the release of the hostages.
In 1985, Reagan entered Bethesda Naval Hospital for colon cancer surgery. While Reagan was recovering in the hospital, McFarlane met with him and told him that representatives from Israel had contacted the National Security Agency to pass on confidential information from Rafsanjani. According to Reagan, these Iranians sought to establish a quiet relationship with the United States, before establishing formal relationships upon the death of the aging Ayatollah. McFarlane told Reagan that the Iranians, to demonstrate their seriousness, offered to persuade the Hezbollah militants to release the seven U.S. hostages. Reagan claimed that he allowed this because he believed that establishing relations with a strategically located country prevented the Soviet Union from doing the same. Reagan claimed that he understood that the arms sales were to a "moderate" faction of Iranians, and not to Iran itself.
The Lebanese magazine Ash-Shiraa exposed the arrangement on November 3, 1986. This was the first public report of the weapons-for-hostages deal. The operation was discovered after a plane loaded with guns crashed over Nicaragua. Eugene Hasenfus, who was captured by Nicaraguan authorities after surviving the plane crash. The Iranian government confirmed the Ash-Shiraa story. On November 13, President Reagan appeared on national television from the Oval Office. He said:
"My purpose was to send a signal that the United States was prepared to replace the animosity between the United States and Iran with a new relationship. At the same time we undertook this initiative, we made clear that Iran must oppose all forms of international terrorism as a condition of progress in our relationship. The most significant step which Iran could take, we indicated, would be to use its influence in Lebanon to secure the release of all hostages held there."
The scandal was complicated when Lieutenant Colonel Oliver North destroyed or hid pertinent documents between November 21–25, 1986, in order to prevent their discovery by Congress. During North's trial in 1989, his secretary, Fawn Hall, testified extensively about helping North shred, and remove official United States National Security Council (NSC) documents from the White House. North claimed that he destroyed the documents in order to protect the lives of individuals involved in Iran and Contra operations.
On November 25, U.S. Attorney General Edwin Meese admitted that profits from weapons sales to Iran were made available to assist the Contra rebels in Nicaragua. On the same day, John Poindexter resigned, and President Reagan fired Oliver North. The NSC had usually acted as an advisory agency until the Reagan administration.
On November 25, 1986, President Reagan announced the creation of a Special Review Board to look into the matter. The following day, he appointed former Senator John Tower, former Secretary of State Edmund Muskie, and former National Security Adviser Brent Scowcroft to serve as members of the review board. This Presidential Commission became known as the Tower Commission. The main objectives of the commission were to inquire into "the circumstances surrounding the Iran-Contra matter, other case studies that might reveal strengths and weaknesses in the operation of the National Security Council system under stress, and the manner in which that system has served eight different presidents since its inception in 1947".
President Reagan appeared before the Tower Commission on December 2, 1986, to answer questions regarding his involvement in the affair. When asked about his role in authorizing the arms deals, he said that he had no recollection of doing so. The report published by the Tower Commission was delivered to the president on February 26, 1987. The Commission had interviewed 80 witnesses, including Reagan, and two of the arms trade middlemen. The 200-page report criticized the actions of Oliver North, John Poindexter, Caspar Weinberger, and others. It determined that President Reagan did not have knowledge of the extent of the program, especially about the diversion of funds to the Contras. But it also said that the president ought to have had better control of the National Security Council staff. The report heavily criticized Reagan for not properly supervising his subordinates or being aware of their actions. It said that Reagan should have listened to his National Security Advisor more.
In January 1987, Congress announced it was opening an investigation into the Iran–Contra affair. Democrats controlled Congress. The Congressional report was issued on November 18, 1987. It concluded that "If the president did not know what his national security advisers were doing, he should have." The report added that the president bore "ultimate responsibility" for wrongdoing by his aides, and his administration exhibited "secrecy, deception and disdain for the law". It also concluded that "the central remaining question is the role of the President in the Iran–Contra affair. On this critical point, the shredding of documents by Poindexter, North and others, and the death of Casey, leave the record incomplete".
Reagan gave a nationally televised address from the Oval Office on March 4, 1987. He offered the following explanation:
"The reason I haven't spoken to you before now is this: You deserve the truth. And as frustrating as the waiting has been, I felt it was improper to come to you with sketchy reports, or possibly even erroneous statements, which would then have to be corrected, creating even more doubt and confusion. There's been enough of that. First, let me say I take full responsibility for my own actions and for those of my administration. As angry as I may be about activities undertaken without my knowledge, I am still accountable for those activities. As disappointed as I may be in some who served me, I'm still the one who must answer to the American people for this behavior.
Reagan acknowledged that his previous assertions that the U.S. did not trade arms for hostages were incorrect:
"A few months ago I told the American people I did not trade arms for hostages. My heart and my best intentions still tell me that's true, but the facts and the evidence tell me it is not. As the Tower board reported, what began as a strategic opening to Iran deteriorated, in its implementation, into trading arms for hostages. This runs counter to my own beliefs, to administration policy, and to the original strategy we had in mind."
Debate continues about exactly what Reagan knew and when, and whether the arms sales were motivated by his desire to save the U.S. hostages. Oliver North wrote that "Ronald Reagan knew of and approved a great deal of what went on with both the Iranian initiative and private efforts on behalf of the contras and he received regular, detailed briefings on both. I have no doubt that he was told about the use of residuals for the Contras, and that he approved it. Enthusiastically." The"Report of the Congressional Committees Investigating the Iran-Contra Affair" made the following conclusion:
There is some question and dispute about precisely the level at which he chose to follow the operation details. There is no doubt, however, that the President set the US policy towards Nicaragua, with few if any ambiguities, and then left subordinates more or less free to implement it.
The Iran-Contra affair led to a large decline in President Reagan's popularity. His approval ratings fell from 67% to 46% in November 1986, according to a The New York Times/CBS News poll. However his approval rating recovered by the end of his term.
Soon after taking office, Reagan began implementing sweeping new political and economic initiatives. His supply-side economic policies, called "Reaganomics" by his opponents, called for tax rate reduction to spur economic growth, economic deregulation, and reduction in government spending. He would prove successful only on the first two. In his first term he survived an assassination attempt, declared a "War on Drugs", and stood up to public sector labor. Over his two terms, the economy saw a reduction of inflation from 12.5% to 4.4%, and an average annual growth of real GDP of 3.4%. Reagan enacted cuts in domestic discretionary spending, cut taxes, and increased military spending which contributed to increased federal outlays overall, even after adjustment for inflation.
Foreign affairs dominated his second term, including ending the Cold War, the bombing of Libya, the Iran–Iraq War, and the Iran–Contra affair. In June 1987, four years after he publicly described the Soviet Union as an "evil empire", Reagan challenged Soviet General Secretary Mikhail Gorbachev to "tear down this wall!", during a speech at the Brandenburg Gate. He transitioned Cold War policy from détente to rollback by escalating an arms race with the USSR while engaging in talks with Gorbachev. The talks culminated in the INF Treaty, which shrank both countries' nuclear arsenals. Reagan began his presidency during the decline of the Soviet Union, and the Berlin Wall fell just ten months after the end of his term. Germany reunified the following year, and on December 26, 1991 (nearly three years after he left office), the Soviet Union collapsed.
The "curse" on his second term was a controversy known as "Iran-Contra". With some parallels to Watergate, contravention of the law was traced to the administration and the question was: how much did the President know? Reagan claimed to have no knowledge of what had occurred. That didn't turn out to be completely correct, but in the end, Reagan was not found to have committed any wrongdoing himself.
The United States had once been the largest seller of arms to Iran under Mohammad Reza Pahlavi, better known as the Shah. When the Shaw was overthrown, and the vast majority of the weapons that the Islamic Republic of Iran inherited were American-made. To maintain this arsenal, Iran required a steady supply of spare parts to replace those broken and worn out. But after Iranian students stormed the American embassy in Tehran in November 1979 and took 52 Americans hostage, U.S. President Jimmy Carter imposed an arms embargo on Iran. When Iraq invaded Iran in September 1980, Iran desperately needed weapons and spare parts for its current weapons. But when Ronald Reagan took office as President, he promised to continue Carter's policy of blocking arms sales to Iran.
In 1986 it was discovered that senior administration officials had secretly facilitated the sale of arms to Iran. In early July 1985, Michael Ledeen, a consultant of National Security Adviser Robert McFarlane, requested assistance from Israeli Prime Minister Shimon Peres for help in the sale of arms to Iran. McFarlane learned that the Iranians were prepared to have the terrorist organization Hezbollah release American hostages in Lebanon in exchange for the Israelis shipping American weapons to Iran. Iran was in the midst of the Iran–Iraq War and could find few Western nations willing to supply it with weapons. The plan was for Israel to ship weapons through an intermediary to Iran in order to aiding a moderate faction within the regime of Ayatollah Khomeini who was believed to be seeking a rapprochement with the United States. In a memo to Secretary of State George Shultz and Defense Secretary Casper Weinberger, McFarlane wrote: "The short term dimension concerns the seven hostages; the long term dimension involves the establishment of a private dialogue with Iranian officials on the broader relations. They sought specifically the delivery from Israel of 100 TOW missiles."
The plan was discussed with President Reagan on July 18, 1985 and again on August 6, 1985. Shultz counseled Reagan that "we were just falling into the arms-for-hostages business and we shouldn't do it."
McFarlane believed that there was a moderate faction in the Islamic republic headed by Akbar Hashemi Rafsanjani, who was a leading potential successor to Khomeini and who was alleged to want to reestablish relations with the United States. McFarlane believed that Rafsanjani had the power to order Hezbollah to free the American hostages. McFarlane convinced the Israelis that the U.S. government approved the sale, and Israel obliged by agreeing to sell the arms.
The official justification for the arms shipments was that they were part of an operation to free seven American hostages being held in Lebanon by Hezbollah, a paramilitary group with Iranian ties connected to the Islamic Revolutionary Guard Corps. The plan was for Israel to ship weapons to Iran, for the United States to resupply Israel, and for Israel to pay the United States. The Iranian recipients promised to do everything in their power to achieve the release of the hostages.
In 1985, Reagan entered Bethesda Naval Hospital for colon cancer surgery. While Reagan was recovering in the hospital, McFarlane met with him and told him that representatives from Israel had contacted the National Security Agency to pass on confidential information from Rafsanjani. According to Reagan, these Iranians sought to establish a quiet relationship with the United States, before establishing formal relationships upon the death of the aging Ayatollah. McFarlane told Reagan that the Iranians, to demonstrate their seriousness, offered to persuade the Hezbollah militants to release the seven U.S. hostages. Reagan claimed that he allowed this because he believed that establishing relations with a strategically located country prevented the Soviet Union from doing the same. Reagan claimed that he understood that the arms sales were to a "moderate" faction of Iranians, and not to Iran itself.
The Lebanese magazine Ash-Shiraa exposed the arrangement on November 3, 1986. This was the first public report of the weapons-for-hostages deal. The operation was discovered after a plane loaded with guns crashed over Nicaragua. Eugene Hasenfus, who was captured by Nicaraguan authorities after surviving the plane crash. The Iranian government confirmed the Ash-Shiraa story. On November 13, President Reagan appeared on national television from the Oval Office. He said:
"My purpose was to send a signal that the United States was prepared to replace the animosity between the United States and Iran with a new relationship. At the same time we undertook this initiative, we made clear that Iran must oppose all forms of international terrorism as a condition of progress in our relationship. The most significant step which Iran could take, we indicated, would be to use its influence in Lebanon to secure the release of all hostages held there."
The scandal was complicated when Lieutenant Colonel Oliver North destroyed or hid pertinent documents between November 21–25, 1986, in order to prevent their discovery by Congress. During North's trial in 1989, his secretary, Fawn Hall, testified extensively about helping North shred, and remove official United States National Security Council (NSC) documents from the White House. North claimed that he destroyed the documents in order to protect the lives of individuals involved in Iran and Contra operations.
On November 25, U.S. Attorney General Edwin Meese admitted that profits from weapons sales to Iran were made available to assist the Contra rebels in Nicaragua. On the same day, John Poindexter resigned, and President Reagan fired Oliver North. The NSC had usually acted as an advisory agency until the Reagan administration.
On November 25, 1986, President Reagan announced the creation of a Special Review Board to look into the matter. The following day, he appointed former Senator John Tower, former Secretary of State Edmund Muskie, and former National Security Adviser Brent Scowcroft to serve as members of the review board. This Presidential Commission became known as the Tower Commission. The main objectives of the commission were to inquire into "the circumstances surrounding the Iran-Contra matter, other case studies that might reveal strengths and weaknesses in the operation of the National Security Council system under stress, and the manner in which that system has served eight different presidents since its inception in 1947".
President Reagan appeared before the Tower Commission on December 2, 1986, to answer questions regarding his involvement in the affair. When asked about his role in authorizing the arms deals, he said that he had no recollection of doing so. The report published by the Tower Commission was delivered to the president on February 26, 1987. The Commission had interviewed 80 witnesses, including Reagan, and two of the arms trade middlemen. The 200-page report criticized the actions of Oliver North, John Poindexter, Caspar Weinberger, and others. It determined that President Reagan did not have knowledge of the extent of the program, especially about the diversion of funds to the Contras. But it also said that the president ought to have had better control of the National Security Council staff. The report heavily criticized Reagan for not properly supervising his subordinates or being aware of their actions. It said that Reagan should have listened to his National Security Advisor more.
In January 1987, Congress announced it was opening an investigation into the Iran–Contra affair. Democrats controlled Congress. The Congressional report was issued on November 18, 1987. It concluded that "If the president did not know what his national security advisers were doing, he should have." The report added that the president bore "ultimate responsibility" for wrongdoing by his aides, and his administration exhibited "secrecy, deception and disdain for the law". It also concluded that "the central remaining question is the role of the President in the Iran–Contra affair. On this critical point, the shredding of documents by Poindexter, North and others, and the death of Casey, leave the record incomplete".
Reagan gave a nationally televised address from the Oval Office on March 4, 1987. He offered the following explanation:
"The reason I haven't spoken to you before now is this: You deserve the truth. And as frustrating as the waiting has been, I felt it was improper to come to you with sketchy reports, or possibly even erroneous statements, which would then have to be corrected, creating even more doubt and confusion. There's been enough of that. First, let me say I take full responsibility for my own actions and for those of my administration. As angry as I may be about activities undertaken without my knowledge, I am still accountable for those activities. As disappointed as I may be in some who served me, I'm still the one who must answer to the American people for this behavior.
Reagan acknowledged that his previous assertions that the U.S. did not trade arms for hostages were incorrect:
"A few months ago I told the American people I did not trade arms for hostages. My heart and my best intentions still tell me that's true, but the facts and the evidence tell me it is not. As the Tower board reported, what began as a strategic opening to Iran deteriorated, in its implementation, into trading arms for hostages. This runs counter to my own beliefs, to administration policy, and to the original strategy we had in mind."
Debate continues about exactly what Reagan knew and when, and whether the arms sales were motivated by his desire to save the U.S. hostages. Oliver North wrote that "Ronald Reagan knew of and approved a great deal of what went on with both the Iranian initiative and private efforts on behalf of the contras and he received regular, detailed briefings on both. I have no doubt that he was told about the use of residuals for the Contras, and that he approved it. Enthusiastically." The"Report of the Congressional Committees Investigating the Iran-Contra Affair" made the following conclusion:
There is some question and dispute about precisely the level at which he chose to follow the operation details. There is no doubt, however, that the President set the US policy towards Nicaragua, with few if any ambiguities, and then left subordinates more or less free to implement it.
The Iran-Contra affair led to a large decline in President Reagan's popularity. His approval ratings fell from 67% to 46% in November 1986, according to a The New York Times/CBS News poll. However his approval rating recovered by the end of his term.