Politics and Economics The End of the Cold War

George Bush Takes Office The war in the Persian Gulf was only one of many international crises that confronted President George Bush after his election in 1988. Civil rights leader Jesse Jackson, tried to create a “rainbow coalition” –a broad group of minorities and the poor-by speaking about homelessness and unemployment. Democrats, keep control of Congress.

Domestic Challenges Gridlock in Government Capital gains tax-the tax paid by businesses and investors when they sell stocks or real estate for a profit. Bush broke his “no new taxes” campaign pledge. He agreed to a tax increase in exchange for cuts in spending.

Domestic Challenges The Economy Slows The recession that began in 1990 was partly caused by the end of the Cold War. Downsizing: laying off workers and managers to become more efficient. As the Soviet threat faded, the US began reducing its armed forces. Many former military personnel now had to find civilian jobs. The government canceled orders for military equipment. This forced defense factories to lay off thousands of workers.

The “New World Order” The Persian Gulf War In August 1990, Iraq’s dictator, Saddam Hussein, sent his army to invade oil-rich Kuwait. President Bush persuaded other UN member countries to join a coalition to stop Iraq. Iraq refused to comply with the UN deadline, and on January 16, 1991, the coalition forces launched Operation Desert Storm. The attack killed thousands of Iraqi soldiers.

The “New World Order” Panama While president Bush struggled to deal with global events elsewhere, a crises developed in Panama. By 1989 Panama’s dictator, General Manuel Noriega, had stopped cooperating with the United States. U.S. troops helped the Panamanians hold elections and organize a new government.

The Cold War Ends Gorbachev’s Reforms To save the economy, Gorbachev instituted perestroika, or “restructuring,” and allowed some private enterprise and profit-making. Principle of Gorbachev’s plan was glasnost, or “openness.”

The Cold War Ends Revolution in Eastern Europe In 1989 peaceful revolutions replaced Communist rulers with democratic governments in Poland, Hungary, Czechoslovakia, Romania, and Bulgaria.

The Cold War Ends The Soviet Union Collapses In late December 1991, Gorbachev announced the end of the Soviet Union. In Moscow, Russian president Boris Yeltsin defied the coup leaders.

The “New World Order” Tragedy in Tiananmen Square In May 1989, Chinese students and workers held demonstrations for democracy. In early June, government tanks and soldiers crushed their protests in Tiananmen Square.

Essay Question Explain how the end of the Cold War contributed to the recession that began in 1990.

Essay Question Explain how the end of the Cold War contributed to the recession that began in 1990. As the Soviet threat faded, the United States began reducing its armed forces. Many former military personnel now had to find civilian jobs. Meanwhile, the government canceled orders for military equipment. This forced defense factories to lay off thousands of workers.