In Congress in 1989 Bush faced Democratic
majorities in both Houses. The Democrats were
not inclined to vote for measures to reduce the
large deficit if it meant cutting welfare, social
security, medical care for the old or any of the pet
‘pork-barrel’ projects that gained Democrats and
Republicans alike support from their constituen-
cies. The president’s policies at home began cau-
tiously in 1989; with an eye on the deficit, he
rejected public-spending increases. But the dereg-
ulation of the Savings and Loans institutions
during the Reagan years had led to imprudent
lending and the imminent bankruptcies that
ensued required a large federal bail-out. The
deficit grew instead of shrinking, and the eco-
nomy began to show signs of downturn after the
credit expansion and stock-market wheeling and
dealing of the 1980s.
A severe recession began in 1990 and con-
tinued through 1992. Despite his campaign
promises, President Bush was forced to raise indi-
rect taxes and reduce exemptions from tax for the
better-off. He was widely blamed for not giving
sufficient attention to the state of the economy
and the rapidly growing unemployment. Yet for
a time his popularity reached extraordinary
heights. The explanation for this lies in ‘patriotic’
America. Bush’s forceful handling of Panama
gained him enthusiastic support. The strongman
of Panama was the virulently anti-American
General Manuel Noriega, who was wanted in the
US for drug dealing. In May 1990 Noriega had
forcibly prevented the democratic opposition
leader from gaining the presidency: the elections
had been accompanied by violence, intimida-
tion and corruption. The US pressed for the
removal of Noriega, but without success. Finally
on 20 December 1989, a large US military force
descended on Panama City, causing some loss of
life and destruction. Noriega was cornered, cap-
tured and brought to the US for trial, and the
opposition candidate of the previous May was
installed as president. But such forceful interven-
tion raised renewed fears in Latin America of
‘gunboat diplomacy’.
A much bigger issue was the Gulf crisis after
the Iraqi invasion of Kuwait in August 1990.
President Bush’s consistent and decisive response
in leading the United Nations and forming a
coalition of European and Arab nations to defend
Saudi Arabia won him general support. The
despatch of ground troops, however, caused con-
siderable anxiety inside and outside Congress. By
the end of the year, from the Democratic side of
Congress especially, there was opposition to the
use of force and an insistence that negotiations
and sanctions should be continued and allowed
time to work. When the Gulf War was quickly
and brilliantly won with few American casualties
in 1991, Bush’s reputation was at its height.
But Bush’s decision to stop the fighting once
Kuwait had been liberated without toppling
Saddam Hussein was a profound misjudgement as
Hussein defied the UN and was anything but
cowed. Nor did the immense efforts at mediation
by Secretary of State James Baker, which brought
together Israel and its Arab neighbours to try
to negotiate a peace settlement at conferences
in Madrid and Washington in the autumn of
1991 and early in 1992, appear to lead to much
progress.
The Bush administration could certainly take
credit for responding positively to the changes in
the Soviet Union and for recognising that to
welcome the reunification of the two Germanys
was a more realistic and productive policy than
the more hesitant reactions in Western Europe.
Nor should Bush or Baker be criticised for not
recognising the independence of the Baltic states
sooner, which would only have added to
Gorbachev’s difficulties. Gorbachev’s credentials
as an international statesman and peacemaker
were impeccable, while those of Boris Yeltsin
(then only a possible successor) were still untried.
Bush remained cautious throughout, preferring
what looked like the safer bet. Nor was he ready
to commit American resources or to sacrifice the
lives of US servicemen for ideological reasons or
to engage in war a day longer than was required
to meet American objectives. He could claim that
his had been a safe pair of hands.
But the election in November 1992, with the
Cold War over, no longer turned on foreign
issues or defence. Attention focused on domestic
problems, the state of the economy, the frustra-
tions of the economically disadvantaged and of
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