After Nixon’s resignation, Gerald Ford became president. Plagued by his inability to solve the nation’s economic problems and his pardon of Nixon, Ford was defeated in 1976 by Jimmy Carter. Carter, though unquestionably well-intentioned and virtuous, was not an effective president. He unable to raise the country out of what he termed its “malaise.” During the Carter presidency, the nation faced double-digit inflation, economic competition from abroad, and a recession, none of which Carter addressed effectively. In foreign policy, Carter sought to put “basic human rights” before all else; with this in mind he cut aid to Chile and Argentina. He negotiated the return of the Panama Canal to Panama, and withdrew recognition of Taiwan and recognized the People’s Republic of China. And while he attempted to continue détente and negotiated the Strategic Arms Limitation Treaty with the Soviet Union, Soviet actions in Afghanistan led Carter to withdraw the treaty, suspend grain and technology sales to the Soviets, and boycott the Moscow Olympics. Carter’s greatest foreign-policy accomplishment was the Camp David Agreement; his greatest defeat the Iranian hostage crisis. Although there may have been little he could do about the crisis, the failure of a rescue mission brought wide criticism. Carter lost the 1980 election to Ronald Reagan, upon whose inauguration the hostages were freed. Reagan deeply believed in supply-side economics, cutting federal programs, tax cuts, and military spending; his policies brought about a recession in 1982.

In foreign policy, he was a dedicated anticommunist and supported right-wing rebels in Nicaragua and El Salvador, and used the American military to oust a Cuban-backed government in Grenada. After his reelection in 1984, Reagan’s feelings toward the Soviets softened in light of the reforms initiated by Mikhail Gorbachev. Reagan did, however, adhere to his commitments to defense spending, tax cuts, and opposition to communism and terrorism. The Reagan administration was shaken, and the president’s image tarnished, by the Iran-Contra scheme in his second administration.

During the Reagan years, the United State absorbed new immigrants from Asia and Latin America, saw an aging population and a new disease, AIDS, begin to put demands on health care and social services, and faced troubling questions about the state of the family, urban decay, maldistribution of wealth, crime, drugs, and dislocations caused by government deregulation, mergers and acquisitions, and a shift from a production-oriented to a service-based economy.