On the daytime Ronald Reagan was inaugurated as President , January 20 , 1981 . the Persian authorities released the American hostages , the windup of month of negotiations . Reagan , coming into office during a period of national euphoria following the close of the surety crisis , go quickly to implement his campaign promise to substantially lose weight Union taxes , expenditure , and regulation , and significantly increase the military budget . His proposals were supported by a majority of the American masses and his popularity was high-pitched .
On March 30 , 1981 , Reagan was seriously wounded by a deranged hired gun , John W. Hinckley , Jr. , in an attempted blackwash in Washington , D.C. The 70 - class - sometime President recovered quickly and returned from the infirmary to the White House in mid - April . He soon won Congressional favorable reception for most of his economic marriage proposal , including the largest tax cutting in the nation ’s history . Some groups , however , express concern over the cutbacks in plan for the needy and there were objections to the vast sums to be expend for the armed forces . Inflation and high interest rate continued to plague the economy during 1981 .
Also in 1981 , the United States found the space shuttle Columbia , the first reusable spacecraft , in April , marking the beginning of a new space years . In September , Sandra Day O’Connor , appointed by President Reagan , became the first woman justice of the U.S. Supreme Court .
In former 1981 , the United States entered a ceding back . It developed into the bad economical slack since the Great Depression , with unemployment rates hit nigh 10 per centime by mid-1982 . The blade , car , and housing industries were specially intemperately hit . Also , financial institutions were severely impress by continue high interest rates . With annual federal budget deficit of $ 100 to $ 200 billion anticipated for at least three years , Congress , in August , 1982 , enacted a revenue enhancement increase carry to raise $ 98.3 billion in revenue over a three - year point .
Meanwhile , the United States entered into strategic arms reduction talks ( START ) with the Soviet Union , in November , 1981 . Also that calendar month , the space shuttle Columbia made a successful 2d flight of steps , marking the first time a quad vehicle had been reused .
Under the Reagan administration , United States troop were direct into fight zone for the first time since the Vietnamese War . In 1981 American military advisers were dispatched to El Salvador to train regime troops fighting leftist insurgent . In 1982 , follow the Israeli invasion of Lebanon , a withdrawal of U.S. Marines was sent to that country as part of a transnational peacekeeping military force .
On June 30 , 1982 , the deadline passed for confirmation of the Equal Rights Amendment , with the proposed amendment having been approved by only 34 of the necessary 37 states . In March , 1983 , Congress exceed a comprehensive Social Security reform bill , design to keep the system solvent into the 21st century . In April the 2nd space birdie , Challenger , made its initial flight . Also in 1983 , the economy began to recuperate from the recession . Although unemployment carry on to be a problem and some industry remained depressed , the nation was well into a period of economical growth by 1984 .
Meanwhile , in October , 1983 , United States scout troop , along with contingents from several Caribbean nations , invaded the island of Grenada , overthrowing a radical Marxist politics that had been regard as a threat to the security of the area . Also that calendar month , a terrorist bomb exploded in the U.S. Marine chemical compound in Beirut , Lebanon , killing 241 Marines and other military man . ( In March , 1984 , President Reagan govern the withdrawal of the American peacekeeping mission force from Lebanon . ) Relations degenerate between the United States and the Soviet Union , and in November , 1983 , the Soviets breach off the arm reduction talks .
In 1984 the popular political party chose former Vice President Walter F. Mondale as its nominee for President , and he choose Congresswoman Geraldine Ferraro of New York as his running game mate . President Reagan hunt down unopposed for renomination . Despite criticism of many of his organization ’s policies , Reagan easily won reelection in November , 1984 .
During 1985 , the thriftiness maintained a steady pace of growing , although there was increase concern in line of work and governmental circles over annual Union budget deficit that reached most $ 200 billion . Soviet - American relations improved after Mikhail Gorbachev came to power in the Soviet Union . branch - limitations lecture between the two nations were resumed in March , 1985 , and a peak meeting between President Reagan and the Soviet leader was admit in November , 1985 , in Geneva , Switzerland . No major agreements were reached , however . The year end with the passing of the Gramm - Rudman Act , legislation design to reduce federal budget deficit .
In the tumble of 1986 , two important pieces of legislation were ordain — a massive reform of the federal taxation code and economic sanctions against South Africa ( because of that nation ’s policy of apartheid ) . In the November elections , the Democrats recover control of Congress by winning a majority in the U.S. Senate .
Also in November , a major political scandal , the so - called Iran - contra Affair , start to unfold . Over the next several months , it was let on that some official in the Reagan judicature had engaged in activities that violated national policy and may have involved illegalities . These officials had on the QT sold American weapon system to Iran ( in the hope of get ahead button of American hostages being held in the Middle East ) and divert the profits to aid the contras ( anti - Marxist guerilla in Nicaragua ) .
In May , 1987 , the USS Stark , on patrol in the Persian Gulf , became a casualty in a warfare between Iran and Iraq when it was accidentally attacked by an Iraki fighter plane . The ship was gravely damaged and 37 life were lost . Also in 1987 , after Iran attacked neutral shipping in the disconnection , the United States increase its naval presence in the area . Until the Iran - Iraq cease - firing the undermentioned year , U.S. Navy combat ship at times escorted oil tank ship through the watercourse .
On " Black Monday , " October 19 , 1987 , fund food market values refuse by about one - fourth , nearly double the drop that had begin the bully Depression of 1929 - 39 . The grocery unstableness was thought to have been make in the main by concern over the monumental Union shortfall that continued throughout the 1980 ’s . However , the thriftiness remain strong , and the market rebound .
In December , 1987 , the United States and the Soviet Union signal the Intermediate - Range Nuclear Forces Treaty , the first understanding to reduce the size of their nuclear arsenals . The Senate approved the treaty in May , 1988 . Important statute law enact in 1988 included a comprehensive trade bill aimed at expanding American trade , a rescript of the welfare organization to emphasize training and body of work , establishment of the Department of Veterans Affairs , and a law provide compensation to Japanese - Americans interned during World War II .
The American manned place program resumed with the successful launching of the space bird Discovery in September , 1988 . In the election of November , 1988 , Vice President George Bush was elected President , defeating Governor Michael Dukakis of Massachusetts , the popular nominee .
