Ronald Reagan produced a major realignment with his 1980 and 1984 landslides. In 1980, the Reagan coalition was possible because of Democratic losses in most social-economic groups. "Reagan Democrats" were those who usually voted Democratic, but were attracted by Reagan's policies, personality and leadership, notably his social conservatism and hawkish foreign policy. Reagan's economic policies (dubbed "Reaganomics") and the implementation of the Economic Recovery Tax Act of 1981 lowered income taxes from 70% to 28% over the course of seven years. Reagan continued to downsize government taxation and regulation. The U.S. experienced a recession in 1982; unemployment and business failures soon entered rates close to Depression-era levels. These negative trends reversed the following year, when the inflation rate decreased from 11% to 2%, the unemployment rate decreased to 7.5%, and the economic growth rate increased from 4.5 to 7.2%.
Reagan took a hard line against the Soviet Union, proclaiming it to be the Evil Empire. Reagan ordered a massive buildup of the U.S. military, incurring a costly budget deficit. Reagan introduced a complicated missile defense system known as the Strategic Defense Initiative (dubbed "Star Wars" by opponents) in which the U.S. could, in theory, shoot down missiles by means of laser systems in space. Though it was never fully developed or deployed, the Soviets were genuinely concerned about the possible effects of the program and the research and technologies of SDI paved the way for the anti-ballistic missile systems of today. The Reagan administration also provided covert funding and assistance to anti-Communist resistance movements worldwide. Reagan's interventions against Grenada and Libya were popular in the U.S., though his backing of the Contra rebels was mired in controversy. The arms-for-hostages scandal led to the convictions of such figures as Oliver North and John Poindexter. He shared many common views and goals with friend and ally Margaret Thatcher, the Prime Minister of the United Kingdom.
Reagan met with Soviet Leader Mikhail Gorbachev, who ascended to power in 1985, four times, and their summit conferences led to the signing of the INF Treaty. Gorbachev tried to save Communism in the Soviet Union first by ending the expensive arms race with America, then by shedding the East European empire in 1989. The Soviet Union collapsed in 1991, ending the US-Soviet Cold War.
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