-- captions by vitac -- www.vitac.com in this present crisis, government is not the solution to our problem. government is the problem. >> if ever a policy reflected a president's own character, it is reag reaganomis. >> the president was hit, the story from middle east sources is that iran has helped the united states free a hostage from lebanon. >> they called it the reagan revolution. but for me it just seemed like a rediscovery of our values. once you begin a great movement, there's no telling where it will end.

♪ ♪ >> thank you. we're faced with an unprecedented situation in this country today. jimmy carter's demonstrated

inability to dpomgovern our nat. but this country has everything that it always had before, except the leadership in washington that this country requires. [ applause ] >> reagan put a lot of energy and effort into 1980. the economy had been through a recession, and in addition to that, the united states had been embarrassed by the iran hostage crisis. the country wanted to turn a corner and ronald reagan held the promise to all of that. >> america is turning to a new political direction, at least for the next four years, to the right, republican. ronald reagan rode an electoral landslide to the white house. ♪ >> reagan conveyed a sense of optimism and hope.

the secret to his success was that he made people feel good. >> even though reagan had been a fairly successful governor of the largest state of the union, he was still doubted for his background as having been a hollywood actor, and he was very controversial. he took a lot of outrageous positions. >> in this present crisis, government is not the solution to our problem, government is the problem. [ applause ] >> for 50 years, americans had been looking to government to solve their problems. when reagan gave his speech, that marked a 180 degree turn around in the american political conversation in the trend of american politics. >> can we solve the problems confronting us? well, the answer is an unequivocal and emphatic yes. and after all, why shouldn't we believe that? we are americans. [ applause ] god bless you and thank you.

thank you very much. >> we have a report, i'm just told that the associated press reports that the hostages are leaving iran. they say that the hostages are heaving the airport. >> for 444 days, 52 americans were held halfway around the world, a sign of carter's weakness. and reagan comes in, and poof. >> mr. president, they're free. we've had press reports they're free. what do you have to say, sir? >> only one thing to say, thank god. >> you could not have had a more stunning beginning to a presidency. the whole last year of the carter administration is defined by the hostages. now the first hour of reagan, they're free. that's the case where the image defines the reality.

>> i just won't call them hostages. they were prisoners of war. [ applause ] >> if the hostages had not been released, reagan would have been forced to focus on the hostage crisis, with the hostages -- he was free to focus on the economy. >> inflation and unemployment are threatening the way of the american life like never before, and without a change of policy, it will get worse. >> inflation flared again last month. >> in 1967, inflation was 2.9%. last year, it was 12.4%. >> people were afraid. people had begun to think that america was in a kind of relative decline. >> we had high unemployment and high inflation. which at the time was thought to be impossible under the existing economic orthodoxy. so it required something new to change that problem. >> if we can lower the rate of increase in government

spending -- >> today, we have found 72% of the savings that we would have to achieve in order to meet that $53 billion reduction target. >> reaganomics ba s was basical you give the investing class the money, it would trickle down, and cutting taxes would increase revenues. >> the president spent the day dealing with brush fires on the right and left. the cuts he wants to make in the budget and in income taxes, brought out into the open some disagreements among his supporters as well as opponents. >> reagan says cut back. >> we say fight back. >> the administration has gambled our future on a dubious plan that does not deal directly with the relentless spiral of rising prices, wages, and interest rates. >> i read an awful lot about how we're going to really hurt the

poor and things oh of that nature in this administration with our cuts. that is absolutely not what we're going to do! >> reagan came in with a savvy staff that understood the challenges they faced to try to change things, but they came up against an entrenched washington culture and democratic establishment that just wasn't going to roll over for reagan and let him get his way. >> if we do nothing else in this administration, we're going to convince this city that the power, the money, and the responsibility of this country begins and ends with the people and not some secinder block building in washington, d.c. thank you very much. [ applause ] >> mr. president. mr. president. >> get down! get out of here!

>> we interrupt. there's been a late development. shots reported fired outside the hotel where president reagan spoke a short time ago. here's bernard shaw. >> details are sketchy. we don't know the sequence. first of all, the president is safe. >> wait a minute, i'm on the air and trying to get more information. >> we have a report that the president's adviser for political -- for political affairs, he told reporters at the hospital that the president was not wounded -- >> he was. >> he was wounded. my god! he was -- the president was hit? he is in stable condition. all this information -- we have one more bit of information. the bullet that struck the president has not yet been removed. and he's not undergoing surgery at this time. he was, however, struck in the left chest. the last word we had is that he

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♪ we were told that a decision is now being made on whether to operate on the president to remove the bullet from his left side. >> when the world came, it sounded as if the president might not make it through the night. >> i would emphasize that the president's condition is stable, and that we were informed by jim baker that he did walk into the hospital. >> i was at the white house, the information coming in was incomplete. they weren't fully up to date on what was happening with the president's condition. when they found out how serious it was, they wanted to reassure everybody. >> coming in indirectly from one of the surgeons is that the

bullet, as we have reported once before, did miss the president's heart, missed by an inch. >> he told mrs. reagan, honey, i forgot to duck. >> what? >> i forgot to duck. and then when he got into the operating room, he looked at the doctors and he said, please tell me you're republicans. >> reagan relied on this trick of advisers. jim baker is his chief of staff, a really killed, shrewd political insider. ed meese is a counselor to the president. and michael beaver is in charge of the media operation. they ran the white house. >> the assassination attempt and aftermath elevated ronald reagan's popularity to a new high. his job rating jumped ten points. >> reagan understood that he was getting this sort of sympathy reaction.

everybody was rooting for him all of a sudden because they didn't want him to die. they didn't want to lose a president. without missing a step, he goes into what the message is. we have to get this tax and spending bill passed and do it now. >> mr. speaker, the president of the united states! [ applause ] >> it was just like the movies. reagan was a true american hero. >> the president looking very healthy. >> i was seated in the well of the house there when he was addressing congress. it was magic. everybody was so grateful his life had been spared. it was a stirring moment. >> if you want them to stop, they're not going to stop for a while. >> they handed president reagan and the republicans a major victory. president reagan got what he wanted for a house controlled by the opposition party. >> reagan comes off the victory in congress, and the recovery

from the assassination attempt, looking very strong and bold. like a very determined leader. >> workers united! >> the strike began as scheduled at 7:00 local time this morning. its impact was immediate. most flights delayed, many more canceled. >> the air traffic controllers were underpaid, worked terrible hours, they wanted a big raise. they said we're going to strike. >> they were the only union in the country that endorsed ronald reagan. but by law, they were forbidden to strike. >> they are in violation of the law, and if they do not report for work within 48 hours, they have forfeited their jobs and will be terminated. end of statement. >> what? he actually did that? and it's kind of like hitting the mule on the head with a 2 x 4. that got people's attention. >> this afternoon, president reagan started firing the

strikers and the government claimed it was ready to rebuild the whole system without them. >> this sent a different message. many unions were terrified. and it sent a bigger message what kind of leader he would be. he was not scared to do what was controversial. >> if ever a presidential policy reflected the president's own character, it is reaganomics. it's so personal it barely qualifies as an economic theory. but the trouble is, it's not working. >> it's been the single overwhelming failure of the reagan administration. 12 million americans out of work, the highest rate of inflation since the 1930s. business got steadily worse. fakctories closed, the federal deficit skyrocketed. inflation had been brought under control, but at a terrible cost. >> reagan was trying hard to kill inflation as fast as he

could. >> that was working, but the problem was, interest rates were going up to 18%. it's like chemo therapy for the economy. it kills a lot of other things along the way. >> the government can live with high unemployment to curb inflation. that seems to be a high place for us to be. >> this is supposed to be the land of opportunity. it's not anymore. it's the land for the rich and the poor can go to hell. >> i think we're going to have some hard times for the next few months. while we predicted a stagnant economy, none of us predicted the stepping over into recession. >> when david stockton came in and said the deficit is getting larger, reagan apparently was shocked. perhaps he had been too beguiled by his own supply side rhetoric. >> reaganomics was not generating enough revenue. the theory if you detax the rich, everybody will be better

off because they'll invest that money turned out not to be true. >> these are not happy for the budget director david stockman. there's a long article which he is quoted as saying some things he wishes he had not said. >> i got the magazine, and it was an early copy. i couldn't believe it. the president gave a news conference that day, and i kept waving my hand. he didn't call on me. so i chased him out. >> your budget director says -- [ inaudible ] >> he had no idea what i was talking about. so i broke the story that night. the budget director blew the whistle on this plan. >> what he still contends were off the record conversations, stockman expressed disillusion with the reagan supply side theory. the whole thing, meaning the reagan plan, is premised on faith, said stockman.

none of us understands what's going on with all these numbers. >> it was very, very damaging. a lot of people wanted him fired. but i thought we had to keep him, because he knew more about the budget than anybody. so i prevailed upon the president to not fire him. >> we have faith in our program and we're sticking with it. to the paid political complainers, let me say as politely as i can, put up or shut up. >> president reagan standing in the nbc ap poll has gone from a high of 65% approval after he was shot, to a low of 43% last fall. that's a bit lower than any previous president at that stage of his stay in the white house. >> we lost big in the 1982 midterms. and everybody was blaming the bad economy on our tax cuts, and spending reduction. >> i remember thinking, okay, the bubble has burst, and when a president sinks like that, and i had just seen it with jimmy carter, you just don't come back. and i did believe that, he's not going to come back.

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considerably higher. >> i was sound asleep, and this bomb went off. you could feel it shake across beirut. it was so massive. it was devastating. >> a truck filled with explosives was driven into a compound in the midst of a marine ba taitaliatall -- batta headquarters. >> the man went by, and i'll always remember the man was smiling. >> israel had gone into lebanon to create a buffer zone against the palestinians, the plo. >> a battalion of american marines came to oversee the withdrawal of the plo from lebanon. but it got sucked into the civil war. >> the civil war was between christians and muslims and it

looked like we were supporting the christians. >> a big debate broke out should we have put our marines in that position? >> the united states in the middle east was faced with an array of small forces, little cells, underground, not knowing who they were, where they were. and even what they wanted. >> there are no words to properly express our outrage, and i think the outrage of all americans. >> do you have any idea who did it? >> are we going to take reprisal, sir? >> reagan called the killing of the marines the saddest day of my presidency, the saddest day of my life. >> i think it was the low point in the reagan presidency. >> a question that must be asked is, why 241 men were killed by troift terrorists, but there was little outcry. the reason, within 48 hours, the united states invaded grenada.

>> about 1,900 u.s. army rangers and marines this morning assaulted the small island, which measures only 12 miles by 21 miles. the population is about 110,000. roughly the size of ceasar rapids, iowa. >> there's a communist coup and reagan seizes on this to stage an invasion. >> the united states received an urgent, formal request to assist to restore democracy and order on the island of grenada. >> an american troop carrier was passing by on its way to lebanon. so all they did was turn that combat ready ship in to grenada. >> marines took control of the airports and began broadcasting a soothing message. >> your cooperation will ensure that peace and democracy are restored in the near future. >> at least at a psychological,

moral level reagan was doing something in grenada that he wanted to do in lebanon but couldn't. he could show that the united states would take action. >> reagan was lucky. he had the good fortune to have an easy military victory, just eliminating our them try of what happened in beirut, and replacing it with this scene of the military rushing ashore in the caribbean. >> the world has changed. today, our national security can be threatened in far away places. it's up to all of us to be aware of the strategic importance of such places and to be able to identify them. the events in lebanon and grenada are closely related. not only is moscow encouraged the violence in both countries but provides direct support through surrogates and terrorists. >> what he really cared about was this cancer on the world. so if there was a marxist regime anywhere and somebody was trying to take it down, he would be for

them. >> perhaps by coincidence, the u.s. greatly expanded its military presence in central america. a big battleship joined two aircraft carriers in the waters off nicaragua, all the while denying anything was special. >> in nicaragua, the united states was supporting the contras in their efforts to overturn the sandinista government. >> that is an evil bunch, the sand nies sandani sandanisas, and it was going to overthrow them. >> we are complying with the law, we complying with that fully. >> the bolin amendment says specifically the united states cannot provide funds for the purpose of overthrowing the government of nicaragua. >> when congress tried to cut

funding, reagan believed that it was his obligation, a moral obligation, as well as an obligation to american security, to make sure that the contras continued to get funding. >> the last of the u.s. marines left beirut today, sending a 17-month peacekeeping mission, which brought lebanon no closer to resolving its strife. >> after a series of several bombings, the impact was short lived. so these groups in lebanon began nabbing americans. >> in beirut today, the united states was the target of lebanon shadowy men with guns, kidnapping american william buckley, the embassy's contact man for the rival christian and muslim factions. he's the third american to be kidnapped in six weeks. >> it kept happening. it was not all one go. they were taken many months

apart, but it kept adding up. it consumed the reagan presidency. >> almost every day, he would have is there any news on the hostages? is there something we can do? >> there's a chink in reagan's arm armor. he felt a sense of obligation that he had to do something to get them out. i never count the wrinkles. and i don't add up the years. but what i do count on, is staying happy and healthy. so, i add protein, vitamins and minerals to my diet with boost®. boost® high protein nutritional drink has 20 grams of protein, along with 26 essential vitamins and minerals your body needs. all with guaranteed great taste. the upside- i'm just getting started. boost® high protein be up for life. half of small businesses fail within 5 years.ne. and more people than ever struggle with debt.

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government economists have taken another look at how fast the economy grew during the first quarter of this year, and today they said it was surging ahead faster than they thought. the jobless rate was down to 7.8%. that means 700,000 people found jobs. >> the american economy was in the tank when we took office. so did it take a while to get out of that? you bet it did. >> we were directing what had gone wrong. >> the economy starts to bounce back in 1983. gas prices are falling. the stock market is rising. >> you start seeing inflation go down. employment go up. by 1984, they have an economic revival to pitch. >> it's morning again in america. and under the leadership of president reagan, our county is prouder and stronger and better. >> it was a brilliant ad, and it worked.

there was no chance a democrat was going to beat that. >> a u.s. political summit meeting takes place in louisville, kentucky. not to resolve differences but to exploit them. ronald reagan meets walter mondale. just about everything is calling it a major opportunity for mondale. >> yeah, he doesn't need just to win by a nose, but he needs to win by five or six lengths. he needs to do very well, because he starts from so far back. >> the question of his age had been in the back of the mind of a lot of people. he was well into his 70s. >> umm, i -- as i say, i feel that we have a problem here to resolve. >> when reagan in the first debate against walter mondale, looks confused, speaks too long, gets lost. it's not just that walter

mondale won that debate, it's that people's fear is the age issue. >> it showed without teleprompters, the great communicator doesn't always communicate all that well. >> we had six dress rehearsals last time, plus loading him with compute statistics. he was smothered with extraneous material. >> the mantra let reagan be reagan, let's take advantage of what we got. the strongest thing we have is ronald reagan being himself, communicating with the american people. when he was showing his personality, his ideas and rhetoric, he generally succeeded. >> a new abc poll indicates the race continues to narrow. >> i think the audience will be looking at ronald reagan in a new way. i think in louisville, the myth or the mystique of the great communicator was dented.

>> president kennedy, who had to go for days on end with little sleep during the cuban missile crisis, any doubt in your mind that you could function in such circumstances? >> not at all. and i will not make age an issue of this campaign. i'm not going to exploit for political purposes my opponent's youth and experience. [ laughter ] >> it brought down the house, and it was his house by then. >> there were several times during his first term when i thought, this man is not going to be re-elected president. i guess what i underestimated is how much the public really loved and liked this man. >> it now appears president reagan as won and won big. his aides say they're seeing a victory of historic proportions. there's the national totals. >> so many people act as if this

election means the end of something. to each one of you i say tonight is the end of nothing, it's the beginning of everything. [ applause ] >> it came as a surprise this morning when president reagan announced that two of the leading figures of his administration are going to change jobs. >> by the time the four years was over, i was worn out. >> we took it to the president. he thought it was a great idea, and we switched jobs. >> the staff system, which kept the president on an even keel, folded into one man. >> it turned out to be an unsuccessful experiment. >> don regan was not cut out for that job. >> i'm not the president, i'm not taking charge of anything. ro ronald reagan is in charge of the country. >> reagan needed good advisers, and in the second term he

doesn't have the same quality of people surrounding him. it had huge political effects for the president. >> from nbc news, this is "today." >> former hostage david jacobson is a step closer to u.s. soil at this hour. he was freed sunday after 17 months of captivity in lebanon. >> because we are still negotiating for the other hostages, we're not going to say anything more about what process we went through to get him out. >> the american policy is that we don't negotiate with hostage takers, we don't make deals, we don't pay ransom. but reagan hammered to find a way to get them out. >> today, the story from middle east sources is iran has helped the united states free a hostage from lebanon. >> in a bizarre tale worthy of a thriller, iran's news agency reports that robert mcfarland, president reagan's former national security adviser, made a secret visit to tehran. iran says he came seeking help in freeing hostages held by pro

iranian groups in lebanon. >> i couldn't believe the administration could be that clumsy. it seemed so unlike all it stood for and all it promised. >> why not dispel the spe speculation and tell us what happened, sir. >> in the name of god, would you just be responsible and back off. >> how are we to know what is responsible and what is not? first tattoo? yeah relax, amigo, it's gonna look ok.

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a book that you're ready to share with the world? get published now, call for your free publisher kit today! in spite of the false stories about arms for hostages, and alleged ransom payments, we did not, repeat, did not trade weapons or anything else for hostages. >> mr. president, the record shows that every time an american hostage was released, there had been a major shipment of arms just before that. are we all to believe that was just a coincidence? >> chris, the only thing i know about major shipments of arms, as i said, everything that we told them could be put in one cargo plane and there would be plenty of room left over. there was no dekrepception inte

by us. >> for the first time, reagan seemed to not know how to deal with this particular problem. it was a debilitating experience and the president showed it. >> it became clear, even in the government, that things were going on at the nsc that not everyone knew about, so the president asked his attorney general, ed meese, to investigate. >> now i'm going to ask attorney general meese to brief you. >> did you make a mistake in sending arms to tehran, sir? >> no, and i'm not taking any more questions -- >> in the source of the arms transfers, which involved the united states providing the arms to israel, and israel in effect selling the arms to representatives of iran, certain moneys, which were received if the transaction, between representatives of israel and representatives of iran, were taken and made available to the

forces in central america, which are opposing the sandinista government there. >> there was an audible gasp in the room. cynical reporters gasped out loud. there it was, smoking gun proof of the connection between these two programs. and the fact that part of this administration was using the money from the sales of arms to iran to fund the contras. >> the thing we've been hearing about at the center of today's extraordinary revelations, oliver north, is that his public testimony is what the country is waiting for. >> oliver north had this idea, since we're selling weapons to iran, and there's certain profits coming from these weapons, and since we're not supposed to be selling these weapons, so we can't announce the profits, these are off the books, let's take those profits

and let's use them to support the contras to kill two birds with one stone. >> the problem was, both of those schemes violated american policy and violated the law. so when they were exposed, it all came crashing down. and ronald reagan was left trying to explain why his administration had actually violated his own policies. >> vice admiral john poindexter asked to be relieved of his assignment for national security affairs. lieutenant colonel oliver north has been relieved of his duties. >> at the time, i thought this was another watergate. felt that way. >> when the iran contra story broke, it seemed to play into various strains of the narrative about reagan. here's this hollywood actor who doesn't know what's being done in his name. or that he was clearly lying to the american people about this. >> one of the more poignant things is the president's letter of february 20th of this year.

he says, i have no personal notes or records to help my recollection on this matter. try as i might, i cannot recall anything whatsoever about whether i approved and the simple truth is, i don't remember. period. >> very early in the iran contra story, a riff off of a watergate line showed up, what did the president know and when did he forget it? >> it was very serious. his political opponents and the american people saw something they didn't approve of. and we could see his numbers were dropping. and the whole presidency was at risk. >> tomorrow morning, the iran contra congressional hearings move into their most dramatic stage. lieutenant colonel oliver north will testify in public for the first time. >> coloranel north, please rise. >> oliver north's appearance was one of the historic moments of

'80s setelevision. >> one question the american people would like to know the answer to, is what did the president know? >> throughout the conduct of my entire tenure, i assumed that the president was aware of what i was doing, and had, through my superiors approved it. >> ollie north said everything he did was in the service of what he understood ronald reagan wanted and everything he did was really just done out of love of country. and it was very tough for those politicians in suits to knock that testimony down. >> i did do it. i was given a mission, and i tried to carry it out. >> but a part of that mission was to shield the others who were giving it. >> that is the part of any subordina subordinate. >> president reagan still wasn't talking about lieutenant colonel oliver north's testimony, but suggested he could hardy wait to do so. >> i'm not going to comment till the hearings are over.

and then you won't be able to shut me up. >> the white house states flatly the president did not know about the diversion. but officials here a a man who unlike north met with the president every day. sometimes with no one else in the room. >> did you at any time tell the president that proceeds from the iranian arms sale were being used to support the contras? >> i don't -- i did not. you know, the important here is that on this whole issue, you know, the buck stops here with me. >> if there had been evidence that reagan knew about the diversion of money from the contras in nicaragua, there would have been serious calls for his resignation. but he walked away not unscathed

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i was stubborn in my pursuit of a policy that went astray, yet the buck does not stop with admiral poindexter as he stated in his testimony. it stops with me. i am the one ultimately accountable to the american people. >> even if what reagan did was a horrible blunder, at least it wasn't for political gain. this wasn't a dirty trick against the opposition party. this wasn't the same as watergate. a lot of people didn't want to go through that, they wanted to give the president the benefit of the doubt. >> ronald reagan was thought of as the teflon president because reporters couldn't touch him. he could make mistakes but the voters didn't care. they cared about reagan's grand vision of a better country. >> the president appeared relaxed and happy as he visited friendly nebraska country today. his spokesman reported that right after his speech last night the white house received 1,145 positive phone calls. >> it's time to get down to the real business at hand, to move forward with america. >> reagan didn't recover

quickly, but he did recover, so he could go on and govern. he brought in a new team, howard baker as his chief of staff, colin powell. and that third team was the third chapter. >> ladies and gentlemen, the president of the united states. >> george bush played a major role in everything that we have accomplished in these eight years. america needs george bush and barbara bush as first lady. >> george bush will be the 41st president of the united states. >> the election of bush for the american people was, we want more reagan, we want more of

what we had. bush was the closest thing to a third term for ronald reagan. >> ronald wilson reagan, the 40th president of the united states, in two days he leaves office as our oldest president and as one of the most popular ever. >> ronald reagan was the chief architect of the 1980s. you don't always identify a president with the years, but in this case, the '80s should be identified as the reagan years. >> they called it the reagan revolution, and i'll accept that, but for me it always seemed like the great rediscovery, the rediscovery of our values and common sense. as long as we remember our first principles and believe in ourselves, the future should always be ours. once you begin a great movement there's no telling where it will end. >> the very firmness of his rhetoric enabled him to be a pragmatist. so with that faith in ronald reagan as he's our conservative warrior. the fact at that he raised taxes the fact that he appointed two

pro-choice supreme court justices, the fact that he signed and advocated a bill for amnesty for 3 million illegal immigrants, they forgiave all that because ronald reagan had been for so long their champion. >> president reagan understand that you get judged on what you accomplished and he understood politics. that together with the fact that he was a beautiful human being, those were the secrets to his success. >> the last day he just sort of lingered. and then finally they said, "mr. president, it's time." and the photographer came in. the stage was set. he turned away from the desk, went to the door and through. it was an actor leaving the stage.

it's that reagan magic that he had. and it was real. it was magic but it was real. >> on the big issues, the revival of the american spirit, the reignition of the american economy, ronald reagan succeeded beyond anyone's expectations. as for his critics, many still frustrated, even angry, but they do concede that ronald reagan leaves washington an enormously popular figure and in this day and age, that alone is an historic achievement. on the next "'80s." >> there is one sign the soviets can make that would be unmistakable. mr. gorbachev, open this gate.

mr. gorbachev, tear down this wall. "the eighties," next on cnn. the only morality they recognize is what will further their cause. they reserve under themselves the right to commit any crime, to lie, to cheat. >> the russians are gearing up for war. >> the senate today approved a record $136.5 billion defense budget. >> the largest anti-nuclear protest in u.s. history. >> president reagan is now much more eager to meet with the new leader of the soviet union. >> do you have an agreement, mr. president? >> mr. gorbachev, tear down this wall.