In the aftermath of the Persian Gulf War, Bush's popularity reached its high point, and conventional wisdom was that he was almost guaranteed a second term. He and Dan Quayle easily won the Republican nomination for the 1992 election, while Bill Clinton, the little-known governor of Arkansas, headed the Democratic ticket along with Tennessee senator Al Gore. Both Clinton and Gore were baby boomers, and their platform called for job creation, environmental protection, and health care reform. During the primaries and in the campaign, Clinton overcame allegations of marital infidelity to gain popularity in the polls. Perhaps the most interesting aspect of the 1992 campaign was the third-party candidacy of H. Ross Perot, a Texas billionaire who understood that the election hinged on Bush's weakness — the economy. Perot offered an array of solutions to the country's economic problems, but he was an erratic candidate, dropping out of the race in July and reentering it in October. Although he did not win any one state, Perot took 19 percent of the popular vote, mainly from Republicans. Clinton won the election with 370 electoral votes to Bush's 168.
Health care reform and NAFTA. Clinton's strength was expected to be domestic policy, but he faced a number of setbacks early in his first term. Congress balked at his $30 billion economic stimulus package, and his proposal that homosexuals be allowed to serve openly in the armed forces generated strong opposition from the military and criticism from the public. Clinton was forced to compromise with a policy of "Don't ask, don't tell," which satisfied neither the Pentagon nor gay rights activists. The most significant early setback for the Clinton Administration was the failure of health care reform. There was widespread agreement that the health care system in the United States was in crisis, both in terms of spiraling costs and availability of coverage. The president appointed his wife, Hillary Rodham Clinton, to head a task force examining the problem, but the program that was developed was considered too complicated and relied too heavily on the federal government and employer mandates to win congressional support.
One of the major issues of the 1992 election was the North American Free Trade Agreement (NAFTA), which would establish a free trade zone between the United States, Canada, and Mexico. NAFTA was strongly opposed by organized labor, which feared that American companies would shift production to Mexico to take advantage of a cheap workforce. Environmentalists also attacked the agreement, noting that Mexican industry was not subject to the same pollution controls that applied in the United States. The president supported amendments that addressed these concerns, and NAFTA was approved in November 1993. A month later, Clinton won approval for the General Agreement on Tariffs and Trade (GATT), which lowered trade barriers around the world.
The economy rebounds. The Democratic Party suffered a major political defeat when the Republicans gained control of both the Senate and the House in the 1994 midterm elections. Under the leadership of the new Speaker of the House Newt Gingrich, Republican conservatives put forward a legislative program known as the Contract with America that included a balanced budget. Although Clinton appeared to be seriously weakened politically by the election results, the president was able to hold his own against the Republican Congress. Indeed, as the deficit was reduced and unemployment declined, Clinton sought and received the lion's share of the credit for the improving economy. (Economists and the administration recognized that the policies of Federal Reserve Board Chair Alan Greenspan to control inflation were also an important factor.) Part of the reason for Clinton's success was that he began taking a more moderate position on a number of key issues. For instance, despite the opposition of his core liberal constituencies, the president signed the Welfare Reform Act (August 1996) that changed Aid to Families with Dependent Children distributions from direct federal assistance to individuals over to block grants to the states to use as they saw fit. Along with its work and training requirements, the legislation marked a major change in welfare policy.
The strength of the economy was a key factor in Clinton's victory in the 1996 election against Senator Robert Dole of Kansas, and he became the first Democrat reelected to the White House since Franklin Roosevelt. Although the Republicans continued to hold a majority in the House and Senate, the president and Congress were able to compromise on deficit-reduction legislation in 1997. The economic growth was so robust that the reduction targets were met much sooner than expected. The budget shortfall that had stood at $290 billion in 1992 turned into a surplus of almost $80 billion in 1999. The stock market remained strong throughout the Clinton presidency, and the unemployment rate dropped to just over 4 percent, which many economists consider full employment.
From Whitewater to impeachment. The Clinton administration was plagued by scandal. Early in Clinton's first term, a special prosecutor was appointed to investigate the Whitewater real estate deal in Arkansas that both the president and first lady were involved in before the 1992 election. After Kenneth Starr became special prosecutor in 1994, the probe was expanded to include the firing of White House travel office personnel, the suicide of a White House lawyer, and the inappropriate use of FBI security files. There were also charges, examined by a Senate committee, that the Democrats had engaged in illegal campaign fundraising activities in 1996. Ultimately, however, it was the allegations of sexual misconduct that led to Clinton's impeachment.
Reports surfaced in January 1998 that Clinton had an affair with White House intern Monica Lewinsky. Although the affair itself was not illegal, Starr asserted that the president lied about the affair in testimony he gave in a sexual harassment case (stemming from events that occurred when he was governor of Arkansas). Starr maintained that Clinton had encouraged Lewinsky to lie in her affidavit in the same case, and that Clinton had not told the truth about his relationship with Lewinsky before a federal grand jury investigating his conduct. Starr submitted his evidence to the House Judiciary Committee in September. Despite the fact that Clinton's approval rating remained high, the House of Representatives voted, for only the second time in history, to impeach a sitting president. The Senate refused to convict and remove him from office on either the charge of perjury or obstruction of justice.
Clinton's foreign policy. In the 1990s, the United States became the world's only superpower. Relations with Russia and the People's Republic of China primarily revolved around trade and economic assistance, rather than strategic confrontation. In Haiti, Clinton's Administration was successful in forcing the military regime to step down in favor of an elected president, Jean-Bertrand Aristide. In other parts of the world, Clinton tried, as Bush had done, to exercise American foreign policy within an international framework, such as the United Nations or the North Atlantic Treaty Organization. The president used military force against Iraq to enforce UN sanctions (particularly inspections seeking evidence of weapons of mass destruction) and to respond to Saddam Hussein's provocations against his neighbors and the Iraqi Kurds. One of the most intractable problems in the 1990s was the Balkans.
In 1993, the United States pressed its NATO allies to take action to stop the ethnic cleansing occurring in Bosnia-Herzegovina. Although reluctant to commit American ground troops, the United States allowed American aircraft to take part in United Nations-approved attacks against Serbian forces in the region. U.S. soldiers participated as peacekeepers in Bosnia-Herzegovina following the Dayton Accords (November 1995), which were negotiated by State Department official Richard Holbrook. Clinton was determined to keep the ethnic conflict from spreading throughout the region, but this goal proved impossible to accomplish. Serbian leader Slobodan Milosovicz intensified his campaign against ethnic Albanians in the province of Kosovo in 1998. Although the conflict was a civil war between the ethnic-Albanian-based Kosovo Liberation Army and Serbian troops and police, acts of violence against the ethnic Albanian civilian population by Serbian forces brought international condemnation. When Milosovicz refused to end the conflict through a political settlement, NATO — with the United States assuming the lead — began a massive air campaign against targets in Serbia and Kosovo.
The Clinton Administration was deeply involved in efforts to resolve the Israel-Palestinian conflict. In September 1993, Israeli Prime Minister Yitzhak Rabin and Palestine Liberation Organization (PLO) chair Yasir Arafat signed an agreement at the White House that provided for mutual recognition and Palestinian self-rule in the Gaza Strip and Jericho; another agreement brokered by the United States two years later extended self-rule to the West Bank. Although Clinton brought Israeli and Palestinian leaders together several more times right up to the end of his term in office, peace was ultimately elusive. In July 2000, for example, a summit between Israeli Prime Minister Ehud Barak and Arafat on so-called "final status" issues — settlements, refugees, and the status of Jerusalem — was held at Camp David. The two-week meeting ended without an agreement. The president presented new proposals on these questions in late December, again to no avail.
Terrorism — foreign and domestic. Islamic terrorists, often associated with Osama bin Laden and his al Qaeda network, targeted the United States during the 1990s. A bombing at the World Trade Center in New York killed six people and injuried a thousand in February 1993. The Khobar Towers in Dhahran, Saudi Arabia, which housed American Air Force personnel, was attacked three years later. In August 1993, car bombs destroyed the American embassies in Kenya and Tanzania with significant casualties. Clinton blamed bin Laden, and ordered military strikes against terrorist bases in Afghanistan and Sudan. A small, explosive-filled boat rammed the American destroyer U.S.S. Cole in the port of Aden, Yemen, in October 2000; 17 soldiers died and more than 30 others were hurt. But bin Laden was not the only threat to the United States. Right-wing extremist Timothy McVeigh blew up the Alfred P. Murrah Federal Building in Oklahoma City on April 19, 1995, in the worst instance of domestic terrorism in the nation's history.