Why did the Iran-Contra affair undermine President Reagan's support and credibility?

By 1984, the American economy, which had been in a recession in 1982 and 1983, showed signs of renewed prosperity. Many voters attributed this upturn to Reagan's economic policies. His military buildup also contributed to economic growth by spurring those portions of the Northeast, South, and West coast where many of the nation's defense contractors were located. Reagan's re-election campaign focused not on particular policy proposals but on optimism. His most famous television advertisement showed a series of images of happy, prosperous Americans at work and play, proclaiming that "It's morning in America." In the fall election, Reagan won a landslide victory over Democrat Walter Mondale.

The final two years of Reagan's presidency were less successful than the first six, and to some extent tarnished the president's reputation as a plainspoken, straightforward leader. In November 1986, Americans first learned of a complicated diplomatic scandal, which became known as the Iran-Contra affair. The Reagan administration, eager to win the release of several Americans still held hostage in the Middle East, secretly agreed to sell missiles and other sophisticated weapons to Iran in exchange for Iran's assistance in winning freedom for American hostages. Additionally, the Reagan administration hoped that dealing with the Iranian government could lead to better relations between the two nations.

Trading arms for hostages, especially with Iran, would have been controversial under any circumstances, because many Americans still considered Iran an enemy nation since the hostage crisis of 1979-1981. Moreover, Reagan had clearly declared that the U.S. would never agree to deal with nations or terrorists who engaged in kidnaping. But the trade was even more controversial, because the Reagan administration used some of the profits earned from selling weapons to Iran to support the Contras, anti-Communist guerrillas who were trying to overthrow the communist government in Nicaragua. Aiding the Contras in this way was clearly illegal, because the U.S. Congress had passed legislation called the Boland amendment, which prohibited the United States from supplying military aid to the Contras. When Americans learned of the Iran-Contra scandal, many were shocked to learn that the Reagan administration had broken his promise not to trade arms for hostages, had dealt with the government of Iran, and had illegally funneled money and supplies to the Contras. Some Americans even predicted that Reagan would be impeached and removed from office if he had personally authorized the arms sales and the so-called "diversion" of funds to the Contras.

Reagan and his top aides maintained that the president had been unaware of the Iran-Contra deals, which had been arranged primarily by two of his aides, Adm. John Poindexter and Lt. Col. Oliver North. Televised congressional hearings into the scandal were held in the summer of 1987. Colonel North, especially, became a celebrity during these hearings, with his defiant attitude toward the Senators and Congressmen who dared to question whether aiding the Contras was a worthwhile goal. The hearings uncovered evidence that Poindexter and North had run the Iran-Contra policy but did not prove that the president was aware of their actions. The Tower Commission, an independent commission appointed by the president to investigate the scandal, also concluded that Reagan himself had not known directly of the arms-for-hostages trade or the efforts to fund the Contras. Instead the Tower Commission Report criticized the president's lax "management style," which allowed two aides to run a major foreign policy operation in the White House, without the president's knowledge.