POD: The Iran-Contra affair goes much, much worse for the Reagan administration, leading to Reagan's impeachment and removal from office.
George H.W. Bush is sworn in as the 41st President of the United States three years earlier, though many publicly wonder how long he'll last in the position or whether or not he's intimately involved with the scandal himself. Investigations and hearings are held for the duration of Bush's Presidency, and, rather than facing down impeachment like his predecessor, Bush is merely censured by the Congress for his involvement in the Iran-Contra dealings. Bush appoints Bob Dole as his Vice President, and the economy begins to slow down much as it did IOTL near the end of the eighties. The slow economy, combined with an anti-corruption campaign on the part of Michael Dukakis gives the Democrats the needed push to defeat the Republicans in 1988, making Michael Dukakis the 42nd President of the United States.
Dukakis' administraion pursues a proto-DLC program, focusing first on economic recovery before delving into budget balancing and reducing government expenditure. President Dukakis' infrastructure program lies down the beginnings of America's high speed rail system, and likewise, the President and the Congress do much to bolster investment and savings. Butterflies result in no Gulf War, and thus, the Republicans end up doing a bit better in Congress in 1990, though they don't take back either house. Dick Cheney challenges Robert Michel for the leadership role in the House and wins with the support of younger, conservative Republicans, becoming House Minority Leader.
Dukakis wins the 1992 Presidential Election over former Vice President Dole and Representative Kemp handily, though his second term is met with less progress. His failed attempt to reform the American health insurance system pumps up Republican and conservative activists, leading to Republican control of both houses of Congress in 1994. Dick Cheney is now Speaker of the House, and Newt Gingrich is Majority Leader. Dukakis' second term focuses on deficit reduction whole-heartedly, and the budget is put into surplus in 1995 and 1996, without the Medicare and education cuts proposed by Speaker Cheney.
At any rate, as the 1996 Presidential Elections approach, the field on both sides begins to divide. Vice President Bentsen will not seek the Presidency because of his health, leaving the Democrats split between liberals, (Jesse Jackson, Paul Wellstone, Mario Cuomo) moderates (Bill Clinton, Al Gore, Dick Gephardt, Chris Dodd), and conservatives (Robert Casey and Joe Lieberman). Chris Dodd and Joe Lieberman withdraw before the first primaries can be held, though Gephardt, Jackson, and Gore drop out after poor showings in Iowa, leaving Wellstone, Cuomo, Clinton, and Casey. Wellstone and Cuomo split the liberal vote, enabling Clinton and Casey victories in states that might have otherwise went for them, though Cuomo eventually drops his bid after Super Tuesday, leaving Wellstone, Clinton, and Casey in the race. Casey decides to throw his support behind Wellstone, surprising many within the party, though neither Wellstone nor Clinton have the sufficient delegates to clinch the nomination. Wellstone, in order to preserve party unity, agrees to exit the race. Clinton chooses Al Gore as his running mate, solidifying the 'New Democrat' wing's control over the ticket.
On the Republican side, the early favorite is Jack Kemp, the former Representative from New York and 1992 Vice Presidential pick. He's young, conservative, and is able to reach out to minority voters, so he makes sense as a pick. Other contenders include establishment Republicans (Arlen Specter, Pete Wilson) and more populist conservatives, like Pat Buchanan. The big question in Washington is whether or not Speaker Cheney is going to run, and he's made a lot of hints that he will. He announces his intentions to seek the Presidency early in the primary season, and topples Kemp in most primaries, though the two fight a protracted primary campaign that eventually comes out in Cheney's favor. Cheney accepts the Republican nomination and chooses Texas Governor George W. Bush as his running mate.
The subsequent Presidential race is brutal between both camps, though the Republicans seem to be throwing more punches against their Democratic opponents. Sex scandals plague the Democratic ticket, and many left-wing voters have given their support to Ralph Nader because of Clinton's moderating stance on many Democratic stand-bys. Even with the endorsement of President Dukakis, who remains relatively popular, it's not enough to save the Democrats in November, which go down in defeat to Cheney-Bush, despite being able to clinch a plurality of the popular vote, and despite Ralph Nader taking a large swath of the vote.
Cheney takes office in 1997 promising to 'return the surplus to the American people', i.e. through tax cuts and by pressing through deregulatory measures. The late nineties see Cheney deregulate much of the financial industry with the help of Speaker Newt Gingrich as well as continue deregulation in other areas. The Republicans seem to forget to keep their promise of a balanced federal budget and press forward with a generous Medicare prescription drug benefit. Interestingly enough, President Cheney does require military spending cuts and cancels a number of programs (through his Defense Secretary, Donald Rumsfeld). He also keeps the United States out of war in the Balkans in the late nineties, despite Democrats' calls for humanitarian intervention.
With the economy still humming along, Cheney and Bush are re-elected to a second term in 2000 over the Democratic ticket of Al Gore and Joseph Lieberman. Problems do, however, begin to arise as the economy finally starts to come down in the summer of 2001 and stalls in 2002, allowing the Democrats to take back control of Congress. Speaker Dick Gephardt and Majority Leader Tom Daschle negotiate with President Cheney to invest further in American infrastructure and cut taxes, and he does so, despite opposition from rank-and-file Republicans.
In 2003, the Supreme Court, in a 5-4 decision legalizes same-sex marriage across the United States, thanks to a pro-liberal majority placed on the Court by the Dukakis administration. President Cheney does not actively respond to the news, though it's Washington's worst kept secret that Cheney welcomes the decision. Vice President Bush condemns the ruling, however, and will use it in his Presidential bid in the next year to fire up social conservative support.
In 2004, Democrats see the failing economy and the increasingly unpopular Cheney administration as a means to get back into power, but not before they have a primary fight of their own. Senator Wellstone, representing the party's liberal wing, however, is able to overcome the DLC-endorsed candidates in the race and win the nomination for President, choosing former Vermont Governor Howard Dean as his running mate.
Vice President Bush wins his own Presidential primary with little opposition, and chooses former Senator John Danforth as his running mate. Wellstone and Dean crush the Bush-Danforth ticket in November, giving the Democrats a supermajority in the Senate and a comfortable working majority in the House for the first time in years.
List of Presidents
40. Ronald Reagan (R-CA): 1981-1986
41. George H.W. Bush (R-TX): 1986-1989
42. Michael Dukakis (D-MA): 1989-1997
43. Richard Cheney (R-WY): 1997-2005
44. Paul Wellstone (D-MN): 2005-2013 (1)
(1) First Jewish President.
List of Vice Presidents
43. George H.W. Bush (R-TX): 1981-1986
44. Robert Dole (R-KS): 1987-1989
45. Lloyd Bentsen (D-TX): 1989-1997
46. George W. Bush (R-TX): 1997-2005
47. Howard Dean (D-VT): 2005-2013