No, the US government did not approve of Iraqi chemical weapon use. You wildly exaggerate, to be polite.
And you are lying, to be precise. Here're some choice quotes from the article in the "Foreign Policy" that I linked to
U.S. intelligence officials conveyed the location of the Iranian troops to Iraq, fully aware that Hussein's military would attack with chemical weapons, including sarin, a lethal nerve agent.
U.S. officials have long denied acquiescing to Iraqi chemical attacks, insisting that Hussein's government never announced he was going to use the weapons. But retired Air Force Col. Rick Francona, who was a military attaché in Baghdad during the 1988 strikes, paints a different picture.
"The Iraqis never told us that they intended to use nerve gas. They didn't have to. We already knew," he told Foreign Policy.
Looks like tacit approval to me.
The Reagan administration decided that it was better to let the attacks continue if they might turn the tide of the war. And even if they were discovered, the CIA wagered that international outrage and condemnation would be muted.