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Presidents Ford and Carter. Chapter 28. Economy of the 1970s. Prosperity widespread after WWII in US Mid-1960s (Johnson Admin.) Widespread spending on Vietnam War and Great Society Inflation occurs (loss of the value of money). OPEC. Organization of Petroleum Export Countries
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Presidents Ford and Carter Chapter 28
Economy of the 1970s • Prosperity widespread after WWII in US • Mid-1960s (Johnson Admin.) • Widespread spending on Vietnam War and Great Society • Inflation occurs (loss of the value of money)
OPEC • Organization of Petroleum Export Countries • Mostly Arab nations • 1973: Arab-Israeli Conflict • Oil becomes political weapon • Embargo on Israeli supporters • Raised price of crude oil by 70%, then another 130% • Crude Oil Price (by barrel) • 1973: $3 • 1980: $30
Economic Stagnation at Home • Aging US manufacturing plants • 1971: US imports > US exports • First time since 1889 • Stagflation • Nickname for a combination of inflation with a stagnant economy and high unemployment • Economists confused
Economists Dilemma • Spending to help end recession? • Increases inflation • Raising taxes to slow inflation? • Recession continues • Nixon’s decision: Control inflation • Cut spending • Raise taxes
Post-Nixon Economy • 1975: Unemployment approaching 9% • Ford urges American changes • Reduce dependency on oil/gas • Raise interest rates • Big changes under Ford • Cut government spending • Vetoed 50 bills • Balance the budget • Keep taxes low
Ford’s Foreign Policy • Sec. of State Kissinger pursues détente with communist states • Helsinki Accords: • Borders of Eastern Europe accepted • Soviets will uphold basic human rights including migration • Soviets did not follow agreement • US turns against foreign policy • Cambodians capture Mayaguez cargo ship • Marines attack, 41 die
1976 Election • Ford • Continued tax cuts • Continued economic recovery programs • Bad public image • Carter • Former GA Governor • Promises to restore integrity to US • Promote energy development • Tax Reforms • Welfare Reforms • Nationalized health care • “Outsider” in Washington
Electoral Vote: Carter 297 Ford 240
The Carter Administration • Priority #1: Fix the economy • Increase Government Spending • Cut Taxes • Result: Inflation surge • Ended tax cuts and vetoed spending programs he proposed • Reduce money supply and raise interest rates • Result: Failed to stop inflation and recession
Oil and Carter • Foreign Oil Dependence • Energy usage concerns • Conserve Oil; Promote Coal and Renewable Energy • Create Department of Energy • Deregulation of oil companies • Agreed to by Carter, but with “windfall tax” • 1979: Middle East instability causes fuel shortage
Jimmy Carter’s Policies • Domestic Policy • Energy concerns • Inexperience and Outsider Status hurt relations with Congress • Blocked Proposals • Didn’t Reach Out • Public Polls show unease • Foreign Policy • Be honest with other nations • Latin America • Interventionist • Panama Canal to Panama after 60+ years • USSR • Human Rights • Imprisonment of Protesters • Afghanistan • Grain Embargo • Boycotted Olympics
Carter and the Middle East • Camp David Accords • Iranian relationship • US Supported Shah • Oil • Anti-USSR expansion • Iranian discontent with Shah • Western reforms • Repression • Shah forced to flee, new administration takes over
The New Iran • Ayatollah Khomeini takes over • Religious leader • Islamic republic • Distrust of US • November 1979: US Embassy taken over • 52 Americans taken hostage • Carter administration fails to negotiate release • April 1980: Rescue mission • January 20, 1981: Hostages released after 444 days in captivity
