Much is made of the double-digit interest rates and burgeoning national deficit that characterized Jimmy Carter’s administration, but just how responsible was he for these economic problems?
I recall Ronald Reagan chiding Carter for the soaring deficit during 1977 - 1981, but deficit-hawk-turned-president Reagan managed to treble the national deficit to record levels–and then blamed Congress.
IIRC, many of the economic problems during Carter’s term were structural and long-term. Inflation had been a (smaller) problem since at least Nixon’s second term. The structural deficit morphed during and after Vietnam, and again as the entitlement programs and Great Society of President Johnson went online.
Is there any consensus on Carter’s responsibility?
There was The War, as you mentioned. We lost, and I think that had a severe effect on the American Psyche. Then there was Watergate. Another blow. During the '60s we had the Space Race. We won that one, and then it seemed pointless to continue. (The last moon shot was in 1972.) I’m guessing there were a lot of engineers who lost their jobs after that. And there was the 1973 Oil Embargo.
Rising fuel prices were a bit of a shock to Americans. In response they looked for cars that got better mileage. The Japanese in particular had been making fuel-efficient cars for a long time. American automakers threw economy-minded drivers a bone or two, offering cars capable of more than 20 mpg as far back as the early-'60s – or even farther back. But their main products were very large (‘Look at that trunk! It’s like a bowling alley!’) gas-guzzlers. When it became clear that Americans wanted cars that got better mileage, they still produced land-yachts. Since they were not offering what people wanted to buy, the buying public bought cars from overseas competitors. Plants started closing and thousands of American auto workers lost their jobs.
Imported steel put many factories in the Rust Belt under. Why? I’m not sure. I’d guess that since making steel is energy-intensive, it cost more to make it domestically with the Embargo on. Perhaps there were political issues as well. In any case, a lot of steel workers lost their jobs.
So we had at least two massive American industries that were laying people off. Laid-off people don’t buy things, and this affected other sectors. Not to mention rising prices of consumer items (possibly brought on by higher fuel prices) and that many consumer items that were traditionally made domestically increasingly started coming in from Asia.
Notice that many of these problems happened before Carter took office. Gerald Ford had already been waging a ‘Whip Inflation Now!’ campaign. The after-effects of the problems that began in the first half of the decade were still rippling through the economy when Carter was elected. Seems to me that Carter inherited a lot of the problems rather than being ‘responsible’ for them.
But what did he do to solve the problems? I was too young to vote, so I can’t really say. One thing I do remember is his infamous ‘malaise’ speech. Defeatism, or ‘telling it like it is’? If the latter, then the first part ofthe solution is to identify the problem – even if those who are part of the problem don’t like to hear it.
Mostly, his contribution was a failure of leadership. He ran as an outsider, winning primarily because many people voted against Ford for the Nixon pardon and his penchant for putting his foot in his mouth, then found he had (as an outsider) no leverage with Congress to actually push through legislation. Regardless whether his ideas might have been bad or good, the fact that so few went any where left the country appearing to drift with no strong leader. A lack of clear leadership combined with runaway inflation (I don’t recall 7% - 11% inflation as a small problem), meant that many industries were very conservative in their plans, which fed a cycle of downward spiraling economics.
Many things were not under his control–he was not the one who let the automakers conspire with the unions to slash their own throats in the face of Japanese competition–but he did nothing to spur other aspects of the economy.
The end of his tenure was also characterized by some of the (potentially) good things he did, but was marred by the initial chaos that was inevitable in that situation. Specifically, Carter managed to push through a lot of deregualtion of several industries. This probably helped the nation in the long run, but the immediate effect of deregulation is always uncertainty and confusion as some corporations fail to respond in ways that will keep them afloat.
In one way, Carter actually created the situation on which Reagan was able to capitalize: by appointing Paul Volcker to the Federal Reserve, he finally put in place a person who would take the harsh steps to conquer infation. Unfortunately, the president only gets to change Fed chairman in the third year of his term. Like deregulation, the clamps on the money supply had an initially painful effect, (one that lasted into the second year of Reagan’s administration), but by the time Reagan came up for re-election, it had finally damped inflation to the point where the economy could grow strongly, rather than exploding like a balloon. (I am not claiming that Reagan did nothing or that he owed his success to Carter; I am simply pointing out the irony that two of the features that helped Reagan greatly (deregulation and control of inflation) were begun by Carter in ways that harmed Carter’s ability to stay in office.)
David Harvey’s book The Condition of Postmodernity gives a good explanation, with plenty of evidence, as to why 1973 was such a watershed year for the U.S. (and, largely, world) economy. If neither Ford nor Carter are fondly remembered for their leading the U.S. during a time of plenty, it’s probably mostly not their fault, considering the big changes that were happening around 1973.
Some good points made so far. The thing from the Carter-era I remember most (beside the Iranian hostage thing) was the price of gas. When I got my drivers license in Spring 1979, gas was $0.66 a gallon. By late 1979 it was $1.25. That wasn’t Carter’s fault.
Budget deficits were also very high. Not really Carter’s fault. High interest rates and high unemployment had a lot to do with it. It was headed that way under Ford.
True, Carter wasn’t a forcefull leader, but I dont think that had anything to do with the weak economy of the late 70’s. But, by 1980, I was ready for a change. I would have voted for Reagan (I’m a democrat now).
Republicans love to blame the malaise on Carter. It makes Reagan look so good!!!
I remember Carter as someone who was a good man but a weak leader. Along with the self inflicted problems of car makers, there was the oil “crisis” and stagflation. I put quotes around “crisis” for a reason. During that time, I was in the Army and was stationed in the Panama Canal Zone. We heard about the “crisis” on Armed Forces Radio, and read about it in the newspapers. From the canal out to the horizon, you could see tankers - just sitting there, as if the sea was a giant parking lot. When oil prices rose, the tankers vanished. So, I have wondered since then how real this “shortage” was. Maybe I’m just cynical and suspicious, but to this day I’m still wondering.
Anyway, to make a long story short, Carter got blamed for everything and didn’t seem to be doing much of anything about it (fair or unfair).
Of course it wasn’t real. It was OPEC fucking with us. And the oil companies were only too happy to go along with it and make record profits (at least they were records until the oil companies posted record profits in 2004).
Quick GQ question, on topic: I recently heard it asserted that unemployment got as high as 25% during the Carter administration. This number sounds absurdly high to me (I don’t think it was ever even that high during the Depression,) but can somebody shed some light?
I agree that the 25% claim is wrong. We have never exceeded 10% on a national level since the Depression (although individual regions have gone as high as 15%, such as Michigan during the automotive downturn). My memory was that the highest unemployment level was around 1982-1983, when the converging effects of various industry deregulations and Volcker’s inflation-busting tight money all converged.
I’ve always thought Carter was the unluckiest president in history. He was no more to blame for the troubled economy than the next president will be. The huge spike in oil prices simply took their way to work through the economy similar to a goat working its way through the belly of a snake. That was a huge change in the nation’s cash flow and no matter who was in charge, there would have been a big downturn at the time.
It is true that Carter was not a great charismatic leader. He probably did not feel empowered to lead the nation into war and due to his personal morality, would have done so only as a last resort. That, in my opinion, is an attribute more valuable than leadership skills.
Thats an interesting statement. Especially coming from someone who is very critical of Bush on the economy. Why was Carter not to blame? He was the man in charge. Bush was blamed for a souring economy after all, an economy already starting to tank before he even took office. While how robust the recovery has been while Bush was in office is debatable, there HAS been one…and both the downturn and up turn started in his first term.
What did Carter have on his plate, exactly? No terrorist attack costing the US hundreds of billions and setting us on the road to various foreign adventures. No dot com bubble crash, no US city under 20 feet of water with millions scattered to the winds. He had his moral crisis with Playboy and the hostage crisis in Iran…a situation that, frankly, was probably as much his fault as it was Irans IMO. Seriously…I’m curious how you can give Carter a pass because he inherited a poor economy and couldn’t or wouldn’t do anything about it, yet you ride Bush like you do though he inherited the dot com bubble bust, had 9/11 happen within months of taking over, etc…and yet we have a recovery of sorts less than 4 years later.
Bush has basically screwed the pooch in so many ways that it runs and hides every time he enters the room…and yet, we have a recovery, the economy is on an up swing, and there is none of the bleakness that was pervasive during Carters reign. And this is with a hell of a lot of shit flying, various disasters striking the country and two wars. Carter basically accomplished nothing even without all that against him.
XT, Carter did not turn record surpluses into record deficits. To a large degree, the economy does what it does no matter who is in charge. The effect of the presidency is limited to what he does in tax policy and spending policy. The fact that he made no massive corrections in course speaks well in his favor. Bush, on the other hand, took a healthy economy and made massive changes in course both in his foolish war and in his misguided tax policies. So Carter’s reign could in my estimation be summed up as no worse than benign neglect while Bush’s is wanton destruction.
Carter had the oil crisis. Bush had 9/11. Neither can justly be blamed for it. But Carter’s inaction to the oil crisis trumps Bush’s reaction to 9/11. No president controls the weather. Unless the New Orleans levees had been a much higher priority for the preceding generation, Katrina would have flooded the city no matter who was in charge. But I dare say that under any other president, the fate of the Superdome evacuees would have been less severe.
I wouldn’t say so. Hoover just didn’t believe that the government had any role in the general welfare or in the economy. Hoover’s reign came when the country begged for leadership, Carter’s did not.
I disagree that the economy was healthy when Bush took over. I would agree with your assessment of Bush’s reign as ‘wonton destruction’ (though we’d probably disagree as to what constituted that exactly)…that was the point I was trying to make in fact. Bush, for all the shit he’s done, basically managed to take an economy that was tanking hard and for whatever reason have an economy that was already showing signs of recovery by the end of his first term…certainly its showing such signs today. Carter took an economy that was stagnant and…left an economy that was stagnant. He did virtually nothing.
I don’t think that 9/11 equates to the oil crisis to be honest. I think that a case could even be made that we are in yet another oil crisis today as well as all the other things going on in fact. I also disagree that Carters inaction trumps Bush reaction (or shear fuckupedness)…in fact I think the results speak for themselves if we are equating the two. Whether the president has any real control over the economy or not, people THINK they do…and looking at whats befallen Bush (and what he’s brought on himself, the stupid bastard), and what happened during Carters reign, then looking at the state of the two economies I’d have to say that Carter trumps no one.
As for Katrina and the levee’s, I disagree with you that whether Bush (or Clinton, or Bush, or Reagan, or…) had fully funded the ACoE for the levee’s or not it wouldn’t have made a difference in the end. There were too many other factors in play, the biggest being the shear size of the storm…and the funding (and time required) to bring the levee system up to a full CAT 5 rating would have taken literally decades, cost billions and never had a hope in hell of happening no matter who was the president.
I also disagree with your Superdome assessment of course…again, its the scale of the thing. But I don’t want to hijack this thread in that direction so I’ll leave it at that. Reguardless, I don’t see how this lets Carter off the hook.
Not to totally hijack the thread, but if any president in the past 25 years had gotten the Dutch to come over and engineer a failsafe levee system it would have held. Of course, it would have been prohibitively expensive at the time (although now cheaper in our hindsight).
The virtue of Carter lies in what he wouldn’t have done in Bush’s place. Things like giving tax breaks to the wealthy, launching a war without reason, pushing for repeal of the estate tax, etc. Prudent inaction is better than reckless action. The 1977 economy was due for a slump and the oil crisis made it worse. In 2001, the economy was due for a slump and Bush’s policies not only didn’t do squat for the economy, they bankrupted the treasury. Reagan got the credit for a natural rebound in the economy, Busy’s successor will get the same.
Well, leaving aside the Dutch (after all, we could have done it ourselves if we REALLY wanted too), I agree…if we had it to do over and knew what was coming we would have been better served spending the $14 billion and the several decades (or whatever it took) to upgrade the system to withstand a Katrina type storm. The problem is that the realities of American politics precluded this as being a viable alternative. Unless someone could have used a magic time machine to go back into the past with the details of what was going to happen, no one was going to fund the thing. Many of the political forces that would have supported it would have supported it because it would have lined their own pockets. And those folks were already trying to get it done for just that reason. There were a host of folks opposed from all over the political spectrum and for all kinds of reasons.
Bad as Bush has been, I shudder to think what Carter would have done in his place considering what he did when his own crisis unfolded. :eek:
I’m not sure what you mean by the 1977 economy was due for a slump…it had been slumping along for quite a while. It was due for a rise I would think…but no such rise took place until Reagan took over, and even then it wasn’t right away.
The 2001 economy was certainly due for a slump…but we got a crash instead. As for whether or not Bush’s policies did ‘squat’, I’d say thats debatable…certainly the results are that the economy is slowly rising, despite wars and storm. As I said, Carter took an economy that was stagnant when he started his term and left with the economy in aproximately the same state.
I’m not sure how Bush’s successor will get the credit, since the economy is already rising now. Unless you are predicting a reversal of this trend I don’t see what you are getting at here. This wasn’t appearent when Reagan took over (far from it in fact)…thats why he got the credit. Bush’s successor can take credit for getting us out of Iraq perhaps.