The U.S. Economy

in the 1970s

The 1970s: A Crisis in Confidence■The “overextended society” of the

1970s was defined by:

–Low economic growth, high prices, & rising unemployment

–Distrust of the government due to the Watergate scandal

–“Passionless presidents” who failed to project clear leadership

–An end of Nixon-era détente & resumption of Cold War rivalries

Energy and the Economy

■In the 1970s, 2 great oil shocks

hurt the U.S. economy:

–In 1973, the Arab members of

OPEC initiated a 5% cut on

production & an embargo

against the U.S.

–The Iranian Revolution in 1979

cut off oil & led to another gas-

shortage & soaring interest rates

To punish Israel’s allies when Egypt & Syria attacked against Israel

The fuel shortage led to a 200% increase in the price of gas & home heating

Led to worst recession since Depression

The OPEC oil embargoIranian Revolution

The Oil Shocks: Price Increases of Crude Oil & Gasoline

The Search for an Energy Policy

■These oil shocks forced the U.S. to realize its dependency on other nations for oil & led to action:

–Nixon formed the EPA to oversee industry’s environmental impact

–The new Dept of Energy (1977) emphasized conservation & domestic energy production

–Still…U.S. oil imports rose 50% from 1973 to 1979

Mandated gas mileage requirements, speed

limits, & price controls on domestic oil

Nuclear plants & Alaskan oil pipeline

A Troubled American Economy

■The 1970s economy grew stagnant:

–Unemployment grew to 9%

–Heavy industry jobs fell due to outsourcing & foreign competition

■1970s experienced huge inflation:

–Due to Vietnam deficit spending, global food shortage, oil shocks

–Massive price increases led to a 5.5% decrease in “real income” for average Americans

Workers’ wages did not keep up with rising prices

Milk & hamburger prices rose 200%

Bread prices rose 400%Car prices rose 72%

A stagnant economy

High inflation

STAGFLATION

Neither Ford nor Carter could stop “stagflation;” Carter’s policies actually

drove interest rates up to 20%

The Presidency of

Jimmy Carter (D)

1976-1980

Essential Question:

Why did the economic & foreign

policies of Carter fail to meet the

needs of America in the late 1970s?

The 1976 Campaign

■In 1976, Jimmy Carter won the Democratic nomination & campaigned as an outsider, an honest man, with fresh leadership

■Carter won a narrow victory due to social class & racial factors:

–Affluent, well-educated, suburban voters chose Ford

–Socially & economically disadvantaged voted for Carter

Ford’s foreign policy blunder during the TV debates in 1976: “There is no Soviet

domination of Eastern Europe”

Carter’s Domestic Policy■ The Community Reinvestment Act of

1977 was designed to encourage

commercial banks and savings

associations to help low- and moderate-

income neighborhoods.

– Supported the changing role of

government to REGULATE the free-

market and protect “an abundance of

liberty for all” (Great Society goal)

Supreme Court Cases

1972- Wisconsin V Yoder

– Amish children do not have to go to school

past the 8th grade. Parents’ religion

outweighed the right of state to educate

■ 1973 White v Regester

– Court discontinued MULTI-MEMBER

DISTRICTS in favor of SINGLE member

districts due to the fact it would favor the

wealthy/whites over the minorities in

representation.

Domestic Disenchantment with Carter

■Carter entered office with no clear

political philosophy or vision:

–Deregulated the airline industry

which lowered prices

–But…his attempts to reform

welfare & Social Security failed

–He had no remedy for soaring

inflation, interest rates, & bank

failures that hurt the economy

In 1979, Carter gave the “national malaise” speech -discussed the importance of

conserving energy but blamed Americans for creating a “crisis in confidence”

A Declining Superpower■America’s international dominance

declined sharply in 1970s due to:

–Americans’ increasing desires to avoid “another Vietnam”

–The War Powers Act forced the president to consult with Congress before sending troops

–The escalating military costs & deficit spending made sustaining the Cold War impossible

Carter’s Human Rights

Foreign Policy

Foreign Policy & Human Rights

■Carter focused his foreign policy

on a commitment to human rights:

–Spoke out against repressive

regimes in Latin America &

apartheid in South Africa

–Reformed the CIA to operate

“within the law” (but only briefly)

–Negotiated the return of the

Panama Canal to Panamanians

Foreign Policy & Human Rights

■In Nov 1977, Egyptian leader Sadat made an appeal with Israel to settle the October War of 1973

■Carter invited Egyptian leader Sadat & Israeli leader Begin to the U.S. to negotiate terms

■The *Camp David Accords* in 1979 led to a peace treaty between Egypt & Israel, but alienated other Arab nations

Celebrating the Camp David Accords: Menachem Begin, Jimmy Carter, & Anwar Sadat

The Cold War Resumes

■ During the Carter years, the Cold War rivalry between the U.S. & USSR widened due to:

– SALT II failed to make lasting arms reduction

• The Senate did not ratify SALT II in light of USSR’s invasion of Afghanistan

– A new arms race as the U.S. adopted new MX missiles & Trident submarines

– Increased U.S.-Sino relations put the USSR on the defensive

Ohio-class submarine with Trident nuclear missile capability

The Cold War Resumes

■Détente ended when the USSR

invaded Afghanistan in 1979

■The U.S. interpreted the attack as

a move to take the Middle East &

responded with:

–Economic $embargo$ of the

USSR

–Boycott of the Moscow Olympics

–Aid to the Afghani resistance

Carter hoped to limit nuclear arms & advance human rights, but found himself in a heightened Cold War.

Soviet Invasion of Afghanistan, 1979

The Iranian Hostage Crisis

■The Camp David victory was offset

by the 1979 Iranian hostage crisis:

–Exiled Islamic fundamentalist

Ayatollah Khomeini led a coup

against U.S.-backed the shah

–When Carter allowed the shah to

enter the U.S. for medical aid,

irate mobs in Tehran took 52

hostages from the U.S. embassy

Quest for Peace in the Middle East

■Carter’s attempts at diplomatic, military, & economic threats failed to bring a return of the hostages

–In 1980, Carter approved a rescue mission that was aborted after 2 helicopters crashed

–The perceived blunders & inability of Carter to end the hostage crisis hurt Carter in his re-election bid in 1980

A Failed Presidency

■Carter’s failures with inflation,

Iran, & Afghanistan overshadowed

his foreign policy victories with the

Panama Canal & the Middle East

■The failures of Johnson, Nixon,

Ford, & Carter led to a desire

among Americans for a strong

leader who could face both

domestic & foreign challenges

Carter’s 1980 approval rating was 23%