presidents ford and carter chapter 28. economy of the 1970s prosperity widespread after wwii in us...
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Presidents Ford and CarterChapter 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 297Ford 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