Ford & Carter

Ford & Carter

Economic Crisis of the 1970s

Economic Troubles– spending during the Johnson

administration had spurred inflation• rising prices of consumer goods

• rising costs of oil

• rising costs of raw materials

• slowing down of industry

– an oil embargo

Founding members (1960)

Iran Iraq Kuwait Qatar Abu Dhabi Saudi Arabia Venezuela

Members by 1973

Algeria Libya Nigeria Gabon Indonesia Equador

1973 oil embargo –

gas shortage

You must drive, 55mhp!

Make an

Alaskan pipeline

!

1986-1997: the result of declining U.S. crude oil production and rising demand

• Because of high oil prices, consumers conserved energy and switch to other fuels, driving down the import share of total consumption in the late 1970s and early 1980s.

• OPEC's share of world oil production– 55 percent in 1973– 30 percent in 1985– 43 percent in 1997

• The U.S. share of total world output of crude oil production – 52 percent in 1950 – 10 percent in 1997.

• Real U.S. motor gasoline prices – peaked in 1981– fell to a low of $1.12 per gallon in 1988– stood at $1.15 in 1997.

• U.S. crude oil reserves fell 31 percent between 1977 and 1997, to 22 billion barrels.

OPEC’s Oil Embargo:

They were angry the US supported Israel in the Yom Kippur War

“stagflation”• rising prices and economic stagnation combined to create a new economic problem in the 1970s

• Now seen in 2008?

Gerald Ford •Our first president…

Helsinki accords• Signed by 35 nations

• A human rights agreement

• in exchange for recognition of post-WWII Soviet borders

–recognized Soviet control of the Baltic States (Estonia, Latvia, and Lithuania)

–All nations agreed to promote personal liberties in their countries.

FINLAND

CONTRA

DIC

TION?

• pardon – forgives crimes and penalty

• commutation – reduces penalty

• reprieve – postpones punishment

• September 8, 1974: Ford granted Nixon a full pardon for any crimes he might have committed while President.

• majority of Americans disapproved of the pardon

• Ford's public-approval ratings dropped

_____________________________________________

Draft Dodgers and Draft Dodgers and DesertersDeserters

•Pardon?•Amnesty?•Clemency?

Ford granted conditional amnesty

• Carter pardoned those who peacefully evaded the draft–travelling abroad (100K)–failing to register

• Deserters could apply for a limited pardon, case by case

AMNESTY

AMNESTY

“Cultural Reconciliation”

Jimmy Carter

Carter’s popularity•Washington outsider

•perceived as honest

•Peanut farmer

The guiding principle of President Carter’s foreign policy was

–human rightshuman rights

Carter’s Promises:• restore morality and honesty

to the federal government

• government reform

• welfare reform

• provide national medical care

• foreign policy: human rights

Camp David Accords (1978)

• peace agreement between Egypt and Israel

• bitter enemies

• Carter’s greatest foreign policy success

Panama Canal Treaty

• US to return sovereignty of the canal to Panama in 2000

Iranian Revolution (1979)

• The Shah relaxed censorship laws in 1977

• The writings of Ayatollah Khomeini began to circulate widely

• Iran erupted into demonstrations and dissents.

Two movements gradually merged

• the the religiousreligious movement movement –demanded the return to a society

based on the Shari'ah and ulama administration.

• the the liberalliberal movement movement –wanted Westernization–demanded greater democracy,

economic freedom, and human rights.

CONTRADICTION?

Long Term Effects of the Iranian Revolution

• a world-wide panic about oil supplies pushed prices up

• prices hurt the developed nations

• reinforced links between the oil industry and the Middle East

• there were vast changes in the Middle East during the next twenty years

ProtestProtest• Thousands demonstrated outside the

walls of the US Embassy compound

• Protesting US protection of Reza Pahlavi, Shah of Iran, who had fled the country 8 months earlier

• 300 radical Iranian students stormed the US Embassy to stage a sit-in

Iran Hostage Crisis (1979)• - 52 Americans were taken hostage

• - 13 Americans - the female and black hostages - were released within days.

• - The sit-in hardened into a siege

• Ayatollah Khomeini condemned the "Great Satan" America.

• demanded the Shah face trial in Iran.

• "This has united our people. Our opponents dare not act against us"

Carter cut diplomatic relations & suspended trade with Iran

Christmas InvasionChristmas Invasion• On Christmas Day, the Soviets

invaded Afghanistan

• tabled the SALT II Treaty

• Carter warned the Soviets that invading the Middle East would be taken as a “direct threat to U.S. national security” – The Carter Doctrine

Botched RescueBotched Rescue• 5 months into the stand-off• In a sandstorm, 2 helicopters failed to take off, 2 collided, 8 US servicemen died.

•On his last day in office, Carter negotiated a deal through the Algerian Government to release $8B of Iranian funds frozen in bank accounts across the world.

Carter urged a boycott of the 1980 summer Olympics

•In response to the Soviet invasion of Afghanistan

Ronald Reagan The oldest

president ever elected (age 69)

The Reagan RevolutionThe Reagan Revolution

•fiscal conservatives

•social conservatives

•“Reagan Democrats”

fiscal conservativesfiscal conservatives

social conservativessocial conservatives

““Reagan Democrats”Reagan Democrats”• white, working-class Northerners

who no longer saw Democrats as champions of their working class aspirations, but instead saw them as working primarily for the benefit of others: the very poor, the unemployed, African Americans, and other groups

““Reagan Democrats”Reagan Democrats”•national security

• immigration

•crime

•taxes

•pornography

"Government is not the solution to our problems; government is the problem."

• White House Press Secretary James Brady was shot in the head - paralyzed

• March 30, 1981

• 69 days into his presidency

• John Hinckley, Jr.

• Hinkley was copying a scene from the movie Taxi Driver

• He believed this was going to make actress Jodie Foster love him

• The bullet barely missed Reagan's heart.

Air traffic controllers' strike

(1981) • Federal air traffic controllers went on

strike, violating a regulation prohibiting government unions from striking.

• Reagan declared an emergency according to the 1947 Taft Hartley Act

• Reagan fired 11,345 striking air traffic controllers who had ignored his order to return to work

1998: Washington National Airport was renamed Reagan National Airport

1993: Clinton ended the "ban for life"

“supply side” economics • budgetary discipline

and tax reduction would:

–Stimulate investment

–Boost productivity

–Foster dramatic economic growth

Supply Side Assumption

•Economic health depends upon maintaining and enhancing incentives for private production

•Real gross domestic product (GDP) growth recovered strongly after the 1982 recession

–grew during his eight years in office at an annual rate of 3.4%

•Unemployment peaked at 10.8% percent in December 1982—higher than any time since the Great Depression

–then dropped steadily to 5.3% by 12/1988

•16M new jobs created

• inflation significantly decreased.

•Net effect of all Reagan-era tax cuts was 1% decrease in government revenues

Criticisms of Tax Cuts• The immediate consequence

was a deep, though temporary recession

• In the 1980s, for the first time in the 20th Century, income gaps widened between the richest and the poorest.

• Some economists believe the Reagan’s economic upturn was the result of massive military expenditures–40% real increase in defense spending between 1981 and 1985

–Supports Keynesian government spending – domestic or military

Reagan called the USSR

“the focus of evil in the

modern world”

Star WarsStar Wars• Reagan’s new “Star Wars”

program altered decades of thought about nuclear weapons:

• It emphasized defense against a nuclear attack as the most effective form of nuclear capability

• Voodoo school of economics

• Balanced budget promises

• Latest budget-deficit estimates

1987: Crash or Correction?• A stock market crash a significant

decline in the value of stocks - resulting in the failure of many companies and substantial losses to private investors

• A stock market correction brings a number of stocks more in line with their true value - usually does not result in widespread investor losses or the failure of companies.

Savings & Loan Scandal

Lebanon 1983 • American peacekeeping forces in Beirut, a part of

a multinational force (MNF) during the Lebanese Civil War who had been earlier deployed by Reagan, were attacked on October 23, 1983. The Beirut barracks bombing, in which 241 American servicemen were killed by suicide bombers, was the deadliest single-day death toll for the United States Marine Corps since the Battle of Iwo Jima, and the deadliest single-day death toll for the United States military since the first day of the Tet offensive. Reagan called the attack "despicable", pledged to keep a military force in Lebanon, and planned to target the Sheik Abdullah barracks in Baalbek, Lebanon, which housed Iranian Revolutionary Guards believed to be training Hezbollah fighters,[104][105] but the mission was later aborted by Defense Secretary Caspar Weinberger. On February 7, 1984, President Reagan ordered the Marines to begin withdrawal from Lebanon.

Grenada (1983)• only two days later, U.S. forces invaded Grenada, where a 1979

coup d'état had established a Marxist-Leninist government aligned with the Soviet Union and Cuba. On October 13, 1983, a faction led by Deputy Prime Minister Bernard Coard seized power. A formal appeal from the Organisation of Eastern Caribbean States (OECS) led to the intervention of U.S. forces; President Reagan also cited the regional threat posed by a Soviet-Cuban military build-up in the Caribbean and concern for the safety of several hundred American medical students at St. George's University as adequate reasons to invade. In the first major operation conducted by the U.S. military since the Vietnam War, troops invaded and several days of fighting commenced, leading to a U.S. victory,[106] with 19 American fatalities and 116 wounded American soldiers.[107] In mid-December, after a new government was appointed by the Governor-General, U.S. forces withdrew.[106]

War on Drugs

Challenger Disaster (1986)

Bombing of Libya (1986)• Relationships between Libya and the United States under President Reagan

were continually contentious, beginning with the Gulf of Sidra incident in 1981. These tensions were later revived in early April 1986, when a bomb exploded in a Berlin discotheque, resulting in the injuries of 63 American military personnel and one death of a serviceman.[130] Citing that there was "irrefutable proof" that Libya had directed the terrorist bombing, Reagan authorized the use of force against the country.[130] In the late evening of April 15, 1986, the US launched a series of air strikes on ground targets in Libya.[130] The attack was designed to halt Libyan leader Muammar Gaddafi’s ability to export terrorism, offering him "incentives and reasons to alter his criminal behavior."[130]

• The president addressed the nation from the Oval Office after the attacks had commenced, stating, "When our citizens are attacked or abused anywhere in the world on the direct orders of hostile regimes, we will respond so long as I'm in this office."[131] He justified the attack by accusing Libya of direct responsibility for terrorism aimed at the U.S.[131]