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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%