Section Ford and Carler - Council Rock School District and... · Ford and Carler Guide to Reading Big ... marred the terms of Presidents Ford and Carter. ... Ford continued Nixon's

Section 3 o Section Audio • Spotlight Video

Ford and Carler

Guide to Reading Big Ideas Economics and Society A weaken­ing economy and growing energy crisis marred the terms of Presidents Ford and Carter.

Content Vocabulary • inflation (p. 718)

• embargo (p. 718) ,

• stagflation (p. 719)

Academic Vocabulary • theory (p. 719)

• deregulation (p. 721)

People and Events to Identify • OPEC (p. 718)

• Helsinki Accords (p. 720)

• Department of Energy (p. 721)

• Camp David Accords (p. 723)

Reading Strategy Organizing Complete a graphic organizer similar to the one below by listing the causes of economic problems in the 1970s.

Causes

'-_---lh Economic Problems

~ in the 1970s ,------,I '-------'

718 Chapter 21 Politics and Economics

By th tim Rich.ard Nix n [ ign d, the boom period Americans had experienc din th n preVt'o

· llS decades was c ming to an end. Through the 1970s I Presidents Gerald R. Ford and Jimmy Carter attempted with varying levels of success, to lead the United State: through both domestic and foreign crises.

The Economic Crisis of the 1970s IM!1I~lat¥i In the 1970s Americans had to face a slowing economy and an end to plentiful, cheap energy.

HISTORY AND YOU Have you ever heard anyone describe their experiences during the energy crisis of the 197051 Read on to learn how politics and Americans' dependency on oil imports led to a serious crisis.

After World War II, American prosperity seemed normal. This prosperity relied on easy access to global raw materials and a strong manufacturing base at home. In the 1970s, however, prosperity gave way to a decade of hard times.

A Mighty Economic Machine Slows Economic troubles began in the mid-1960s when President

Johnson increased federal deficit spending, to fund both the Vietnam War and the Great Society programs, without raising taxes. This spending spurred inflation by pumping large amounts of money into the economy. One measure of inflation, the Consumer Price Index (CPI) calculates the average price of goods and services purchased by households. Comparing CPI on a yearly basis during the 1970s shoWS that the inflation rate rose more rapidly during this decade. .

Another economic blow came when the price of oil began to nse. By 1970, the United States had be omc dependent on oil imports from the Middle Ea t and Afrj a. This was n t a problem as long as prices remained low, but in 1973, tl1 Cl Organization of Petroleum Exporting Countries (OPEC)-a cartel dominated by Arab coun-tries-decided to usc oil as a political. weapon. In 1973 a war d erupted between Israel an d its Arab neighl ors. PEe anJl 0 tlJlC J

port u an embargo, or trade ban, of p tr I tim t countries that SLlI d Jsrael. OPEC also raised th e price of crude oil by 70 percenl, all

then by an tJler 130 perc nt a few montbs later. . Although the emba rgo ended witl1in a few months, oi l p[Jces.

. d . '1'1 . j' b I f' d 'l r."om $3 In contmue to l1se. i. 1€ pnce 0 ' a ane 0 cru e 1 rose u , j1()d

1973 t $30 in 1980. As oil and gas lin pric s rose, Amcnca ns

less money for other go ds, which conLTibuted t a rec ssion.

· £C 's embargo caused long lines at ~as stations OPd caused inflation to accelerate rapidly. The U.S. an rnment responded by imposing pri ce controls. gOVe

1. Drawing Conclusions What problems did American consumers face because of the oil embargo?

2. Specifying In what year, between 1970 and 1990, did gasoline reach its highest price?

A Stagnant Economy Another economic problem was the decline

of manufacturing. By 1970, many American manufacturing plants were old and less effi­cient than the plants Japan and Germany had bUilt after World War II. In 1971, for the first time since 1889, the United States imported more than it exported. Unable to compete, many factories closed, and millions of workers lost their jobs. Thus, in the early 1970s, PreSident Nixon faced a new economic prob­lem nicknamed "stagflation"-a combina­tion of inflation and a stagnant economy with high unemployment.

Economists who emphasized the demand side of economic theory, including supporters of I<eynesianism, did not think that inflation and recession could occur at the same time. They believed that demand drives prices and that inflation could only occur in a booming economy when demand for goods was high. A.s a result, they did not know what fiscal

~

V f"""'-o.. ~ ~ ~

o 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990

Year 'Price of Leaded Regular Gasoline in Constant 2000 dollars.

Source: Energy Information Administration.

policy the government should pursue. Increased spending might help end the reces­sion, but it would increase inflation. Raising taxes might slow inflation, but it would also keep the economy in recession.

Nixon decided to focus on controlling infla­tion . The government moved first to cut spending and raise taxes. The president hoped that higher taxes would prompt Americans to spend less, which would ease the demand on goods and drive down prices. Congress and much of the public, however, protested the idea of a tax hike . Nixon then tried to reduce consumer spending by getting the Federal Reserve Board to raise interest rates. When this failed, the president tried to stop inflation by imposing a 90-day freeze on wages and prices and then issuing federal regulations limiting future wage and price increases. This too met with little success.

"4I@mrnmma Explaining How did President Nixon attempt to stop stagflation?

Chapter 21 Politics and Economics 719

Ford and Carter BaUle the Economic Crisis 'mgm'ali' When Gerald Ford failed to solve the nation's problems, Americans turned to politi­cal outsider Jimmy Carter to lead the nation.

HISTORY AND YOU Do you think a president should be a Washington insider? Read how being an outsider affected Carter's ability to lead.

WlJen Nixon resigned in 1974, inflation was stilllli gh , despite m any efforts to reduce prices. Meanwhile, the unemployment rate was over 5 percent. It would now be up to the n ew p resi­dent, Gerald Ford, to confront stagflation.

~~ord Tries to "Whip" Inflation By 1975, the Am erica n economy was in the

worst recession since the Great Depression, wi tll unemployment at nearly 9 percent. Ford responded by launching a plan ca lled WIN­"Wllip Inflation N ow." He urged Am ericans to reduce their usc of oil and gas, and take steps to conserve energy. The plan had little impact on the economic situation. The president then began cutting govern ment spendin g and urged the Federal Reserve to Jaise interest rates to curb inflation. He also sought to ba lance the budget and keep taxes low. He ve toed m ore than 50 bills that the D em ocratic Con g ress passed during the first two years of his admin­istration . Th ese efforts fail ed to rev ive the economy.

Ford's Foreign Policy In fo reign policy, Ford continued Nixon 's

general strategy. Ford kept Kissinger o n as sec­retary of state and continued to pursue detente with the Soviets and th e Chinese. 1n August 1975, he met with leaders of NATO and the Wa rsaw Pact to sig n the Helsinki Accords. U nder the accords, the parties recognized the borders of Eastern Europe established at the end of World War II. The Sovie ts in return promised to uphold ce rtain basic human rights, including the right to move ac ross national borders. Tlle subsequent Soviet failure to uphold these basic rights turn ed many Americans against detente.

120 Chapter 21 Politics and Economics

Ford also met with problems In S lithe Asia. In May 1 75, S J1 after onlrnu .USt

seized power in C, mbodia, 31llbodjilll 6i11Sts ca p tured th ' MaY(l.gltez, an Am · ricun ~rc~~ ship traveling near its hores. Calling th~:gQ zure an "act ofpira \f"F I'd s nt s~. Ct_

J' ., • IvJ.ari t ret,-i e it. ambocUa secTetly r lea cd ~c crew shortly before the marin · sari" h

IVed Unaware th rew was af ·, the n,"'. . ·,nn. attacked and recaptured the ship, bUl 4] s

. d' d' I b 1 SCr_ Vlcemen Ie 111 t 1 att e.

The Election of 1976 ~he presidential race pitt d .G raId Ford

agam t James Earl Carter, Jr., r JImmy Carte ' 'is he liked to be called. A Emmer gOY · [nor ~f Georgia, Cart'T had no politi a] experienc I n Washingt n. Carter took advantag F his Out-sider status, promising to r stoTe honesty to the f deral govemment, H e also prol11 is d n.w program for energy developm nl., tax ref 0 011,

welfare reform, and. nati n a l h allh are. Ford characterized Carter as a liberal whOSe'

social programs would produce higher rates of inflation and require tax increases. For many vote rs, h owever, Carter's ima ge L1S Cl moral and upstanding individual, unlJinted by Washington politics, made him '-HI attGJCl ivL; candidate. In the end, Carter narrowly defeated Ford with 50.1 percent o f the popular votc [(1

Ford's 47. 9 percent, while capturing 297 elee tora1 votes to Ford's 240.

Carter's Economh; P licmes M ost of Carter's dom estic policies wert'

intended to fix the economy. A t first he tri cd In . 1 yll1C nl

end the receSSlOn and reduce unemp 0

by increas.ing gOY rnm -nt sp>nding and cut­ting taxes. When inflation surged in 1978, hd changed his mind. He delayed t he tel u~s ;~:Ir vet ed the sp nding programs h had .h1l1( _

'£IJ brcl Li proposed. He tried to ease U1 Ll tn . ~ ., . teq~sl rate ..

ing th mon ' y supply and ralsJl1g In •. In the end, none of his eEf rts .u ~ ed~~~ se ri ­

arter believed that th nob.on sm. n oil. ous problem was its dcpendenc pn for ·Ig -ked

.. . .' he a~ 111 one of hIS first national addl es5~, , "sillg

• " .If ;]g(1 ll1st II AmenCaJ1 t supp rt a war • !Jotlt

. " . d' isj n a energy onsump tto ll . UI .. Alll riC' 11 energy wiU test the character f th 'd'l1 t all j

Pc pi and th abili ty f th · presl r .wt d. " 'Drl Congress to govern tl1is nation, '

When p(esident Ford failed to solve the nation's .onomic problems, voters decided to give

~a5hington outsider Jimmy Carter a chance.

inflation and Unemployment Rates

- Inflation 14 12

~ 10 ~ 8 ~ 6 l~"~~-~·~~~~-~--~~~~

t 4 2

o " 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990

Year source: US. Department of Labor; Bureau of Labor Statistics,

Analyzing ~~~~""""-':"_;;I;;;"..,"'-----""" 1. Analyzing In what areas of the country did

Carter receive the most votes? Why do you think this was so?

2. Interpreting What was the trend for both unemployment and inflation after 1976?

Carter proposed a national energy program to conserve oil and to promote the use of coal and renewable energy sources such as solar power. He also convinced Congress to create a Department of Energy, and asked Americans to reduce their energy consumption,

Meanwhile, many business leaders and economists urged the president and Congress to deregulate the oil industry. They believed that regulations, first imposed as part of President Nixon's price control plan, made it very difficult for oil companies to make a profit. They claimed they lacked the spare capital needed to invest in new domestic oil wells. T~is in turn kept the nation dependent on for­eIgn oil.

. Carter agreed to support deregulation but lf1sisted on a II windfall profits tax" to preven toil (;Ol;'l1panies fr m vercharging consumers. ~ri~i , argued that the tax conflicted with the

aSle tdea f deregulation, which was to free up capitaJ for lise in find ing new sources of oil. Nt.ln the sum mer f 1979, instability in the

lddle Ba t PI' due d a second major fuel short"ag and deepened the nation's economic

% of Presidential Popular Popular Electoral Candidate Votes Vote Votes

Carter 40,825,839 50.15% 297 o Ford 39,147,770 48.09% 240

* Eight electors in Washington voted for Ford and one voted for Reagan.

problems. Under increasing pressure to act, Carter made several proposals in a televised address. In the speech, Carter warned about a "crisis of confidence" that had struck" at the very heart and soul of our national will." The address became known as the "malaise" speech, although Carter had not specifically used that word. Many Americans felt that Carter was blaming the people for his failures.

President Carter's difficulties in solving the nation's economic problems lay partly in his inexperience and inability to work with Congress. Carter, proud of his outsider status, made little effort to reach out to Washington's legislative leaders. As a result, Congress blocked many of his energy proposals. The president also failed to set clear goals for the nation. Instead, he followed a cautious middle course that left people confused. By 1979, public opinion polls showed that Carter's popularity had dropped lower than President Nixon's during Watergate.

~itlm;m' Summarizing To what did President Carter devote much of his domestic agenda?

Chapter 21 Politics and Economics 721

-

Carter's Foreign Policy 'Mt;1P.mi' Carter attempted to reestablish the United States as a moral force for good on the international stage but had few successes.

HISTORY AND YOU Do you think a leader's per­sonal morality should shape policy? Read how Carter applied his moral code to foreign policy.

In contrast to his uncertain I >adership at home, Carter's for ign poHey was more clearly defined. A man of str ng re ligi llS beliefs, Carter argued that the United States must try to be "right and honest and truthful and decent" in dealing with other nations. Yet it was on the internatiopal front that Carter suf­fered one of his most devastating defeats .

PRIMARY SOURCE

Jimmy Carter and the Middle East

During his administrati~, ~;y Carter faced a nu~b~ 0

challenges in the Middle East. His foreign policy there met with mixed success.

Morality in Foreign Pre idel;1t arter S l the tone f r I . li ' L' ' 1 'lIs fOre' po c 11.1 l iS maugura pee ~ wh I 19n

" ' 1 n 1e ' ur omlmtmen t t :,\urnan rights aid, ab clute. , , , The powerful must nOI 1l1usl b

perse the weak, and human ignity . Cllt

1 d /I Al ' tl l ' 111LI~t I, n .lance, ·ng WIl liS for ig - -e team- whic11 included AndrewYOLl11 01\)POI,icy A c..' A' . bOIl) fleS!

L-uL1Can menca n am assa Or to the U . Nati ns-- arter strove to achi.ev- thes nil d

The p reSident pUl his principles int pgoal,s. . L . A . rr. racbc IJ1 ab.n I1lerlca, u remove a l1l,jorsyrnb US . ,. 1 01 f .. mtetv n tlomsm, le agreed t oive D..

o · rulla11la con trol ofthe Panama Canal, which I-he U .

. ru td States had bwlt and perated for ov r 60 y . , ears. In 1978 the Senate ratifled tw Panama C I

. I . l ed ana tr atJes, W lie 1 tran s ~erre can trol f the canal to Panama n December 31,19 9.

A The Soviet Invasion of Afghanistan

The Soviet invasion of Afghanistan shattered detente. Carter responded by imposing a grain embargo, but it did not force the Soviets to pull back .

... The Iranian Hostage Crisis

A The Camp David Accords

In 1978, Carter helped negotiate a peace treaty between Egypt and Israel. Above, Egyptian President Anwar Sadat. Carter, and Israeli Prime Minister Menachem Begin sign the accords.

Analyzing ~~~:::::! __ ---..

1. Specifying What was Carter's major success in foreign policy?

2. Theorizing Why was the Middle East a major focus of Carter's foreign policy?

722 Chapter 21 Politics and Economics

The Ayatollah Khomeini (right) led a revolution in Iran in 1979. Fifty-two Americans were taken hostage. Carter's inability to negotiate their release hurt his reelection campaign.

Most dramatically, rutcr singled out the Soviet Union as a . lator o£ human rights. He strongly condemned, for example, ~e 5 vi t practice of imprisoning those who protested against \,e g vcrnl11 nt. R lati ns between the two superpowers suffered t further etback when Soviet troops invaded the Central Asian a ation of Afghanistan in Decem ber 1979. Carter responded by ~11pD ing an embargo on the ale of grain to the Soviet Union and ~Oy -ottiJ1g tb 1 0 ummel' lympic Ganl.es in Moscow. Under the after admini baD n, d ~tent , eroded further.

rriMmph and Failure in the Middle East It was in the volatile Middle East that President Carter met

both his gr atest foreign pohey tliumph and his greatest failure. In 1978 Cart r helped broker a historic peace treaty, known as the Camp David Accords, between Israel and Egypt-two nations that had been bitter enemies for decades. The treaty was formally si!mcd in 1979. MoSL other Arab nations in the region opposed the treaty, but it m rked a first step to achieving peace in th Middle East.

Just months after the Camp David Accords, Carter had to deal with a crisis in Iran. The United States had long supported Iran's monarch, the Shah, because Iran was a major oil supplier and a buffer against Soviet expansion in the Middle East. The Shah, however, had grown increasingly unpopular in Iran. He was a repressive ruler and had introduced Westernizing reforms to Iranian society. The Islamic clergy fiercely opposed the Shah's reforms. Opposition to the Shah grew, and in Januaty 1979 pro­testers forced him to flee. Art Islamic republic was then declared.

The new regime, led by religious leader Ayatollah Khomeini, distrusted the United States because of its support of the Shah. In November 1979, revolutionaries stormed the American embassy in Tehran and took 52 Americans hostage. The militants threat­ened to kill the hostages or try them as spies.

The Carter administration tried unsuccessfully to negotiate for the hostages' release . In April 1980, as pressure mounted, Carter approved a daring rescue attempt. To the nation's dismay, the rescue mission failed when several helicopters malfunc­tioned and one crashed in the desert. Eight servicemen died in the accident. Hamilton Jordan, President Carter's chief of staff, described the atmosphere in the White House the day after the crash. The president "looked exhausted and careworn . . .. The mood at the senior staff meeting was somber and awkward. I sensed that we were all uncomfortable, like when a loved one dies and friends don't know quite what to say."

The crisis continued into the fall of 1980. Every night, news programs reminded viewers how many days the hostages had ?een held . The president's inability to free them cost him support In the 1980 election. Negotiations continued right up to Carter's iast day in office. On January 20, 1981, the day Carter left office, ran released the Americans, ending their 444 days in captivity.

Summarizing What was President Carter's main ?

Section 3 REVIEW

Vocabulary 1. Explain the significance of: inflation,

OPEC, embargo, stagflation, Helsinki Accords, Department of Energy, Camp David Accords.

Main Ideas 2. Describing How did the OPEC embargo

affect the U.S. economy?

3. Specifying What were two ingredients in Carter's failure to achieve success in his domestic policy?

4. Identifying What crisis in the Middle East occurred during the Carter administration?

Critical Thinking 5. Big Ideas How did Carter attempt

to deal with the nation's energy crisis?

6. Organizing Complete a graphic orga­nizer by listing the ways in which President Carter applied his human rights ideas to his foreign policy.

7. Analyzing Visuals Study the pho'to­graph of the hostages on page 722 . What effect do you think images such as this one had on Americans who were living or traveling in other countries?

Writing About History 8. Expository Writing Write an essay

identifying what you believe to be Carter's most important foreign policy achievement. Explain your choice.

Histo ~

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