1. Presidents Ford and Carter Chapter 28

2. 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)

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. Electoral Vote: Carter 297 Ford 240

10. 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

11. 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

12. 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

13. 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

14. 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