Fair enough but I am not inclined to say the guy is pure evil and
every word of his should always be interpreted with the utmost
cynicism. Maybe if you can provide the context in which he made the
remark, we may be able to evaluate it better.
-raghu.
Jimmy Carter's Economy: Policy in an Age of Limits | Book Reviews
Published by EH.Net (January 2004)
W. Carl Biven, Jimmy Carter's Economy: Policy in an Age of Limits.
Chapel Hill: The University of North Carolina Press, 2002, ix + 346p.,
(Hardcover), ISBN:0-8078-2738-X.
Reviewed for EH.Net by Toby G. Bates, Department of History, University
of Mississippi
W. Carl Biven's Jimmy Carter's Economy: Policy in a Age of Limits
examines the steps and missteps in the national fiscal strategy of the
Carter administration and details a president tested by economic forces
over which he possessed limited control. The author utilizes personal
interviews with former members of the Carter administration, as well as
an exhaustive examination of primary and secondary material, to detail a
coalescence of events that faced the new chief executive. The severity
of the economic problems prevented the application of any lasting
solutions. In a business-like chronological narrative Biven argues that
Carter inherited many of the complex economic problems of his term,
gamely attempted various solutions, but in the end failed due to his
management style, political infighting, and the overall limits forced by
the dire economic times upon government policies.
Biven details three central problems that haunted the Carter
administration: the Iranian hostage crisis, division in the Democratic
Party, and most importantly the national economy. Double-digit
inflation, slow national growth, high unemployment, a decline in the
rate of growth of output per worker, and serious international economic
challenges from Japan and Germany remained just a few of the problems
the thirty-ninth president faced upon entry into the White House. Biven
describes a Democratic party traditionally committed to full employment
and the protection of the welfare state. The author concludes, however,
that Carter understood that to confront the economic ills challenging
the nation his political party needed to reconsider traditional national
priorities and undertake an overall shift to the political center.
Carter's personality and work traits played a role in his
administration's reaction to the economic despair confronting the
nation. The president focused, such as in the case of inflation, on the
microeconomic problems as opposed to macroeconomics. The author suggests
that Carter preferred problems of a micro-nature where less of a chance
existed for political or other outside entanglements. Biven quotes
government officials that suggest that the president, due to his
background in engineering, remained too wedded to minute details.
Biven begins his scholarship with an examination of the 1976
presidential election. He argues that while the economy had begun to
recover from the severe recession suffered under President Gerald Ford,
a different perception existed between true statistical recovery and an
awareness of an upturn among the American populace. High unemployment
and inflation dogged the incumbent, and Carter subsequently won a close
election. Biven argues that initially Carter utilized traditional
Democratic economists that remained wedded to Keynesian ideals. The
problem, however, was that while these economic advisers focused at the
outset on unemployment, the true threat to economic stability remained
inflation. Biven writes that it was not until early 1979, after what the
author describes as an inflation explosion, that Carter's advisors
shifted into anti-inflation mode and recognized the problem as issue
number one. In other words, the economic problems in the mid to late
1970s required new ways of thinking, as the nation faced unprecedented
troubles.
Biven details not only the domestic economic problems confronting the
nation but the tensions inside the government to reach solutions. Carter
did not possess a great deal of knowledge concerning economics so it was
vital for the president to be surrounded by qualified advisors. The
author documents the efforts of the Economic Policy Group, labeled by
some as the Troika, to confront many of the nation's economic woes. The
first Troika consisted of the Secretary of the Treasury Michael
Blumenthal, the Director of the Office of Management and Budget Bert
Lance, and the Chairman of the Council of Economic advisors Charles
Schultze. The Economic Policy Group also contained the secretaries of
state, commerce, labor, housing and urban development, as well as the
national security advisor. A Quadriad of advisors also possessed a role
in economic policy as it consisted of the Troika as well as the Federal
Reserve Chairman. Tensions surfaced as many viewed the groups as being
too large and unwieldy to supply a coherent economic strategy. Personal
politics played a part as well as many members of the Economic Policy
Group practiced differing political beliefs and played to conflicting
constituencies.
The author writes that due to the economic policy limits placed upon the
nation Carter's subsequent move to the ideological center on fiscal
strategy alarmed many Democrats. Branded a reluctant Keynesian and a
financial conservative, the president faced great opposition from many
members of his own party in the passage of many economic programs. The
first signs of trouble arrived in the debates concerning passage of a
stimulus package, tax cuts and a jobs program, in the first few months
after the inauguration. Carter also experienced difficulty with many of
his own party members in Congress on the passage of energy legislation.
Biven argues that the president's difficulties with a Congress dominated
by members of his own party contributed to the domestic image of Carter
as a weak national leader.
Biven describes the various international efforts of the Carter
administration to increase economic growth. He writes of Carter's
efforts to press West Germany and Japan to join the United States in a
joint expansion effort as he sent Vice President Walter Mondale overseas
to garner support. While the Germans remained skeptical, the Japanese
displayed a warm if not cautious reception. Biven also writes of the
1978 Bonn summit in which Carter hoped to increase support for
international expansionary policies. Debates among allies concerned
American oil imports and the trade surpluses of Germany and Japan. The
author awards mixed success to the American president.
Unlike issues of inflation and unemployment that preceded the Carter
years, Biven does describe some "self-inflicted wounds" of the
administration. The author devotes one section of his work to what he
describes as the narrower, microeconomic decisions that influenced the
Carter administration's approach to the inflation problem. The author
examines the Social Security tax increase, periodic minimum wage
expansion, economic and social deregulation, and issues involving trade
restriction. Biven concludes while many of the programs remained
necessary in the grand scheme of things, the administration complicated
the inflation picture on matters of micro-concern.
He details the limits of presidential power in relation to the economy
and in a similar vein the relationships of Carter with the Federal
Reserve chairmen of the time: Arthur Burns, William Miller, and Paul
Volcker. The president did not enjoy a close relationship with Burns,
the chairman inherited from the Ford administration, as Carter feared
that his stimulus plan would suffer if the Federal Reserve responded
with monetary restraint. After Miller moved to the treasury department,
the arrival of Volcker again brought intermediate frustration for
Carter. Regardless of tensions, he argues that Carter deserves a great
amount of credit for the appointment of Volcker to the Federal Reserve
as the chairman's monetary polices after Carter left office eventually
broke the back of inflation.
Biven argues convincingly that economic limits set boundaries to the
policy options available to Carter and placed his administration on a
more conservative fiscal path. In a clear presentation the author
reveals that monies normally available for traditional Democratic
programs did not exist, as the slow growth of the national economy did
not provide needed revenue. The conservative direction resulted in the
developments of fissures in the president's party and election year
troubles for the incumbent. Biven describes Carter's administration as
well as the president's economic policies as both occurring during a
transitional time for the American financial system. He writes that the
historical record remains unclear if the soaring inflation of the late
1970s, the president's number one nemesis, resulted solely from the
actions of Carter's administration. The president realized that the
national economy could no longer be viewed as an unlimited source of
revenue and instead had to work within an atmosphere of limits. Biven
concludes rightfully that before historians declare Carter's a failed
presidency, scholars should first examine the severe economic limits
forced upon and contained within his four years in the White House.
Toby G. Bates is a Ph.D. candidate in modern American history at the
University of Mississippi.
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