New Republic endorses John Anderson
Think that the American people have a good reason to be disappointed with the performance of George W. Bush? TNR has been reprinting previous presidential endorsements, and the one from 1980 is a great read. It’s almost hard to believe that this world existed. Bush gets his share of criticism for imposing relatively modest steel tariffs, but the 70’s were a time of price controls, wage controls, double digit inflation, credit controls…. ad nauseum.
Roger Arnold used to say on his much-missed radio show that the cold war was, for America, a matter of looking at itself in the mirror–struggling with it’s own definition of where the line should be drawn for centralization of power. There was definitely a belief that the state had an obligation and mechanism to manage the economy in the 1970s that is alien to someone who came of age in the 90s. While TNR provides a voice of reason here arguing for “price decontrol”, and an understanding of the “price mechanism”, the hubric assumptions of the era are palpable.
[F]or every exercise of courage, consistency, skill, or wisdom during the past four years, there have been repeated demonstrations of cowardice, vacillation, clumsiness, and bad judgment.
Carter’s most important failure has been managing the economy. When he became president, the unemployment rate was 7.4 percent and inflation the previous year had been 4.8 percent. Campaigning in 1976, Carter had added up inflation and unemployment to a “misery index” of 14, which he called “a travesty.” In August 1980, unemployment was 7.6 percent and inflation the previous year had been 12.8 percent, for a “misery index” of over 20. The dollar of 1976 is worth 69 cents today. In 1976, Carter charged that the average worker’s take home pay was less, in real terms, than in 1968. It was: a fraction of one percent less. Today it is more than nine percent less than in 1976. Despite regular fireworks displays, Carter has done nothing of any consequence to alter the tragic tradeoff between inflation and unemployment.
During the 1976 campaign, Carter called six percent inflation “terrible, unacceptable,” but in fact he accepted this inflation rate without much fuss for the first 15 months of his administration. (No doubt he would gladly accept it again.) In April 1978, with inflation over seven percent, came the first of his many “plans” to deal with it. This plan consisted of hiring Robert Strauss as “special counsellor on inflation” to fly around the country and try to cajole prices down. It didn’t work.
Next plan. In October 1978, with inflation up over eight percent, Carter announced a complicated system of “voluntary guidelines” to be enforced by Alfred Kahn and an expanded wage and price bureaucracy. He threatened to cut off government contracts for anyone who violated the guidelines, but never actually did so. He proposed a dubious system of tax incentives to go with the guidelines, but never pursued them through Congress.
In September 1979, with inflation well into double digits, Carter unveiled a “national accord” with labor leaders to create a Pay Advisory Committee and Price Advisory Committee to formulate new guidelines. Labor’s condition for joining was that the guidelines not be enforced. Carter agreed.
In October 1979, as all previous inflation records were toppling, Carter’s new Federal Reserve chief, Paul Volcker, decreed a severe tight money policy. This was the only serious anti-inflation move of Carter’s administration. Carter had said in 1976, “I pledge to … the American people that, if I am elected, we will never use unemployment and recession as a tool to fight inflation.” But this was the essence of Volcker’s move, and it had White House support.
In March 1980, with inflation running at 18 percent, Carter announced that he would balance the 1981 budget (submitted with a large deficit only six weeks before). He also ordered the Federal Reserve Board to impose credit controls, intended to induce a recession. The controls worked. The economy shrank faster in the second quarter of 1980 than any time since World War II. As for the balanced budget, in August Carter suddenly embraced “supply side” economics and proposed various new spending initiatives and tax cuts, all of which will increase the 1981 budget deficit.
That’s it so far: four or five (depending on how you count) “plans” to cure inflation, radically varied in design, all more show than substance, each presented as if it alone were the true cross. Yet while these grand schemes have come and gone, the Carter administration has continued old and created new government policies that maintain artificially high prices for special interest groups. Carter’s innovations in the field of government-induced inflation include the 1977 International Sugar Agreement, whereby poor third world countries agree not to inflict too much of their inexpensive sugar on us, and the steel trigger-pricing system, which in effect sets a minimum price for steel and prevents imports from undercutting it. Just last week it was reported that the administration plans to increase the steel trigger price by 10 to 12 percent. Buy your car now.
In 1976 Carter said, “A government which cannot ensure for its citizens an opportunity to work does not deserve their support.” Two weeks ago 26,200 people, mostly black, applied for 75 entry-level jobs with Social Security in Baltimore. Over four years Carter has proposed various jobs programs providing various mixtures of job training, government jobs, and incentives to private employers. They have suffered various fates, including fatal wounds by Carter himself in his budget slashing phases. None has aspired to anything like guaranteeing a job to all who want one, which Carter promised. The Humphrey Hawkins bill, endorsed by candidate Carter, was gutted of all content by Carter’s operatives before the president signed the ruins with a flourish two years ago. Already Carter has used his authority to postpone its meaningless deadlines for reducing unemployment.
TNR then (as now), threw up it’s hands and endorsed a candidate that it felt couldn’t do much worse. The biggest misjudgment they made in the editorial was that Reagan would likely drift along with a conservative approach and, like Carter, make little headway, and likely move south, on the big issues. Of course Reagan encouraged policy revisions in his first term which, instituted by Volcker and later becoming the basic law of central banks world-wide, would properly control inflation for the next 20 years, and helped usher in the collapse of communism in his second term. By 1984, TNR was being overwhelmed by the prospect of 4 more years of Reaganomics and endorsed Mondale.