CARTER AND THE ECONOMIC CRISIS

Although his party controlled both houses, Carter often found himself at odds with Congress. He viewed inflation, not unemployment, as the country’s main economic problem, and to combat it he promoted cuts in spending on domestic programs. In the hope that increased competition would reduce prices, his administration deregulated the trucking and airline industries. Carter supported the Federal Reserve Bank’s decision to raise interest rates to curtail economic activity until both wages and prices fell, traditionally a Republican policy. But oil prices kept rising, thanks to the overthrow of the shah of Iran, discussed later, and inflation did not decline.

The deregulation of the airline industry produced lower fares, but also a drastic decline in service. Before deregulation, with prices fixed, airlines sought to attract customers by providing good service. Today, fares are low, but passengers are jammed in like sardines and have to pay for checked baggage, onboard meals, and other amenities.

Carter also believed that expanded use of nuclear energy could help reduce dependence on imported oil. For years, proponents of nuclear power had hailed it as an inexpensive way of meeting the country’s energy needs. By the time Carter took office, more than 200 nuclear plants were operating or on order. But in 1979 the industry suffered a near-fatal blow when an accident at the Three Mile Island plant in Pennsylvania released a large amount of radioactive steam into the atmosphere. The rise of the environmental movement had promoted public skepticism about scientific experts who touted the miraculous promise of technological innovations without concern for then social consequences. The Three Mile Island mishap reinforced fears about the environmental hazards associated with nuclear energy and put a halt to the industry’s expansion.

Since the New Deal, Democrats had presented themselves as the party of affluence and economic growth. But Carter seemed to be presiding over a period of national decline. It did not help his popularity when, in a speech in 1979, he spoke of a national “crisis of confidence” and seemed to blame it on the American people themselves and then “mistaken idea of freedom” as “self-indulgence and consumption.”

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