The 1970s were dark years in many ways, and one cannot blame all the economic woes on one individual. OPEC kept increasing oil prices, which was a major headache for everyone. Yet presidential leadership can make a difference. That leadership was not forthcoming, however. At the beginning of the decade, we had Watergate and the Nixon resignation, followed by Ford, who failed to inspire. Both were Republicans; the economy was not strong.
When Jimmy Carter took office in 1977, it was hard to believe things could get worse–but they did. The Carter presidency gave rise to a new term: stagflation. What did it mean? Depressed productivity occurring simultaneously with high inflation. Unemployment rose to 9%, inflation topped out at over 13%, and buying a home became foolhardy. Who would want to pay double-digit interest rates? Carter tried “voluntary” wage and price controls. To save energy, he encouraged people to turn their thermostats down in the winter to 65 degrees. That’s an energy plan?
While the decade’s problems cannot be laid solely at Carter’s feet, he obviously didn’t have any idea of what to do to solve them. When Reagan took office in 1981, he inherited this terrible economy. The media loved to call it “Reaganomics.” But Reagan’s first budget and the tax cuts he initiated didn’t even start to go into effect until October 1981. What the country was experiencing was not Reagan’s fault. By the end of 1982, things were picking up, and by the timeÂ the next election came in 1984, the economy was in a constant pattern of growth. Reagan noted that after a while, the media stopped referring to the economic situation as Reaganomics–they didn’t want to give him any credit for the turnaround.
Genuine Presidential leadership on the economy is a rare commodity. None of the Democratic presidents I have highlighted thus far really understood how an economy works. Their basic solution for growth was government spending, which is actually a big part of the problem.