Word: deficits
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Dates: during 1970-1979
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While wage and price guidelines attracted the most attention, Carter was well aware of the complaint by businessmen and some economists that the Federal Government is the biggest single contributor to inflation. With pride, he pointed out that his Administration had reduced the federal budget deficit, a prime contributor to inflation, from $66 billion in Gerald Ford's last year as President, to less than $40 billion in the current fiscal year. He pledged to cut it to "$30 billion or less" next year. As part of the effort to do so, he said he would veto any plan...
...start the spiral. The blame for that is ingloriously bipartisan. The bulge began when Lyndon Johnson in 1966 failed to level with American people about the true costs of the Viet Nam War and refused to recommend an income tax increase. So the nation plunged deeply into deficit, and inflation roared from little more than 1% in the mid-'60s to 4.2% in 1968. Richard Nixon grossly worsened a bad situation by also using deficit spending and then clamping on controls; prices soared after they were lifted rising 6.2% in 1973 and 11% in 1974. Gerald Ford, inheriting...
Most important, he might have called for a severe reduction in the growth of federal spending, because it is deficit spending that obliges the Federal Reserve to print the money that generates inflation...
...supposed to stimulate exports. Carter might have foreseen that as the dollar fell, prices of imports would rise, lifting with them the prices of similar domestic products, from Wisconsin gorgonzola to Detroit subcompacts. Budget Chief James Mclntyre last January submitted a fiscal 1979 budget that projected a $61 billion deficit, even though the country was entering the fourth year of .economic recovery. Carter might have recognized that this would be grossly inflationary-and that leaders of business and labor would post higher prices and press for steeper wages just to keep up. Robert Strauss, who was Carter's anti...
...regime, the Shah has been forced into a radical reassessment of his priorities. In recent weeks, strikes by workers angered over the country's inflation rate (currently 50%) have paralyzed the nationalized oil refineries, postal service, airline, and copper and steel industries. The nation's balance of payments deficit exceeds $5.5 billion. To pay for an across-the-board wage increase for at least 1 million workers, and for subsidized housing and other social projects, the Shah has canceled $7 billion worth of American and European military orders, including the controversial U.S. AWAC airborne warning system. He is also scrapping...