Was the bad economy truly Carter's fault?

Question

OPEC was responsible for the economy,it was felt all around the world.
So what did he do wrong?
Or what should he have done?

Answer 1

The question shouldn't be "was it Carter's fault?" The question should be what he did to relieve the problems--and he did nothing.

Under the Carter Administration the economy looked like this:

Here's where things stood in 1980, Carter's last year in office, and in subsequent periods:

• Carter: Interest rate, 21%. Inflation, 13.5%. Unemployment, 7%. The so-called "Misery Index," which Carter used to great effect in his 1976 campaign to win election, 20.5%.

It's not even close. The only question is: Why did things get so bad under Carter? And that's a long story. The fundamental reason, however, is he made mistake after mistake, blinded by the leftist rhetoric his party adopted after the infamous '72 Democratic Convention, when the so-called New Left seized control.

In office, Carter adopted the Keynesian economics of the time, buying into the theory that there was a reverse "trade-off" between inflation and unemployment — an idea that proved spectacularly wrong. The U.S. became mired in "stagflation," with both inflation and unemployment rising sharply.

As things grew worse, Carter sharply boosted government spending. When that didn't work, he blamed the American people. "I think it's inevitable that there will be a lower standard of living than what everybody had always anticipated," he told advisers in 1979. "The only trend is downward. But it's impossible to get people to face up to this."

Those remarks were followed by his now-famous "malaise" speech in which he unveiled six proposals — including import quotas, windfall profits taxes and increased spending on alternative fuels — to combat higher oil prices charged by OPEC. Nothing about tax cuts. Nothing about finding more energy. In short, he told Americans to consume less, but pay more.

"We have learned that 'more' is not necessarily 'better,' and that even our great nation has its recognized limits," Carter said, borrowing heavily from the "limits to growth" movement that swept liberal intellectual circles in the '70s.

With public anger growing and his own polls lagging, Carter started wearing sweaters and encouraging us to turn down the thermostat. But his big spending didn't work. The resulting budget deficit, 12 times bigger than the one President Nixon left, gave him a serious public relations problem.

On this score, Carter might have escaped his own malaise if he had cut taxes to get the economy going again. But even with marginal income tax rates at a hefty 70%, he accepted the common wisdom that a tax cut would boost inflation and lower government revenue. He was dead wrong.

As noted in "The Commanding Heights," a leading economic history of the last century, "Carter's attempts to follow Keynes' formula and spend his way out of trouble were going nowhere."

Eventually (but grudgingly), Carter did agree to slash the tax rate on capital gains to 28% from 40%. But that didn't kick in until 1979. By then it was too late to help him politically.

It should be noted that the economy was good--but not great--under Nixon and Ford where both President failed to stay off inflation. Nixon also got the economy in big trouble since he imposed price controls--where the government and not demand--control the price of things. This in turn lead to President Ford trying to combat things with his "WIN" policy--whip inflation now.

The crux of the matter is that Carter states that GWB economy was the worst in decades. Compared to Carter, Bush's present economy is:

Bush today: Interest rate, 8%. Inflation, 2.6%. Unemployment, 4.5%. Misery Index, 7.1%.

The economy under President Clinton was better than Jimmy Carter's even though there was a small recession in the last year of the Clinton Administration. For a further comparison, the economy under Ronald Reagan was:
Interest rate, 9%. Inflation, 4.1%. Unemployment, 5.5%. Misery Index, 9.6%.

Answer 2

I think the much of economic problems from1973 to 1983 was due to to OPEC. particularly their embargoes, so the question for me is how much responsibility did Carter have for the embargo in 1979. As I sat in the gas lines I cursed him for his foreign policies, but in retrospect I am no longer sure a different policy would have changed anything. He may have made the problem of shortages worse by some of his policies for allocation of oil to regions. The economy did not really get better until we reduced the percentage of GDP we spent on oil through a price decline and conservation, Fortunately oil represents a much smaller percent of GDP now, so the economy is coping with the current more gradual run up in the price of oil, http://zfacts.com/p/196.html