The election of Jimmy Carter in 1976 brought a Democrat to the White House for the first time since 1969. Large Democratic majorities in Congress provided the new president with an opportunity to move aggressively on the legislative front. With the infighting of the early 1970s behind them, many Democrats hoped the Carter administration would update and expand the New Deal. But Carter won the presidency on a wave of post-Watergate disillusionment with government that did not translate into support for liberal ideas.
In its early days, the Carter administration embraced several policies backed by liberals. It pushed an economic stimulus package containing $4 billion for public works, extended food stamp benefits to 2.5 million new recipients, enlarged the Earned Income Tax Credit for low-income households, and expanded the Nixon-era Comprehensive Employment and Training Act (CETA).11 But the White House quickly realized that Democratic control of Congress did not guarantee support for its initially left-leaning economic proposals. Many of the Democrats elected to Congress in the aftermath of Watergate were more moderate than their predecessors, who had been trained in the New Deal gospel. These conservative Democrats sometimes partnered with congressional Republicans to oppose Carter, most notably in response to the administration’s proposal for a federal office of consumer protection.
Events outside Carter’s control certainly helped discredit liberalism, but the president’s own temperamental and philosophical conservatism hamstrung the administration and pushed national politics further to the right. In his 1978 State of the Union address, Carter lectured Americans that “government cannot solve our problems . . . it cannot eliminate poverty, or provide a bountiful economy, or reduce inflation, or save our cities, or cure illiteracy, or provide energy.”12 The statement neatly captured the ideological transformation of the county. Rather than leading a resurgence of American liberalism, Carter became, as one historian put it, “the first president to govern in a post–New Deal framework.”13Organized labor felt abandoned by Carter, who remained cool to several of their highest legislative priorities. The president offered tepid support for a national health insurance proposal and declined to lobby aggressively for a package of modest labor law reforms. The business community rallied to defeat the latter measure, in what AFL-CIO chief George Meany described as “an attack by every anti-union group in America to kill the labor movement.”14 In 1977 and 1978, liberal Democrats rallied behind the Humphrey-Hawkins Full Employment and Training Act, which promised to end unemployment through extensive government planning. The bill aimed not only to guarantee a job to every American but also to reunite the interracial, working-class Democratic coalition that had been fractured by deindustrialization and affirmative action.15 But Carter’s lack of enthusiasm for the proposal allowed conservatives from both parties to water the bill down to a purely symbolic gesture. Liberals, like labor leaders, came to regard the president as an unreliable ally.
Carter also came under fire from Republicans, especially the religious right. His administration incurred the wrath of evangelicals in 1978 when the IRS established new rules revoking the tax-exempt status of racially segregated, private Christian schools. The rules only strengthened a policy instituted by the Nixon administration; however, the religious right accused Carter of singling out Christian institutions. Republican activist Richard Viguerie described the IRS controversy as the “spark that ignited the religious right’s involvement in real politics.”16 Race sat just below the surface of the IRS fight. After all, many of the schools had been founded to circumvent court-ordered desegregation. But the IRS ruling allowed the New Right to rain down fire on big government interference while downplaying the practice of segregation at the heart of the case.
While the IRS controversy flared, economic crises multiplied. Unemployment reached 7.8 percent in May 1980, up from 6 percent at the start of Carter’s first term.17 Inflation (the rate at which the cost of goods and services increases) jumped from 6 percent in 1978 to a staggering 20 percent by the winter of 1980.18 In another bad omen, the iconic Chrysler Corporation appeared close to bankruptcy. The administration responded to these challenges in fundamentally conservative ways. First, Carter proposed a tax cut for the upper middle class, which Congress passed in 1978. Second, the White House embraced a longtime goal of the conservative movement by deregulating the airline and trucking industries in 1978 and 1980, respectively. Third, Carter proposed balancing the federal budget—much to the dismay of liberals, who would have preferred that he use deficit spending to finance a new New Deal. Finally, to halt inflation, Carter’s appointed chair of the Federal Reserve, Paul Volcker, raised interest rates and tightened the money supply—policies designed to reduce inflation in the long run but which increased unemployment in the short run. Liberalism was on the run.
The decade’s second “energy crisis,” which witnessed another spike in oil prices and oil shortages across the country, brought out the southern Baptist moralist in Carter. On July 15, 1979, the president delivered a nationally televised speech on energy policy in which he attributed the country’s economic woes to a “crisis of confidence.” Carter lamented that “too many of us now tend to worship self-indulgence and consumption.”19 The country initially responded favorably to the push for energy conservation, yet Carter’s emphasis on discipline and sacrifice and his spiritual diagnosis for economic hardship sidestepped deeper questions of large-scale economic change and downplayed the harsh toll inflation had taken on regular Americans.