Ford became president on August 8, 1974. There was inflation: prices rising at an annual rate of around 12 percent. Economic growth was flat and unemployment was rising. An oil embargo by OPEC nations protesting Nixon's support of Israel in the Yom Kippur War (October 1973) had ended before Ford took office, but crude oil were still climbing and gas prices had doubled at the pump.
Ford thought that fiscal austerity would help. He proposed cutting federal spending and raising taxes in order to balance the budget, and he embraced the idea of a voluntary wage-price freeze. As the country sank into recession he changed his focus. In October he urged the public to reduce their buying (a reduction in demand expected to reduce prices) and he asked people to wear "WIN" buttons — Whip Inflation Now.
The button gimmick soon disappeared amid public ridicule. And, in December, Ford admitted that the economy was in recession and that unemployment was rising (from 5.4 percent in August and expected to reach 7 percent). In January 1975 he called for a tax cut of $16 billion to jump-start the economy.
In March, Congress (controlled by the Democrats) passed a tax cut of more than $22 billion but also raised spending on government programs. Ford regarded this as irresponsible, but he signed the bill, believing that his veto would play into a Democratic Party claim that he was doing too little to help the economy. Ford went along with a tax on domestic oil producers, a sop to a public that viewed oil companies as greedy profit-mongers. By 1976, following Ford's signing the spending package the economy began to recover. Inflation abated to a rate of 4.8 percent per year, and the economy began to grow. But the government had a $74 billion deficit.
In September 1975, Ronald Reagan (Governor of California to January '75) responded to urgings by the conservative (Goldwater?) wing of the Republican Party to challenge Ford the party's nomination. Reagan lived up to his pledge not to speak ill of a fellow Republican (his Eleventh Commandment), but in his 1990 autobiography, An American Life, he would write of his displeasure with Ford having "given away control of the Panama Canal, which Americans had bought and paid for." And he wrote:
It was time to scale back the size of the federal government, reduce taxes and government intrusion in our lives, balance the budget, and return to the people the freedoms usurped from them by the bureaucrats. (p 201)
It was a close race, with Ford winning the nomination. It would be Ford and Bob Dole against Jimmy Carter and Fritz Mondale. Ford would be handicapped by his unpopular pardon of Nixon and by the collapse of the anti-Communist regime in Saigon. Voters, it is said, were gravitating to leaders from outside the Washington sphere, and Carter, the Governor of Georgia, portrayed himself as an outsider in Washington, his slogan: "A Leader, for a change." Carter won the South and most of the Northeast. 50.1 percent of the popular vote to Ford's 48 percent. There was little change in congressional seats, with the Democrats holding on their majorities in the Senate and the House.
CONTINUE READING: The Carter Presidency
Copyright © 2018 by Frank E. Smitha. All rights reserved.