We're Not Going Back to a 1970s Economy. It's Worse than That.
Comparisons are being made of our current economy to that of the Jimmy Carter presidency of the 1970s. President Biden's policies appear to parallel those of the Carter administration. We haven't heard the term "stagflation" in the news for the past forty years. That's the term for high unemployment and high inflation. It's measured by what is called the Philips Curve. There certainly are similarities to our present economy and that of the 1970s.
Presently we are looking at inflation, slow job growth, shortages of materials, and even long lines for gasoline. While the gasoline shortage was only a temporary one affecting only a portion of the country, it was caused by a pipeline shutdown. This was exacerbated by the fact that President Biden shut down the Keystone Pipeline his first day in office. Prices, however, continue to rise due to the lessening of supply.
Did the poor economy of the 1970s begin under Jimmy Carter? Not really. Looking back, we know that as early as President Nixon's first term, he imposed a wage-price freeze on the United States. On the night of August 15, 1971, he made that announcement in a nationally televised address. We were also hit with the Organization of the Petroleum Exporting Countries (OPEC) oil embargo of 1973. This led to long gasoline lines, gasoline rationing, and inflation caused by an increase in the cost of oil.
This inflation lasted throughout the 1970s. President Ford, who completed the last year and a half of the Nixon presidency, made attempts to deal with inflation. His means of dealing with it was to have people wear WIN buttons. WIN stood for "Whip Inflation Now." Some people might say it was as effective against inflation as a mask mandate is in stopping a pandemic.
Given these facts, should we conclude that the Carter administration's policies were the chief cause of the poor economy of the 1970s? His policies certainly did not help matters. But Nixon's wage-price freeze led only to further inflation. President Ford's feckless campaign was intended to induce a positive attitude which he hoped would propel the nation through the poor economy the same way the V for Victory Campaign kept people positive during World War Two. No, while all these attempts at defeating inflation, high unemployment, long gas lines, and an energy crisis, were basically unsuccessful, the real blame for the economy of the 1970s firmly belongs on the policies of the 36th president of the United States: Lyndon Baines Johnson.
In May 1964, President Johnson announced, in an address at the University of Michigan, his plan for the United States. He called it the Great Society. It's been called Johnson's version of Franklin Roosevelt's New Deal. Although he may have announced the plan in 1964, the many aspects of the plan and its effect on the economy did not take place until just before President Nixon's administration. Prior to that, the economy of the nation was growing steadily due to President Kennedy's implementation of tax reform.
President Kennedy lowered the tax rates. As he stated, "a rising tide raises all boats." The real key to Kennedy's tax plan was not just the tax cut, but the Investment Tax Credit. These changes, improvements, to the tax law are largely responsible for the great economy the United States had during the 1960s. This was true despite the escalation of the Vietnam War over the same period. All this came to an end when Johnson implemented his Great Society.
The cost of this continues today. In 2014, the Heritage Foundation published a report disclosing that 22 trillion dollars had been spent on the Great Society programs in an effort to eradicate poverty. That amount is three times the cost of all military wars in U.S. history. While there has been an improvement in that regard, there is hardly the benefit that was intended.
The poor economy of the 1970s can be traced not to Jimmy Carter, but to Lyndon Johnson. With the spending that the Biden administration is implementing and, even more, that it has proposed, a return to the stagflation of the 1970s may be mild in comparison to what we can expect to get from policies of the current Congress.
The same can be said of the shutting of the Keystone Pipeline and canceling of domestic drilling and oil production. These actions could have results that make the gas shortages of the 1970s pale in comparison.
There is another policy of the Biden administration that is similar to a law passed in 1965: the Hart-Celler Act. This was known as the Immigration and Nationality Act of 1965. This act changed dramatically the immigration policy of the United States. Our immigration policy went from one of bringing in immigrants who could contribute to the betterment of the country to one in which immigrants were chosen by where they came from.
It is similar to the fiasco that Biden created on our southern border with his reversal of President Trump's immigration policies. The three executive orders he signed to this effect place more financial strain on the nation. With jobs going to illegals and illegals receiving benefits at taxpayer expense, there is added cost placed on our economy.
The American philosopher George Santayana said, "Those who cannot remember the past are condemned to repeat it." This was stated in his work, The Life of Reason: Reason in Common Sense. The political left seems to do this all the time and is quick to give the same excuse when confronted with the truth: "It didn't work in the past because we didn't throw enough money at it."
We may be returning to the economy of the 1970s, but that poor economic period had its roots in the 1960s. If we are witnessing what has been compared to the 1970s, what does our future have in store for us? What roots are we planting now? The bill proposed at this time by the Biden administration and the Democrats in Congress is for six trillion dollars in spending. This alone is more than 25% of the amount the Great Society spent in its first fifty years. While that is unadjusted for inflation, the point remains. That doesn't include the trillions spent in the previous year due to the COVID pandemic. Are we witnessing the Great Society on steroids?
David Ennocenti is a retired accountant and graduate of the State University of N.Y. at Buffalo, School of Management, with a degree in accounting and finance. He passed the CPA examination in 1983. His writing has appeared in American Thinker, USA Today, The New York Times, and several other publications.
Image via Wikimedia Commons, Public Domain.
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