Politics and Economics

Chapter 211968-1980

Nixon: The International Diplomat

In the White House, the contradictions in President Nixon were most obvious. He could be bold, yet also cautious; effective, yet often inept. Working closely with his national security advisor (later, Secretary of State), Henry Kissinger, he forsook the anti-Communist policies that he had supported throughout most of his career in favor of détente with the USSR and rapprochement with the Communist government of China. In 1969, he began the Strategic Arms Limitation Talks (SALT) with the Soviet Union. In Feb. 1972, he made a historic trip to Beijing (first by an American president)—where he was received by Mao Tse-Tung—thus reversing the U.S. policy of not recognizing the Communist government. In 1973, after 4 years of waging war in Vietnam—including heavy bombing raids on North Vietnam (1972) and the invasion (1970) of Cambodia—the administration managed to arrange a cease-fire that would last long enough to permit U.S. withdrawal from the Indochinese war zone. After the Arab-Israeli War in 1973, the efforts of Henry Kissinger led to a cease-fire and troop disengagement in the Middle East. Domestically, under the banner of “A New Federalism,” Nixon attempted to shift important elements of governmental power and responsibility back to state and local governments. He cut back and opposed federal welfare services, proposed anti-busing legislation, and used wage-and-price controls to fight inflation. A combination of domestic and international developments, notable the quintupling of oil prices by the Organization of Petroleum Exporting Countries (OPEC) in 1973, led to the economic recession of 1974-75.

President Nixon and Chairman Mao Tse-Tung during the China visit

Nixon’s “New Federalism”

At the time Nixon took office in 1969, inflation was at 4.7 percent—its highest rate since the Korean War. The Great Society had been enacted under Johnson, which, together with the Vietnam War costs, was causing large budget deficits. There was little unemployment, but interest rates were at their highest in a century. Nixon's major economic goal was to reduce inflation; the most obvious means of doing so was to end the war. This could not be accomplished overnight, and the U.S. economy continued to struggle through 1970.

Nixon was far more interested in foreign affairs than domestic policies, but believed that voters tend to focus on their own financial condition, and that economic conditions were a threat to his reelection. As part of his "New Federalism" views, he proposed grants to the states, but these proposals were for the most part lost in the congressional budget process. However, Nixon gained political credit for advocating them. In 1970, Congress had granted the President the power to impose wage and price freezes, though the Democratic majorities, knowing Nixon had opposed such controls through his career, did not expect Nixon to actually use the authority. With inflation unresolved by August 1971, and an election year looming, Nixon convened a summit of his economic advisers at Camp David. He then announced temporary wage and price controls, allowed the dollar to float against other currencies, and ended the convertibility of the dollar into gold.

WatergateRe-nominated with Spiro Agnew in 1972, President Richard Nixon defeated his Democratic challenger, the liberal Senator George S. McGovern, in one of the largest landslide victories in the history of American presidential elections: 47.1 million to 29.1 million in the popular vote and 520 to 17 in the electoral vote. Despite his resounding victory, Nixon would soon be forced to resign in disgrace in one of the worst political scandals in United States history.

The Watergate Scandal stemmed from illegal activities by Nixon and his aides related to the burglary and wiretapping of the national headquarters of the Democratic Party at the Watergate office complex in Washington, D.C and its cover-up; eventually it came to encompass allegations of other loosely related crimes committed both before and after the break-in. The five men involved in the burglary, who were hired by the Republican Party’s Committee to Re-elect the President, were arrested and charged on 17 Jun 1972. In the days following the arrests, Nixon secretly directed the White House counsel, John Dean, to oversee a ‘cover-up’ to conceal the administration’s involvement. Nixon also obstructed the Federal Bureau of Investigation in its inquiry and authorized secret cash payments to the Watergate burglars in an effort to prevent them from implicating the administration.

President Nixon Concept Map

Nixon Administratio

n

Policies

Watergate actions that take place

Foreign Policy actions

President Nixon Quiz1. Name a foreign policy and a domestic policy of

President Richard Nixon.

2. What trip did President Nixon make that was a first for an American president?

3. What two economic factors did President Nixon attack with his “New Federalism” policy?

4. What crimes were committed during the Watergate Scandal?

5. What was the outcome of the Watergate Scandal for President Nixon?

Regulatory Presidents Nixon Administration

OSHA (Occupational Safety and Health Administration MSHA (Mine Safety and Health Administration NIOSH (National Institute for Occupational Safety and

Health) EPA (Environmental Protection Agency)

Carter Administration United States Department of Education United States Department of Energy

The Egyptian-Israeli Peace Initiative (Camp David Accords)

In 1974, the United States and Egypt resumed diplomatic relations, previously severed by Egypt in 1967. By September 1975, through U.S. mediating efforts, Egypt and Israel had reached several agreements on the disengagement of their forces. In March 1976, President Anwar Sadat of Egypt abrogated a friendship treaty with the USSR signed in 1971.

Sadat took a dramatic and significant step toward peace with Israel by visiting Jerusalem in November 1977. President Jimmy Carter sponsored a peace summit in September 1978 between Sadat and Israeli Prime Minister Menachem Begin. Egypt and Israel signed preliminary documents for a peace treaty. The actual treaty, signed on 26 Mar 1979, in Washington, D.C., called for the gradual withdrawal of Israeli troops from the Sinai over a period of 3 years. The withdrawal proceeded smoothly, and in January 1980, Egypt and Israel established diplomatic relations. Little progress was made, however, in the difficult negotiations on Palestinian autonomy, and the rest of the Arab world rejected the rapprochement with Israel.

From 1974, Sadat had followed a policy entirely different from that of President Abdul Nasser, who advocated war with Israel, Arab socialism, and Arab unity. Sadat promoted peace with Israel, economic liberalism, and Egyptian nationalism. Although Sadat increased political freedoms, he also periodically cracked down on dissidents. In 1981, he was killed by Muslim fundamentalists.

America Held HostageThe Ayatollah (Arabic: “Reflection of Allah”) Ruhollah Khomeni (Ruhollah Hendi), b. Khomein, Iran 1900, d. 3 Jun 1989, became leader of Iran in 1979 by forcing the overthrow of the shah (Muhammad Reza Shah Pahlavi) and Prime Minister Shahpur Baktiar. The son of an ayatollah of the Shi’ia sect, he studied theology and by 1962 was one of the six grand ayatollahs of Iran’s Shi’ia Muslims. Exiled in 1963 for his part in religious demonstrations against the shah, he was expelled from Iran in 1978 and moved to France, where he emerged as the leader of the anti-shah movement. In January 1979, after the shah left Iran, he returned to lead the country, becoming in December faqih (supreme religious guide) of Iran’s Islamic republic for life.

In his efforts to transform Iran into an Islamic state, Khomeni was hostile to the West—U.S., the Great Satan and Israel, the Little Satan. In November 1979, he supported militant students who invaded the U.S. embassy and precipitated the Iranian Hostage Crisis. Khomeni and other fundamentalist clerics faced opposition from Western-educated moderates, from minorities within the country, and from various leftist guerilla groups but gradually consolidated control, imposing rigid censorship, executing members of the opposition, and banning Western customs. Khomeni used the Iran-Iraq War initiated by Iraq in 1980 to help unify the country, although he was less than successful in exporting his revolution and reluctantly accepted a cease-fire in the costly conflict in 1988. After his death, which prompted an outpouring of religious fervor, Iran remained a theocracy, although the constitution was revised to grant more power to the president.

After months of negotiations, helped by Algerian intermediaries and the Shah's death, US diplomacy bore fruit. On the day of President Ronald Reagan's inauguration, 20 January 1981, the hostages were set free. A day later they arrived at a US Air Force base in West Germany. Here Air Force attaché David Roader shouts with joy as he arrives on German soil. In return the US had agreed to unfreeze Iranian assets worth $8 billion and give hostage takers immunity. From Germany, the freed Americans were taken to Washington where they were given a hero's welcome along Pennsylvania Avenue before a reception hosted by Ronald Reagan at the White House. The crisis may have helped bury the Carter administration's re-election hopes but it gave Mr. Reagan a massive boost at the beginning of his presidency. However, some skeptics remarked at the convenient timing of the release. Newly inaugurated US President Ronald Reagan listens to Bruce Laingen, top diplomatic hostage during the Iran hostage crisis who was one of the three seized at the Iranian foreign ministry on 4 November 1979.

The Carter EconomyDespite calling for a reform of the tax system in his presidential campaign, once in office Carter did very little to change it. President Carter reduced the minimum tax on capital gains to 28% from as high as 98%. The government was in deficit every year of the Carter presidency. However, the debt as a percentage of the GDP decreased slightly.

When the energy crisis set in, Carter was planning on delivering his fifth major speech on energy; however, he felt that the American people were no longer listening. On July 15, 1979, Carter gave a nationally-televised address in which he identified what he believed to be a "crisis of confidence" among the American people. This came to be known as his "malaise" speech, although Carter himself never uses the word in the speech:

“I want to talk to you right now about a fundamental threat to American democracy. . . . I do not refer to the outward strength of America, a nation that is at peace tonight everywhere in the world, with unmatched economic power and military might. The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation. . . .

In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns. But we've discovered that owning things and consuming things does not satisfy our longing for meaning....

I'm asking you for your good and for your nation's security to take no unnecessary trips, to use carpools or public transportation whenever you can, to park your car one extra day per week, to obey the speed limit, and to set your thermostats to save fuel.... I have seen the strength of America in the inexhaustible resources of our people. In the days to come, let us renew that strength in the struggle for an energy-secure nation. . . .”

Carter Inflation Year Inflation

Unemployment (1)

-------------------------------

1961 1.0% 6.7%

1962 1.0 5.6

1963 1.3 5.6

1964 1.3 5.2

1965 1.6 4.5 < Vietnam war spending increases

1966 2.9 3.8

1967 3.1 3.8

1968 4.2 3.5

1969 5.5 3.5

1970 5.7 5.0

1971 4.4 6.0

1972 3.2 5.6

1973 6.2 4.9

1974 11.0 5.6 < First oil crisis

1975 9.1 8.5

1976 5.8 7.7

1977 6.5 7.1

1978 7.6 6.1

1979 11.3 5.9 < Second oil crisis

1980 13.5 7.2

1981 10.3 7.6

1982 6.2 9.7

1983 3.2 9.6

1984 4.3 7.5

President Carter Frayer Model

13

Carter Administration

Camp David Accords Regulatory

Iran Hostage Crisis Economy

President Carter Quiz1. What was the speech that President Carter made when

he had a “crisis of confidence” in the economy with the American public?

2. What economic factor was consistently high during the Carter administration?

3. What was the greatest accomplishment of the Carter administration?

4. Who was responsible for taking 400 American hostages in Iran posing President Carter’s greatest failure?

5. Who got the release of the American hostages just prior to his inaugural address?