Jimmy Carter, Bill Clinton, and the New Democratic Economics

Abstract

Jimmy Carter's response to stagflation, the unprecedented combination of stagnation and double-digit inflation that afflicted the American economy during his presidency, made him the subject of virulent attack from liberal Democrats for betraying New Deal traditions of activist government to sustain high employment and strong economic growth. Carter found himself accused of being a do-nothing president whose name had become ‘a synonym for economic mismanagement’ like Herbert Hoover's in the 1930s.1 Liberal disenchantment fuelled Edward Kennedy's quixotic crusade to wrest the 1980 Democratic presidential nomination from Carter. ‘[H]e has left behind the best traditions of the Democratic Party’, the Massachusetts senator charged, ‘We are instructed that the New Deal is old hat and that our best hope is no deal at all.’2 A quarter-century later a more dispassionate analysis would suggest that Carter was neither a do-nothing president nor a throwback to the past in terms of economic policy. Far from being the ‘Jimmy Hoover’ of liberal obloquy, Carter was really ‘Jimmy Clinton’ because in seeking solutions for stagflation his administration laid the foundations of a new political economy that the next Democratic president would build upon.

The Impossible Leadership Situation? Analyzing Success for Disjunctive Presidents

“…In his last two years, Carter clearly prioritized inflation over unemployment. Although he never repudiated the era's economic orthodoxy outright, or provided a vision to replace it, he publicly admitted that his administration was trying several anti‐inflation measures with no certainty that any would work (Morgan , 1018–19). Carter's anti‐inflation program of October 1978 suffered from the need to balance regime commitments with situational realities.…”

“…Carter's own political base fiercely resisted this plan, and liberal Democratic challenger Ted Kennedy promised instead to reverse course and pursue nationalization (Anderson ). Unexpectedly, Carter's deregulation efforts, not intended as an anti‐inflation measure, were effective in reducing inflation, whereas policies targeted at inflation, such as price guidelines and fiscal restraint, had no real effect, underscoring the importance of broad, open‐minded policy experimentation (Morgan , 1023–24).…”

Party Polarization and the Ascendance of Bipartisan Posturing as a Dominant Strategy in Presidential Rhetoric

“…Placed in the unenviable political position of adjusting flagging New Deal/Great Society initiatives to conform to the realities of 1970s‐era “stagflation,” Carter initially distanced himself from his party, seeking to build an independent, “outsider” image that could appeal to moderates displeased with the legacy of modern liberalism (Gould , 181‐82; Jones ). To burnish his transcendent credentials, Carter not only criticized long‐standing social welfare priorities of liberal Democrats as inimical to budgetary discipline; he also ultimately adopted a macroeconomic agenda that disavowed the party's historic emphasis on full employment in favor of a program to combat rapid inflation (Leuchtenberg , 7‐17; Morgan ). At the symbolic level, the president also conveyed his independence by deliberately snubbing Democratic Party leaders and traditional Democratic constituencies (e.g., Heyward , 507‐9).…”

Deregulation, Economic Growth and Growth Acceleration

“…1 Deregulation reforms were initiated in the US (Winston, 1998;Morgan, 2004), followed by the UK and other developed economies in the early 1980s (Pera, 1988;Healey, 1990;Matthews, Minford, Nickell, & Helpman, 1987) and were imitated by the new democracies and many developing countries in the 1990s with an extensive set of labor-, capital-, and product-market reforms. The process continued throughout the early years of the 21 st century (Wölfl, Wanner, Kozluk, & Nicoletti, 2009) until the recent global economic and financial crisis undermined the credibility of relaxing economic regulations.…”