President Jimmy Carter's Economic Policies

How Carter Created Jobs, Fought Stagflation, and Brokered World Peace

President Jimmy Carter
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 Photo by Bettman/Getty Images

James Earl Carter, Jr. was the 39th president, serving from 1977 to 1981. Upon entering office, he had to fight the stagflation created by Richard Nixon. His one-term presidency ended under the shadow of the Iran hostage crisis. But he also added 9.3 million jobs, the fourth-largest job creation among all presidents. In 2002, he received the Nobel Peace Prize for his work in the 1978 Camp David Accord.

Accomplishments

Carter’s immediate challenge was the combination of both inflation and unemployment. President Nixon had created inflation by ending the gold standard in 1973. As a result, the dollar's value plummeted on the foreign exchange markets. Import prices rose and created inflation. Nixon tried to stop it with wage-price controls in 1971. That cramped business growth and increased unemployment. 

The Federal Reserve fought the resultant slow growth by lowering interest rates. The economy improved, creating millions of jobs. But inflation threatened to destroy all the prosperity. In 1979, Carter appointed Paul Volcker as the Fed chair. He raised interest rates and ended double-digit inflation.

The Volcker Shock caused a recession that helped destroy Carter’s re-election chances. Until the Fed got the economy under control, it suffered from the combination of high unemployment and high inflation. It led to the creation of the misery index.

In 1979, OPEC raised oil prices to an average $20 a barrel. In response, Carter instituted sorely-needed energy conservation measures. U.S. oil consumption per person was twice that of Europe and almost three times that of Japan.

To end the energy crisis, the Carter administration created automobile mileage standards. It deregulated the airline, trucking, and railroad industries. He established a national energy policy that deregulated oil prices to increase U.S. supply. The combination of lower demand and higher supply led to lower oil prices.

To prevent future energy crises, Carter created a Department of Energy. Its goal is to regulate the industry and fund research on alternative fuels.

Carter signed the Alaska National Interest Lands Conservation Act. It protected more than 100 million acres of land. He also expanded the national park system. The administration established a "Superfund" to clean up toxic waste sites and regulated strip mining.

Carter created the Department of Education to assist the nation’s schools, collect data on their performance, and enforce civil rights. Conservatives opposed it because they said it wasn’t mentioned specifically in the U.S. Constitution. They ignore that an educated labor force creates a more productive economy.

He increased payroll taxes to keep Social Security from going bankrupt. Working with Congress, Carter raised the minimum wage to increase payroll taxes.

Carter also had some major success in foreign policy. In 1978, he negotiated the Camp David Accords. It led to a lasting peace treaty between Israel and Egypt.

That same year, Carter established full diplomatic relations with China. It reduced tensions in Asia and led to China’s shift from being a dominant military presence to an economic one. That allowed the United States to import consumer goods, lowering inflation but creating a trade deficit.

In 1979, Carter negotiated the SALT II nuclear limitation treaty with the Soviets. But six months later, the Soviets started a war in Afghanistan that prevented the agreement’s ratification.

Iran Hostage Crisis

On November 4, 1979, Iranian students took 66 American diplomats hostage at the U.S. Embassy in Tehran. They were protesting Carter’s decision to allow the deposed Shah to come to the United States for cancer treatment. Students were also supporting the Islamic rule of their country under Ayatollah Ruhollah Khomeini. Ten days later, Carter imposed sanctions on Iran. He also froze all Iranian assets that were under the jurisdiction of the United States.

In April 1980, he sent an elite military team to rescue the hostages. A sandstorm botched the operation and killed eight servicemen. Although Carter's administration negotiated a release in December 1981, it was too late to save Carter's presidency. They were released a few hours after Ronald Reagan’s inaugural address.

Carter and the Debt

Carter added $299 billion to the $699 billion debt existing at the end of President Gerald Ford's last budget, Fiscal Year 1977. This 43% increase was modest compared to other U.S. debt by president.

After Leaving Office

Jimmy Carter used his status as an ex-president to assist in peace-keeping missions. He has mediated disputes between the United States and North Korea, Libya, and other Middle East countries.

The Carters have volunteered for Habitat for Humanity for 35 years. The organization has helped 13 million people find housing.

Carter established the Carter Center at Emory University. It furthers peace, human rights, and democracy. It led a coalition that almost eradicated the Guinea worm disease.

Carter is a prolific writer, having written 62 books. The 12 most popular are:

Salary

As president, Jimmy Carter received a salary of $200,000 a year with an additional expense account of $50,000. That’s worth $1 million in 2019.

The Former Presidents Act of 1958 mandates that U.S. presidents get lifetime pensions equal to what the head of a federal government executive department would receive. In 2016, that pay was $205,700 annually. Inclusive in the 1958 mandate are funds for office space, support staff, travel, and mailing costs.

As a former president, Carter received $207,000 for pension, $112,000 for office space, and $111,000 for other costs. He does not receive compensation for personnel or travel expenses. President Carter and his wife, Rosalynn, are also entitled to lifetime Secret Service protection.

Carter’s Early Years

Carter showed his leadership abilities even as a boy. By the age of 13, he had saved enough money from selling produce to buy five rental houses. He graduated in the top 10% of his class at the Naval Academy. He taught nuclear engineering to the crew of the first nuclear submarine, the Seawolf.

In 1953, Carter returned to run his ailing father’s peanut farm. He fought discrimination in the South as he had in the Navy. He became a state senator after proving his opponent’s win was based on voter fraud.

In 1970, he became Georgia’s governor. He continued to fight segregation and cut government bureaucracy. He then became chair of the Democratic Governor’s Campaign Committee, then the campaign chair of the Democratic National Committee. He won the presidency in 1976 by running as an outsider who would clean up Washington. The public was hungry for change after Watergate and stagflation.

Jimmy Carter’s Age

Carter was born on October 1, 1924. As of January 2019, he was 94 years old. That makes him the oldest living president.

Carter’s Health

The former president’s advanced age makes many people wonder about his health.

In 2015, Carter reported that he had melanoma that had spread from his liver to his brain. Four months later, he announced he was free of cancer. The cancer disappeared after being treated with pembrolizumab, an immunotherapy drug. On average, the treatment extends life by 18 months. Some patients are cancer-free after 10 years.

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