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The problem was that federal spending stimulation and tax cuts to promote business activities stood the risk of increasing inflation. Carter was caught between promoting and restricting the economy.\n\nInitially there was a $30b federal spending plan and tax cuts but the president became more worried about inflation when it reached 7% and abandoned the idea of tax rebate and instead aimed to reduce welfare spending and job creation. However, economic downturn promoted another reversal and tax cuts returned to the agenda. But stop go prevailed and cuts were reduced and attempts at a voluntary wages and prices policies followed high levels of inflation in 1978. In 1979–80 partially because of higher energy prices inflation moved to 10% promoting high interest rates and monetary policies aimed at deflation. Carter faced criticism for energy shortages and from business for inconsistency and attempting to control prices. The stock market fluctuations reflected this. 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Indicative content

Carter inherited economic problems – unemployment rose to 7.5% in 1977 and there were energy shortages. There was the ongoing problem of low economic growth and inflation. The problem was that federal spending stimulation and tax cuts to promote business activities stood the risk of increasing inflation. Carter was caught between promoting and restricting the economy.

Initially there was a $30b federal spending plan and tax cuts but the president became more worried about inflation when it reached 7% and abandoned the idea of tax rebate and instead aimed to reduce welfare spending and job creation. However, economic downturn promoted another reversal and tax cuts returned to the agenda. But stop go prevailed and cuts were reduced and attempts at a voluntary wages and prices policies followed high levels of inflation in 1978. In 1979–80 partially because of higher energy prices inflation moved to 10% promoting high interest rates and monetary policies aimed at deflation. Carter faced criticism for energy shortages and from business for inconsistency and attempting to control prices. The stock market fluctuations reflected this. Carter was unpopular with many in the business sector but organised labour and liberal Democratic opinion were critical of unemployment, a failure to address poverty and to provide medical care reform. The agrarian sector objected to cuts in guaranteed prices and there was unrest about cancelled public water projects in the West.

Carter had had some success with energy management with the creation of the federal Department of Energy and the establishment of a national energy policy. Another reform was the creation of the Department of Education. He was successful in promoting affirmative action for black Americans, supporting civil rights groups in the Bakke Case but was criticised for not doing enough for black unemployed workers.

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Assess the effectiveness of Carter's domestic policies.

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2022 - O/N - 9489/42 | Q2

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