On his first day in office, Carter signed an order granting unconditional amnesty to Vietnam era draft dodgers. It was a time of high inflation. By 1980, inflation hit 18%. The government was in deficit each year of his administration, going from about $680 billion in debt to $900 billion. The Carter administration was fiscally conservative, vetoing a number of spending bills as the capital gains tax was lowered to 28%. A number of deregulation initiatives were begun in the airline, trucking, rail, communications, and finance industries. The defense budget was cut by $6 billion. Carter had campaigned as an outsider and generally took that approach when he got into office — leading to a strained relationship with Congress, controlled by his fellow Democrats.
The energy crisis sparked by the OPEC boycott in 1973 had Carter’s attention. He believed the energy crisis was a clear and present danger and took some controversial measures in response.
Carter set oil and natural gas price controls, had solar hot water panels installed on the roof of the White House, had a wood stove in his living quarters, ordered the General Services Administration to turn off hot water in some federal facilities, and requested that all Christmas light decorations remain dark in 1979 and 1980. Nationwide, controls were put on thermostats in government and commercial buildings to prevent people from raising heater temperatures in the winter above 65 °F (18 °C) or cooling in the summer below 78 degrees Fahrenheit (26 °C) through 1980.
His calls to the American people to carpool, follow the speed limit, and set thermostats lower were not well received.
Internationally, Carter was instrumental to the signing of the Camp David Accords between Egypt and Israel which helped reduce tensions in the Middle East somewhat. However, it also created problems of its own. Under Carter, Cold War sensibilities were blunted. Part of his administration wanted to give human rights priority — supporting those countries that treated their people well and withholding support from those countries that did not. However, there were more traditional Cold Warriors in the administration who favored supporting countries that were seen as strategically valuable in opposing the Soviet Union regardless of their human rights record.
Negotiations had been ongoing prior to the Carter administration to transfer the Panama Canal to Panama. However, it was under the Carter administration that a deal was brokered to surrender the canal to Panama in 1999. The treaty was opposed by a majority of the American public and by the Republican Party. A common argument against the treaties was that the United States was transferring an American asset of great strategic value to an unstable and corrupt country led by an unelected but popularly supported General. Strom Thurmond reasoned that we paid for it, we built it, and so we should keep it. Opponents pointed out that “it was built within Panamanian territory therefore, by controlling it, the United States was in fact occupying part of another country and this agreement was intended to turn back to Panama the sovereignty of its complete territory.”
Iran, along with Saudi Arabia, had been strategically central to the U.S.’s influence in the Middle East, and that was due to the support of the Shah of Iran. He had been restored to power when the Eisenhower administration engineered a coup that toppled the elected prime minister Mohammed Mossadegh. He was good for the U.S., but at home he was regarded as an autocrat and a kleptocrat. He was overthrown by the Iranian Revolution, led by the Ayatollah Khomeini. When the Shah sought asylum in the U.S., the Carter administration initially refused, in January of 1979 but relented in October and allowed him to get medical treatment. This gave Iranian militants a pretext for seizing the U.S. embassy in November 1979. They held 52 American diplomats and citizens hostage for 444 days. The Iran hostage crisis came to dominate the last part of the Carter administration. Negotiations for the release of the hostages was completed during the Carter administration but they were not released until the day of Reagan’s inauguration.
The Iranian revolution and the abrupt reversal of Iran’s close relationship with the U.S. emboldened Iraq which invaded Iran. The U.S. would provide support to Saddam Hussein’s Iraq.
Carter had challenges from the left of the Democratic Party who supported Senator Edward Kennedy. Kennedy challenged Carter in the 1980 primaries, but Carter won 60% of the delegates in the primaries. Despite this, Kennedy refused to drop out prior to the convention. Carter won the nomination and went on to lose the election to Ronald Reagan by 10% of the vote (51% to 41%) with Independent John Anderson winning 6% of the vote.
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