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In Search of Jimmy Carter

The Missing Link to the Democratic Party’s Pivot to Wall Street

by CHRIS MACAVEL

The egalitarian Left is long overdue for soul searching. For decades the Democratic Party, ostensibly the instrument of progressive policy, has informally renounced its New Deal roots. Consequently, the middle class, long held as the linchpin America’s democratic system, has been dramatically attenuated from its peak in the post-New Deal state of the 1940s. In this reorientation of America, the physical economy — America’s highly skilled labor force, manufacturing capacity, and infastructure — has languished to a near moribund state while a veritable financial casino economy has emerged transcendent.

Although this phenomenon cannot be entirely ascribed to any single political leader or movement, its center of gravity is undoubtedly Wall Street. The Democratic Party — imbibing on years of “free-market” orthodoxy and neoliberalism, has rejected its erstwhile commitment to economic progress for the average person. Instead, it has enabled the financial interests of the owning and possessing class to enrich itself at the expense of the vast majority of Americans, leading to the glaring income disparities that have become a feature of current public discourse.

This fundamental reality was recently explored in Harpers by political scientist Adolph Reed Jr. in perhaps one of the most incisive — though not perfect — much needed critiques of Left politics in recent times. Reed observes:

For nearly all the twentieth century there was a dynamic left in the United States grounded in the belief that unrestrained capitalism generated unacceptable social costs. That left crested in influence between 1935 and 1945, when it anchored a coalition centered in the labor movement, most significantly within the Congress of Industrial Organizations (CIO). It was a prominent voice in the Democratic Party of the era, and at the federal level its high point may have come in 1944, when FDR propounded what he called “a second Bill of Rights.” Among these rights, Roosevelt proclaimed, were the right to a “useful and remunerative job,” “adequate medical care,” and “adequate protection from the economic fears of old age, sickness, accident, and unemployment.”

Carter: Austerity ‘Democrat’

Reed traces the roots of the ideological shift to a Democratic defensive posture in the face of the triumphant conservative “Reagan Revolution” of the 1980s, noting that the “Democratic…center has moved steadily rightward since Ronald Reagan’s presidency.”

He posits:

[D]uring the 1980s and early 1990s, fears of a relentless Republican juggernaut pressured those left of center to take a defensive stance, focusing on the immediate goal of electing Democrats to stem or slow the rightward tide. At the same time, business interests, in concert with the Republican right and supported by an emerging wing of neoliberal Democrats, set out to roll back as many as possible of the social protections and regulations the left had won.

As this defensiveness overtook leftist interest groups, institutions, and opinion leaders, it increasingly came to define left-wing journalistic commentary and criticism. New editorial voices — for example, The American Prospect — emerged to articulate the views of an intellectual left that defined itself as liberal rather than radical.

Although not without merit, this assessment falls short in identifying the true origins of the Democratic Party’s rightward economic reorientation. Before the advent of Reaganism, the foremost tragedy to progressivism was the presidency Jimmy Carter. This “tragedy” of the Carter tenure, as described by one journalist, Haynes Johnson in his In the Absence of Power, has become eclipsed by the ensuing Reagan presidency. Reaganism was doubtless a resounding defeat for the Left, but the coming of Carter, a watershed event, set the Democratic Party on a rightward economic trajectory from which it has yet to alter in any meaningful way. Suprisingly, any mention of Carter, is conspicuously absent from Reed’s analysis. This glaring omission detracts from Reed’s overall analysis because it is from the presidency of Carter that the Democratic Party repudiates its historic relationship to labor and its commitment to deliver economic progress to the average person.

In fact, rather than progress the quintessential feature of the Carter regime are the limits to progress — the need of the American people to sacrifice and limit the scope of their vision for the future — the need to adopt a mentality of scarcity. In Civic Religion and the Presidency, Pierre and Linder conclude that he “told the American people what they did not want to hear — that they would have to renounce their profligate lifestyles.” (Kaufman 1) Tellingly, in Carter’s 1977 inaugural address he asserts that “we have learned that ‘more’ is not necessarily better, that even our great nation has its recognized limits.” Carter’s ideological outlook could not be spelled out more explicitly.

This position has been adopted as a central tenet of Democratic Party orthodoxy, and it has yet to be repudiated hitherto. Indeed, though not tracing this reality to Carter, Reed does touch upon the pessimistic zero growth mentality adopted by the Democratic Party, noting that the Democratic “shift requires, as the historian Russell Jacoby notes, giving up ‘a belief that the future could fundamentally surpass the present,’ which traditionally has been an essential foundation of leftist thought and practice. ‘Instead of championing a radical idea of a new society,’ Jacoby observes in The End of Utopia, ‘the left ineluctably retreats to smaller ideas, seeking to expand the options within the existing society.’ ”

Carter, similar to President Obama, entered the national political scene as a candidate who presented himself in studiously vague terms. Ideologically, he was difficult to pinpoint. Rather than concrete political program and measures, the crux of what Carter offered was himself alone. Kaufman observes, “Wherever he travelled, Carter remained intentionally vague on the issues.” (Kaufman 12) Instead of concrete programatic proposals, Carter ran on values, seeking to opportunistically capitalize on the distrust of Washington garnered by the corrupt Nixon years. (Kaufman ibid.) Not surprisingly, Carter’s characteristic “fuzziness” was repeatedly targeted by his Republican counterpart Gerald Ford.

This studied vagueness inveigled the American people and allowed the eventual content of Carter’s economic program — brutal austerity — to be imposed. But the American people were not fooled once his economic policy was underway. As Stuart Eizenstat his Cheif Domestic Policy Advisor pointed out to Carter, his economic policy was widely regard “solely as austerity, pain, and sacrifice.” Unsurprisingly, Carter’s approval rating dropped precipitously to record lows as a result of his austerity policies.

As eminent historian Arthur Schlesinger Jr., an aide to President Kennedy, posited, Carter was a Democrat in name only; his actions were more characteristically Republican. He observes: “[T]he reason for Carter’s horrible failure in economic policy is plain enough. He is not a Democrat — at least in anything more recent than the Grover Cleveland sense of the word.” Grover Cleveland, it must be remembered, was an austerity Democratic who presided over an economic depression in the late 19th century. According to Schlesinger, Carter is “an alleged Democrat” who “won the presidency with demagogic attacks on the horrible federal bureaucracy and as president made clear in the most explicit way his rejection of… affirmative government…. But what voters repudiated in 1980 [Carter's defeat] was not liberalism but the miserable result of the conservative economic policies of the last half dozen years.” (Leuchtenburg 17)

Deindustrialization and Disaster

The Carter years not only saw a dramatic reduction of the Democratic Party’s efforts at social reform such as the war on poverty and programs for the working poor, but it also began the process of deindustrialization of the American economy. Carter who presented himself as being above the fray of Washington politics, torpedoed a number of water and dam projects, which he considered to be government porkbarrel profligacy. Sparking the ire of the congressional Democrats, the loss of these projects represented a blow to much needed jobs. Tellingly, Carter also ushered in the tendency towards deregulation of key industries such as oil and gas, airlines, banking, trucking, and public utilities — also a later hallmark of the Reagan regime.

Most notably, the systematic deindustrialization of the United States began under Carter, represented the loss of innumerable blue-collar jobs and the US’s preeminent productive capacity, a national asset. Carter, who originally claimed to regard unemployment as one of the most crucial issues, reversed his policy, deciding instead that addressing inflation was of paramount importance. Trade unionists of the AFL-CIO, who were up until this point an integral part of the Democratic electoral base, anticipated Carter would propose a public works program of $30 billion to reduce unemployment. Carter’s refusal to enact the program, inter alia, produced resentment among industrial trade unionists. Kaufman comments that labor was in “open rebellion” against Carter. The AFL-CIO termed Carter’s new plan as “a retreat from the goals we understand President-elect Carter to have set during last year’s election campaign.” (Kaufman 29) Similarly, Democratic mayors, who needed an infusion of aid for their cities, were shunned. These were the groups that elected him in the first place.

More than any other event, the process of deindustrialization, and its corrollary the defeat of labor, accelerated when Carter nominated Paul A. Volcker as head of the Federal Reserve. Volcker’s paradoxical remedy for purging the the economic system of inflation was to inflict economic depression. Volcker proceeded to gut the US’s industrial base with astronomical interest rate increases, with a prime rate as high as 22%, constricting productive activity. Dr. Webster G. Tarpley usefully describes this in Surviving the Cataclysm:

Volcker was a monetarist and “financial institutions conservative,” meaning that he cared little for the economic fate of the American people as a whole, but only reacted to threats to the big banks and to the federal reserve system…

Volcker pushed US interest rates inexorably higher. In March of 1980, Carter and Volcker added a patchwork of credit controls, and Carter attacked the population for using credit cards too much. By April 1980, the prime rate charged by US money center banks to their most reputatable customers had reached 20%. In the second quarter of 1980, the government’s estimate of the real Gross National Product was plummeting at a yearly rate of 10%; it was the sharpest single quarter drop in postwar US history. (Congressman Henry Reuss later complained that “for the first time in history, a Democratic President put the economy into recession.”)…

These were, as German Chancellor Helmut Schmidt and others complained, the “highest real interest rates since the birth of Christ.”

Volcker’s 21.5% prime rate vastly accelerated the deindustrialization on the battered US economy; it was compared by some to a Soviet thermonuclear attack. As a result of the unprecedented interest rates, the traditional industrial areas of the Great Lakes and the North Atlantic seaboard collapsed into a rust bowl. Steel mills, chemical plants, plus small and medium concerns that had been weakened by the oil shocks now had no strength left, and succumbed. (Tarpley 279-282)

The ravages of Volcker set the stage for “the Great U-Turn,” as termed by the research team of Harrison and Bluestone: the repudiation of the implicit social contract that governed labor relations since the postwar epoch. Harrison and Bluestone’s conclusions are that “the 4.5 million people thrown on the streets as unemployed during the 1979-1982 interval, even as US GNP fell by 4.9% in the last quarter of 1981 and by an additional 5.5% in the first quarter of 1982, were the precondition for historic defeats of the labor movement whose effects are still being suffered.”

Following Carter’s 1980 defeat, the Democratic Party never reaffirmed its relationship with labor. Walter Mondale, running in the presidential election of 1984, continued shunning blue-collar workers and unions, regarding them as a special interest group. Blue collar workers, repulsed by the austerity, economic calamity, and Malthusian zero growth grotesqueness of Carter, subsequently gravitated to Reagan, who seemingly brimmed with optimism. If the Democratic Party did not regard blue collar workers as a worthwhile consideration, then the GOP was more than willing to absorb them into their electorate. These are the so-called “Reagan Democrats,” those lost to the follies of Carter. These working class whites continue to elude Democrats today.

It must be remembered that the ensuing Reagan presidency — ushered in by the calamity of Carter — proceeded to preside over perhaps one of the greatest explosions of usury and speculation ever witnessed with the advent of the hostile takeover and leveraged buyout bubble. It accelerates the deindustrialization and contraction of labor relations in America as well.

Reed’s recent essay correctly laments the neoliberalism of the Clinton years and the Left’s subsequent complacent glorification of Clinton, which, in truth, was an extension of Reagan’s terms of political practice and debate. Some of Clinton’s measures included effectively ending welfare, thereby pushing many into abject poverty; pushing the adoption of NAFTA to the detriment of labor and many congressional Democrats; and presiding over privatizations, and deregulation of Wall Street, all of which reverberate today. With the understanding that Carter initiated the Democratic rightward turn and the abandonment of the New Deal, it then becomes apparent that these neoliberal excesses of Clinton are not possible without Carter. Consequently, the current Obama regime which has paralyzed a multitude of meaningful progressive initiatives and transformative economic recovery is not possible without Carter either.

As the debate over the future of progressive politics continues, stemmed by Reed’s recent analysis, progressives will do well to remember the lesson of the catastrophic Jimmy Carter presidency: a Democratic Party that is serious about progressive politics is not viable without a robust relationship to the labor movement, bread and butter economic issues, the rejection of a Malthusian zero growth mentality, and an activist government. There is no future without repudiating the follies of Carter and recreating the New Deal coalition.

Chris Macavel is an independent political analyst based in Harlem, NY. He writes for the blog “The Nation-State” at thenationalstate.wordpress.com. He seeks to enlighten about the growing dangers of NATO imperialist ambitions and Wall Street domination in American political life. He is the author of the forthcoming book “Imperialism in the “Arab Spring: How Western Imperialists Guided the MENA Uprisings.”

Sources:

Burton I. Kaufman, “The Presidency of James Earl Carter Jr.” (Lawrence, Kansas: University Press of Kansas, 1993)

Webster G.Tarpley, “Obama: The Post-Modern Coup: The Making of a Manchurian Candidate.” (Joshua Tree, California: Progressive Press, 2008)

Webster G. Tarpley, “Surviving the Cataclysm: Your Guide to the Greatest Financial Crisis in Human History.” 2nd Edition (Joshua Tree, California: Progressive Press, 2009)

William E. Leuchtenburg, “Jimmy Carter and the Post-New Deal Presidency,” in Gary M. Fink and Hugh Davis Graham, eds., The Carter Presidency: Policy Choices in the Post-New Deal Era (Lawrence, Kansas: University Press of Kansas, 1998)