President Carter

by Stuart E. Eizenstat

  Eliot Cutler, in charge of natural resources at OMB, Interior Secretary Andrus, and I developed a defense against the increasing likelihood that Congress would not pass legislation in time, while simultaneously prompting Congress, especially Stevens and Gravel, to act on an issue that had been delayed for eight years. Our plan involved two federal acts, the 1976 Federal Land Policy and Management Act and the Antiquities Act, an environmental weapon of awesome potential. Enacted in 1906 under President Theodore Roosevelt, it gave a president the right to designate objects and land of historic and scientific interest as national monuments without congressional approval, essentially freezing any commercial and other activity, even hunting and fishing. Although draconian in its reach, it had been used more than a hundred times to preserve the Grand Canyon and the Grand Tetons, along with many other natural treasures. But it had never been invoked to protect such a huge swath of pristine territory. Andrus sent the president a memorandum in November 1978, growing out of our interagency review that warned Carter he needed to act now “to assure that these lands are not despoiled while we await congressional action.”2

  The Interior secretary had just withdrawn 105 million Alaska acres from mining and other local exploitation, but that order extended only three years and could be challenged in court. He also warned Carter that he would be criticized as immoderate because “no president has ever taken an action of this magnitude—nor will any future president have the opportunity to do so.” Outside Alaska, Andrus explained, “there are no more frontiers, only remnants of our natural heritage.” As for congressional objections, he pointed out that the House had passed a bill by the overwhelming bipartisan vote of 277 to 31, setting aside even more acreage than the administration, but it had been filibustered to death by none other than Alaska’s Mike Gravel.

  Because of the great political risks, I wanted the president to hear every argument, positive and negative. So the next day, in a November 29, 1978, joint memorandum from Andrus, Agriculture Secretary Bob Bergland (whose department managed some of the areas to be protected), and me, we detailed the areas that would be protected under the monuments designation, and summarized the pros and cons. We said it was the strongest tool available, would be the most significant spur to congressional action, could not be blocked by Stevens and Gravel or even by another president, but only by a future Congress. Thus further delays by the two senators would be eliminated. We warned him of the likelihood of future court challenges, but we emphasized to the president that “regardless of the outcome of legislation, his action would be viewed as strong and decisive.”3

  If anyone doubted that Jimmy Carter was tough and now seasoned late in his presidency, they would be dissuaded by the fact that he promptly checked the option for his approval, and issued a formal Designation of National Monuments on the first day of December, before the deadline.4 (The Trump administration has removed several designations that protect pristine Monument areas elsewhere from economic development.)

  Thus outflanking Congress, he warned that the land would “remain permanent Monuments until the Congress makes other provisions for the land.” This was designed as a spur to action—which it was, but only after two years of hand-to-hand political combat. The Alaska congressional delegation, in Andrus’s words, “went bonkers.”5 It would be an understatement to say that Carter’s proclamation was not readily accepted in Alaska. The president was burned in effigy in Fairbanks. Residents in the Cantwell area organized a major act of civil disobedience known as the Great Denali Trespass, entering the park and violating laws by lighting campfires and firing guns. The towns of Eagle and Glennallen, located in the shadow of newly designated monuments, issued official declarations that they would neither respect nor enforce National Park Service regulations, and would shelter those who violated them.

  Even months later, in June 1979, Carter expressed concern about landing briefly in Anchorage on the way to a G7 summit in Tokyo. Stevens greeted him as he descended from Air Force One, and to Carter’s surprise, Governor Jay Hammond of Alaska gave the president a mule driver’s whip, “just in case he needed it,” or in Carter’s own words, “I might need it to whip somebody’s ass.”6 Indeed, it would come in handy for what followed.

  Stevens knew the leverage had shifted decisively to the president, and that further delaying tactics would play against the Alaska senators, who would be better off negotiating a legislative solution with more flexibility than the rigid limits in the monuments designations. We rallied support for his controversial use of the Antiquities Act, with a number of events at the White House organized by Anne Wexler, the most memorable of which occurred the following May. The president was given the ultimate compliment by Chief Matthew Fred of the tribes on Admiralty Island for preserving “this island, its natural resources, its wildlife, from time immemorial.” On behalf of the people of Angoon, the chief presented the president with a clan vest and a noble name, Nakoo’woo, meaning “a great nation in migration.” The chief movingly explained: “The name was given birth when my nation was coming back to their beloved coastal home after the ice had receded from the land, and that is a long time ago. You are now my brother of the Raven Beaver Clan and an honorary chief of Angoon and of all Admiralty Island.” Carter thanked the chief and the tribe he represented and repeated sentiments about his deep love for nature in its purest state, as well as his apologies on behalf of all the well-meaning leaders including himself for the times they had fallen short.

  Joining the White House ceremony was none other than Theodore Roosevelt IV, a New York investment banker and a Republican, who said, “No cause was closer to the heart of my great-grandfather than the conservation of our natural resources. Were he here today, I think he’d be amongst the first to applaud your efforts to preserve our priceless jewels in Alaska for future Americans, and he would probably use his favorite adjective, ‘bully,’ to describe your efforts.”7

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  To say that the president was involved in the negotiations would also be an understatement. Even while engaged with gaining the release of the Iranian hostages, and following his crushing electoral defeat, he was focused on preserving the Alaska lands before he left office.

  One example illustrates Carter’s attention to detail—a characteristic that had its pluses and minuses. Stevens was concerned about the designation of a small piece of Alaska land and asked to discuss it directly with Carter. When he arrived for the appointment with the president and Andrus and raised the issue of this obscure parcel, the president countered, “Let’s check that,” got down on his hands and knees on the floor of the Oval Office, and rolled out his giant map of Alaska with all of his designated monuments and our proposed legislative positions. “No, I don’t think you’re right,” Carter told Stevens. “You see this little watershed here actually doesn’t go into that one. It comes over here.” In the car going back to Capitol Hill, Stevens told his chief of staff, Jack Ferguson, that Carter “knows more about Alaska than I do! I’ve been campaigning all over it and representing it for twenty-five years!”8

  A final deal reached down to the last watershed. It also protected the Arctic National Wildlife Refuge from development unless the president and both houses of Congress allowed it. The ceremony in the East Room of the White House was memorable. When Carter signed the legislation, Mo Udall, his 1976 Democratic primary opponent, declared: “No president has done more, with the possible exception of Theodore Roosevelt, to do things in conservation that need being done, and nobody can ever take that away from you, Mr. President.”9

  For me, there was a personal event twenty years later that gives Carter’s victory a special meaning. I took my two sons with their wives and children, and my grandchildren, on an Alaska cruise. We took two side trips on a smaller boat off the cruise liner—one to Glacier Bay and one to Fjords National Park—both areas among the many that had been set aside in the Alaska Lands Act. The craft displayed copies of the president’s 1978 Antiquities Act Proclamation and Monuments Des
ignation, and the National Park Service pamphlets handed out to visitors recounted the history of the bills he signed into law. When I told the park ranger that I had worked with President Carter to make this happen, he was incredulous. He said, “This is wonderful; it really is; I hope I can do it justice on this tour.” But Cecil Andrus said it all: “It was the only place in the North American continent, if you go around the coastline, where you don’t have the industrial footprint of man, and there are just certain things and places that ought to be left alone.”10

  But our environment is dynamic; changes in the air we breathe, the land we till, and the sea around us are constant, and threats can never be ignored. Part of that coastline is now being slowly inundated by rising seas, and some native villages are already being forced to retreat to higher ground.11 And even during that family Alaska visit, our guide had pointed out the dramatic melting of the glaciers from global warming.

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  President Carter elevated the environmental movement to the highest political level. He left office with the environment at the forefront of his thoughts, where it remained, and was taken up as a challenge and a cause by political leaders everywhere. The environment, along with nuclear weapons and human rights, was highlighted in his farewell address to the nation on January 14, 1981—the importance of the “stewardship of the physical resources of our planet” and the need to protect against the “real and growing dangers to our simple and most precious possessions: the air we breathe; the water we drink; and the land that sustains us.” He did more than any president of the United States before or since to put the nation on a course to protect this precious heritage.12

  PART IV

  THE ECONOMY

  14

  THE GREAT STAGFLATION

  Jimmy Carter entered office in January 1977, at a time of great economic challenge and flux. The entire decade of the 1970s was characterized by a combination of economic phenomena not seen before or since—a painful condition of simultaneously high unemployment, stagnant growth, and high inflation that required a painfully awkward new term to describe it: stagflation.1 It contradicted the prevailing economic theory that higher levels of inflation were related to high levels of growth, and higher unemployment would lead to less inflationary pressures. Consequently, an angry public was caught running in place, economists were baffled, and the administration was divided over what to do about the miseries of an economy with a unique malady for which no one had a clear, painless prescription: fight unemployment and stoke further inflation, or tackle inflation and worsen unemployment?

  The new president inherited a witches’ brew that began when Lyndon Johnson decided to fund the Vietnam War simultaneously with the Great Society. It was compounded by Nixon’s decision to impose wage and price controls, which enabled him to press his Fed chairman, Arthur Burns, to print money that helped ease his way to reelection. Quickly removed after his victory in 1972, the controls were followed by the first oil shock of 1973, prompting the first burst of double-digit inflation. During the 1970s inflation never fell below 5 percent, double the historic average.2 Experts from Paul Samuelson, the dean of liberal economists whose textbook remains a staple for economic classes the world over, to conservatives like Alan Greenspan, the longtime Federal Reserve chairman, believed the stagflation cycle began with President Johnson’s policy of guns and butter without raising taxes to pay for both. As Greenspan told me, “LBJ let the canary out of the cage.”3

  The administration’s economic policy was constantly whipsawed between balancing our commitment to lower unemployment while dealing with surging inflation, a struggle that not only divided the administration internally but also from our liberal Democratic constituency groups, which focused only on jobs. It created dissonance in our economic policy and uncertainty among the American public and our key allies abroad.

  After stimulating the economy mainly with tax cuts in the first part of his term, Carter realized before most of his advisers, myself included, that inflation was the greatest danger to the nation and its growth. He employed everything from two anti-inflation czars, tight budgets, increasingly tough wage and price guidelines, a labor-management advisory board, and deregulation. These measures were like using a toy gun against a raging elephant. In the end, however, after all else had failed, Carter courageously appointed Paul Volcker to head the Federal Reserve in the full knowledge that this determined public servant would deploy the blunt instrument of tight money and high interest rates. This ultimately squeezed inflation out of the economy at the cost of high unemployment and helped squeeze him out of a second term, but with long-term benefits to the country to this day.

  But on the way we made a series of policy errors in which I was directly complicit (although hardly alone). We failed to recognize the seriousness of inflation and inflationary psychology early enough. We were willing to live with the high rates we inherited in the mistaken belief that we could stimulate the economy to drive down unemployment without further spiking inflation. We failed to reinforce the president’s own conservative instincts by persuading him not to veto the 1978 tax cut, as he repeatedly told us he wanted to do. All these domestic decisions combined with a “perfect storm” of other events over which we had little control—the second oil price shock of the 1970s, sparked by the Iranian revolution, soaring world food prices, and productivity that sank to unprecedented low levels. All that boosted inflation from its already high level of about 6 percent that he inherited from Ford to double digits four years later.

  This created a fear among the American public that the economy was out of control and their livelihoods with it, a fear shared by America’s allies and global financial markets, which questioned whether economic leadership of the free world was in sound hands. This withdrawal of confidence sent the dollar plunging, despite tight budgets and deficits that were a fraction of those racked up during the Reagan administration. In retrospect, if Carter had administered the harsh medicine of a recession during his first year to get it out of the way, that would have run contrary to his campaign promise of restoring growth. While it might have led to lower inflation later in the administration, no one could have been sure of that, and in any case it was a policy that no one advised, inside or outside the administration.

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  The level and force of inflation had not been seen in America since the Civil War. It made a mockery of economic policy making throughout the decade. One Republican president, Nixon, imposed wage and price controls, while the second, Ford, resorted to vetoing Democratic spending bills and a widely derided Whip Inflation Now campaign of cheerleading conferences and their wacky signature WIN buttons. It was politically easier for the Ford administration to switch its focus from reducing unemployment to fighting inflation by citing the Republican mantra of balancing the budget. But neither Nixon nor Ford urged Arthur Burns, their Federal Reserve chairman, to raise interest rates to fight inflation, fearful it would create a recession. Ford got the recession anyway, along with an inflation rate that averaged 9 percent in 1975.4 This helped elect Carter but did little to enhance understanding by academics or policy makers of the unprecedented phenomenon of stagflation.

  Stagflation had bedeviled three successive American presidents during the 1970s and was a major factor in the defeat of two of them. Against Ford in the 1976 election, we employed economist Arthur Okun’s invention of a “misery index” that added up the high percentages for both unemployment and inflation—only to have Ronald Reagan throw it back at us four years later. Stagflation also prevailed in all the leading industrial democracies of Europe and Japan. In the end the Carter administration could boast four years of growth and the creation of more than 10 million new jobs. That was more than were created under Nixon and Ford, almost twice the number created during Ronald Reagan’s first term, and almost identical to that in his second; nearly four times more than in George H. W. Bush’s one term, and just below the job growth in Bill Clinton’s first four years, during his golden times
in the 1990s.5 Our budget deficits were a fraction of Reagan’s mammoth ones, and federal spending during the first four years of the Reagan administration averaged about 24 percent of gross domestic product (GDP), compared with only 21 percent during the Carter administration.6

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  Early in his term, Carter, a Democrat who was conservative in both personal and public finance, recognized that inflation was a mortal danger but faced a divided administration, unremitting pressure from Democratic congressional leaders and the party’s dominant Washington-based liberal wing, plus union, minority, and urban supporters demanding that he expand the economy, create jobs, and ignore inflation. They had been out of power for eight years and were anticipating a big surge in spending on job creating and social programs starved during the Republican years. This pulled in the opposite direction from every conservative fiscal fiber in Jimmy Carter’s being. The gap between his own balanced-budget instincts and those of the party whose banner he carried represented a fault line that cut across his administration. The policy tools in the hands of our traditional Keynesian economists had been devised to fight a 1930s Depression through government spending and were not equipped to confront this new economic phenomenon.