Johnson and the Great Society
Lyndon Johnson's economic/social program was called the
Great Society. Billions of dollars
were used to improve and build schools, create
the Head Start program for early
education, Upward Bound for low income
teens to attend college, and
Job Corps, which provided vocational training.
Other programs include Medicare, which provided
health insurance to low income people over 65, and
Medicaid, which provided money to states to help
with health insurance costs. Johnson also created
a new Cabinet post, the Department of Housing
and Urban Development to stimulate the economy and
help build up low income areas of cities.
Nixon and New
Nixon was mainly a foreign policy president. His
domestic policy focused on turning federally funded
social programs over to the states. He called this
program New Federalism. He believed
many of the Great Society's programs were to costly.
As a result, he instituted revenue sharing,
which is sharing federal tax money, with the states so
that they could fund social welfare.
Nixon's other big economic problem was inflation,
which was on the rise due to the Vietnam War.
also wanted to balance the budget, which means
spending no more money than what was generated through
taxes. But, the economic problems of America
worsened as unemployment rose and the country's
gross nation product declined. Despite a 90
day wage freeze to get the economy under control,
inflation continued to be a problem throughout Nixon's,
Ford's, and Carter's presidencies.
Ford and the Oil
The Organization of Oil Exporting Countries (OPEC)
placed an embargo on the United States in 1973 as a
result of the U.S.'s support of Israel. This
resulted in gas prices more than doubling and inflation
rising to a high of 10%, which placed the country in the
worst recession since World War II.
Carter and Stagflation
Inflation and continued rising unemployment were the
focus of Carter's domestic policy. The term
stagflation was used to describe the inflation and
the stagnant economy. These problems were worsened
by federal social welfare programs that increased taxes.
The federal government was also forced to make millions
in loans to Chrysler Corporation and
Lockheed Aircraft to keep each from going
bankrupt and laying off thousands of
employees. This did nothing to help an already
and New Federalism
Reagan reinstituted the idea of states handling more of
the cost for social programs, and for reducing the
size of the federal government. He also
wanted to cut taxes for businesses and high
income individuals with the idea that they would
reinvest the saved tax money into the economy by hiring
more workers and purchasing more goods and services,
thus stimulating it. This was called supply
side economics, or Reaganomics, and was meant
to end inflation.
Reagan also wanted to balance the budget.
He attempted to do this through deep cuts in social
welfare programs. But, his
spending in the area of national defense
actually caused a bigger budget deficit.
The federal government was also forced to bail out
farmers who where suffering due to a worldwide
recession. Surplus crops drove prices down, so
Reagan's government paid farmers not to grow crops,
hoping for prices to increase. This never happened
and many farmers lost the homes and farms when they
could not repay government loans.
During the Reagan presidency, America also suffered
from a large trade imbalance. This is when
a country imports more goods and services than it
exports. This also contributed to the increase in
the national debt.
Bush and “No New Taxes”
The budget deficit caused President Bush to go back on a
campaign promise to not raise taxes, which he did
in 1990. A growing recession of the economy
and rising unemployment resulted in Bush being
voted out of office in the 1992 election.
Clinton and the .com
President Clinton took over the presidency during an
economic slump, but soon manage to climb out due to
trade through NAFTA and the bull
markets of the 1990's caused in part by the
start up of hundreds of .com businesses.
The economy took an upturn due in part to many companies
starting a business on the internet. Initial
Public Offerings (IPO) of these company's
stock sent the stock market higher than it had ever
been. Unfortunately, many of these companies not
only had no market, but many had no product. The
.com bubble burst costing many investors millions of
Free trade expanded during Clinton's presidency with
the passage of NAFTA. The North American Free Trade
Association was created by the United States,
Mexico, and Canada in 1993. Its
purpose was to provide free trade between the three
nations, by eliminating trade barriers like
tariffs. Many feared a loss of America jobs as
companies moved to Mexico where is is less expensive to
do business. Instead, Mexico has faced problems
due to the influx of inexpensive American products.
and Corporate Fraud
George W. Bush's administration has been forced to
respond to corporate fraud which has cost investors
procedures have come under fire as the Enron
Corporation faced scrutiny over fraudulent
bookkeeping practices which resulted in investors
losing millions and the company going bankrupt.
Martha Stewart, CEO of Martha Stewart Omnimedia
is under investigation for insider trading in the
ImClone Inc. scandal. Insider
trading is making stock exchanges based on knowledge not
available to the general public. These and other
corporate scandals have caused investors to lose
confidence in the stock market resulting in the
beginnings of a new recession.