The 70s: Richard M. Nixon1969-1974

DOMESTIC POLICY

1968 PRESIDENTIAL ELECTION

1968 PRESIDENTIAL ELECTION

• Richard Nixon elected

• aided by his image of dedication to traditional values

• in 1969, Nixon was committed to

• achieving international stability

• ending the Vietnam War

• restoring order in America

THE 70s ECONOMY

THE 70s ECONOMY • First Term: Nixon supported significant

expansion of welfare programs in many areas• succeeded in implementing the Supplemental

Security Income program

• Second Term: attempting to address the needs of Middle America, Nixon dismantled many of the social programs created during the Kennedy and Johnson years

THE 70s ECONOMY • By the early 1970s, the post-World War II

economic boom had crested as a result of • the Vietnam War• a slump in productivity

• general shift in the economy from manufacturing to services caused decline in worker productivity

• a decline in the competitive advantage of American business

• the economic recovery of Japan and Germany• In the late 1960s, American manufacturers (steel and

automobiles) began to face additional competition from Western Europe and Japan

THE 70s ECONOMY • During the Nixon administration, the U.S.

suffered from• high inflation • high unemployment • trade deficits

} STAGFLATION

THE 70s ECONOMY • high inflation rate

• LBJ’s refusal to raise taxes for spending on social-welfare programs and the Vietnam War = deficit spending = wartime inflation

• also running a trade deficit for the first time in the twentieth century

• most significant cause of 1970s inflation was a large increase in the price of oil • responses to the energy crisis in 1973-1974

• Congress sanctioned the construction of the Alaskan pipeline• Congress enacted a 55–mile–an–hour speed limit• agitation mounted to use more coal and nuclear power

• Nixon’s policies for curbing inflation included• wage and price controls

• in the early 70s, Nixon imposed a 90 day wage-and-price freeze

• a sharp rise in interest rates• devaluation of the dollar (to help trade deficit)

• Took the US off the gold standard

Devaluation • A deliberate downward adjustment to a country's

official exchange rate relative to other currencies. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the official value of the currency. Contrast to "revaluation".

• There are two implications for a currency devaluation. First, devaluation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit.

Gold Standard• Monetary system that pegs or fixes the value of a nation's

currency unit to a fixed amount of gold bullion. Paper currency in such systems is convertible freely into gold.

• The gold standard was introduced in Great Britain in 1821 and was the basis for the U.S. Monetary system from the 1870s to 1971, when the U.S. Treasury Department announced it would no longer back the U.S. Dollar, for foreign exchange purposes, with its gold reserves.

• (The Gold Act of 1934 abolished the right of U.S. Citizens to exchange paper currency for gold.)

• The gold standard insures a fixed rate of exchange in international trade, while limiting the amount of paper currency a central government can issue for domestic spending. Its main drawback is that it hinders the ability of a government to control the supply of money

The Federal Reserve System

• History

• Monetary Policy

• GoTo:• http://www.federalreserveeducation.org/fed101/

History/index.cfm

THE 70s ECONOMY • The "Nixon Shock"• By the early 1970s, as the Vietnam War accelerated inflation, the United States

as a whole began running a trade deficit (for the first time in the twentieth century). The crucial turning point was 1970, which saw U.S. gold coverage deteriorate from 55% to 22%. This, in the view of neoclassical economists, represented the point where holders of the dollar had lost faith in the ability of the U.S. to cut budget and trade deficits.

• In 1971 more and more dollars were being printed in Washington, then being pumped overseas, to pay for government expenditure on the military and social programs. In the first six months of 1971, assets for $22 billion fled the U.S. In response, on August 15, 1971 Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly "closed the gold window," making the dollar inconvertible to gold directly, except on the open market. Unusually, this decision was made without consulting members of the international monetary system or even his own State Department, and was soon dubbed the "Nixon Shock".

• The surcharge was dropped in December 1971 as part of a general revaluation of major currencies, which were henceforth allowed 2.25% devaluations from the agreed exchange rate. But even the more flexible official rates could not be defended against the speculators. By March 1976, all the major currencies were floating—in other words, exchange rates were no longer the principal method used by governments to administer monetary policy

THE WARREN COURT

The Warren Court • the Supreme Court under Chief Justice Earl

Warren reflected deep concern for the individual

• handed down rulings to • prevent required prayer and Bible readings in public

schools• protect the rights of individuals accused of crime• support rights for blacks

Warren Court Cases• Right to Privacy

• Griswold v. Connecticut (1965)• upheld a married couple’s right to use contraceptives

base on the right to privacy

• Rights of the Accused• Gideon v. Wainwright (1963)

• Entitled to an attorney provided by the government if can’t afford one

• Escobedo (1964)• Miranda (1966)

• Entitled to informed of their rights at time of arrest• Right to remain silent

The Warren Court • Critics of the Warren Court complained it was

ignoring the Constitution in favor of its own social values

• Chief Justice Burger succeeded Chief Justice Warren• remained committed to social reform • but followed a moderate path concerning civil

liberties

1972 PRESIDENTIAL ELECTION

• George McGovern• the Democratic nominee for the presidency in 1972• alienated the traditional working-class backbone of

the Democratic Party by appealing to racial minorities , feminists, and youth

• appealed most strongly to the anti-war movement

• Nixon’s reelection aided by • his defense of traditional values• the liberal politics of George Mc Govern• the tremendous campaign funds acquired and

dispensed by his reelection committee

1972 PRESIDENTIAL ELECTION

• the Environmental Protection Agency (EPA)

• Supplemental Security Income for the blind , disabled ,and indigent aged (SSI)

• the Endangered Species Act

• the Occupational Health and Safety Administration

Nixon Legacy

• on Wall Street and Broadway in New York City • Vietnam anti-war protesters and construction workers

from sites in the area clashed • four days after the Kent State shootings in Ohio • anti-war protesters

• reportedly waving Viet Cong flags and defiling American flags in protest ag. the Kent State shootings and the expansion into Cambodia

• "Hard Hats" • set up American flags, then pursued the fleeing protesters • the construction workers were unexpectedly joined by white

collar office workers from the exchange• The Hard Hat Riots were followed by a series of

peaceful, police-guarded pro-war rallies in New York almost every day during May

1970 : Hard Hat Riots

• prison uprising in New York • at least thirty-nine people were killed• prisoners demanded better living conditions, showers,

education, and vocational training, less censorship of their mail and visitors• At the time, inmates given one bucket of water a week as a

"shower" and one roll of toilet paper a month

• forty-two officers and civilians taken hostage• 5 day standoff • tear gas was dropped into the yard and State Troopers

opened fire• The New York State Special Commission on Attica wrote, “

• With the exception of Indian massacres in the late 19th century, the State Police assault which ended the four-day prison uprising was the bloodiest one-day encounter between Americans since the Civil War."

1971: Attica Prison Riot

WATERGATE

Changes in the office of the Presidency• TRENDS

• Public expectations of the President had increased• Constraints on the President had increased

• Congress• Courts• Interest groups• Media• federal bureaucracy

• By the time Nixon became president, the power structure of the federal government had become swollen and unresponsive to the president

• Succession of Presidents after WWII• New methods to exercise authority • Stretching (sometimes) breaking the law (in the name of National

Security)

• The Break-In• During 1972 presidential campaign• Burglars caught breaking into Democratic Party

Headquarters in Watergate complex in Washington D.C. • Burglars = paid by & connected to the government

• The Scandal• Political scandal over Nixon’s abuse of power• Break-in investigated = exposed link to White House• Nixon tried to cover-up incident = pay-offs, tried to stop FBI

investigation• Nixon recorded conversations = “smoking gun”

• The Resignation• Before he could be impeached

WATERGATE: 1972-74

TWO SCANDALS emerged• General pattern of abuse of power

• White House & Nixon & Nixon campaign committee• use of the Internal Revenue Service to harass political

opponents• burglarizing enemies’ psychiatry offices

• Daniel Ellsberg = man who “leaked” the Pentagon Papers to the Press

• Cover-up of Watergate burglary

• Watergate cover-up • Illegal efforts to obstruct the investigation

• obstruction of justice• illegal use of the FBI and CIA

• Withhold information

• Senate Watergate hearings (73-74):• Howard Baker’s question, “what did the president know and

when did he know it?” was in direct reference to the president’s role in the Watergate cover-up

• revealed that Nixon conversations had been recorded on tape

• Special Prosecutor Archibald Cox demanded Nixon turn over the tapes

• Nixon tried to resist giving his taped conversations to the special prosecutor and Congress by claiming that he had Executive Privilege (confidentiality )

• Nixon fired Cox

• Saturday Night Massacre = Atty General & his first replacement refused to fire Cox = Nixon fired them (finally 3rd Atty Gen. fired Cox on Nixon’s orders)

• Public pressure = appointment of new Special Prosecutor = Leon Jawarski• Also went after the tapes

WATERGATE

• evidence in the Watergate case • indicated that Nixon was guilty of a major crime :

• obstructing justice by covering up evidence of the crimes of others

• “smoking gun”• Tapes turned over by Supreme Court ruling • Offered “incontrovertible” evidence of his

involvement days after the Watergate burglary • Had ordered the FBI to stop investigating the

break-in

WATERGATE: 1972-74

• the House Judiciary Committee adopted Impeachment articles charging President Nixon with

• obstruction of the administration of justice (in Watergate cover-up)

• abusing the powers of his office• contempt of Congress (by refusing to turn over the tapes)

• Nixon Resignation• To avoid impeachment & conviction by the

Senate• Announced his resignation (1974)• 1st president to resign

WATERGATE: 1972-74

• John Dean Nixon’s close friend and adviser, who first voiced allegations that Nixon was directly involved with the Watergate Break-in• Later confirmed by the tapes

• John Mitchell Nixon’s close friend and adviser who apparently ordered the actual break-in at the Watergate office building

• Haldeman & Ehrlichman Nixon’s top White House assistants

WATERGATE: 1972-74

• Vice President

• forced to resign in 1973 after being accused of accepting bribes

• Gerald Ford APPOINTED Vice President• This is what makes Ford the 1st UNELECTED

president (when Nixon resigns, as VP he becomes President)

Spiro Agnew: 1973

• 1974 = most controversial action of Ford presidency = pardoning Nixon for any known or unknown crimes he had committed while president (one month after resignation)

Gerald Ford: 1974

• Burglars & numerous White House aids sent to prison

• New laws to avoid gov’t abuse

• More aggressive mass media

• Scandal ( along with turmoil of Civil Rights Movement & Vietnam War ) = public disillusionment , cyncism toward American government

Effects of Watergate