1979: United States

The Presidency

Jimmy Carter opened his third presidential year with a State of the Union speech in which he appealed for help in building a 'new foundation' for America. But handicapped by double-digit inflation, a sluggish economy, gasoline lines, an obstinate Congress, plummeting polls, party schisms, and the distractions of some preliminary reelection campaigning, Carter was lucky to get through the year with most of the old foundation intact. He was also plunged into a harrowing crisis, with the seizure of the U.S. embassy in Iran.

He governed conservatively. His budget called for slight cuts in social security benefits (which Congress rejected) and moderate increases in defense spending (which many in Congress sought to further enlarge). He left the inflation fight mainly to the Federal Reserve, and it responded with a record-high discount rate (the rate at which banks borrow from the Fed) of 12 percent by October, in an effort to curb the money supply. His old wage-price guidelines having become virtually inoperative, Carter persuaded labor leaders in September, after ten months of negotiations, to join, along with representatives of management and the general public, a new Pay Advisory Board. His only major new social legislation, a national health insurance program, was sent to Congress too late and with too little lobbying to get action.

Congressional relations.

Carter had a difficult year on Capitol Hill. He did win congressional approval of a new Department of Education, thereby fulfilling a promise he had made to the teachers' lobby in 1976. With the education bureaucracy transferred, the Department of Health, Education, and Welfare was to be renamed the Department of Health and Human Services.

Congress gave Carter an especially hard time in energy matters and in foreign affairs. When he announced that phased decontrol of domestic crude oil prices would begin on June 1, the House Democratic Caucus voted 153 to 82 against the move (it was an embarrassing partisan rebuke but had no binding legal effect). Congress revamped his plan for standby gasoline rationing, and the Senate Finance Committee sharply cut his proposed tax on excess oil company profits, although a House bill was closer to what Carter had sought.

Just as chances were improving for Senate ratification of the second-stage strategic arms limitation talks (SALT II) treaty with the Soviet Union, it was disclosed that the Soviets had about 2,000-3,000 combat troops stationed in Cuba. The Senate, already growing noticeably more conservative in foreign affairs, shifted to a hard-line stance. Many who had originally said they would support SALT II now said they would do so only if the Soviets removed their troops. Others, especially some southern members, demanded an additional price for their support: a defense budget 5 percent higher than Carter had originally asked for (the president had upped this original request by 3 percent). On October 1, Carter announced the administration's answer to the Soviet troop presence. He promised to increase surveillance of Cuba, to establish a Caribbean Joint Task Force Headquarters in Key West, Fla., to increase naval maneuvers in the Caribbean, and to increase foreign aid to poor Caribbean countries.

Foreign policy.

So long as he could conduct foreign policy on his own, independent of Congress, Carter showed himself to be a tireless and usually efficient negotiator. Having broken diplomatic relations with the Nationalist regime on Taiwan and established formal relations with People's Republic of China, effective January 1, Carter shortly afterward hosted China's Deputy Premier Deng Xiaoping (Teng Hsiao-ping). In February, Carter flew to Mexico City to discuss economic issues. President José López Portillo, apparently feeling that the United States was not offering a fair price for Mexico's natural gas and angry about U.S. treatment of illegal immigrants, gave him a cold reception. When President López Portillo visited Carter in Washington in September, he seemed to have thawed a bit, an agreement on U.S. gas imports having just been concluded.

In March, when the peace agreement between Israel and Egypt that Carter had helped hammer out at Camp David in 1978 seemed to be eluding the parties, he flew to the Middle East for six days of relentless negotiating that resulted, on March 26, in the signing at the White House of a treaty. Then, in June, Carter was off to Vienna, where on the 18th he and Soviet President Leonid Brezhnev signed the SALT II pact. Next, he attended an economic summit meeting in Tokyo, where the leaders of the world's largest non-Communist industrial nations agreed on oil import ceilings through 1985.