Inflation Issues: A Time for “National Austerity?”

Vanessa Reguitti, October 1979

With inflation steadily rising to frightening heights, attention has turned once again to president Carter and what he has done to begin to deal with the situation. Federal tax rebates and asking for only a 7% increase in wages are two of the many approaches Carter has so far presented on the inflation problem in this country, with this said maximum not being applied to lower income workers. Federal spending has also been reduced by $13 billion; with tax credits being given to workers who follow guidelines the president has set forth. Always a setter of famously high goals, the president has stated a want for inflation to drop to 4% by 1980.

When it comes to large companies, ones with “sales of more than $500 million”, monitoring by the government will be conducted to make sure price and wage actions are being followed by those who are able. The staff of the Wage and Price Stability Council, of which the staff is currently being increased, will conduct this monitoring. Unlike previous proposals, this anti-inflation package of sorts has seemed to bring with it support from congress, something the president has been notorious for having previous trouble with.

Similar to how the public has reacted to his energy plan, Carter has gained much less than full support for his tactics on how to handle this economic issue from the average American citizen. He has repeated that being that this is not a mandatory guideline for all companies, he expects people to follow it due to their trust that it is necessary. Yet, an almost threat of government interference if the guidelines are altogether ignored has also been shared. According to statements from the president, “Firms that supply goods…to the government will be required to certify their compliance with wage and price standards…companies that fail to comply will be denied government contracts.” This contradicting tendency had led to much talk on the matter of his proposals, and of course, unions have already begun to make their voices heard on the again varying opinions this proposal had created.

With still prevailing optimism that people will follow the plans he has set forth, Carter and his administration have admitted that improvement will not happen overnight. Inflation is bound to continue to rise over the next few months, but beginning to work now against it is the first step towards improvement. Carter has said that he wants the idea of spending, “What we can afford in the long run-not what we can borrow in the short run,” to begin to take force, with people becoming more aware that this crisis is real and here. Federal hiring has also become limited, with a higher oil import fee partly in an effort to also tie in the energy crisis. This higher fee was reported to probably bring down oil consumption by 100,000 barrels a day, a high number for the energy-concerned president.

Whatever your opinion may be of Carter’s proposals, what can be noted is that the president truly has in mind to bring forth these programs without causing mass unemployment. Whether this is in an effort to build trust with unions or in an honest belief that it is necessary, Carter has said on several occasions that fighting inflation goes hand in hand with fighting unemployment. This, he has said, will bring again a sense of patriotism and unity with everyone working for a common cause.

Whether this plan will bring change to the rising inflation rate greatly depends on, once again, whether the public will listen to the president’s concerns or not. Labeled our, “Most serious domestic problem,” by Carter himself, only time will tell whether change will come. Belief in the president, a repeating problem, is truly what will in the end show whether it will be successful or not.

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