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He did none of that, and if he had tried, he would have had a tough tangle with the profligate Congress. Instead, the Administration sent out signals that it worried much less about stemming inflation than stimulating the economy. Who could mistake the message in Carter's call, early in his presidency, to add billions to spending and to rebate $50 to every American taxpayer? Carter attempted to meet the demands of every constituency of the old Democratic coalition, and practically everybody else as well. He gave in to—or actively encouraged —increases in the minimum wage, Social Security benefits, veterans' benefits, farm subsidies, civil service pensions, grants to states and a plethora of other payouts. He acceded to tariff increases or stricter import limits on sugar and steel, TV sets, CB radios and other products, thus sheltering domestic producers from competition and enabling them to get theirs—by raising prices.
Some of Carter's economic aides served him about as well as Typhoid Mary in the kitchen. Treasury Secretary Michael Blumenthal talked down the value of the dollar last year —a cheap dollar was supposed to stimulate exports. Carter might have foreseen that as the dollar fell, prices of imports would rise, lifting with them the prices of similar domestic products, from Wisconsin gorgonzola to Detroit subcompacts. Budget Chief James Mclntyre last January submitted a fiscal 1979 budget that projected a $61 billion deficit, even though the country was entering the fourth year of .economic recovery. Carter might have recognized that this would be grossly inflationary—and that leaders of business and labor would post higher prices and press for steeper wages just to keep up. Robert Strauss, who was Carter's anti-inflation czar until last week, strong-armed coal mine operators last March to accept a highly inflationary contract (39% increases over three years). Carter might have recognized what would happen: every other union leader, just to prove his manhood and keep his job, would strive to equal or top that figure. Blumenthal, Strauss and Carter himself repeatedly, if sometimes vainly, cajoled the Federal Reserve to keep credit easy and hold down interest rates. The President might have known that bankers and businessmen, many of whom considered money policy to have been loose in months past, would interpret this as yet another sign that the Administration was soft on inflation.
As late as last spring, although new jobs were being created at record rates, Carter's aides bickered over which was the greater peril: inflation or unemployment. Even when they agreed that it was inflation, they divided over how strongly to fight it. Political aides wanted the President to go gently, at least until after the November elections, lest any budget cuts alienate unionists, veterans, farmers, welfare recipients and other voters. Economic advisers wanted him to act firmly, paring away at programs. Characteristically, Carter split the difference, calling in April for a timid policy of a modest bud get constriction and limits on federal pay increases. He might have known that this policy would not be enough, that inflation would continue to accelerate.