Economic Stabilization Act of 1970 - Background

Background

Seeking reelection in the 1972 presidential race, President Richard Nixon had to tackle complex economic issues. The radical and rapid changes of the late 1960s such as the Vietnam War and the 1970s Energy Crisis, combined with workforce shortages and the rise in Healthcare cost caused the country to face a recession. President Nixon "inherited a mess". President Lyndon B. Johnson was said to have not accepted the "advice of his economists". There was a dilemma; inflation was high and unemployment was low. In the midst of this recession President Nixon was faced with two options. He could either let the economy stay the way it was, meaning allow the inflation and allow Americans to keep their jobs, or he could tackle the inflation by cutting jobs to balance out the economy. Nixon chose the latter. President Nixon had kept the American worker in mind with this decision to tackle the inflation and cut jobs. Nixon proposed that this was a temporary solution, but promised that more was to come in terms of change, hope and "manpower".

The Economic Stabilization Act of 1970 was passed, inaugurating a policy of wage and price controls. Nixon stated in a letter that he wrote to Congress for full support of this act "Our tactics for pursuing this objective are twofold: First, to accomplish much needed and long overdue reform of the manpower programs set up under the Manpower Development and Training Act and subsequent legislation and thus increase their effectiveness in enhancing the employability of jobless workers; and, second, to move toward a broader national manpower policy which will be an important adjunct of economic policy in achieving our Nation's economic and social objectives".

This statement was the essence of his letter and the "promise" of this act. He commented on the futile attempts to contain the economy in the 1960s, and he promised to bring about change by proposing tax cuts over the course of his term to create new jobs. In 1971 Nixon proceeded with the tax cuts under the provisions of phase II of the Economic Stabilization Act as it was amended earlier that year. It was believed by Nixon that America needed a comprehensive manpower policy to bring power back to the United States economy. There was no greater proof that America lacked strong manpower than the economic mishaps of the 1960s that lead to the recession that Nixon inherited. Nixon, along with the Economic Stabilization act, referenced the Manpower Development and Training act of 1962 to utilize the competence of America's workforce and the Manpower Revenue Sharing Act, to make such manpower training programs accessible to local governments to "administer". Referencing the success of these programs, Nixon promoted these acts to increase employment and to support his newly proposed Economic Stabilization Act.