Jimmy Carter's response to stagflation, the unprecedented combination of stagnation and double-digit inflation that afflicted the American economy during his presidency, made him the subject of virulent attack from liberal Democrats for betraying New Deal traditions of activist government to sustain high employment and strong economic growth. Carter found himself accused of being a do-nothing president whose name had become ‘a synonym for economic mismanagement’ like Herbert Hoover's in the 1930s.1 Liberal disenchantment fuelled Edward Kennedy's quixotic crusade to wrest the 1980 Democratic presidential nomination from Carter. ‘[H]e has left behind the best traditions of the Democratic Party’, the Massachusetts senator charged, ‘We are instructed that the New Deal is old hat and that our best hope is no deal at all.’2 A quarter-century later a more dispassionate analysis would suggest that Carter was neither a do-nothing president nor a throwback to the past in terms of economic policy. Far from being the ‘Jimmy Hoover’ of liberal obloquy, Carter was really ‘Jimmy Clinton’ because in seeking solutions for stagflation his administration laid the foundations of a new political economy that the next Democratic president would build upon.
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