Miller Center

American President

A Reference Resource

Domestic Affairs

After taking the oath of office to become the thirty-eighth President of the United States, Gerald Ford forthrightly declared, "Our long national nightmare is over." With this simple statement, the new President both recognized the anguish caused by Watergate and indicated that he intended to lead the country forward.

The future, however, held many challenges and uncertainties. The American economy was sputtering, with both inflation and unemployment on the rise. Fiscal problems were hampering a number of state and city governments, and divisive social issues—such as busing, abortion, and women's rights—were splintering the American polity. Just as important, the Watergate scandal had profoundly altered the political environment. The public, by all accounts, was demanding honesty and accountability from its political leaders. And Congress was determined to take back some of the power it had ceded to the President over the previous four decades.

Ford had risen through the Republican ranks in Congress in large part because of his reputation for decency, integrity, and fairness, and his willingness to compromise. He thus was uniquely situated to lead the country in the aftermath of Watergate. Ford attempted to cultivate this image with the public by inviting the press to see his common-man, next-door-neighbor lifestyle. He toasted his own English muffins in the morning, opened doors for himself, and talked casually to White House security guards.

Ford was not entirely successful in maintaining this image, however. Within months of taking office, he had become something of a comic figure. Comedian Chevy Chase impersonated Ford every week on the popular television show "Saturday Night Live," stumbling and falling down stairs, saying the wrong thing at the wrong time, and accidentally injuring himself and innocent bystanders. Journalists often joined in the ridicule, circulating Lyndon Johnson's remark that Ford had played too much football without his helmet. In fact, Ford had, indeed, fallen upon exiting Air Force One in Austria, but Chase's act—which Ford later admitted was funny—was unfair. An all-Big Ten football player, Ford was certainly one of the most athletic Presidents in history. These negative portrayals, however, tarnished Ford's image and standing with the American public.

Pardoning Richard Nixon

Ford's ascent to the presidency implicitly promised the end of the Watergate scandal. The new President, however, re-opened old wounds when, exactly one month into his tenure, he granted Richard Nixon a "full, free, and absolute pardon . . . for all offenses" Nixon committed, or "may have committed," while President. Ford told Americans on September 8, 1974, that he had granted the pardon because Nixon had suffered enough, because the threat of prosecution was damaging Nixon's health, and because a trial of the ex-President would reignite bitter and divisive passions and prevent the country from moving forward. Privately, Ford worried that a trial would seriously harm his ability to govern, and he yearned for a presidency free from daily questions about the fate of Richard Nixon. Ford clearly hoped that the pardon would bring a sense of closure to the whole sordid affair.

Instead Ford's pardon of Nixon touched off a firestorm of protest. Polls showed that most Americans wanted Nixon punished. Observers also questioned Ford's judgment in pardoning Nixon so soon after taking office, with one Republican senator asking a presidential aide, "doesn't he have any sense of timing?" Indeed, his first press secretary, Jerald terHorst, resigned in protest over Ford's decision. Ford's popularity plummeted in public opinion polls, dropping from the high sixties into the high thirties.

Just as important, members of Congress from both parties reacted angrily to the pardon. A group of liberal Democrats, in particular, wanted to learn more about the pardon—and especially whether Ford had discussed Nixon's pardon with the ex-President or his staff. The specter of a deal between Nixon and Ford hung in the background as a special subcommittee of the House Judiciary Committee ("The Hungate Committee") sent Ford a set of questions about the pardon. Attempting to answer his critics, Ford agreed to appear before the committee, a decision his White House aides did not support. Ford thus became the first President since Abraham Lincoln to testify before a congressional committee of inquiry. In a nationally televised appearance on October 17, 1974, Ford admitted that a pardon was one of the many options presented for discussion by Nixon's chief of staff, Alexander Haig. But Ford denied having promised a pardon or having made any commitment at all regarding Nixon's resignation, declaring "There was no deal, period, under no circumstances." The committee voted to close the investigation shortly thereafter. While historians have generally discounted the likelihood of any "deal," the episode damaged Ford nonetheless. The presidential honeymoon—with the American public, the press, and with Congress—was over.

The Ford Administrative Team

Early in his administration, President Ford faced another challenge which threatened to burden him with the sins of his predecessor: what to do with Nixon's cabinet and staff, whose assistance he needed in the near term to run the White House effectively. Ford's closest advisers counseled that key members of Nixon's team be kept in office for a period of time after Nixon's resignation and then eventually be replaced by Ford's own appointees. Ford essentially followed this advice.

In the modern White House, the most important position was that of "chief of staff," a post that Alexander Haig held for the last eighteen months of the Nixon presidency. Haig remained in that position for the first six weeks of the new administration until Ford appointed him commander of NATO (North Atlantic Treaty Organization) in Europe. Ambassador to NATO Donald Rumsfeld, an old colleague of Ford's from the House of Representatives and a veteran of the Nixon White House, became Ford's "staff coordinator," essentially the new chief of staff. Ford kept other Nixon appointees in key positions as well, including Roy Ash as head of the Office of Management and Budget and Kenneth Cole as head of the Domestic Council. At the same time, Ford named several trusted aides to important staff positions. Unfortunately for the new President, his appointees and the Nixon holdovers (or those with ties to Nixon such as Rumsfeld) often clashed.

Ford also nominated Nelson Rockefeller, the former governor of New York and leader of the moderate wing of the Republican Party, to fill the vacant office of vice president. Rockefeller's selection alienated many conservative Republicans who would later back Ronald Reagan (then a second-term governor of California) as a Republican presidential candidate in 1976. Rockefeller assumed leadership of the Domestic Council, a position from which he often tried to play a major role in formulating the administration's domestic policies. His suggestions, for the most part, went unheeded. In addition, Rockefeller and Rumsfeld despised each other, making life difficult in the Executive Office.

During the first months of his tenure, Ford kept much of Nixon's cabinet in place as well. But throughout 1975, Ford slowly replaced his predecessor's selections with his own appointees. Indeed, on the domestic policy side, only Secretary of the Treasury William Simon and Secretary of Agriculture Earl Butz remained in office into 1976—and Butz was dismissed in October of that year. Likewise, Richard Cheney, Rumsfeld's assistant, became White House chief of staff in late 1975 after Rumsfeld left to head the Department of Defense.

Ford also had his share of difficulties in working with Congress. He hoped that his long years in the House of Representatives would produce good relations between the government's executive and the legislative branches, but he was sorely disappointed. The pardon of Nixon, of course, had gotten that relationship off to a bad start. The 1974 midterm congressional elections, coming just a few months after the pardon, compounded the problem as Democrats gained 43 seats in the House, for a 291 to 144 advantage, and four seats in the Senate, for a 61 to 39 lead.

Ford not only faced significant Democratic majorities in Congress, he confronted a Democratic opposition—as well as some Republican factions—that, in the wake of Watergate and Vietnam, were determined to reassert themselves in the policymaking process. The legislature as a whole wanted to reclaim powers it had ceded to the President over the previous forty years. The newcomers to Congress who triumphed in the 1974 elections were called the "Watergate Babies" in recognition of these goals and their self-proclaimed mission to clean up Washington politics.

Stagflation and the Energy Crisis

The deteriorating American economy, however, was the key domestic issue Ford had to address. The nation's economic decline could be traced to the end of American predominance in the international economy and the rise of a low-paying service sector in the American economy. These structural factors contributed to three additional problems Ford had to confront: inflation, unemployment, and the energy crisis.

During Ford's presidency, both inflation and unemployment rose to heights not seen in the post-World War II years. The rapid growth of inflation, attributable to the aforementioned macro-economic issues as well as to the escalation in federal outlays since 1965, was exacerbated by the rising price of oil. American consumption of oil grew rapidly in the 1960s and 1970s—a need the country met by importing oil from the Middle East. By 1974, 35 percent of the oil Americans consumed came from overseas. But in 1973, the consortium of oil-exporting nations called OPEC embargoed its shipments of oil to the United States in protest of the Nixon administration's decision to support Israel in the Yom Kippur War. The embargo ended before Ford took office but the price of foreign petrol remained high. Crude oil prices skyrocketed to ten times their pre-1973 levels and gas prices doubled at the pump—conditions which, combined with severe oil shortages, made for a gloomy economic environment.

Conventional thinking about the economy held that high prices meant a growing economy, a healthy business environment, and low unemployment. America's economy in the 1970s confounded these expectations, however, as both unemployment soared and inflation grew. The rise in unemployment resulted largely from increased foreign competition that slowed economic growth and job creation, and from a larger American workforce—replete with baby-boomers—looking for work. Economists coined a new term, "stagflation," to describe this unprecedented situation.

At first, Ford's economic team advised him to attack the inflation problem. Whereas Nixon had implemented wage and price controls in an attempt to manage inflation, Ford, in October 1974, proposed a tax hike and asked for a reduction in federal spending. To build public support for his economic program, Ford asked Americans to join the fight by wearing buttons festooned with the acronym "WIN," for "Whip Inflation Now." More than twelve million buttons were produced, but only 100,000 requests for these pins came into the White House. The media, moreover, portrayed the "WIN" campaign as a silly public relations gimmick.

Additional roadblocks thwarted Ford's plans for economic recovery. First, with congressional midterm elections fast approaching, politicians had little use for higher taxes and cuts in federal government services. Second, Ford's critics accused him of ignoring the problems of the unemployed as he focused on inflation. Indeed, unemployment had grown from 5.4 percent in August to 6.5 percent by November—and White House economists soon expected that number to top 7 percent. The economy, Ford finally admitted in December 1974, was in recession with economic production falling and unemployment rising.

The President offered a new plan to deal with the nation's economic woes in January 1975. He now called for a tax cut of $16 billion to jump-start the economy. Additionally, Ford asked Congress to hold the line on government spending. Democrats responded by decrying Ford's flip-flop on taxes and by criticizing his efforts to stimulate the economy as too little, too late. In March, Congress passed a tax cut of more than $22 billion but raised spending on government programs. Ford regarded this mix of tax cuts and federal spending as irresponsible. Politically, however, he had little choice but to sign the bill, for a veto would only play into Democratic critiques that he had done too little to help the economy.

Thereafter, Ford insisted that he would not accede to any more hikes in government spending. The Democratic Congress, however, believed that economic recovery necessitated additional government expenditures; it kept sending spending proposals to the White House, most of which Ford vetoed. For the rest of his term, Ford waged a war with Congress over the appropriate balance between tax cuts and government expenditures. He won a small victory when Congress passed the Revenue Adjustment Act of 1975, which featured another modest tax cut of $9 billion and assurances that Congress would limit future spending.

Ford's travails with Congress over energy policy were no less difficult. In his January 1975 proposal, Ford asked for a tariff on imported oil, the end of price controls on domestic oil, and a new tax on domestic oil producers. His goal was to stimulate domestic oil production, which he believed would cause prices to drop in the long term as supply increased. The tax on American oil companies was a political necessity, a sop to a public that viewed oil companies as greedy profit-mongers. The political reaction was predictable: conservative Republicans were not happy with the tax on American oil companies, while Democrats believed that the tariff, the tax, and the end of price controls would only increase prices.

Ford and the Democrats argued about his energy proposal throughout 1975 before reaching a deal in December. In an Omnibus Energy bill, Ford accepted a 12-percent reduction in domestic oil prices in return for authority to end price controls on oil over a forty-month period. Ford and his advisers knew they had compromised but feared that Congress would not only override a veto, but that the political damage to the President would be too great if he did not go before the electorate in 1976 with some success in energy policy. Just as important, Ford believed that ending price controls was a worthwhile victory, one that harmonized with his small-government, free-market philosophy. Unfortunately for the President, the Democrats could also claim victory, at least in the short term, for they had secured an immediate reduction in the cost of domestic oil. The Democrats, it should be noted, worried that in the long term the end of price controls would raise the cost of oil. Conservative Republicans, on the other hand, had little to celebrate; they fumed at Ford's acquiescence to lower oil prices and his inability to win the immediate end to price controls.

By 1976, the economy had begun to recover. The consumer price index—one measure of the rate of inflation—dipped from 9.1 percent in 1975 to 5.8 percent in late 1976. Unemployment also receded; by January 1977 it was at 7.4 percent, a significant drop from the previous year, when it nearly hit 9 percent. Nevertheless, the American economy remained sluggish.

Busing and the New York City "Bailout"

The most divisive issue in American race relations in the early and mid-1970s was busing. No city dramatized the tensions and problems inherent in the busing issue more than Boston, Massachusetts. In the summer of 1974, a Boston judge ordered the city school system to integrate immediately schools that were segregated and in close proximity by busing black students to predominantly white schools, and vice versa. In the parochial neighborhood communities of Boston, this was a recipe for disaster and violence. Mobs of whites greeted black children with taunts and obscenities, and fights broke out between black and white students inside the schools. The violence only worsened throughout the fall, culminating in the stabbing of a white student and a subsequent riot. At the same time, U.S. District Court Judge Arthur Garrity, Jr., ruled that the school system was implementing his initial desegregation order too slowly.

Many Democrats—as well as the only black member of Ford's cabinet, Secretary of Transportation William Coleman—called on Ford to intervene. The President, instead, chose to stay on the sidelines and out of the political fire. Ford was in favor of integrated schools; he had attended an integrated high school in Michigan and had thoroughly enjoyed it. But Ford opposed busing, largely because he believed the federal government had an obligation only to end "de jure" (by law) segregation rather than "de facto" (by circumstance) segregation. In Boston, Ford reasoned, schools were not segregated because of legal mandate, so the federal government had no role to play.

Ford, it must be said, was ready and willing to intervene with federal troops if the Boston situation deteriorated so egregiously that it endangered public safety. The President never reached this conclusion. He did, however, direct the Justice Department to press for a more conservative approach to integration. On this score, Ford and the Justice Department had little success. But Ford's actions on the busing issue reflected his preference for a less activist federal government that let state and local governments decide local issues.

Ford faced another potentially explosive issue—and another opportunity to demonstrate his desire to rein in the power and responsibilities of the federal government—when New York City nearly went bankrupt in the spring of 1975. Quite simply, the city's budget, which provided social services for a population the size of Sweden's, was greater than its income. Throughout the spring and summer, New York City officials tried to get financial aid from the federal government, which already supplied one-quarter of the city's budget. Ford never seriously considered intervening, despite the advice of his vice president, New York's own Nelson Rockefeller. In October 1975, Ford publicly stated his opposition to a "federal bailout" of the city. The following day, the New York Daily News offered its own summation of Ford's position: "Ford to City—Drop Dead."

After the state government of New York announced in late 1975 that it had a plan to put the city on long-term stable financial ground, Ford reversed course. He offered his support for a $2.3 billion loan to the state to assist in the bailout. Ford told his advisers, "I hope they understand this is it. Come hell or high water, this is it." Ford defended his change of heart by saying it was appropriate for the federal government to lend a hand after the city and state had taken appropriate steps to put their fiscal house in order. The historian John Robert Greene suggests that Ford acquiesced on the bailout to satisfy Senator James Buckley of New York, whose support the President desperately needed in the upcoming election year. Ford's reversal, however, did not help his political standing with conservative Republicans, who saw his actions as another example of Ford's lack of fealty to conservative principles.