1980 Presidential Candidate Debate: Governor Ronald Reagan and President Jimmy Carter – 10/28/80

Above is the video of the complete debate. Below is the second part of the transcript that deals with the issue of inflation among other things. This segment ends at 28 minute mark. Also if you want to know how Ronald Reagan did cure inflation then all you have to do is check out the film series by Milton Friedman called Free to Choose and the episode “How to Cure Inflation.” I have done three previous posts on it. (Number 1, Number 2, and Number 3)

(R Row, from front to rear) Milton Friedman, George Shultz, Pres. Ronald Reagan, Arthur Burns, William Simon and Walter Wriston & unknown at a meeting of White House economic

October 28, 1980 Debate Transcript

October 28, 1980

The Carter-Reagan Presidential Debate

MR. SMITH: Thank you gentlemen. The next question is from Harry Ellis to President Carter.

MR. ELLIS, CHRISTIAN SCIENCE MONITOR: Mr. President, when you were elected in 1976, the Consumer Price Index stood at 4.8%. It now stands at more than 12%. Perhaps more significantly, the nation’s broader, underlying inflation rate has gone up from 7% to 9%. Now, a part of that was due to external factors beyond U.S. control, notably the more than doubling. of oil prices by OPEC last year. Because the United States remains vulnerable to such external shocks, can inflation in fact be controlled? If so, what measures would you pursue in a second term?

MR. CARTER: Again it’s important to put the situation in perspective. In 1974, we had a so-called oil shock, wherein the price of OPEC oil was raised to an extraordinary degree. We had an even worse oil shock in 1979. In 1974, we had the worst recession, the deepest and most penetrating recession since the Second World War. The recession that resulted this time was the briefest since the Second World War. In addition, we’ve brought down inflation. Earlier this year, in the first quarter, we did have a very severe inflation pressure brought about by the OPEC price increase. It averaged about 18% in the first quarter of this year. In the second quarter, we had dropped it down to about 13%. The most recent figures, the last three months, on the third quarter of this year, the inflation rate is 7% – still too high, but it illustrates very vividly that in addition to providing an enormous number of jobs – nine million new jobs in the last three and a half years – that the inflationary threat is still urgent on us. I notice that Governor Reagan recently mentioned the Reagan-Kemp-Roth proposal. which his own running mate, George Bush, described as voodoo economics, and said that it would result in a 30% inflation rate. And Business Week, which is not a Democratic publication, said that this Reagan-Kemp-Roth proposal – and I quote them, I think – was completely irresponsible and would result in inflationary pressures which would destroy this nation. So our proposals are very sound and very carefully considered to stimulate jobs, to improve the industrial complex of this country, to create tools for American workers, and at the same time would be anti-inflationary in nature. So to add nine million new jobs, to control inflation, and to plan for the future with an energy policy now intact as a foundation is our plan for the years ahead.

MR. SMITH: Mr. Ellis, do you have a follow-up question for Mr. Carter?

MR. ELLIS: Yes. Mr. President, you have mentioned the creation of nine million new jobs. At the same time, the unemployment rate still hangs high, as does the inflation rate. Now, I wonder, can you tell us what additional policies you would pursue in a second administration in order to try to bring down that inflation rate? And would it be an act of leadership to tell the American people they are going to have to sacrifice to adopt a leaner lifestyle for some time to come?

MR. CARTER: Yes. We have demanded that the American people sacrifice, and they have done very well. As a matter of fact, we’re importing today about one-third less oil from overseas than we did just a year ago. We’ve had a 25% reduction since the first year I was in office. At the same time, as I have said earlier, we have added about nine million net new jobs in that period of time – a record never before achieved. Also, the new energy policy has been predicated on two factors: One is conservation, which requires sacrifice, and the other one, increase in production of American energy, which is going along very well – more coal this year than ever before in American history, more oil and gas wells drilled this year than ever before in history. The new economic revitalization program that we have in mind, which will be implemented next year, would result in tax credits which would let business invest in new tools and new factories to create even more new jobs – about one million in the next two years. And we also have planned a youth employment program which would encompass 600,000 jobs for young people. This has already passed the House, and it has an excellent prospect to pass the Senate.

MR. SMITH: Now, the same question goes to Governor Reagan. Governor Reagan, would you like to have the question repeated?

MR. ELLIS: Governor Reagan, during the past four years, the Consumer Price Index has risen from 4.8% to currently over 12%. And perhaps more significantly, the nation’s broader, underlying rate of inflation has gone up from 7% to 9%. Now, a part of that has been due to external factors beyond U.S. control, notably the more than doubling of OPEC oil prices last year, which leads me to ask you whether, since the United States remains vulnerable to such external shocks, can inflation in fact be controlled? If so, specifically what measures would you pursue`?

MR. REAGAN: Mr. Ellis, I think this idea that has been spawned here in our country that inflation somehow came upon us like a plague and therefore it’s uncontrollable and no one can do anything about it, is entirely spurious and it’s dangerous to say this to the people. When Mr. Carter became President, inflation was 4.8%, as you said. It had been cut in two by President Gerald Ford. It is now running at 12.7%. President Carter also has spoken of the new jobs created. Well, we always, with the normal growth in our country and increase in population, increase the number of jobs. But that can’t hide the fact that there are eight million men and women out of work in America today, and two million of those lost their jobs in just the last few months. Mr. Carter had also promised that he would not use unemployment as a tool to fight against inflation. And yet, his 1980 economic message stated that we would reduce productivity and gross national product and increase unemployment in order to get a handle on inflation, because in January, at the beginning of the year, it was more than 18%. Since then, he has blamed the people for inflation, OPEC, he has blamed the Federal Reserve system, he has blamed the lack of productivity of the American people, he has then accused the people of living too well and that we must share in scarcity, we must sacrifice and get used to doing with less. We don’t have inflation because the people are living too well. We have inflation because the Government is living too well. And the last statement, just a few days ago, was a speech to the effect that we have inflation because Government revenues have not kept pace with Government spending. I see my time is running out here. I’ll have to get this out very fast. Yes, you can lick inflation by increasing productivity and by decreasing the cost of government to the place that we have balanced budgets, and are no longer grinding out printing press money, flooding the market with it because the Government is spending more than it takes in. And my economic plan calls for that. The President’s economic plan calls for increasing the taxes to the point that we finally take so much money away from the people that we can balance the budget in that way. But we will have a very poor nation and a very unsound economy if we follow that path.

MR. SMITH: A follow-up, Mr. Ellis?

MR. ELLIS: Yes. You have centered on cutting Government spending in what you have just said about your own policies. You have also said that you would increase defense spending. Specifically, where would you cut Government spending if you were to increase defense spending and also cut taxes, so that, presumably. Federal revenues would shrink?

MR. REAGAN: Well. most people, when they think about cutting Government spending, they think in terms of eliminating necessary programs or wiping out something, some service that Government is supposed to perform. I believe that there is enough extravagance and fat in government. As a matter of fact, one of the secretaries of HEW under Mr. Carter testified that he thought there was $7 billion worth of fraud and waste in welfare and in the medical programs associated with it. We’ve had the Central Accounting. Office estimate that there is probably tens of billions of dollars that is lost in fraud alone, and they have added that waste adds even more to that. We have a program for a gradual reduction of Government spending based on these theories, and I have a task force now that has been working on where those cuts could be made. I’m confident that it can be done and that it will reduce inflation because I did it in California. And inflation went down below the national average in California when we returned the money to the people and reduced Government spending.

MR. SMITH: President Carter.

MR. CARTER: Governor Reagan’s proposal, the Reagan-Kemp-Roth proposal, is one of the most highly inflationary ideas that ever has been presented to the American public. He would actually have to cut Government spending by at least $130 billion in order to balance the budget under this ridiculous proposal. I notice that his task force that is working for his future plans had some of their ideas revealed in The Wall Street Journal this week. One of those ideas was to repeal the minimum wage, and several times this year, Governor Reagan has said that the major cause of unemployment is the minimum wage. This is a heartless kind of approach to the working families of our country, which is typical of many Republican leaders of the past, but, I think, has been accentuated under Governor Reagan. In California – I’m surprised Governor Reagan brought this up – he had the three largest tax increases in the history of that state under his administration. He more than doubled state spending while he was Governor – 122% increase – and had between a 20% and 30% increase in the number of employees

MR. SMITH: Sorry to interrupt, Mr. Carter.

MR. CARTER: in California. Thank you, sir.

MR. SMITH: Governor Reagan has the last word on this question.

MR. REAGAN: Yes. The figures that the President has just used about California is a distortion of the situation there, because while I was Governor of California, our spending in California increased less per capita than the spending in Georgia while Mr. Carter was Governor of Georgia in the same four years. The size of government increased only one-sixth in California of what it increased in proportion to the population in Georgia. And the idea that my tax-cut proposal is inflationary: I would like to ask the President why is it inflationary to let the people keep more of their money and spend it the way that they like, and it isn’t inflationary to let him take that money and spend it the way he wants?

MR. SMITH: I wish that question need not be rhetorical, but it must be because we’ve run out of time on that. Now, the third question to Governor Reagan from William Hilliard.

WILLIAM HILLIARD, PORTLAND OREGONIAN: Yes. Governor Reagan, the decline of our cities has been hastened by the continual rise in crime, strained race relations, the fall in the quality of public education, persistence of abnormal poverty in a rich nation, and a decline in the services to the public. The signs seem to point toward a deterioration that could lead to the establishment of a permanent underclass in the cities. What, specifically, would you do in the next four years to reverse this trend?

MR. REAGAN: I have been talking to a number of Congressmen who have much the same idea that I have, and that is that in the inner city areas, that in cooperation with the local government and the national Government, and using tax incentives and with cooperating with the private sector, that we have development zones. Let the local entity, the city, declare this particular area, based on the standards of the percentage of people on welfare, unemployed, and so forth, in that area. And then, through tax incentives, induce the creation of businesses providing jobs and so forth in those areas. The elements of government through these tax incentives For example, a business that would not have, for a period of time, an increase in the property tax reflecting its development of the unused property that it was making wouldn’t be any loss to the city because the city isn’t getting any tax from that now. And there would simply be a delay, and on the other hand, many of the people who would then be given jobs are presently wards of the Government and it wouldn’t hurt to give them a tax incentive, because they… that wouldn’t be costing Government anything either. I think there are things to do in this regard. I stood in the South Bronx on the exact spot that President Carter stood on in 1977. You have to see it to believe it. It looks like a bombed-out city – great, gaunt skeletons of buildings. Windows smashed out, painted on one of them “Unkept promises;” on another, “Despair.” And this was the spot at which President Carter had promised that he was going to bring in a vast program to rebuild this department. There are whole or this area there are whole blocks of land that are left bare, just bulldozed down flat. And nothing has been done, and they are now charging to take tourists there to see this terrible desolation. I talked to a man just briefly there who asked me one simple question: “Do I have reason to hope that I can someday take care of my family again? Nothing has been done.”