The new president tried to restore public confidence in the national leadership and in the institutions of government. His administration was one of the most open in years, and Ford sought to emphasize candor in his relationships with the public and the press. But in both domestic and world affairs he inherited problems that did not lend themselves to quick solutions.
In his first year in office, Ford confronted severe economic problems, including both inflation and recession. At first he emphasized the fight against inflation by proposing solutions that reflected his long-standing personal belief in reduced spending, balanced budgets, and tight money.
In early 1975, Ford reluctantly changed his goals to concentrate on relieving recessionary pressures rather than inflationary ones. Unemployment was over 9%, new housing starts were at their lowest point in years, and new car sales were down sharply. Ford urged Congress to cut individual and corporate taxes by $16 billion and to take steps to reduce the national dependence on foreign oil imports. He also called for substantial reductions in spending in order to hold the prospective federal budget deficits as low as possible. He proposed few new spending programs of his own, and in the course of two years in office he vetoed more than 50 pieces of legislation that, in his view, increased spending and undercut the recovery effort. Democrats, who held heavy majorities in both houses of Congress, argued that the nation could stand greater deficits than those proposed and that federal programs to help people were crucial. Congress, however, was able to override only a few of Ford’s vetoes.
By mid-1976 recessionary pressures had eased. Industrial production advanced steadily, making up almost two thirds of the 1973-1975 drop. Nonfarm employment increased by 2.5 million persons, the workweek was lengthened, and the unemployment rate dropped from 8.9% in mid-1975 to 7.8% in late 1976. Unemployment, however, remained high by historical standards. Inflation continued to plague the consumer, but the rate of price increases dropped dramatically.
By late 1976, many of the key economic indicators showed that the economic recovery was slowing down. But administration economic analysts said that such a “pause” was normal.
