A Hundred Days of Action - Part I
The late 1970s economic crisis was easily the most severe postwar downturn and thus the worst macroeconomic conditions since the Great Depression; that high inflation came, counterintuitively, partnered with double-digit unemployment across the Western world was what flummoxed policymakers more than anything. Though nobody knew it yet, in the United States the worst was already passed by the spring of 1981, with inflation having peaked in October of 1980 and unemployment reaching its highest level - nearly 12% - in March of 1981, and the next twelve months would be marked by the slow, arduous decline of both indicators to more manageable levels before the economic recovery began to be felt for the first time starting in the second half of 1982.
[1] The recovery of 1982-84 would eventually be seen as the bookend to the horrible macroeconomic conditions of a ten-year stretch begun by the 1971 Nixon Shock, exacerbated by the 1973-74 oil crisis, and then just when it looked like the worm had turned, the chaos of the Panama Shock and small-scale oil crisis in Venezuela, Iran and Saudi Arabia in 1979 to go along with debt defaults across much of the developing world, particularly in Latin America and East Asia, in 1980.
The Carey administration viewed alleviating the immediate pain that would be felt by the cranking up of interest rates through the end of the year - a process begun belatedly in late 1979 by Arthur Miller's Federal Reserve - as their first priority, indeed the one that had won them the election against Ronald Reagan. The Carey campaign had aggressively courted the Greatest Generation's reliable voters and their fond memories of FDR by drawing very explicit parallels between 1932 and 1980 economically and culturally, and shaped that message to younger, more conservative Silent and Baby Boomer voters by portraying Carey as a gruffer, tougher and more modern update of America's longest-serving President designed for the meaner, leaner 80s. As such, any opportunity to cast Carey as FDR, Version 2.0 was taken with aplomb, and so began the marketing campaign around "A Hundred Days of Action," hearkening back to FDR's own first hundred days.
The backbone of the Days of Action of course would be the Economic Stabilization Act of 1980, which would feature two of the pillars of "Careynomics" - counter-cyclical infrastructure spending to bring down unemployment and targeted demand-side tax cuts for 65% of Americans to boost their pocketbooks in the near term. While both of these policies were, by definition, inflationary, they would be combined with continued interest rate hikes and thus designed to "balance the scale," in Carey's words. The President appeared before a joint sitting of Congress on February 22nd, at the invitation of Speaker O'Neill, to explain his vision, and then gave a follow-up address from the Oval Office a week later to the general public, outlining the "three planks" of the ESA: energy independence, infrastructure improvements, and small-scale tax reform. Combined with a variety of executive orders - one per day for a hundred days, each targeted at a different piece of the economy or federal regulatory environment - he termed it a "rescue package for every American." The response was positive, but skeptical. Carey enjoyed a honeymoon period approval in the low 70s and polling suggested he was trusted by the American people, but they had heard Gerald Ford declare that the United States would "Whip Inflation Now!" back in 1975 and, everybody had seen how well that had gone. The difference, of course, was that Carey by his nature was not one to sugarcoat things. In his Oval Office address, in his famously blunt style, he stated: "Things are likely to get worse before they get better, but I am confident that by this time next year, we will start seeing green shoots in this very difficult environment, and the spring after this grim economic winter will come soon enough."
While Republican politicians mocked the "Springtime for America" messaging from the White House, Congress got going on assembling the package, and the first major test of Carey's Presidency in managing the massive big tent of various Democratic factions began. O'Neill had a massive majority but well over fifty right-wing "boll weevil" Southern Democrats, most prominently led by Richard Shelby of Alabama, who were often more conservative than many of their Republican colleagues and were likely to be difficult to drag into whatever final vote occurred. The Senate was a different animal entirely. Though there was a veto-proof majority of Democrats, that majority featured very conservative Southerners, and even though many of them were relatively young and recently elected - with the major caveat being Mississippi's two octogenarian lifers in Jim Eastland and Jim Stennis - they were still fairly skeptical of major new spending programs, unless that spending was lavished on their home states
[2], and they were part of the same majority that included progressive firebrands like New York's freshman Elizabeth Holtzman, who within weeks of being sworn-in was already being talked about as the future of the American left and the likely first female President of the United States.
With the Senate being the most difficult piece of the equation, Carey deployed his "secret weapons," as he called them - Vice President Reuben Askew and Senate Health Committee Chair Ted Kennedy, who he leaned heavily on as a whip operation to cajole both the Southern right and the progressive left in the body and be the point men in building a bill. Despite Askew never having served in the Senate, through his close friendship with Senator Lawton Chiles of his home state of Florida - who crucially was the third-ranking Democrat on the Budget Committee, behind Chairman Ed Muskie of Maine and Fritz Hollings of South Carolina - he quickly built cachet on Capitol Hill and within weeks of inauguration looked likely to the most influential VP since Johnson. Kennedy, meanwhile, swallowed his pride and agreed to set aside his push for a national health insurance scheme until the fall. Unemployment and inflation needed to be tamed first.
The man whose buy-in was needed the most, it turned out, was Finance Chair Russell Long of Louisiana. Long was a moderate-conservative who was open to playing ball with the administration. The "cheddar," as Carey put it dryly to White House Chief of Staff Basil Paterson
[3], for Long was major investments in oil pipelines, drilling rigs and refinery facilities in the final act to benefit his home state of Louisiana and other oil-producing states. This was an easy sell publicly, of course, as a way to improve American energy independence, but risked angering the burgeoning environmentalist movement that had erupted in the 1970s out of the mostly unsuccessful anti-nuclear movement, and which had powerful adherents such as Wisconsin's Gaylord Nelson and Secretary of the Interior Mo Udall, who would be in charge of much of the issuance of future drilling permits, particularly on federal land. As a result, the expansion of American oil infrastructure was paired with a variety of "new energy" provisions. Ignoring the loud and stubborn minority of anti-nuclear activists, the ESA pushed ahead with dramatically expanding the provisions of 1979's Energy Policy Act, upping subsidies not only for under-construction nuclear power plants but research as well, such as the small modular reactor at Clinch River or Princeton's tokamak project, and diverted billions more to boosting the efficiency of hydroelectic, biomass and geothermal projects both extant and proposed while also shoveling billions into research into improved solar and wind energy technology and granted the FERC broad new powers in avoiding litigation over power line permitting and new transformer and switching stations. In addition to this, the ESA would move into law hundreds of thousands of acres of protected land, increase pollution standards for motor vehicles and power plants under the Clean Air Act, and made the Environmental Protection Agency a Cabinet-level department, the Department of Environmental Protection.
More than anything, though, the ESA - its acronyms chosen to avoid confusion (and association) with the Equal Rights Amendment by foregoing the title "Recovery" or "Renewal" - was an employment bill. The energy provisions were designed to provide new jobs, as was the demand-side management of creating the Employment Services Board, a new body that was designed to target unemployment via job matching, and the Employer Stabilization Fund, which provided cash transfers to employers to have them keep employees on the payroll rather than lay them off, which many on the left - most prominently Holtzman - derided as corporate welfare but begrudgingly acceded to. The ESF was particularly targeted at jobs in the automotive and steel industries, which had suffered grievous job losses in the prior five years, and not coincidentally were heavily unionized and concentrated in important Midwestern swing states which the Democrats had made huge inroads in during the Ford years. Billions more were allocated to the Federal Transport Reserve Fund, which would finance at subsidized interest rates a variety of road, rail and air transport projects to improve the infrastructure for the newly-deregulated transport sector and provide the baseline for innovation in that space - the money earmarked for Conrail in particular provided massive improvements throughout the 1980s to passenger rail travel in the Northeast and helped finance new projects in Philadelphia, New York and Boston.
The third leg of the ESA was its tax provisions. Carey and Paterson were adamant in negotiations that they would not cut corporate or top-level tax rates, but they did provide a small payroll tax holiday of two years and then a six-year tax cut to marginal tax rates for about 60% of Americans, with a staggered sunset of the rates in 1983, 1985, and 1987. Targeted tax code changes were also included that heavily incentivized the construction of commercial and multifamily real estate in city centers after two decades of construction in suburban areas, meant to revitalize decaying and collapsing urban tax bases; a boom in commercial high rises in city centers was to follow for the next decade. With the three prongs - energy, employment and demand-side tax cuts - the Economic Stabilization Act of 1981 was ready to go, with lots of interest groups unhappy with specific provisions but begrudgingly accepting of other pieces that brought them onboard. Now all that remained was to get it passed, along with a Supreme Court nomination at the same time. Nobody could claim that Carey's first one hundred days didn't have plenty of action...
[1] This is, shall we say, a marked difference from how the early 80s recession(s) went IOTL, where monetarist shock therapy exacerbated and extended the crisis well into late 1983 before the roar-back of 1984.
[2] Oink oink, gimme that pork, baby!
[3] For those keeping track at home, yes, that means we have a Black WHCOS as early as 1981, when there hasn't been one yet IOTL. This arguably makes Paterson the most powerful Black official in US history up to this point