Abstract: For Carter, It Was Never in the Cards: Credit Controls and Reagan’s 1980 Victory

Sean H. Vanatta

Abstract

This paper will provide a provisional assessment of President Jimmy Carter’s 1980 credit control policy, focusing specifically the administration’s choice to limit new extensions of credit through credit cards in March 1980. In doing so, the it will address three questions: Why were credit cards targeted? Where the controls effective (and by what measure)? And what were their consequences? To answer these questions, the paper will situate Carter’s control policy within the long federal effort to fit credit cards within the New Deal system of consumer financial regulation, and immediate term concerns about the relationship between consumer credit and inflation. The control policy worked, the paper will argue, though perhaps too well, and precipitated an economic slowdown at a critical moment in the 1980 presidential campaign. Employing political-science literature on the relationship between economic conditions and electoral outcomes, it concludes by suggesting that Reagan’s victory was not the culmination of grassroots conservative activism, as much of the rise-of-the-right literature contends, but instead the contingent result of the Carter administration’s economic policy blunder. In the end, the Reagan administration set aside executive-level concerns about the political economy of credit in favor of a full embrace of a deregulated, financialized economy.