APPENDIX A
Timeline of Key Events
January 1962—President Kennedy’s Council of Economic Advisers recommends voluntary “guideposts” for wage and price setting in its annual report.
April 1966—George Shultz and Robert Aliber organize a conference of leading economists at the University of Chicago on price-wage guideposts. The conference proceedings are published in Guidelines, Informal Control, and the Market Place.
June 9, 1970—Secretary of Labor George Shultz states his opposition to wage and price controls at a press conference at the National Press Club.
August 15, 1970—Congress passes the Economic Stabilization Act of 1970, giving the president authority to stabilize prices, rents, and wages.
February 12, 1970—Fed chair Arthur Burns testifies before the Joint Economic Committee: “It is the considered judgment of the Federal Reserve Board that, under present conditions, monetary and fiscal policies need to be supplemented with an incomes policy.”
March 10, 1970—Burns testifies before the Senate Banking, Housing, and Urban Affairs Committee: “From a practical viewpoint, we face a problem unknown to earlier generations—namely, a high rate of inflation at a time of substantial unemployment.”
April 22, 1970—George Shultz, now director of the Office of Management and Budget, delivers “Steady As You Go” speech to the Economic Club of Chicago, arguing that “the basic strategy of economic policy and its current tactical implementation are generally on course.”
June 22, 1971—Burns sends “personal and confidential” letter to President Nixon urging wage and price controls.
August 13, 1971—President Nixon meets at Camp David with senior economic advisers, including Arthur Burns, Treasury secretary John Connally, under secretary for international monetary affairs Paul Volcker, George Shultz, secretary of commerce Peter Peterson, Council of Economic Advisers chair Paul McCracken and future chair Herbert Stein, Caspar Weinberger, and William Safire.
August 15, 1971, and following—President Nixon announces his New Economic Policy with (1) an executive order imposing a ninety-day freeze on all wages and prices (excluding agricultural goods), (2) a 10 percent imported goods and services surcharge, and (3) the end of dollar-gold convertibility.
“Cost of Living Council,” composed of cabinet members and other senior officials, chaired by Treasury secretary Connally, is established and meets for the first time that afternoon.
A group of a dozen economists publishes a Wall Street Journal editorial arguing against the freeze. Political, corporate, and media reception to the freeze is generally supportive.
November 14, 1971—Cost of Living Council starts phase II of the controls, which would stay in place through the 1972 election, with Donald Rumsfeld as the director. Seven-member Price Commission and fifteen-member Pay Board are established.
January 12, 1973, and following—Phase III of the wage and price controls is instituted. The Price Commission and the Pay Board are abolished in favor of “self-administration” by “obligated parties.”
Economist John Dunlop is named the new director of the Cost of Living Council.
June 13, 1973—Nixon reimposes a sixty-day price freeze, beginning phase IV of the program. Wages are not frozen.
July 18, 1973—Phase IV freeze is ended early by Nixon after just thirty-five days. Price controls will be gradually scaled back from covering 44 percent of CPI basket prices in August 1973 to 12 percent of CPI basket prices by their end in April 1974.
February 6, 1974, and following—John Dunlop tells the Senate Banking Committee of the administration’s plans to end price controls in April 1974 except in health care and petroleum. Authority for price controls on oil and refined products is transferred to new Federal Energy Office.
Congress allows the Economic Stabilization Act of 1970 to expire, ending authority for most wage and price controls.
August 24, 1974—Congress passes and president signs the Council on Wage and Price Stability Act, which tasks a committee of economists to review, on behalf of the White House, significant federal agency rulemakings that could prove inflationary on the US economy.
October 8, 1974—President Ford addresses a joint session of Congress to announce the Whip Inflation Now campaign of voluntary pledges to limit inflation, including carpooling or starting backyard gardens. The effort is abandoned by the end of the year.
March 29, 1975—President Ford signs bill with Keynesian temporary tax rebate.
December 22, 1975—The Energy Policy and Conservation Act directs the Federal Energy Administration to allow the price of crude oil to rise gradually and to remove refined petroleum product price restrictions, subject to congressional review.
January 18, 1977—President Ford’s Council of Economic Advisers issues annual report concluding that 1975 temporary tax rebate did no good, with John Taylor writing section titled, “Tax reduction should be permanent rather than in the form of a temporary rebate.”
April 11, 1978—President Jimmy Carter announces voluntary inflation “deceleration” guidelines, asking unions and business to hold increases below the level of the previous two years.
October 24, 1978, and following—The new guidelines are expanded to a wage increase ceiling of 7 percent.
President’s Council on Wage and Price Stability is tasked to review the profits of the four hundred largest US corporations, with data requests enforceable by subpoena.
November 16, 1980—Coordinating Committee on Economic Policy, chaired by George Shultz, delivers economic strategy report to President-elect Ronald Reagan.
March 31, 1981—Remaining price controls on domestic oil and refined petroleum are ended.
August 13, 1981—President Reagan signs the Economic Recovery Tax Act of 1981, which enacts across-the-board income tax cuts and tax incentives for investment.
October 22, 1986—President Reagan signs the Tax Reform Act of 1986, which had passed the Senate 97–3, enacting further broad-based tax cuts.
February 6, 1990—President George H. W. Bush’s Council of Economic Advisers applauds a “systematic” rather than “undisciplined, ad hoc approach to policy” followed “consistently over time.”
March 12, 1990—Wall Street Journal publishes front page story about John Taylor: “Bush Economist Is Urging Hands Off.”
November 5, 1990—President George H. W. Bush signs the Omnibus Budget Reconciliation Act featuring “enhanced revenues”—otherwise known as higher income tax rates.
January 23, 1996—President Bill Clinton in State of the Union address declares, “The era of big government is over.”
July 2001—Most American taxpayers begin receiving $300–$600 “stimulus” rebate checks as part of the Economic Growth and Tax Relief Reconciliation Act of 2001. This precedes the May 28, 2003, Jobs and Growth Tax Relief Reconciliation Act’s tax rate cuts.
April 2008—Taxpayers again begin receiving $300–$600 rebate checks from the IRS as part of the Economic Stimulus Act of 2008 following Fed chair testimony on the desire to stimulate the economy to avoid recession. Federal Housing Authority loan limits are also increased in a bid to stave off falling home prices.
February 17, 2009—Shortly after taking office, amid the depths of the housing crisis, President Barack Obama signs the $862 billion American Recovery and Reinvestment Act stimulus package.
George Shultz with President Reagan at a meeting of the President’s Economic Policy Advisory Board, February 10, 1981. Courtesy Ronald Reagan Library.