Title: Inflation in the 60's
Headings: Inflation in the 60's
Inflation in the 60's
Content: On January 10, 1967, in his State of the Union Address, Johnson said, "I recommend to the Congress a surcharge of 6 percent on both corporate and individual income taxes—to last for 2 years or for so long as the unusual expenditures associated with our efforts in Vietnam continue." Congress did not pass the tax until 1968, at which point the legislation levying a tax also required a reduction in government expenditures. On June 28, 1968, Johnson signed the Revenue and Expenditure Control Act into law, with its $10 billion tax increase and a $6 billion spending reduction. Many Great Society supporters were concerned that the spending reduction would threaten domestic social programs. Nevertheless, Congress was unable to cut the full $6 billion from the budget, and the fiscal 1969 budget ended up with a $3.2 billion surplus and intact Great Society programs. Along with the American failures in Vietnam, the inflation of the late 1960s was a major factor in the breakdown of the Johnson Administration. Beyond its actual economic effects, it contributed to a general discontent with Johnson and his policies. In addition, the "Great Inflation" proved difficult to eradicate, continuing to plague the American economy into the 1970s, and defying control until 1982. Percent Change of Consumer Price Index (1960-1970)
YEAR CPI (1967=100) % change from previous year
1960 88.7 —
1961 89.6 1.01
1962 90.6 1.12
1963 91.7 1.21
1964 92.9 1.30
1965 94.5 1.72
1966 97.2 2.86
1967 100.0 2.88
1968 104.2 4.20
1969 109.8 5.37
1970 116.3 5.92