The Cold War had a powerful effect on domestic policy in the US after WWII. There was widespread fear of communism. The economy transitioned from war to peacetime production which increased consumer spending. The GI Bill helped veterans enter college and the workforce without increasing unemployment. Inflation became a major problem when price controls were lifted too quickly in 1946. The Employment Act of 1946 aimed to achieve full employment through fiscal policy but had flaws. Post-war strikes over wages led Truman to intervene in industries, angering unions. The Taft-Hartley Act rolled back some union powers and allowed "right to work" laws over Truman's veto.

1. Cold War At
Home

2. Themes:
 Americans had to adapt to
change
 Fear of Communism was
everywhere
 This had a powerful effect on
domestic policy

3. Influences on domestic
policy
 Conversion to a peacetime
economy
 Calling for black civil rights
 Legacy of the New Deal

4. Return to Depression?
 After WWII, the biggest fear
was that the Cold War would
return the economy to
depression
 Gov’t spending did drop
 Consumer spending INCREASED
 Workers had amasses large
amounts of wartime savings

5. GI Bill
 GI Bill put money into economy
by providing educational and
economic assistance to
returning veterans
 War production shifted back to
civilian production
 Veterans entered the
workforce, but unemployment
did not increase

6. Economic Policy
 Inflation was a huge problem
 Truman was fearful of lifting the
wartime restrictions on prices and
rationing
 If done too quickly, it would have a
negative impact on the economy
 1946: he lifted all restrictions, and
inflation increased to a rate of
18.2% annually
 Food shortages and goods
shortages angered consumers

7. Employment Act of 1946
 Federal fiscal planning became
permanent
 Goal was to achieve full
employment
 Promoted use of tax policy as a
tool for managing the economy
 Tax cuts used to spur economic
growth, taxes to encourage
inflation

8. Problems with this
policy:
 Advocated, not mandated, these
changes
 Also did not make a clear
connection to full employment
and a balanced budget
 The significance was that this
act was a symbolic one in
establishing federal
responsibility for the
performance of the economy

9. Post-war Strikes
 Cost of living went up quickly
 Workers were demanding higher
wages
 Corporate profits doubled while
real wages declined
 Government kept wages where they
were
 This led to strikes in auto, steel, and
coal industries
 Businesses closed in several states

10. Truman’s response
 He put the railway system under
federal control
 Asked Congress to give him the
power to put striking workers into
the army by being drafted
 Also controlled the coal mines
 Americans in general supported
Truman, but union/labor were angry
at these actions

11. Taft-Hartley Act
 1947: rollbacks of several
provisions in the 1935 NLR Act
(Wagner Act)
 Allowed states to pass “right of
work” laws that further limited
union’s operations
 Restricted unions’ political power
by prohibiting their use of dues for
political activity

12. Taft-Hartley Act
 President could enact an 80-day
“cooling off period” in strikes
that had a national impact
 Truman vetoed the bill;
Congress overrode his veto
 “Slave-Labor Bill”
 Truman”dangerous intrusion
on free speech.”