Nixon's concerns turned out to be valid. The unemployment rate reached a politically harmful 6 percent by the end of 1970.
In that year, Nixon named Arthur Burns as the head of the Federal Reserve. Burns rapidly established his independence by issuing Nixon a challenge: if Nixon failed to maintain federal spending under $200 billion, Burns would continue to keep the money supply constrained in an effort to combat inflation. Nixon complied with Burns' requests. He put off government employees' salary raises by six months in order to conserve money. One outcome was a nationwide postal employees' strike. Nixon employed the U.S. Army to keep the postal service operating, but in the end, he carved into postal workers' salary demands, erasing some of Burns' budget-balancing requirements.
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