Welcome to Jimmy Carter’s Second Term: It’s Worse Than the First

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President Carter’s dreary four years in the White House discredited the Democratic Party for a generation. After he left, it took Democrats 12 years to win the presidency again, and only with a candidate — Bill Clinton — who couldn’t have been more different than the party-pooping preacher from Plains. 

Regardless, President Biden now seems bent on emulating Mr. Carter, and he’s not even doing that very well. His approval rating has tracked Mr. Carter’s in downward trajectory, but it’s significantly worse: 40 percent compared to 52 percent at the same point in their presidencies.

More ominous, inflation is now rising faster than at any point in Mr. Carter’s presidency, which was dominated and ultimately doomed by the losing struggle against rising prices. Inflation in Mr. Carter’s first year was 6.5 percent, up from 5.7 percent the previous year. In Mr. Biden’s first year, inflation was 7.0 percent, up from just 1.2 percent the previous year. 

In fact, the comparison is unfair to Mr. Carter, who was after all a nuclear engineer with an elementary understanding of economics. 

Mr. Carter understood that there was too much money chasing too little productivity, producing the combination of inflation, unemployment, and stagnant growth called “stagflation,” in which wage gains were immediately wiped out by higher prices for consumers.  

He came to office proposing to restrain wage increases and tighten price controls, but these measures only produced shortages and angry labor unions. By the middle of his second year in office, Mr. Carter accepted that there was no alternative to a policy of fiscal and monetary restraint. 

So he proposed a balanced budget with deep cuts to social and environmental programs. He also nominated as chairman of the Federal Reserve a conservative economist, Paul Volcker, who thought interest rates should go as high as necessary to tame inflation.  

Just as important, Mr. Carter worked hard to relieve the regulatory burdens on business. He freed America’s airline industry, paving the way for the most efficient and affordable airline travel in the world, and streamlined environmental regulations. He also championed free trade. 

In embracing such free-market policies, Mr. Carter in effect wrote off the left wing of his party, which was deeply opposed to them. That was a different era: Even the New York Times recognized the need to rein in government and embrace free markets. 

Under Mr. Carter, interest rates hit 20 percent, the highest level in modern times. His  policies were the right antidote to inflation, but they produced a steep recession, and all but guaranteed Ronald Reagan’s electoral victory in 1980. 

Mr. Biden, meanwhile, seems not to have accepted the reality facing America today. Inflation accelerated in January, reaching 7.5 percent. Worse, the producer price index, which drives consumer prices, shot up more than 10 percent at the end of 2021, with consequences that have yet to materialize.

Read the full article at The New York Sun.