The last time America was put through the wringer on inflation was during the Carter administration, when inflation soared to double digits, reaching 14% in 1980. And the men who were advising Carter on what to do about prices are now warning Joe Biden that everything he’s suggested doing about high prices is wrong.
Carter’s Treasury secretary, W. Michael Blumenthal, now 96, remembers vividly the helplessness the advisors felt when everything they tried to bring prices down failed. He doesn’t think Biden has grasped what he has to do.
“The basic problem that this president faces is really not too dissimilar from the one that confronted Carter,” Mr. Blumenthal told the New York Times. “President Biden faces this dilemma, and it’s certainly my hope that he will choose clearly, choose decisively and be very clear not only about the fact that he recognizes that inflation has to be dealt with, but that he is really willing to support painful steps to do that.”
Mr. Blumenthal said Mr. Biden should heed the lessons of Mr. Carter’s failed attempts to curb inflation by avoiding measures that are counterproductive. He urged Mr. Biden to support a substantial interest rate increase and to abandon his sweeping legislative package in favor of deficit reduction, which some economists argue could dampen prices by slowing growth depending on how it is approached.
“Inflation fighting comes first,” said Mr. Blumenthal, who escaped Nazi Germany and lived in Shanghai during a period of hyperinflation in the 1940s. “He has to show the recognition to the public that inflation has lasting deleterious effects on the economy and that by trying to take half measures now, you merely prolong the pain of these effects.”
Suspending the federal gas tax and other gimmicks like eliminating student loan debt will only make inflation worse, says Blumenthal.
Democrats have been talking more openly about oil price controls in recent weeks — controls that were tried in the late 1970s and failed. C. Fred Bergsten, the assistant secretary for international affairs at the Treasury Department from 1977 to 1981, said the United States should avoid the kind of domestic oil price controls that Carter tried. The controls only served to reduce the supply and distort the energy markets.
Blumenthal and Barry P. Bosworth, who led the Carter administration’s Council on Wage and Price Stability, from 1977 to 1979, agree that the $1.9 trillion pandemic stimulus package that the Democrats passed last year is powering the current inflation.
It is apparent to Mr. Bosworth that the $1.9 trillion pandemic aid package that Democrats passed in 2021 has fueled inflation. Now, he said, it will be largely up to the Federal Reserve to corral it.
“It clearly turned out to be excessive,” Mr. Bosworth said. “The amount of transfer funds that we poured into the economy over a short period of time clearly added to inflation.”
You’d like to think we learned valuable lessons from the high inflation of the 1970s. But Joe Biden is proving every day that his party has not taken those lessons to heart. Biden and the Democrats are trying to distract the voters with issues unrelated to the economy, like abortion and guns. Giving women back the right to kill their babies is not going to bring down the price of milk and eggs.
As soon as the voters realize that, Democrats are going to be in a world of hurt.
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