That 1978 Feeling

President Carter was defeated in the 1980 election largely on the basis of one question posed by Ronald Reagan during a debate, "Are you better off now than in 1976?" People voted "no" because of the economy and because of international relations.

The economy during the 1970s was terrible. President Nixon tried a wage/price freeze to cool inflation. President Ford tried a WIN campaign ("Whip Inflation Now"). Neither worked. The economy seemed stuck in a 2-4 year cycle of recession and high inflation. They invented a new name for it - stagflation for stagnant economy with high inflation. This was made worse by oil shortages caused by Arab embargoes. Adjusted for inflation, gas prices were higher during the Carter years than in 2008 when it topped $4/gallon.

Internationally, Carter seemed completely lost. The USSR invaded Afghanistan and Carter's main responses were to cancel a sail of American grain to the USSR and to boycott their Olympics. Both of these hurt Americans more than the Soviets.

But this was nothing compared to Iran. When Carter came to office, Iran was a long-standing American ally in a region that was generally pro-Soviet. In 1978, the country was paralyzed by strikes and demonstrations against the Shah. In early 1979 the Shah left the country and was replaced by a democratically elected government that Carter's administration helped create. Two weeks later the Ayatollah Khomeini announced that he was returning to Iran. The government was going to block him but Carter urged them to allow Khomeini entrance. Almost immediately Khomeini's followers overthrew the interim government and established the current government based on strict Islamic values. Later that year Khomeini's government overran the US embassy and held the staff hostage for 444 days.

Carter seemed powerless to do anything about this. There was an attempted rescue attempt but it stretched what was technically possible and failed completely.

By the 1980 election the common image of President Carter was that he was a nice man who had gotten in over his head. Reagan promised to make the country strong again and to cure the economy through tax and budget cuts. The fact that he delivered on both promises is why President Obama looks to Reagan for a role model instead of Carter. But, two years into his administration he is facing many of the challenges that Carter faced.

Unemployment is high by any measure and the economy is not growing fast enough to reduce it appreciably by the 2012 election. economists have been warning that the measures the Obama administration used to promote a recovery were inflationary. While inflation was flat in 2010, there are signs that it is picking up. Food prices are rising. Some of this is hidden by smaller portions but eventually people will notice. Ethanol subsidies are further affecting the price of food as more and more crop land is being used for fuel. Gas prices are 20% higher than last year with $4-$5/gallon predicted by Summer. Demand from China for raw materials is raising the cost of production world-wide.

So far the economy is not as bad as in the Carter days but chances of a Reagan recovery are remote.

Internationally, Russia is looking more aggressive than it has since the days of the USSR. Worse for Obama, China ignores him on human rights and currency exchange issues.

The big wild-card is Egypt. The Egyptian government is important to the US but it sunk into a dictatorship with sham elections some time ago. Mubarak has led Egypt since Sadat was assassinated in 1981. President Bush (43) pressed for democratic reforms but the Obama administration dropped that initiative. In 2009, Secretary of State, Hillary Clinton referred to Mubarak as a friend of her family. As recently as last week she was still promising that his government was stable. As calls for Mubarak's resignation increase, the United States is increasingly being seen as supporting the dictator.

The problem is that none of the groups who are likely to replace Mubarak are desirable. All of them are sympathetic to radical Islam and Iran and hostile to the US. None of them are likely to support the peace treaty with Israel, either.

The best that can happen in Egypt is an orderly transition to Mubarak's picked successor who may turn into a new dictator. The worst that could happen would be a new radical Islamic government and a new war on Israel.

Events may clear up on their own but if they go the wrong way then the Obama administration will not be able to clean things up in time for the election. Both internally and externally, the future of the Obama administration depends on events which are outside of his control.