This week two American presidents are preparing to leave Washington – one will be vacating the White House and the other after lying in State in the Capitol. Separated by forty-five years as rare one-term presidents, both Jimmy Carter and Joe Biden will be remembered by the high inflation and the mounting national debt each left for their successors to clean up. In the case of Jimmy Carter, it took Ronald Reagan almost his entire eight-year, two-term presidency to reduce Carter’s inflation rate from 12 percent during the 1980 election to under 5 percent in 1989. Not to be outdone, Biden’s inflation peaked at 9.1% year-over-year in June 2022, the highest increase since the Carter years.
Note that the average inflation rates during the three previous administrations spanning the twenty years prior to Biden’s four years in office at 5.2% were: Bush 2001-2009 = 2.8%, Obama 2009-2017 = 1.4%, Trump 2017-2021 = 1.9%.
The most insidious element of high national inflation is that Americans are more divided depending on their economic status, because when inflation occurs, citizens are unequally affected thereby creating greater economic inequality. Asset advantaged families in the past several years smiled as their stock portfolios and fixed assets like homes increased rapidly in value. These were the best of times.
Those families or individuals living paycheck-to-paycheck were crushed by paying more for gasoline, electricity, food, and rent. Wage increases did not make up the difference, so they increased their credit card debt carrying increasing interest rates pushing them deeper and deeper into debt. For these people, these are the worst of times.
To offset the pain within this latter group and the political unrest inflation creates, politicians expand welfare benefits to the lowest income groups paid for by deficit spending or higher taxes on the middle class and the wealthy. Higher asset values protect the wealthy, but the middle class gets squeezed from higher living costs and less asset appreciation to cover the difference. Income inequality increases between those benefitting from inflation and those crushed by it.
During this recent inflation period, divisions occurred between some of our seemingly advantaged younger adults and older Americans. This first generation facing exceptionally high college debt is caught in the double-trouble of repaying these debts while being squeezed by high inflation. Long-term societal damage is occurring with these thirty-somethings having to move back in with their parents or living with multiple roommates and unable to afford marriage, a home, or children – much less repay five or six figure student debt for degrees they acquired for which there is limited or no demand. And Obama/Biden thought they were doing them a favor when the student loan program was federalized ten years ago in 2015.
A long-term problem following high inflation is the increase in national debt that inevitably occurs. (See the above chart). After bringing the Carter inflation down during the Reagan years, the national debt as a percentage of GDP grew from 20 percent to 40 percent in the mid-1900s before dropping to the mid-thirties during the 2000s. Obama’s spending deficit took it up again to the 70s. During the four Trump years it increased to 80 precent. Biden’ spending increases are forecast to take our national debt to again 100 percent of our GDP which was last seen at the peak of World War II in 1945, eighty years ago. But this time the national debt increased without our nation being in an all-out world war!
Because more lower income citizens are damaged by government sponsored inflation policies than there are fat cats benefitting from them, presidents like Carter and Biden (or his stand-in) leave Washington with a push from the electorate and poor legacies that are difficult to overcome. Impartial observers typically rate Carter and Biden as the two worst U.S. presidents since James Buchanan who served from 1857-1861 and was widely criticized for his lame leadership immediately prior to the American Civil War.
Carter, however, was blessed to live another forty-five years after he first left Washington. He used these years to benefit mankind and is being remembered with affection by national and world leaders at his State Funeral today in the Washington National Cathedral. With his advanced age and health issues, Biden will unlikely have no such luxury for a legacy makeover.
As the second Trump Administration takes office on January 20th, wish them a ‘Happy New Year’ for they will need all the goodwill and patience that is possible to repair our divided America.
TW3
January 9, 2025
John Whitmore Jenkins
by