Obama's the first Democrat to face down rising gas prices in an election year since Carter. But he has advantages his unfortunate predecessor didn't.
Cars line up for gasoline during the 1979 fuel shortage / Image: Wikipedia
Gas prices are up, and there's a Democrat in the Oval Office seeking reelection. What year is it?
For Politico, 2012 is 1980 all over again, and the newspaper is now pondering whether President Obama will end up "owning" high gas prices much the way Jimmy Carter did by the end of his term in the White House.
It's certainly possible that, as fuel costs inevitably rise in the coming months, enough cash-strapped voters will start casting blame on the president to cripple his reelection chances. You never know. But economically, comparing Carter's dire predicament, which he notoriously mishandled, with Obama's is silly, in part because you can't look at gas prices in a vacuum. The late 1970s were an economic nightmare in which fuel costs were one of several scourges. Today, we're looking at a strengthening recovery that's better equipped to withstand a bit of pain at the pump.
Here are four big reasons to ignore those Carter comparisons:
No. 1: The U.S. isn't in a fight to the death with inflation
If there's a single graph that captures the misery of America's economy in the 1970s and early 1980s, it's the one below. That blue line? It's the non-core inflation rate, which includes the cost of goods like food and energy which get left out of other measures. Notice that in late 1978, when the Iranian revolution helped send oil prices soaring, prices were already rising at more than 7 percent a year. U.S. policy makers had been trying and failing to slay inflation for most of the decade, and the sudden shock of high oil prices helped set the rate completely out of control. Expensive crude made gas, as well as consumer goods, more expensive. That sent workers bargaining for higher wages, which made prices to rise further. Presto chango: an inflationary spiral.
But it got worse. Federal Reserve Chairman Paul Volcker's early, haphazard attempts to slow down runaway prices and save the value of the dollar led to sky high interest rates, which sent the economy tumbling into recession by the summer of 1980 -- right in the middle of Carter's re-election campaign. By July, unemployment topped out at 7.9 percent (it eventually dropped back to 7.1 percent by November).
Today, inflation is just about dead last on America's list of potential economic problems. Workers also aren't in much of a position to bargain for higher pay based on their weekly gas tab. So high gas prices aren't going to lead to the same terrifying wage-price spiral that, along with some clumsy tinkering by the Fed, demolished the economy under Carter.
No. 2: We don't have ridiculous regulations on selling gas
The long lines of drivers waiting outside gas stations for a chance to fill up might be the iconic image of Carter-era economic malaise. But the gas shortages that yielded those lines weren't a direct result of high prices. Rather, they were the produced of an ill-designed system of price and distribution controls, which led gas stations to sell off what limited fuel they had on a first-come-first-serve basis, then close up shop early. To get a sense of how horribly the government's regulation distorted the market for gasoline, check out this 1979 paper from the Brookings Institute. Among their myriad unintended consequences, the controls actually made it more profitable for refineries to stash away gasoline supplies and sell them at a later date, even if there was an immediate shortage. Thankfully, those kinds of regulations went out of style along with disco.
No. 3: Iran (probably) isn't going to stop selling oil
One of the eeriest similarities between today and the Carter era is the role Iran is playing in sending up gas prices. Then, it was fallout from the Iranian revolution. Today, it's uncertainty generated by U.S. and European attempts to stop Tehran's nuclear program. But there are big, gaping differences between the challenges of of 33 years ago and today.
In December of 1978, following the revolution, Iran's new leaders halted all oil shipments (they resumed a small amount the following March). At the time, the country was the world's second largest oil exporter. The market panicked, and the price of crude increased 150 percent over the coming year. Gasoline prices followed, jumping 55 percent in six months.
The current confrontation between Iran and the West is scary, yes. But unless it erupts into outright war, chances are we won't see similar supply disruptions compared to what happened in 1979. The U.S. has levied sanctions on Tehran aimed at limiting it's ability to sell oil. But as I wrote yesterday, they're not intended to take all of their crude off the market. Iran, for its part, is reportedly so desperate to to sell oil that it's offering barter deals.
No. 4: We're used to high gas prices
There's no question about it: When oil prices rise rapidly, they can hurt the economy. But when it comes to determining just how bad the damage will be, it's important to look at where oil prices have been in the recent past. James Hamilton, a professor at the University of California, San Diego, has come up with a formula for doing this that I call the rule of three. He's found that when oil prices quickly spike to a new three-year high, they can cause a damaging shock to the economy. That's because both businesses and consumers suddenly have to rapidly adjust their budgets, and often drastically cut spending. The rule of three is not a hard and fast law, but more a decent rule of thumb. It happens to describe what happened in 1979 fairly well. At the time, the only frame of reference anybody had for an oil crisis was the 1973 OPEC embargo. Nobody expected a repeat.
While oil prices are rising pretty quickly today, they're still close to where they reached during the Libyan revolution last year. They could go higher -- I'm not going to try and predict -- but at this point, even if it's painful, most Americans have an idea of how to cope with higher fuel costs. Back in 1979, it was still relatively new and frightening. Today, it's old hat.
Some of Charles Schulz’s fans blame the cartoon dog for ruining Peanuts. Here’s why they’re wrong.
It really was a dark and stormy night. On February 12, 2000, Charles Schulz—who had single-handedly drawn some 18,000 Peanuts comic strips, who refused to use assistants to ink or letter his comics, who vowed that after he quit, no new Peanuts strips would be made—died, taking to the grave, it seemed, any further adventures of the gang.
Hours later, his last Sunday strip came out with a farewell: “Charlie Brown, Snoopy, Linus, Lucy … How can I ever forget them.” By then, Peanuts was carried by more than 2,600 newspapers in 75 countries and read by some 300 million people. It had been going for five decades. Robert Thompson, a scholar of popular culture, called it “arguably the longest story told by a single artist in human history.”
In a new book, the former Middle East peace negotiator Dennis Ross explores just how close Israel came to attacking Iran, and why Susan Rice accused Benjamin Netanyahu of throwing “everything but the n-word” at Barack Obama.
Updated on October 9, 2015 at 12:40 p.m.
When Israeli Prime Minister Benjamin Netanyahu arrives in Washington early next month for a meeting with President Obama, he should at least know that he is more popular in the White House than Vladimir Putin. But not by much.
This meeting will not reset the relationship between the two men in any significant way, and not only because Netanyahu has decided to troll Obama by accepting the Irving Kristol Award from the American Enterprise Institute on this same short trip. The meeting between the two leaders will most likely be businesslike and correct, but the gap between the two is essentially unbridgeable. From Netanyahu’s perspective, the hopelessly naive Obama broke a solemn promise to never allow Iran to cross the nuclear threshold. From Obama’s perspective, Netanyahu violated crucial norms of U.S.-Israel relations by publicly and bitterly criticizing an Iran deal that—from Obama’s perspective—protects Israel, and then by taking the nearly unprecedented step of organizing a partisan (and, by the way, losing and self-destructive) lobbying campaign against the deal on Capitol Hill.
The leaderless GOP begins its search for a speaker anew, starting with a campaign to draft Paul Ryan.
First Eric Cantor. Then John Boehner. Now Kevin McCarthy.
Conservatives in and out of Congress have, within a span of 15 months, tossed aside three of the four men most instrumental in the 2010 victory that gave Republicans their majority in the House. When the leaderless and divided party gathers on Friday to begin anew its search for a speaker, the biggest question will be whether that fourth man, Paul Ryan, will take a job that for the moment, only he can win.
Ryan, the 2012 vice presidential nominee and chairman of the powerful Ways and Means Committee, has for years resisted entreaties to run for speaker, citing the demands of the job on his young family and his desire to run the tax-writing panel, which he has called his “dream job.” And he did so again on Thursday, within minutes of McCarthy’s abrupt decision to abandon a race he had been favored to win. “I will not be a candidate for speaker,” Ryan tweeted. Yet the pressure kept coming. Lawmakers brought up his name throughout the day, and there were reports that Boehner himself had personally implored him to change his mind.
Kids who are adopted have richer, more involved parents. They also have more behavior and attention problems. Why?
Being adopted can be one of the best things to happen to a kid. People who adopt tend to be wealthier than other parents, both because of self-selection and because of the adoption screening process. Adoptive parents tend to be better-educated and put more effort into raising their kids, as measured by things like eating family meals together, providing the child with books, and getting involved in their schools.
And yet, as rated by their teachers and tests, adopted children tend to have worse behavioral and academic outcomes in kindergarten and first grade than birth children do, according to a new research brief from the Institute for Family Studies written by psychologist Nicholas Zill.
A new report details a black market in nuclear materials.
On Wednesday, the Associated Press published a horrifying report about criminal networks in the former Soviet Union trying to sell “radioactive material to Middle Eastern extremists.” At the center of these cases, of which the AP learned of four in the past five years, was a “thriving black market in nuclear materials” in a “tiny and impoverished Eastern European country”: Moldova.
It’s a new iteration of an old problem with a familiar geography. The breakup of the Soviet Union left a superpower’s worth of nuclear weapons scattered across several countries without a superpower’s capacity to keep track of them. When Harvard’s Graham Allison flagged this problem in 1996, he wrote that the collapse of Russia’s “command-and-control society” left nothing secure. To wit:
What’s the balance between preparing students for college and ensuring they aren’t killing themselves in the process?
Kids who go to elite private high schools enjoy lots of advantages. They have access to the most challenging academic classes at reputable institutions, with staffs that are well-equipped to help them prepare for college. Parents pay an average of $10,000 per year to ensure their kids this privilege.
And yet the rigor that these opportunities demand can come with an extra cost for the students themselves. A recent study surveyed and interviewed students at a handful of these high schools and found that about half of them are chronically stressed. The results aren’t surprising—between the homework required for Advanced Placement classes, sports practices, extracurricular activities like music and student government, and SAT prep, the fortunate kids who have access to these opportunities don’t have much downtime these days. These experiences can cause kids to burn out by the time they get to college, or to feel the psychological and physical effects of stress for much of their adult lives, says Marya Gwadz, a senior research scientist at the New York University College of Nursing.
A new tally of the those killed last month makes it the deadliest-ever disaster at the annual pilgrimage.
The death toll in last month’s Hajj stampede in Saudi Arabia is roughly double the number that the country first reported, the Associated Press is reporting.
The Saudi estimate of the disaster was 769, but the new estimate, based on an AP count, suggests that 1,453 people died in the stampede. This new number would make it the deadliest catastrophe in the history of the event.
The Hajj draws roughly 2 million pilgrims to Mecca each year, an observance that lends its host, Saudi Arabia, unrivaled prestige across the Muslim world. It also saddles the kingdom with billions of dollars of costs and logistical considerations. Over the course of the past 40 years, several of the pilgrimages have been marred by deaths caused from stampedes, the collapse of infrastructure, violence, and fires.
American politicians are now eager to disown a failed criminal-justice system that’s left the U.S. with the largest incarcerated population in the world. But they've failed to reckon with history. Fifty years after Daniel Patrick Moynihan’s report “The Negro Family” tragically helped create this system, it's time to reclaim his original intent.
By his own lights, Daniel Patrick Moynihan, ambassador, senator, sociologist, and itinerant American intellectual, was the product of a broken home and a pathological family. He was born in 1927 in Tulsa, Oklahoma, but raised mostly in New York City. When Moynihan was 10 years old, his father, John, left the family, plunging it into poverty. Moynihan’s mother, Margaret, remarried, had another child, divorced, moved to Indiana to stay with relatives, then returned to New York, where she worked as a nurse. Moynihan’s childhood—a tangle of poverty, remarriage, relocation, and single motherhood—contrasted starkly with the idyllic American family life he would later extol.
A family that falls behind on even a small loan can find itself in a never-ending pit of payments and shame.
On a recent Saturday afternoon, the mayor of Jennings, a St. Louis suburb of about 15,000, settled in before a computer in the empty city-council chambers. Yolonda Fountain Henderson, 50, was elected last spring as the city’s first black mayor.
On the screen was a list of every debt-collection lawsuit against a resident of her city, at least 4,500 in just five years. Henderson asked to see her own street. On her block of 16 modest ranch-style homes, lawsuits had been filed against the occupants of eight. “That’s my neighbor across the street,” she said, pointing to one line on the screen.
And then she saw her own suit. Henderson, a single mother, fell behind on her sewer bill after losing her job a few years ago, and the utility successfully sued her. That judgment was listed, as well as how one day the company seized $382 from her credit-union account—all she had, but not enough to pay off the debt.
What insight can the new video game Prison Architect offer into the structures and complexities of incarceration in America?
The first person to die in an electric chair was William Kemmler, a peddler from Philadelphia who murdered his common-law wife in the summer of 1890. 1000 volts of electricity, tested the day before on a luckless horse, knocked Kemmler unconscious, but didn’t stop his heart. In a panic, the warden doubled the voltage. 2000 volts of alternating current ruptured Kemmler’s capillaries, forming subcutaneous pools of blood that began to burst as his skin was torn apart. Witnesses reported being overcome by the smell of molten flesh and charred body hair; those who tried to leave found that the doors were locked. The next morning, The New York Times called the execution a “disgrace to civilization … so terrible that words cannot begin to describe it.” The irony, lost on no one, was that until that morning, electrocution had been promoted as a more humane form of capital punishment.