Almost exactly four years ago today in a basement meeting room of a Holiday Inn in Philadelphia, candidate Jimmy Carter, surrounded by a number of his economic advisers, held a press conference to discuss what he called "an economic position paper for now and tomorrow."
Then; as now, it was the eve of the Pennsylvania primary, a primary in which Carter went on to defeat Sen. Henry Jackson (D-Wash.) and effectively assure his own nomination for the presidency.
In many ways, the position paper, which was Carter's first comprehensive economic policy statement, is a good place to start to try understand the record of the Carter administration. From the perspective of 1980, the paper is full of ironies.
"Under two Republican administrations we have been faced with the twin evils of intolerably high unemployment and double-digit inflation," Carter said. "We have experienced the worst recession since the 1930s, and the second recession since 1968. Federal deficits reached unheard-of peacetime levels.
"For eight years we have seen strict wage and price controls suddenly imposed and just as suddenly lifted. We have witnessed two devaluations of our currency. We have had to live with the consequences of the disastrous 1972 grain giveaway to the Soviet Union. We have watched our petroleum prices increase four- and fivefold. We have seen overly restrictive monetary policies and high interest rates compound our recession and greatly restrict our construction and homebuilding indsutry.
"While inflation has declined from its previous levels, it still remains unacceptably high. It must not be ignored, for it is a critical problem facing the American people.
"The major economic problem, however, is unacceptably high unemployement . . . We must give highest priority to achieving a steady reduction of unemployment . . . as rapidly as possible while reducing inflation. . . ."
And, Carter promised, ". . . with a progressively managed economy we can attain a balanced budget within the context of full employment by 1979, prior to the end of the first term of my administration."
Carter has succeeded in reducing unemployment, an accomplishment that seems all but forgotten now, crushed in the public's memory by skyrocketing prices. Unemployment dropped from nearly 8 percent on Election Day 1976, to a low of 5.7 percent last summer -- a low that virtually every economist believes represents full employment in today's American economy.
But what of the other points Carter ticked off in that position paper?
A recession has begun, a recession Carter was forced to seek to curb inflation, even though by his own advisers' forecast it will push unemployment up from March's 6.2 percent level to about 7.5 percent by Election Day. There was no other way, the president and his economic advisers decided, to keep the recent huge oil-generated bulge in inflation from getting built into the nation's wage structure, putting inflation on a permanently higher plane.
With unemployment under 6 percent last year, the budget was $40 billion in deficit.
The dollar declined so far in value in the first two years of Carter's term that his administration had to mount a dramatic "dollar rescue" effort Nov. 1, 1978.
American farmers are living with the consequences of an embargo on grain sales to the Soviet Union imposed by Carter after the Russians invaded Afghanistan.
Petroleum prices have more than doubled in the last 16 months, with the total impact greater than the quintupling of the price in 1974.
Monetary policies are so restrictive that interest rates have never been higher and construction and home building are greatly restricted.
Above all else, inflation has gone up steaidly, not down, since Carter took office. In his press conference Thursday, the president predicted that if all goes well, the consumer price index may only be rising at a 10 percent annual rate this summer, down from about 18 percent now. Carter has stuck by his promise not to use wage and price controls, however.
Elsewhere in that 1976 position paper Carter made another promise that, rightly or wrongly, few members of the American public think he has kept: "My economic policy," he said, ". . . wil avoid the shocks and surprises, the on-again, off-again programs and rapid policy changes which have characterized the last eight years."
Today many critics see Carter as constantly vacillating from one policy position to another; swinging erratically from fighting unemployment to curbing inflation; first letting the beleaguered dollar sink on foreign exchange markets and then being forced to prop it up; and after 90 days in office, proposing the "moral equivalent of war" to meet the energy crisis but days later reassuring everyone that the "war" will require few sacrifices.
But how much have his policies really changed and why did they?
One way to answer those questions is to look at Carter's record, a unique burden for the incumbent in any election. Carter's opponents have the luxury of making promises for the future that no one can claim they haven't kept.
Here is part of that record:
As Carter campaigned in the late summer and fall of 1976, unemployment began to rise. It looked to many economists as though the recovery from the 1974-75 recession had stalled. Certainly Carter's advisers thought so, and the candidate hammered away at President Ford.
In December, while Carter and his aides were planning what to do when he took office, the Labor Department reported that unemployment had reached 8 percent. More and more it seemed, new steps were needed to stimulate the economy.
After a series of meetings the first week in January with several of his newly designated economic team -- including Charles L. Schultze as chairman of the Council of Economic Advisors and W. Michael Blumenthal as Treasury secretary -- Carter announced that he would propose a $31 billion, two-year package of tax cuts and expanded antirecession spending. To give the economy a boost immediately, a $50 rebate would be paid on 1976 income taxes, with a special $50 payments to Social Security recipients and some other beneficiaries who owed no tax.
The plan, which Carter spelled out while standing in the muddy yard of the Pond House, his family's retreat outside of Plains, Ga., was largely the work of Schultze. It was fully in keeping with Carter's campaign promise to cut unemployment quickly, and in the pump-priming tradition of the Democratic party.
Before Congress had acted on the tax cut, however, unemployment began to drop swiftly -- nearly a percentage point in the first few months of 1977 -- and the need for so large a tax cut was questioned, especially the $11.4 billion worth of rebates and payments.
As events unfolded, both Blumenthal and some other Carter aides began to urge the president to scale back the tax cut. Carter, who had never been comfortable with the rebate scheme, announced abruptly in April that he was withdrawing his support for it.
The economic outlook in April had changed from what it appeared to be in January, and Carter responded by killing a rebate that would have amounted to only $11 billion in a $1.9 trillion economy. Yet Carter's critics jumped on the incident as proof the president didn't know his own mind. In the end, the stimulus package Congress passed amounted to only $6.1 billion in calendar 1977 and $16.9 billion in 1978. Nevertheless, about 4 million new jobs were created in Carter's first year in office, an unprecedented number for a single year, even one of strong economic growth as 1977 proved to be.
But inflation reared its ugly head, too. Consumer prices, which rose only 4.8 percent during 1976, took off in the first half of 1977, partly because of food and energy price jumps related to a harsh winter. Carter responded in April by announcing what proved to be the first of a series of anti-inflation programs.
Its centerpiece, a labor-management committee, was set up to advise the administration's Council on Wage and Price Stability. The effort quickly foundered over the issue of the committee's precise role.
Anyway, the weather-related sources of inflation faded away, and the rate of increase in the CPI dropped back to only about 5 percent in the second half of the year.
Meanwhile, Carter began to make a series of decision on issues that were to add to inflation later. As the issues -- increases in the minimum wage, idling of farm land to raise the market price of farm commodities. Social Security payroll tax increases, among others -- arose, White House economists pointed out their impact on inflation. The effect from any single decision was not that great, whatever their cumulative impact, while the political dissatisfaction of whatever group was backing a proposal loomed large in the minds of White House aides.
Carter, sometimes after taking an initial position that would have minimized the effect on inflation, usually ended up making what one key adviser calls "pragmatic" decision.
The increase in the minimum wage and the employer share of payroll taxes passed by Congress in 1977 probably added about one percentage point to labor costs the next year, and hence to the inflation rate, administration economists figured.
The administration had another surprise as 1977 wore on: Productivity, the rate at which goods and services are produced for each hour worked, grew much more slowly than anyone had expected.
Much of the productivity slowdown, which has worsened since then, remains a mystery. Whatever its causes, its effects are clear: to increase output, an employer must hire more workers than if productivity were growing more rapidly; and labor costs rise more swiftly because there is no gain in productivity to offset rising wages, and which adds to inflation.
All that meant, in 1977, that it took less economic growth to generate a large number of additional jobs, and that inflation was worse. Both conditions continued in 1978 and 1979.
Carter's economists, however, thought the peculiar behavior of productivity was an aberration. If so, to keep reducing unemployment, further tax cuts would be needed by the fall of 1978. Otherwise, with some big Social Security tax increases already on the books and inflation pushing people into higher personal income tax brackets, the federal budget would begin to be a drag on the economy, the advisers said.
Unemployment had dropped to 6.3 percent by the end of 1977, and some private economists said the economy was close to full unemployment.
Nonetheless, Carter chose to propose a $25 billion tax cut, to be effective Oct. 1, 1978. But after a bad winter quarter, there was a sharp economic bounceback in the spring and a quickening of inflation. Carter responded by once again cutting back a stimulus proposal. Make it only $20 billion, he told Congress, and make it effective three months later. That, of course, provoked more criticism about a president who could not make a decision and stick with it.
At the beginning of 1979, Carter first shifted his emphasis to slowing the economy. "To avoid creation of excess demand," his advisers said, "economic growth needs to slow . . . . Fiscal and monetary restraint . . . must be applied in a measured way, to moderate growth without producing a recession."
But once again the economy did not perform as expected. Economists in and out of government were thrown for a loop when inflation-conscious consumers ignored higher interest rates and dwindling real incomes to keep right on spending during 1979. By drawing their personal savings rate down to all-time-low levels, consumer demand last year kept the economy out of a recession.
The fed, in October, had tightened credit reins to the point that interest rates were at historic highs. And Carter had presented what by most traditional measures was a very tight budget in January. But neither action had pricked the inflation bubble.
Thus the state was set for Carter's final policy shift last month, when a virtual collapse of the long-term bond market and a distinct worsening of inflationary expectations forced him and the Federal Reserve to crunch the economy. The budget was cut once more and new credit controls imposed.
While the president's many critics complain about abrupt departures from past policy positions, it might be more appropriate to say Carter did not change his policies quickly enough. With hindsight, even his own economists concede it would have been better to have provided less stimulus to the economy, particularly for 1979.
As one official deeply involved in economic policy matters says, "At every turn, Carter tilted toward stimulus, and that was a mistake."
But what of the future?
Carter has now given Congress a balanced budget for 1981, but one balanced by virtue of the biggest increase in taxes in history along with an oil import fee. He opposes any tax cuts until it is clear the budget can remain in balance even with the cuts.
Like all of the other president candidates, when a tax cut comes, Carter says he wants much of it to go to business to provide new investment incentives, or perhaps involve cuts in Social Security taxes that will also reduce labor costs.
Like the other candidates, too, Carter favors reducing government regulation of business. In fact, that is one area in which his administration can point to substantial progress. Airline operations have largely been deregulated. Trucking and railroad deregulation legislation is moving in Congress.
Today, a more conservative-sounding Carter makes no grandiose promises. Some of his close associates say he is comfortable with his fiscal conservatism and has an overriding reason -- inflation -- to say no to some of the traditional liberal segments of the Democratic party.
A reelected Jimmy Carter probably would remain a fiscal conservative, too. After all, as CEA Chairman Schulze says, licking inflation will be a "10-year, a 12-year job."
"We are now entering a very difficult transition period, when recent economic statistics suggest that our economy . . . has probably entered a period of recession," Carter said last week. "I believe that any recession will be mild and short. But I'm deeply concerned about how it affects the people of our country . . . I know the pain and I know the disruption and the heartached that lie below the cold statistics.
"But I also know that we cannot substantially reduce interest rates, and we cannot make jobs secure, until we get the inflation rate down."
How different from the rhetoric of four years ago.