With an energy crisis created by Russia’s invasion of Ukraine that has sent gas prices soaring, major business leaders are worried about an impending recession, and several economists are even warning of stagflation. 

Many have pointed to parallels between today’s U.S. economy and the 1970s economy under President Jimmy Carter. Now, even Carter’s own former Treasury secretary, W. Michael Blumenthal, says the similarities between both time periods are real. And he has some words of wisdom for Biden as he navigates the months ahead. 

“Inflation fighting comes first,” Blumenthal said, emphasizing that settling down the economy needs to be the president’s foremost project, along with reducing the national deficit. 

Under Carter, an oil embargo against Iran resulted in sky-high gas prices and severe energy shortages in the U.S. while inflation climbed to 14.6%, only breaking with the onset of a deep recession. 

Carter’s efforts to curb inflation included an attempt to cap wages and prices, and a release of grain reserves to bring down food costs. In a televised “fireside chat” from early 1977, he also asked Americans to conserve energy in the face of fuel shortages.

Those attempts were ultimately unsuccessful, and Carter lost an election for a second term in 1980 to Ronald Reagan. 

Inflation above 14% is much different than the current 8.6% year-over-year rate of inflation reached in May of this year, but Blumenthal says Biden faces the same 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.”

Those painful steps involve supporting the Federal Reserve in initiating further hikes on its baseline interest rate in order to cool the economy, according to Blumenthal. In enacting changes to its monetary policy, the Fed operates independently of the president. The high inflation of the 1970s finally broke when Paul Volcker, then chair of the Fed, raised rates to 20% in 1981. But the resulting recession lasted until late 1982.

A recession would be a smaller price to pay than years of runaway inflation, according to Blumenthal. 

“[Biden] 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,” he said.

The Fed has already increased its baseline interest rate three times this year and is expected to make further increases in the coming months. Its first hike was 25 basis points in March, followed by a 50 bps hike in May. Last month, the bank initiated a 75 bps rate hike—its biggest since 1994.

With limited tools to directly take on inflation himself, Biden has spoken publicly about bringing down gas prices. 

In June, Biden sent a letter to several oil CEOs criticizing them for making record profits while not doing enough to increase production. Later in the month, he proposed a three-month-long federal gas tax holiday in an effort to lower the price of gas at the pump. Congress is unlikely to pass the proposal.

Blumenthal’s call to prioritize inflation comes as several other political thunderheads gather over Biden, including recent decisions by a conservative-majority Supreme Court that has overturned the landmark abortion case Roe v. Wade, significantly limited the powers of the EPA, and stymied gun control efforts as the country reels from consecutive mass shootings. Meanwhile, many student loan borrowers are still waiting on the president’s decision to enact widespread student loan forgiveness. 

Prioritizing inflation may be critical, but Blumenthal himself admits that there’s hardly a clear path to do so. 

“Once you’re in this cycle, it’s very difficult to be precise,” he said. “The traditional tools of analysis are of limited value in that situation.”