By re-election in 1980, President Carters foreign policy was seen as passage and weak. The USSR was expanding and becoming more hostile and aggressive. We had hostages held in Iran, The Fed raised the prime rate to 21%, causing home mortgage interest to 16% or above, and few could afford a house.he Fed (Federal Reserve) had failed to act, when economic conditions deteriorated, and inflation, unemployment were at double digit levels OPEC had used, and was using, Middle East oil as a political weapon, including a boycott of the U.S, refusing to sell us oil.