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Updating the Reagan v. Obama Economic Rout

Comparing economic legacies.

by
Tom Blumer

Bio

August 6, 2014 - 12:00 am
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The Hill reported last week that President Obama wants to “pivot to his economic legacy.”

Specifically, “the White House hopes to ride the wave of an economic recovery to improve Obama’s approval numbers over the final two years of his presidency, setting up a possible Democratic successor at the White House.” If The Hill’s Amie Parnes and Peter Schroeder had submitted their writeup to The Onion, they would have gladly run it.

Unfortunately for the president, one good quarter — assuming it even survives subsequent revisions, and especially following a quarter of contraction which was originally reported as positive before the heavy-duty erasers came out — does not a positive legacy make. Nor will another two years of the 2.4 percent economic growth seen during the past four quarters, again before revisions to the most current quarter.

By the three key measures of economic, job and income growth, Barack Obama’s economy, also known to yours truly as the POR (Pelosi-Obama-Reid) economy to identify the three parties most responsible for  both the depth of the Great Recession and the historically awful “recovery” which has followed it, has been historically horrid.

Obama’s economic policy, with the help of a pliant Federal Reserve, has been built on the notion that massive deficit spending and easy money would bring the economy roaring back and “stimulate” job growth.  The former strategy was tried during the 1930s. It only succeeded in lengthening the Great Depression, as the nation’s unemployment rate never fell below 12 percent. The fact that Team Obama insisted on making the same mistakes, while at the same time unleashing the federal government’s regulatory apparatus to harass the economy’s productive participants, is enough to make reasonable people question whether this president and his administration have ever truly wanted to see a genuine recovery occur.

On the other hand, five years of strong, solid and uninterrupted economic performance following a serious recession is how you create a positive economic legacy. Ronald Reagan’s post-recession economy — an economy which faced arguably greater challenges when he took office, particularly double-digit inflation and a prime interest rate of 20 percent — did just that.

Reagan’s economic policy, conducted in the face of necessarily painful anti-inflationary Federal Reserve monetary policy, was premised on supply-side tax cuts and regulatory restraint. A third element, getting federal spending under control, didn’t occur because (surprise) Democrats reneged on promises to cut spending made during budget negotiations. Today, Obama’s crew anticipates annual budget deficits which will never fall below $450 billion and will balloon back to $1 trillion within a decade.

Five years after the early-1980s recession ended, the U.S. economy was almost 26 percent larger. The Obama economy, in the worst five-year recovery since World War II by miles, hasn’t achieved even half of that.

The difference is, well, graphic, as the two images below highlight.

ReaganVsObamaGDPthru20quarters

 

ReaganVsObamaCumulGDPthru20quarters

 

Comments are closed.

Top Rated Comments   
More like comparing Lou Gehrig to Helen Keller.
30 weeks ago
30 weeks ago Link To Comment
Comparing Reaganomics to Obamanics is like comparing Lou Gehrig to Mario Mendoza.

Reagan loved America and believed we were exceptional.

Obama, Soros, Ayers, Frank Marshall Davis, the Midwest Academy...despise the free market and always intended to destroy it.

In that sense, both Reagan and Obama successfully advanced their goals.
30 weeks ago
30 weeks ago Link To Comment
I remember all the booing from the DemokRat peanut gallery about "vodoo economics" etc. They did not make Reagan's work easy. Everyone in the administration was investigated, sued, persecuted by any means at hand. In spite of that they did a great job. If the rats would have behaved like Americans and supported Reagan there is no telling how great things could have been accomplished.
30 weeks ago
30 weeks ago Link To Comment
All Comments   (28)
All Comments   (28)
Sort: Newest Oldest Top Rated
Gee, with the $619 billion the Obamacare department "lost", we could pay off most of our Chinese debt!
29 weeks ago
29 weeks ago Link To Comment
Aren't we in like the 4th summer of economic recovery? I think that's Obama's economic legacy right there.
29 weeks ago
29 weeks ago Link To Comment
Reagan's true legacy was the booming economy of the 90's. Now if the Reagan recovery was good and set the stage for a fantastic surge in the 90's ... my question is: what are we to expect five or ten years after the destroyer is gone. Those thoughts make me shudder. We will need five Reagans in a row to recover from the BCO (Bush-Clinton-Obama) era. God have mercy on us!
29 weeks ago
29 weeks ago Link To Comment
Pivot from what exactly?
30 weeks ago
30 weeks ago Link To Comment
'President Obama wants to “pivot to his economic legacy.”'

This will be as great a triumph as the "pivot to Asia".
30 weeks ago
30 weeks ago Link To Comment
Pivot? Or Pirouette?
30 weeks ago
30 weeks ago Link To Comment
During Reagan, if I left a job on Monday, it'd be highly likely I'd have another the following week. Today, leave a job, it's problematic if you even have another one a year down the road.
30 weeks ago
30 weeks ago Link To Comment
I was working independently and I could not stop the phone from ringing. At one point I was booked solid for almost 2 years in advance. Bush Sr. came and the silence was deafening. Then the glorious Contract with America recovered Reagan's principles and work was even more abundant. After that came Dubbya. I never saw anything resembling full employment from 2004 to 2008 when I closed my last contract. I haven't worked since then. I am surviving doing menial work but I use my abundant free time to fight this abomination, reminding people everywhere that we can overcome this new kind of tyranny.
29 weeks ago
29 weeks ago Link To Comment
One guy believed in free markets, human initiative and unlimited possibilities and the other believes in absolute control over all aspects of human activity through bureaucratic edict.

Throughout Obama's term in office, business has been generally wary of expansion for fear of being overwhelmed by that bureaucracy and its endless repressive rules and regulations.

It was ironic last week when an ignorant president attempting to put down his nemesis said "Russia doesn't build anything" when said president himself has claimed that America doesn't build anything without beneficent government enabling it.

He himself has built nothing but dissension and carefully cultivated mistrust.
30 weeks ago
30 weeks ago Link To Comment
Comparing Reaganomics to Obamanics is like comparing Lou Gehrig to Mario Mendoza.

Reagan loved America and believed we were exceptional.

Obama, Soros, Ayers, Frank Marshall Davis, the Midwest Academy...despise the free market and always intended to destroy it.

In that sense, both Reagan and Obama successfully advanced their goals.
30 weeks ago
30 weeks ago Link To Comment
More like comparing Lou Gehrig to Helen Keller.
30 weeks ago
30 weeks ago Link To Comment
Catino, would be hesitant with this comparison as Helen Keller accomplished so much, with such handicaps.

With B.O. in power she may have never accomplished anything.
30 weeks ago
30 weeks ago Link To Comment
I was referring to Keller's ability to play baseball. I admire the lady since infancy. Now that I think of it ... she probably had better eyesight than many umpires I've seen!
29 weeks ago
29 weeks ago Link To Comment
I remember all the booing from the DemokRat peanut gallery about "vodoo economics" etc. They did not make Reagan's work easy. Everyone in the administration was investigated, sued, persecuted by any means at hand. In spite of that they did a great job. If the rats would have behaved like Americans and supported Reagan there is no telling how great things could have been accomplished.
30 weeks ago
30 weeks ago Link To Comment
...and administrations since then would still have found a way to screw it up.
30 weeks ago
30 weeks ago Link To Comment
Yes. My America had 40 presidents. Then came the usurpers.
29 weeks ago
29 weeks ago Link To Comment
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