It's been nearly two full years since the recession officially ended, and the economy is still struggling to get off the ground. It didn't have to be this way.
When the Commerce Department released its estimate for first-quarter growth — a meager 1.8% — President Obama's chief economic adviser, Austan Goolsbee, at least conceded that "faster growth is needed to replace the jobs lost in the downturn."
Wow, Austan, you must have gotten a gold star in Obvious in school! But, back to the article:
Compare the two worst post-World War II recessions. Both the 1981-82 and the 2007-09 downturns were long (16 months and 18 months, respectively) and painful (unemployment peaked at 10.8% in 1981-82 and 10.1% in the last one).
What's dramatically different, however, is how each president responded.
Obama massively increased spending, vastly expanded the regulatory state, and pushed through a government takeover of health care. What's more, he constantly browbeats industry leaders, talks about the failings of the marketplace and endlessly advocates higher taxes on the most productive parts of the economy.
In contrast, Reagan pushed spending restraint, deregulated entire industries, massively cut taxes and waxed poetic about the wonders of a free economy.
The result? While the Reagan recovery saw turbocharged growth and a tumbling unemployment rate, Obama's has produced neither. Consider:
• GDP. In the seven quarters after the 1981-82 recession ended, the economy cranked out quarterly growth rates that averaged 7.1%. Under Obama, GDP growth has averaged a mere 2.8%. (See chart at right.)
• Unemployment. Under Reagan, the unemployment rate had fallen to 7.5% by this point in the recovery. Under Obama, it's still stuck at 8.8%.
• Long-term unemployment. There were far fewer long-term unemployed by this point in the Reagan recovery; just 18% of the unemployed had been without a job 27 weeks or more. Under Obama, that figure is an astonishing 45%.
• Consumer confidence. By this point in the Reagan recovery, the Conference Board's Consumer Confidence Index had hit 100. Today, the index stands at just 65.4.
• Deficits. Under Reagan, the federal deficit was trimmed to 4.8% of GDP by 1984. Under Obama, the deficit is expected to climb to 10.9% of GDP this year.
Obama and his defenders like to say he inherited the worst downturn since the Great Depression and that things would have been worse still had he not acted. But the recession was almost over by the time he took office — and officially over just six months after that.
So while Obama's policies had little to do with bringing an end to the Great Recession, they've had everything to do with producing what is by far the worst economic recovery in the past 70 years.
Reagan understood Economics 101. But of course, he didn't go to an Ivy League school like Obama did. But remember, so too did GW Bush, HWBush, and Clinton. And remember, Bubba had to have help from an Ohio State graduate balancing the budget to get his recovery going....So maybe the Ivy League doesn't know economics. Just sayin.
Bottom line: Reagan was competent and exceptional. The only thing about obama that could be exceptional is his own ignorance and faith in a failed economic outlook.
