WASHINGTON, July 26, 2013 – President Obama and his teleprompter constantly shower the American public with beautiful, flowery, yet empty language, and his big economic speech on Wednesday was no different. He promised that “we will find an ocean of tomorrows.
We will find a sky of tomorrows for the American people and for this great country that we love but the solutions he offered were more of the same failed policies he has followed for his entire presidency: more government programs, more taxes on the rich, more government spending, and more regulations.
Obama continues to discuss how government must act to get us out of this economic slump and if only the cruel and mean spirited Republicans would get out of his way allowing him to create even bigger government programs, spend even more money, and tax the public even more, the economy would be doing just fine. There are many historical precedents that directly conflict with this line of thinking that he willfully chooses to ignore because they do not adhere to his big government ideology.
For the first 150 years of America’s existence, the government experienced recessions, but allowed the market to recover on its own. During that time the down turns were neither as deep nor as long as they have been since the New Deal, which set a disastrous new precedent for how to deal with an economic recession.
It is rarely mentioned, but the recession of 1921, in which unemployment reached a staggering 11.7%, threatened to turn into a depression. President Warren G. Harding reduced government spending and rejected the calls of his Secretary of Commerce to intervene in the market. In 1922 the unemployment rate fell to 6.7% and in 1923 it fell all the way to 2.4%. President Harding’s decision to cut spending and let the market recover on its own is responsible for what is referred to as “the roaring 20s.”
President Ronald Reagan inherited an economy in 1981 that was in very similar, and arguably worse, shape than it was in 2009 when President Obama took office. Unemployment hit a high of 10.8% very early in Reagan’s first term, where under Obama the high was 10.0%. Unlike Obama though, Reagan had to deal with staggering inflation. Obama definitely inherited some unique issues of his own, which he still likes to remind us of, but at the very least these situations make for a reasonable comparison.
Obama’s economic policy has been almost the polar opposite of Reagan’s, with predictably conflicting results. Obama has exponentially increased government spending, added an enormous amount of regulations (for example: EPA, Obamacare and the banking reform bill), increased taxes, discouraged saving and investment in favor of spending, nationalized entire industries, and greatly increased inflation by printing money like never before in American history. Additionally, his relentless anti-business agenda and continuous interference in the market discourage businesses to expand and to hire new employees.
Reagan, on the other hand, did all he could to get government off the backs of the people. He greatly reduced taxes and regulatory burdens, decreased non-defense discretionary spending, decreased inflation by printing less and less money, and took every opportunity to encourage saving and investment. His decision to intervene in the market as little as possible allowed businesses and entrepreneurs the freedom to innovate, expand, and hire more people, because the rules of the game were clear.
In total, through the first three years of both the Obama and Reagan recoveries http://www.humanevents.com/2013/02/06/norquist-reagan-vs-obama-the-record/, Reagan’s policies were responsible for a net gain of 9.7million jobs, while Obama’s netted only 3.0 million, even though 77 million more people lived in America at the beginning of the Obama recovery than did when Reagan was in office. Additionally, over the first three years of the Obama recovery the economy grew 8.9% in total, compared with 18.5% under Reagan.
The economy in general suffered greatly under Obama, but what about individual families in particular? In the first three years of the Reagan recovery, real median income (take home pay) rose $3,380 per year. During the first three years of the Obama recovery, real median income has fallen over $2,400, which is more than it fell during the recession!
Therefore, if Obama had followed Reagan’s smaller government, lower taxes and less regulations approach, the average family would be taking home at least $5,780 more per year than they are today.
Reagan’s policies had long term benefits that lingered way beyond his time in office. In The End of Prosperity, supply side guru Art Laffer and Wall Street Journal chief financial writer Steve Moore discuss the long term effect of the Reagan recovery: “We call this period, 1982-2007, the twenty-five year boom-the greatest period of wealth creation in the history of the planet. In 1980, the net worth-assets minus liabilities-of all U.S. households and business … was $25 trillion in today’s dollars. By 2007 … net worth was just shy of $57 trillion. Adjusting for inflation, more wealth was created in America in the twenty-five year boom than in the previous two hundred years combined.”
Even President Clinton, Reagan’s first Democratic successor, took a page or two out of Reagan’s playbook. He cut capital gains taxes to the lowest they had ever been in history, reduced government spending as a share of GDP by an incredible 3.5%, passed and signed into law the North American Free Trade Agreement (to the chagrin of the unions), and signed into law a revolutionary welfare reform bill.
Obama is one of the greatest demagogues and campaigners of all time, and on Wednesday he told us that he is going to continue to ignore historical blueprints for how to actually fix the economy and will continue to expand the federal government at any and every cost, with predictable results to follow.
The media, in the most Orwellian fashion, has gone right along with Obama’s ‘failure is success’ propaganda.
As President Clinton realized that his big government policies were bound to be unsuccessful, he did the right thing for the nation, regardless of personal ideology, and declared that “the era of big government is over.”
The message that Obama sent on Wednesday was that the era of even bigger government, and the perpetual failure, misery, and pain it will bring, is here to stay.
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