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The Daily Signal
How Obama’s
Recovery Compares to Reagan’s Recovery
Stephen Moore
May 03, 2015
Here’s some advice to the White House: it might be time for President
Obama to cancel the rest of his economic “mission accomplished” tour
and help figure out how to get the U.S. growing again.
The Department of Commerce delivered the miserable news Wednesday
morning that economic growth nearly ground to a halt during the first
quarter, up a microscopic 0.2 percent. Even more disturbing, because
the population is growing at about 0.8 percent, real per capita GDP is
actually negative. Remember we also had an abysmal jobs growth number
for March.
Once again economists blamed the frigid and blizzard conditions on the
East Coast; and no doubt weather was a factor in the subpar performance.
But this is a long-term pattern under Obama, not a seasonal blip. Back
in 2009, Vice President Biden promised us a “Summer of Recovery” and
nearly six years later we are all still eagerly waiting for it.
The tepid growth rate so far in 2015 merely extends the track record of
the 23 quarter post-Great Recession recovery. The annualized growth
rate of 2.24 percent dead last compared to the six other recoveries
since 1960, which averaged 3.97 percent after 23 quarters. This
translates into nearly $1.7 trillion (in constant 2009 dollars) in
absent economic growth.
But the more amazing comparison is that of the Reagan—which trounces
this current so-called recovery. That recovery’s sizzling 4.8 percent
annualized growth through 23 quarters was more than twice the rate of
the current recovery. In other words, for every $1 of economic growth
experienced during the present time, the Reagan recovery produced more
than $2. As a result, the Reagan recovery gap now stands at a record
$2.48 trillion of real annual GDP (in 2009 dollars). The economy is now
more than 15 percent smaller than it would have been with Reagan style
growth.
This didn’t happen by accident. The Obama policies (as well as those in
the final months of the George W. Bush administration) were, almost
without exception, costly and counterproductive. Congress and Obama
pushed through $830 billion in stimulus spending—which was right out of
the Keynesian economic playbook. Then the disciples of Lord Keynes
expanded the assets of the Federal Reserve by $3.5 trillion dollars
during three rounds of so-called quantitative easing. These trillions
of newly created dollars flowed into the credit markets, to the banks,
and into the mortgage-backed securities industry. Like a cheap sugar
high, economic growth seemed to temporarily respond.
The federal minimum wage rate was raised by more than 10 percent. Then
came Obamacare and its new regulations and costs on employers for
mandated health care. Next were the tax increases on the rich. The
Environmental Protection Agency went on a regulatory search and destroy
mission against American fossil fuel producers—and that mission
continues unabated to this day.
Bad ideas have bad consequences. What is especially demoralizing is
that after this flurry of program spending in Washington, all we have
to show for it is $7.5 trillion more debt.
Obama suggested earlier this week that if Republicans hadn’t blocked
his further spending ambitions for more social programs and
“investments in infrastructure” projects, the rioting in Baltimore
might have been averted. Really? Can our economic problem truly be that
we aren’t spending and borrowing enough money in Washington?
Meanwhile, almost all economists agree we need to reduce our corporate
tax rate. We could create hundreds of thousands of more jobs by
encouraging domestic drilling for oil and gas rather than preventing
it—through the EPA and the moronic decision to delay the Keystone XL
pipeline. Fixing the ObamaCare anti-hiring rules would also boost
growth. Those are the easy things—and even they can’t get done in this
White House.
We reject the fears that America is headed into another recession.
Expect a bounce back this quarter. But we’re stuck in a slow growth rut
that is holding back American potential and hurting those at the bottom
of the ladder the most. As John F. Kennedy used to put it: “We can do
bettah.” Yes, much bettah.
Read this and other articles at The Daily Signal
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