Reaganomics Vs. Obamanomics: Facts And Figures
May. 5 2011 - 11:37 am | 614 views | 0 recommendations | 2 comments
Official Portrait of President Ronald Reagan.


In February 2009 I wrote an article for The Wall Street Journal entitled “Reaganomics v Obamanomics,” which argued that the emerging outlines of President Obama’s economic policies were following in close detail exactly the opposite of President Reagan’s economic policies. As a result, I predicted that Obamanomics would have the opposite results of Reaganomics. That prediction seems to be on track.

When President Reagan entered office in 1981, he faced actually much worse economic problems than President Obama faced in 2009. Three worsening recessions starting in 1969 were about to culminate in the worst of all in 1981-1982, with unemployment soaring into double digits at a peak of 10.8%. At the same time America suffered roaring double-digit inflation, with the CPI registering at 11.3% in 1979 and 13.5% in 1980 (25% in two years). The Washington establishment at the time argued that this inflation was now endemic to the American economy, and could not be stopped, at least not without a calamitous economic collapse.

All of the above was accompanied by double -igit interest rates, with the prime rate peaking at 21.5% in 1980. The poverty rate started increasing in 1978, eventually climbing by an astounding 33%, from 11.4% to 15.2%. A fall in real median family income that began in 1978 snowballed to a decline of almost 10% by 1982. In addition, from 1968 to 1982, the Dow Jones industrial average lost 70% of its real value, reflecting an overall collapse of stocks.

President Reagan campaigned on an explicitly articulated, four-point economic program to reverse this slow motion collapse of the American economy:

1. Cut tax rates to restore incentives for economic growth, which was implemented first with a reduction in the top income tax rate of 70% down to 50%, and then a 25% across-the-board reduction in income tax rates for everyone. The 1986 tax reform then reduced tax rates further, leaving just two rates, 28% and 15%.

2. Spending reductions, including a $31 billion cut in spending in 1981, close to 5% of the federal budget then, or the equivalent of about $175 billion in spending cuts for the year today. In constant dollars, nondefense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983. Moreover, in constant dollars, this nondefense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms! Even with the Reagan defense buildup, which won the Cold War without firing a shot, total federal spending declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2% in 1989. That’s a real reduction in the size of government relative to the economy of 10%.

3. Anti-inflation monetary policy restraining money supply growth compared to demand, to maintain a stronger, more stable dollar value.

4. Deregulation, which saved consumers an estimated $100 billion per year in lower prices. Reagan’s first executive order, in fact, eliminated price controls on oil and natural gas. Production soared, and aided by a strong dollar the price of oil declined by more than 50%.

These economic policies amounted to the most successful economic experiment in world history. The Reagan recovery started in official records in November 1982, and lasted 92 months without a recession until July 1990, when the tax increases of the 1990 budget deal killed it. This set a new record for the longest peacetime expansion ever, the previous high in peacetime being 58 months.

During this seven-year recovery, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third-largest in the world at the time, to the U.S. economy. In 1984 alone real economic growth boomed by 6.8%, the highest in 50 years. Nearly 20 million new jobs were created during the recovery, increasing U.S. civilian employment by almost 20%. Unemployment fell to 5.3% by 1989.

The shocking rise in inflation during the Nixon and Carter years was reversed. Astoundingly, inflation from 1980 was reduced by more than half by 1982, to 6.2%. It was cut in half again for 1983, to 3.2%, never to be heard from again until recently. The contractionary, tight-money policies needed to kill this inflation inexorably created the steep recession of 1981 to 1982, which is why Reagan did not suffer politically catastrophic blame for that recession.

Real per-capita disposable income increased by 18% from 1982 to 1989, meaning the American standard of living increased by almost 20% in just seven years. The poverty rate declined every year from 1984 to 1989, dropping by one-sixth from its peak. The stock market more than tripled in value from 1980 to 1990, a larger increase than in any previous decade.

In The End of Prosperity, supply side guru Art Laffer and Wall Street Journal chief financial writer Steve Moore point out that this Reagan recovery grew into a 25-year boom, with just slight interruptions by shallow, short recessions in 1990 and 2001. They wrote:

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.

What is so striking about Obamanomics is how it so doggedly pursues the opposite of every one of these planks of Reaganomics. Instead of reducing tax rates, President Obama is committed to raising the top tax rates of virtually every major federal tax. As already enacted into current law, in 2013 the top two income tax rates will rise by nearly 20%, counting as well Obama’s proposed deduction phase-outs.

The capital gains tax rate will soar by nearly 60%, counting the new Obamacare taxes going into effect that year. The total tax rate on corporate dividends would increase by nearly three times. The Medicare payroll tax would increase by 62% for the nation’s job creators and investors. The death tax rate would go back up to 55%. In his 2012 budget and his recent national budget speech, President Obama proposes still more tax increases.

Instead of coming into office with spending cuts, President Obama’s first act was a nearly $1 trillion stimulus bill. In his first two years in office he has already increased federal spending by 28%, and his 2012 budget proposes to increase federal spending by another 57% by 2021.

His monetary policy is just the opposite as well. Instead of restraining the money supply to match money demand for a stable dollar, slaying an historic inflation, we have QE1 and QE2 and a steadily collapsing dollar, arguably creating a historic reflation.

And instead of deregulation we have across-the-board re-regulation, from health care to finance to energy, and elsewhere. While Reagan used to say that his energy policy was to “unleash the private sector,” Obama’s energy policy can be described as precisely to leash the private sector in service to Obama’s central planning “green energy” dictates.

As a result, while the Reagan recovery averaged 7.1% economic growth over the first seven quarters, the Obama recovery has produced less than half that at 2.8%, with the last quarter at a dismal 1.8%. After seven quarters of the Reagan recovery, unemployment had fallen 3.3 percentage points from its peak to 7.5%, with only 18% unemployed long-term for 27 weeks or more. After seven quarters of the Obama recovery, unemployment has fallen only 1.3 percentage points from its peak, with a postwar record 45% long-term unemployed.

Previously the average recession since World War II lasted 10 months, with the longest at 16 months. Yet today, 40 months after the last recession started, unemployment is still 8.8%, with America suffering the longest period of unemployment that high since the Great Depression. Based on the historic precedents America should be enjoying the second year of a roaring economic recovery by now, especially since, historically, the worse the downturn, the stronger the recovery. Yet while in the Reagan recovery the economy soared past the previous GDP peak after six months, in the Obama recovery that didn’t happen for three years. Last year the Census Bureau reported that the total number of Americans in poverty was the highest in the 51 years that Census has been recording the data.

Moreover, the Reagan recovery was achieved while taming a historic inflation, for a period that continued for more than 25 years. By contrast, the less-than-half-hearted Obama recovery seems to be recreating inflation, with the latest Producer Price Index data showing double-digit inflation again, and the latest CPI growing already half as much.

These are the reasons why economist John Lott has rightly said, “For the last couple of years, President Obama keeps claiming that the recession was the worst economy since the Great Depression. But this is not correct. This is the worst “recovery” since the Great Depression.”

However, the Reagan Recovery took off once the tax rate cuts were fully phased in. Similarly, the full results of Obamanomics won’t be in until his historic, comprehensive tax rate increases of 2013 become effective. While the Reagan Recovery kicked off a historic 25-year economic boom, will the opposite policies of Obamanomics, once fully phased in, kick off 25 years of economic stagnation, unless reversed?

Peter Ferrara is director of policy for the Carleson Center for Public Policy and senior fellow for entitlement and budget policy at the Heartland Institute. He served in the White House Office of Policy Development under President Reagan, and as associate deputy attorney general of the United States under President George H. W. Bush. He is the author of America’s Ticking Bankruptcy Bomb, forthcoming from HarperCollins.

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Se folló a los controladores, con eso me vale.

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Ya... y la caida del precio del petróleo no tuvo NAAAAAAAAAAAAAAAAADA QUE VER, verdad???

El déficit fiscal de los EE.UU. se disparó durante la etapa de Reagan. Pero fue un déficit que beneficiaba a los señoritos ricos tenedores de bonos y de la industria armamentística, mientras se recortaba a marchas forzadas cualquier tipo de ayuda social y se producia un crowding out bestial desde las empresas pequeñas hacia las grandes.

Algunos bautizaron la política de Reagan como keynesianismo de derechas

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El presidente de EE.UU. Barack Obama, montado en la ola de los sondeos, su reelección virtualmente asegurada, puede ahora deleitarse con el brillo de su victoria harto estadounidense en la “guerra global contra el terror”, que su gobierno ha rebautizado “operaciones de contingencia en ultramar” (OCO). El asesinato de Osama Bin Laden del lunes fue ciertamente una OCO –una rápida “acción militar cinética” en ultramar que superó innumerables contingencias como la violación del espacio aéreo de una nación teóricamente soberana.

Sin embargo, la primera reacción de la secretaria de Estado Hillary Clinton fue subrayar que en los hechos la “guerra contra el terror” continuará eternamente, fiel al espíritu de la propia consigna del Pentágono, “La Guerra Prolongada”. Eso se aplica especialmente al ultra estratégico teatro AfPak. Es como si el comandante en jefe Obama no pudiera ser otra cosa que un majestuoso prisionero en un laberinto que no es de su creación.

Paradójicamente, la acción de la Casa Blanca para salir del laberinto fue reaccionar violentamente y sellar la muerte del trauma del 11-S, capitalizado por el gobierno de George W. Bush como una licencia para matar al mal –sea en sí o en la forma de un eje– y así fortalecer la libertad "jeffersoniana". De 2001 a 2008, fueron los años en los cuales la hiperpotencia, en una misión divina y concentrada como un láser en el “fin de la historia” de Hegel/Fukuyama, simplemente pisoteó el derecho internacional.

Las guerras en Afganistán e Iraq sólo iban a ser supuestamente las dos primeras etapas en el camino a la redención (y luego vendría el camino a Damasco, Teherán e incluso Trípoli…). Lo que fue bautizado como el proyecto del Gran Medio Oriente debía supuestamente aplastar el “terror” y a los regímenes que lo albergaban: el Afganistán de los talibanes y –en la visión neoconservadora– el Iraq de Sadam. Otros caerían inevitablemente como piezas de dominó.

Casi una década después del 11-S -y con la promesa de capturarlo “muerto o vivo” de Bush finalmente cumplida al estilo de Terminator– ¿a dónde se dirigirá ahora la ex hiperpotencia ? (........)




Así que por el momento el vencedor en la “guerra contra el terror” es China, que por una serie de razones, sobre todo el dicho de Deng Xiaoping “enriquecerse es glorioso”, está ahora cerca del punto donde estuvo durante 18 de los últimos 20 siglos, es decir, en la cumbre.

A Obama se le podrá acusar de muchas cosas –incluso de ser un Premio Nobel de la Paz belicista. Pero también es un intelectual inteligente. El presidente ha estudiado el paisaje y ha visto cómo la sobre-extensión imperial de EE.UU., diagnosticada por Paul Kennedy, ha acelerado su decadencia. También ha visto cómo al hacerlo EE.UU. fue totalmente corroído por el espectro del “terror islámico”.

Y eso puede conducirnos a la respuesta de la pregunta de la bala mágica sobre la oportunidad del asesinato de Bin Laden.

Cuando ocurrió el 11-S, el genio musical Karlheinz Stockhausen dijo –provocando la indignación de millones de estadounidenses– que “fue la más grandiosa obra de arte que ha visto el mundo”. Tenía razón, ya que el 11-S –en términos de su impacto sobre el inconsciente colectivo de la humanidad, casi hasta llegar a la parálisis– redujo las obras de Albert Speer y de Leni Riefenstahl al tamaño de juegos infantiles.

Por lo tanto, para matar simbólicamente la “guerra contra el terror” –que fue inventada debido al 11-S– Obama tenía que (literalmente) matar al (presunto) perpetrador, fuera real o no, culpable o no, un clon o no. De ahí el asesinato, la eliminación rápida del cuerpo, ninguna foto, fin de la película, sin lista de créditos; una compacta narrativa cinemática. Los obvios vacíos en el guión, como en todo éxito de ventas hollywoodense, se consideran irrelevantes; lo que importa es el éxito en la boletería, y seguimos adelante."





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Todos estos artículos son muy tendenciosos, mezclan información (parte de ella) con expresiones que parecen verdades cuando son muy matizables.
Al final la pregunta es ¿generó esa política una clase media más rica y un país de verdad más próspero para todos o sólo infló unas cifras macroeconómicas haciendo al común de los ciudadanos más pobre e indefenso ante su entorno?

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La cuestión clara es que a los que cortan el bacalao
les importa cuatro karalhos DESTRUIR el planeta !

Y los ingenuos-paletos, como red six naboletti son sus
IDOTAS UTILES del catecismo neoliberal saqueador !


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preguntadle a los libios, a ver cual de los 2 les cae mejor