Thursday, August 5, 2010
Obama Administration's Denial Of Their Failing Economics
By: Les Carpenter III
Rational Nation USA
A great article today in The Washington Post by Richard W. Rahm compares Reaganomics with Obamanomics. The article highlights the Obama administration's refusal to recognize its failures. At least as compared to their own economic forecasts.
Obama and his supporters are in denial that his policies, and the huge expansion of governemnt well beyond that of GBW, has essentially failed to produce the results they hoped for.
A quick read of the chart comparing Reagan's and Obama's results following the bottoming out of the respective recessions clearly shows the positive results of the Reagan's economic policies as compared to the results of Obama's over the same post recession time period.
Excerpts from the article:
As almost everyone now knows, there are two competing theories about how to revive the American economy. One theory is to promote the supply-side of the economy by cutting tax rates or at least to maintain the Bush-era tax rates and reduce spending and government regulation; the other theory is to follow the Keynesians' advice by allowing some or all of the Bush-era tax rates to increase while also increasing government spending and government regulations (which proponents call "more stimulus"). The new data, as captured in the accompanying chart, provides even more evidence as to which of these competing theories is correct.
The first theory was tried during the Reagan administration, and the second theory is now being tried during the Obama administration. Both administrations inherited an economy in trouble. President Reagan inherited an economy with stagnant growth (two years without real growth), rising unemployment and double-digit inflation. President Obama inherited an economy with falling growth and rising unemployment, but little inflation. President Obama likes to say that he inherited the "worst" economy since the Great Depression, but the fact is that the economic "Misery Index" (inflation plus unemployment) - which the Democrats used as a weapon against Republicans - was twice as high when President Reagan took office. (By the time President Reagan left the presidency, the Misery Index had dropped to less than half of what it had been when he assumed office.)
The economy bottomed out in the fourth quarter of 1982 under Reagan, and the economy bottomed out in the second quarter of 2009 under President Obama. As can be seen in the accompanying chart, the economy grew more than twice as fast in the first four quarters after the 1982 bottom as it has in the four quarters since the 2009 bottom. During the 1983 recovery, the unemployment rate fell two full points, while during the present recovery unemployment has barely changed. Why the difference?...
The reason for the difference lies in the fallacy of Keynesian Economic theory followed by the Obama administration. The Ludwig von Mises Institute has a wealth of information refuting Keynes and his theories. For all concerned about the current administrations attack on America's economy visit the Ludwig von Mises Institute.
For Reaganomics -vs -Obamanomics read the full Washington Times article here.
Cross posted to Left Coast Rebel.