Archive for September, 2012
Tags: 2012, obama, Reagan, Recovery, Romney, Unemployment
I keep seeing this cute little picture running around Facebook, maybe you have too.
The top part of it features President Clinton, quoting him from his recent speech at the Democratic National Convention.
In that speech he said:
“no one could have repaired all the damage he found in just four years.”
The bottom part of the picture features a photo of the GOP’s man-crush, Ronald Reagan, and boldy claims “I did!”.
Which is bullshit.
Reagan’s “Recovery” was a 2d term recovery through & through.
People endlessly debate “who had it worse” coming in.
To do this properly, and neither side ever does, you need to make sure you’re including the difference between a “stagflation” recession (Reagan) and one based on a credit bubble crisis that deeply decimated home values and the housing industry, the nations biggest employment sector (Obama).
You need to make sure go through things like the Economic Recovery Tax Act (ERTA) in July of 1981, TEFRA (Tax Equity and Fiscal Responsibility Act) in September of ‘82, the fact that under one President (Reagan) Gov’t jobs increased by around 225K his first term and under the other (Obama) Gov’t jobs had been culled by nearly 600K (further dragging down unemployment one full percentage point) and perhaps most importantly, the influence of Volcker and the Federal Reserve during the “Reagan Recovery”.
The 1981-2 recession was a very different kind of event from the 2007-9 recession: basically, it was a recession deliberately created by the Fed to bring down inflation. The Fed raised interest rates sky-high, causing a plunge in home construction, which was the main driver of the slump. When Paul Volcker believed that we had suffered enough, he cut rates, housing sprang back — and it was housing that mainly drove the recovery.
The 2007-9 recession was driven by the collapse of a huge housing bubble, and the resulting financial fallout. The Fed couldn’t cut rates sharply, because they weren’t all that high to begin with; there couldn’t be a housing boom, because housing was already overbuilt.
BUT…even if you don’t want to listen to this stuff (which sadly applies to most people in the debate right now, they just want to believe what they want to believe) we could just take a look at the unemployment and deficit numbers for both Presidents.
These are the numbers for Reagan’s first term in office (Remember! This whole debate is about who could have done what in his first four years!):
If you want to work the calculator so avoid any “rigging the numbers” claims you do so right HERE.
I don’t like to lay the first six months or so of a President’s term on them simply because they are still operating on the previous guys budget & policies. Hell, an argument can made for just tossing out the whole first year I suppose but six months is more than reasonable in my eyes.
Using that gauge, six months in (February 1981, remember he isn’t sworn in until end of January, through August 1981) saw absolutely zero increase in unemployment. None.
Then something happened. That shit took off. Went up 3.4% over the next fifteen months to be exact.
You had to go all the way to May of 1984 just to see it return to that starting point of 7.4% it was sitting at in August of 1981, Reagan’s first month “on the clock” so-to-speak.
At the time of his re-election in November of 1984 Reagan had lowered the national unemployment rate by .2%.
And raised the National Debt from the $900 billion it was when he took office all the way to $1.8 trillion, literally doubling it.
Now that isn’t to say there weren’t positive signs in Reagan’s first term. There absolutely were. But they were small signs of hope. Faint glimmers of a better future on the distant horizon.
A far cry from “fixed in four years”.
Now let’s look at Obama’s first term numbers:
Using that same six month “grace period” you start his clock at August of 2009, when the National Unemployment Rate stood at 9.6%.
It peaked at 10% in October of 2009 and stayed in the 9.8-9.9% range for six months then started a steady downward decline for 30 months, with one monthly spike in November of 2010.
Slow and steady wins the race they say and with an economy that was in the shitter, it’s better than nothing.
And how much did all of this cost the American public? The deficit increased by 50%, from $10 trillion to $15+ trillion.
People will throw out the raw numbers and scream stuff like “but it’s more debt than all other Presidents combined” (yes, Mitt Romney doesn’t understand the basic concepts of math because he actually claimed that) but you cannot compare 1981 dollars to 2009 dollars.
You can go by percentages though and get a nice clean, fair look at who is using the national treasury like a drunk frat boy using daddy’s credit card.
Doubled the deficit is worse than adding 50% of its value to it in any language.
In the interest of full disclosure, these are Reagan’s numbers in his 2d term:
Voila. The SECOND TERM recovery, hence my title.
The indicators are better right now, we are already trending in a better and the spending is actually half the rate it was under Reagan in his first term.
There’s no reason to argue that Obama’s second term won’t look like Reagan’s did.
He went on to nearly triple the deficit before leaving office, meaning Obama would have to be approaching the $30 trillion deficit range to be on par with the Gipper.
My guess is the only “argument” I’ll hear will be something along the lines “nuh uh”.
But as Bubba said. It’s not that hard and it only takes one word.