The Reagan Recovery vs The Obama Recovery
This Sunday is President Ronald Reagan’s 100th birthday. It’s hard to comprehend the debt of gratitude our nation owes the 40th President of these United States. As Heritage Foundation Distinguished Fellow in Conservative Thought Lee Edwards details, Reagan embodied many of the classical virtues that the best political leaders possess: courage, prudence, justice, and wisdom. And he used each of these virtues to create an environment where the U.S. economy could strongly recover from our last great recession. The current occupant of the White House ought to take some better notes.
According to the National Bureau of Economic Research, our most recent recession began in December 2007, lasted 18 months, and ended in June 2009. The last recession that lasted this long began in July 1981, lasted 16 months, and ended in November 1982. In his 1983 State of the Union Address, President Reagan described an economic situation that mirrored our own today: “The problems we inherited were far worse than most inside and out of government had expected; the recession was deeper than most inside and out of government had predicted. Curing those problems has taken more time and a higher toll than any of us wanted. Unemployment is far too high.” But where President Obama responded to an economic recession with a bigger than $2 trillion expansion of government (more than $1 trillion on health care and almost $1 trillion in economic stimulus), President Reagan passed the Economic Recovery Tax Act of 1981, which cut marginal income tax rates across the board permanently. And the differences don’t end there.
Where President Obama promised government action that was “bold and swift,” President Reagan said: “The permanent recovery in employment, production, and investment we seek won’t come in a sharp, short spurt.” Where President Obama used tax credits, subsidies, and bailouts to perpetuate industries in need of adjustment, President Reagan said: “Quick fixes and artificial stimulants repeatedly applied over decades are what brought us the inflationary disorders that we’ve now paid such a heavy price to cure.”
It is true that no two recessions are ever the same, but as President Reagan asked in 1964: “Shouldn’t we expect government to read the score to us once in a while?” Today, the Labor Department read us the score, and the results speak for themselves. The U.S. economy added a measly 36,000 jobs in January. According to the National Bureau of Economic Research, our most recent recession ended in June 2009, which means we are now in month 19 of the Obama Recovery. Today’s 9 percent unemployment rate marks the 21st consecutive month of unemployment at or above 9 percent, a post–World War II record. Unemployment is only 0.4 percentage points lower today than when the Obama Recovery began. Contrast those results with the Reagan recovery: 19 months into the Reagan recovery, in June 1984, unemployment stood at 7.2 percent. That is a full 3.6 points lower than when the Reagan Recovery began.