Why Obamanomics Has Failed

[mad1]

The administration's stimulus program has failed. Growth is slow and unemployment remains high. The president, his friends and advisers talk endlessly about the circumstances they inherited as a way of avoiding responsibility for the 18 months for which they are responsible.

But they want new stimulus measures—which is convincing evidence that they too recognize that the earlier measures failed. And so the U.S. was odd-man out at the G-20 meeting over the weekend, continuing to call for more government spending in the face of European resistance.

The contrast with President Reagan's antirecession and pro-growth measures in 1981 is striking. Reagan reduced marginal and corporate tax rates and slowed the growth of nondefense spending. Recovery began about a year later. After 18 months, the economy grew more than 9% and it continued to expand above trend rates.

Two overarching reasons explain the failure of Obamanomics. First, administration economists and their outside supporters neglected the longer-term costs and consequences of their actions. Second, the administration and Congress have through their deeds and words heightened uncertainty about the economic future. High uncertainty is the enemy of investment and growth

The Obama economic team ignored past history. The two most successful fiscal stimulus programs since World War II—under Kennedy-Johnson and Reagan—took the form of permanent reductions in corporate and marginal tax rates. Economist Arthur Okun, who had a major role in developing the Kennedy-Johnson program, later analyzed the effect of individual items. He concluded that corporate tax reduction was most effective.

Other aspects of the Obama economic program are equally problematic. The auto bailouts ran roughshod over the rule of law. Chrysler bondholders were given short shrift in order to benefit the auto workers union. By weakening the rule of law, the president opened the way to great mischief and increased investors' and producers' uncertainty. That's not the way to get more investment and employment.

Almost daily, Mr. Obama uses his rhetorical skill to castigate businessmen who have the audacity to hope for profitable opportunities. No president since Franklin Roosevelt has taken that route. President Roosevelt slowed recovery in 1938-40 until the war by creating uncertainty about his objectives. It was harmful then, and it's harmful now.

Allan Meltzer: Why Obamanomics Has Failed - WSJ.com

[brandon184]

[mad1]

Link?

[brandon184]

Link?

U.S. Bureau of Labor Statistics

[sharder8]

Please subtract the temp "census" hires from March 2010 . . . or be prepared to see the BIG decline when the census is over.


Harder

[mad1]

Please subtract the temp "census" hires from March 2010 . . . or be prepared to see the BIG decline when the census is over.


Harder

But Census hiring was responsible for 411,000 of May's increase in employment. Private sector employers also added 41,000 jobs in the period, well below the 218,000 private sector job gains in April. Government payrolls other than Census declined by 21,000 jobs in May, due largely to job cuts by state and local governments.

May jobs report: Unemployment lower - Jun. 4, 2010

[Pexster]

I agree with the premise made in the article about uncertainty. But his "overarching reasons" are irrelevant due to his false premise. How can the charts above represent "failure?"

As for the March 2010 numbers, fine -- ignore them due to the census. You are still left with an indisputable trend.

[pickel]

Please subtract the temp "census" hires from March 2010 . . . or be prepared to see the BIG decline when the census is over.


Harder

+ 1 1/2

41,000 jobs is an insult to the economic recovery. I'm sure the number of people who go laid off and fired is ,at least, doubled or greater. How about counting in the lost jobs due to the oil spill before we start counting the "NEW" jobs created. I'd like to see that statistic

[Gomer]

Please subtract the temp "census" hires from March 2010

[tony_j15]

In 1980, I had the privilege of advising Prime Minister Margaret Thatcher to ignore the demands of 360 British economists who made the outrageous claim that Britain would never (yes, never) recover from her decision to reduce government spending during a severe recession. They wanted more spending. She responded with a speech promising to stay with her tight budget. She kept a sustained focus on long-term problems. Expectations about the economy's future improved, and the recovery soon began.

I'm thinking a little war in the Falklands helped them out, nice of him to overlook that fact.

Let's plan our way out of our explosive deficits and our hesitant and jobless recovery by reducing uncertainty and encouraging growth.

First off, it aint jobless. That's pure partisan BS. Second, let's see his plan instead of just blabbering about planning plans.

[tony_j15]

Go here, play around, have fun.

[MTAtech]

The contrast with President Reagan's antirecession and pro-growth measures in 1981 is striking. Reagan reduced marginal and corporate tax rates and slowed the growth of nondefense spending. Recovery began about a year later. After 18 months, the economy grew more than 9% and it continued to expand above trend rates.

I love when conservatives invent their own history as if there wasn't an Internet to check the facts.

This is from Reagan's 1982 State of the Union Speech:

First, we must understand what's happening at the moment to the economy. Our current problems are not the product of the recovery program that's only just now getting under way, as some would have you believe; they are the inheritance of decades of tax and tax, and spend and Second, because our economic problems are deeply rooted and will not respond to quick political fixes, we must stick to our carefully integrated plan for recovery. And that plan is based on four common-sense fundamentals: continued reduction of the growth h in Federal spending, preserving the individual and business tax deductions that will stimulate saving and investment, removing unnecessary Federal regulations to spark productivity and maintaining a healthy dollar and a stable monetary policy the latter a responsibility of the Federal Reserve System.

We know from history that the recession lasted years into Reagan's first administration. We also know that Reagan did not reduce the growth in Federal spending. He increased it dramatically. We also know that although reduced taxes initially, when they brought on huge deficits, he raised taxes.

In addition, Reagan left office with the federal government $2 Trillion dollars more in debt than he started.

Therefore, if one is looking at the Reagan years as the model for debt reduction as the key to prosperity, one is looking in the wrong place.

Bill Clinton's economy beats Reagan's economy