By William Haupt III | Haupt’s Take
“The truth of the matter is that stimulus money not only doesn’t stimulate; it actually reduces output.” (Dr. Arthur Laffer, Chief Economic Advisor for President Ronald Reagan)
When President Reagan entered office in 1981, he faced a lugubrious economy. According to Bloomberg, the recession of 2009 was the worst since WWII. Reagan didn’t inherit “a recession,” he inherited three. By 1969 we were maturating into the worst economy in our history. He inherited Carter’s double-digit inflation. Unemployment was 11%. Prices had risen over 25%. Economists agreed this was an “epidemic plague” and would vaporize the economy unless we took proximate reformatory action.
“Sound money is the sine qua non of a prosperous society.” (Dr. Art Laffer)
Our economy had been going the wrong way for over a decade and a half. From the beginning of World War II through the end of the 1960s we had enjoyed widespread prosperity. This success resulted from the strength of our free market and the ability of American manufactures to spurn off government interference and circumvent over regulation. But their world of industrial preeminence was beginning to crumble. By 1960, most of the globe had recovered from the war and it was time to retool our approach to economic salvation before the social and business “misery index” got further out of hand. And Americans wanted
“Change they could believe in.” (Barack Obama)
Baby boomers required an economy to create several million new jobs a year and federal spending was out of control. Americans were paying dearly for Johnson’s Great Society. Wars in the Middle East caused oil prices to spike and world wide shortages. This led to unmanaged stagflation. We experienced double-digit unemployment and inflation for the first time in American history. Milton Friedman told us,
“This fiscal monocracy was a monetary phenomenon waiting to happen.”
Presidents Nixon and Carter made clumsy attempts to right our economic ship with unsuccessful dubitable monetary policies. By now Americans were convinced the ‘’Bad Deal” economic system established in the 1930s had failed them. A half century of progressive economics had zapped the free market of its self correcting vitality by over-taxing and over-regulating it. America was paying the price, and something had to give. The government had no more rabbits to pull out of the hat to address this fiscal nightmare. It was time for something different and America needed a new leader with conviction and courage. They knew
“Trust is central for an economy to work.” (Sol Covey)
When President Reagan was elected he promised to restore prosperity by getting “the government off the backs of business.” He cut taxes and spending and deregulated the economy. But success from this did not come over night. The recession continued for 2 years because the Fed refused to stop printing money which had caused the devastating inflation of the 1970s. So Reagan called in economic gurus Dr. Art Laffer and Milton Friedman to stop the bleeding. They pulled the plug on the money machine and that worked miracles. Inflation fell by 10% in 3 years, but this didn’t boost the employment rate and people predicted doom for Reaganomics. But he kept cutting taxes, and federal spending, and pursued his aggressive tax reform and deregulation. These moves enabled the economy to move robustly forward and prosper through the rest of his time in office.
“Reagan’s magic brought us the longest period of economic expansion in American history.” (Abby Bains)
There is a right way and a wrong way to address a failing economy, unemployment, and inflation. Mr. Reagan demonstrated how we could do this the right way. As usual, “politics makes for strange bedfellows.” And some politicians will not enter their opponent’s ideology boudoir no matter how beneficial it is for the country!
“Facts do not cease to exist because they are ignored.” (A. Huxley)
Ben Franklin told us, “Being ignorant is not so much a shame, as being unwilling to learn.” Instead of following the lead of his successful progenitors like Ronald Reagan, President Obama turned back the pages of history to the Progressive Era and resurrected the failed policies of antecedents FDR and Wilson.
“Those who don’t know history are destined to repeat it.” (Edmund Burke)
When President Obama took office, to reenergize the economy he raised taxes, passed the ARRA and numerous other spending initiatives. This included job-killer unnecessary programs, such as ObamaCare which socialized the healthcare free market. He handcuffed the ability of our financial institutions to make a profit with Dodd-Frank and wrote out checks to junk good used cars, “Cash for Clunkers.” He extended unemployment benefits which increased economic uncertainty and reduced incentives to work. FDR would be praising his actions if he were alive today!
“Government spending is taxation. When you look at this, I’ve never heard of a poor person spending himself into prosperity; let alone I’ve never heard of a poor person taxing himself into prosperity.” (Art Laffer)
Dr. Art Laffer reminded all of us, “It has always amazed me how tax cuts don’t work until they take effect.” You don’t need a GED to descry Obamanomics as antithetical to Reaganomics. Obama has raised tax rates on all major brackets. He increased taxes on the top brackets by 20%! The capital gains tax has soared by 60%, and new Obamacare and Medicare taxes have increased 62% for our employers. The death tax went up to 55%. Obama’s views of a fair tax is to increase them on everything. Obamanomics has been a financial nightmare! We traded unemployment for underemployment. His stimulus plan only stimulated higher prices on everything since he printed money like a kid with a new Christmas toy.
“Everyone must pay their fair share.” (Barack Obama)
Obama campaigned to take America in a new direction, and he did. Unfortunately it was in the “wrong direction”! He didn’t just under-perform Mr. Reagan; but every president before FDR. Under the cloak of “change” the socioeconomic of reinventing America with Obamanomics, free market capitalism has gone the way of the pet rock, Hula Hoop, beehive hairdos and the drive-in movie.
“You can’t let your failures define you. You have to let your failures teach you.” (Barack Obama)
Once again our new president has inherited a mess. Under Obama’s watch we’ve had the lowest gain in GNP in history. Labor markets decreased 5%. Those on food stamps have doubled along with our national debt. Free market capitalists are begging for a return to the era of Reaganomics and Donald Trump is following the same game plane as Ronald Reagan to do this. Once again this will not come overnight. It took eight years to destroy the economy and it might take eight to fix it.
“Our best years are ahead of us even though at times it is difficult to realize this.” (Trey Olsen)
Obama’s prescription for fundamental change has been disastrous for America. Everything he has done in the last eight years is contrary to high school economics. There is only one fiscal policy for bringing people back into the workplace; that’s creating real jobs: Its time to dump Obamanomics for “Trumpnomics.” Trump’s policies are the same as Reagan’s; lowering taxes, reducing spending and government regulations to bring economic prosperity back to all Americans. It’s time for us to give everyone an opportunity to work who wants to.
Senator Cruz told us: “Reaganomics means you start a business in your garage; Obamanomics means you move into your parent’s garage.”
This article was written by a contributor from Franklin Center’s independent network of writers, bloggers, and citizen journalists.