Saturday, September 15, 2012

Obama worshippers need a history lesson on economics

I thought you might enjoy my Op-Ed from the September 15th Orlando Sentinel

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On Thursday, Rollins College adjunct professor of international affairs Stephen W. Day informed us in his Sentinel guest column why we cannot ask the question, "Am I better off today than I was four years ago?"

 
Day joined the long list of liberal apologists who teach in America's colleges and universities by selling the flawed notion that President Obama inherited an economy that he could not possibly save in just four years and that our president is doing great things to ensure long-run prosperity if he can only finish the job we allowed him to start in 2009.
 
Incredibly, Day compounded this flawed argument by lecturing Sentinel readers on the dangers of American selfishness. In his words, "Voters today understand that we endure the Great Recession together, so we must find our way out of this mess together. ... We must stand as a nation, united behind a president who has an effective economic plan…"

Hogwash.

Like Day, my fall classes began a couple of weeks ago. Unlike Day, my students are hearing something completely different.

I disagree with Day's reasoning that we have gone through such a horrific economic crisis that no president could turn things around in four years. Must we be constantly reminded that the period from 1973 to 1980 was worse than the recent Great Recession? During that time, oil supply shocks, income-tax rates as high as 70 percent and growing government spending and regulations led to a new word — stagflation — in the economics dictionary.

Stagflation, the combination of unemployment and inflation, is the worst reality any economy can face. During the post-Arab oil embargo through 1980, the U.S. experienced near 20 percent stagflation rates. For 1979-80 it was more than 20 percent. At the height of the recent 2007-2009 recession, we never came close to 15 percent.

In 1981, President Reagan passed the Economic Recovery Tax Act, which lowered income taxes up and down the income scale by nearly 30 percent. At the same time, Reagan supported Fed Chairman Paul Volcker in his efforts to fight inflation as Volcker pushed interest rates to historically high levels.

After a severe recession in 1982, caused by a prime interest rate of more than 21 percent, Reagan's major income-tax reform, combined with accelerated deregulation of American industry, the American economy roared back to life. It grew by historically high rates from November 1982 until the fall of 1990. At that time, this was the longest peacetime recovery in our history.
It should be noted that Reagan's policies were similar to those taken by John F. Kennedy in the early 1960s and Bill Clinton in the 1990s.

Kennedy's income and corporate tax cuts remain, as a percentage of the GDP, the largest in history and were followed by a booming economy in the 1960s.

I show my students that the last six years of Bill Clinton's presidency — with large cuts in capital gains taxes, the creation of tax-friendly investment vehicles, welfare reform, controlled government spending and brilliant international trade polices — helped the 1990s become the most prosperous decade in our history.

Day fails to understand that we did not go into the Great Recession together. We went into it as individuals. My personal economic picture has nothing to do with him. Changes in my income, alterations in the value of my home and the decisions I have to make to help guide my family through tough economic times are all personal decisions. I do not belong to a group that must share in good and bad times. I am not compelled to work with my fellow man. I am only obligated to serve my fellow man. If I serve him well, my personal economic fortunes will reflect that. If I fail, it is not on Day to pull me out of what I created.
 
I would invite Day to explore further the real evidence of Obama's economic policies and those of his predecessors who were successful in guiding meaningful and substantial economic growth.
The facts are clear. When you ask the men and women of America why they are not creating more jobs, you will not find anyone saying, "Well, this has just been too big of a recession to end quickly." You will find them saying that Obama's plans to increase personal and investment income taxes, his costly health-care legislation and the rising tide of regulations have made it nearly impossible to make any plans that include job creation.

The sooner we all learn this, the faster we can make the necessary changes in Washington, D.C.

2 comments:

  1. "I show my students that the last six years of Bill Clinton's presidency — with large cuts in capital gains taxes, the creation of tax-friendly investment vehicles, welfare reform, controlled government spending and brilliant international trade polices — helped the 1990s become the most prosperous decade in our history."

    But wasn't it under Bill Clinton that banks were deregulated which led to the mortgage crisis?

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  2. Deregulation did not lead to the crisis! Allowing banks to have the liberty to work with one another as the repeal of Glass-Steagall did, was an important event to help make markets work more effectively. The problem was not forcing banks to live with their bad decisions. Freedom = responsibility for our own actions.

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