By Mark Esposito, Weekend Blogger
In the red corner, wearing angelic white trunks trimmed in gold that darling of the Right, that Gipper of trickle-down economics, the Great Communicator himself, Ron–ald “The California Killer” Rea–gan.
And in the blue corner with black trunks trimmed in red, the “change” President, the foil of all things conservative, the first of firsts in American History, Bar–ack “Betcha Can’t Believe Where I’m From” O–Bam–a.
And today’s contest is a three-round fight for the World Super Heavyweight Economics Guru Belt. The format is a 10 point “must” system and you are the judges. I, your humble ring announcer, get a scorecard but it’s only advisory.
But first some background, both fighters weigh in after tangling with some decidedly tough contenders before this big bout. Reagan came into office with a much more serious recession than most on the Left give him credit for. In addition, he followed hot on the heels of what his predecessor called the great American “malaise.” Plus he had an adversarial relationship with the nation’s biggest rival, the Soviet Union.
Obama came into office with a war on two fronts in Iraq and Afghanistan, a massive recession, and a world-wide financial industry on the brink of collapse. Pretty tough contenders. Plus, he had and has a Congressional opposition party whose expressed goal was to make sure nothing he proposed made it into law. And law, as you know, is the political boxer’s stock-in-trade.
Ding— ding — ding.
Round 1: Jobs
Barack jabs with the fact that unemployment in the US in August stood at 6.1% that’s a full year faster than it took Reagan to reach the same level. And it’s now down to 5.9% a figure Reagan never achieved. Obama also uppercuts with the fact that the economy he presides over has created, on average, 200,000 new jobs every month for the past six. That puts Obama at a projected 2.5 million jobs created for FY 2014. Reagan counters that in first year in office, unemployment stood at around 10.5% or about a half to three-quarters of a point higher than Obama’s highest figure. Obama counters that initial claims for unemployment are at the lowest point since 2000. 2000!
Reagan dances. “But overall, jobs created while I was in office for the entire term totalled a net figure of 16.1 million. That’s about three times yours, so far, Barack.”
Here’s a graphic depiction of the two fighters comparing the unemployment rate during their first 67 months in office:
Announcer’s Scorecard: Reagan 10 – Obama 9
Round 2: Investor ROI
Reagan comes out strong in Round 2, hooking with the undeniable stat that a dollar invested in the Standard & Poors 500 Index of stocks in year one of his Presidency would have yielded a staggering 190% return on investment after 5.5 years — a record in American history. Reagan bores in saying he did it with tax cuts and government spending in defense and manufacturing sectors. Obama covers up, but is it rope-a-dope? Out of the corner, Obama right crosses that a dollar invested in that same S&P 500 Index during year 1 of his Presidency would yield a return of 220% in the same time frame and that the Dow stands at its highest level ever. And that translates into real dollars for non-passive investors (i.e., working everyday Americans) as 2/3 of Americans are invested in the market through their pensions or 401K plans.
Here’s the chart of ROI:
Your announcer scores it: Obama 10-Reagan 9
Round 3: Government Spending
Staggered but not out of it, Reagan thinks this round is his. He is after-all the supply side economics guy who cut government spending to boost an ailing economy and made all Republican economists sing with delight every time a tax is eliminated. Sort of like that tinkling bell in a Wonderful Life when an angel got it’s wings. Reagan hits hard with the fact that in “the first year of the Obama presidency … the federal budget increased a whopping 17.9%—going from $2.98 trillion to $3.52 trillion.” And the ringside Reagan chanters keep up the mantra from ringside that it was due to the stimulus package.
Except … that every President’s first year budget is proposed and passed, not by his administration but by his predecessor in office and the Congress from the year before. In Obama’s case, George W. Bush passed the Obama’s first year budget and it is his deficit and spending priorities in that document. Thus, Obama’s 2009 budget belongs squarely to President George W. Bush and the 2008 Congress. “Well,” the Gipper says from his coverup crouch, “Obama must have continued the rate of spending to astronomical levels.”
Not exactly. Here is a bar Graph showing the rate of federal government spending under the past 5 US Presidents:
And add these punches to your ring scorecard:
Courtesy of Marketwatch–
- In fiscal 2010 (the first Obama budget) spending fell 1.8% to $3.46 trillion.
- In fiscal 2011, spending rose 4.3% to $3.60 trillion.
- In fiscal 2012, spending is set to rise 0.7% to $3.63 trillion, according to the Congressional Budget Office’s estimate of the budget that was agreed to last August.
- Finally in fiscal 2013 — the final budget of Obama’s term — spending is scheduled to fall 1.3% to $3.58 trillion.
Your Announcer scores it Obama 10 – Reagan 8
And The Winner is:
Ok, now it’s up to you. Who is the best President you’ve seen on the economy out of the last five:
Sources: Forbes (Hartung article); Forbes (Ungar article)
~Mark Esposito, Weekend Blogger
By the way and for better or worse, the views expressed in this posting are the author’s alone and not necessarily those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays of art are solely the author’s decision and responsibility. No infringement of intellectual property rights is intended and will be remedied upon notice from the owner. Fair use is however asserted for such inclusions of quotes, excerpts, photos, art, and the like.
This post is not racist.
https://twitter.com/davidsirota/status/528943897855025152
Elaine M.
We’re so gonna miss Bill at the end of the year… 🙁
bfm:
You’ll choke a lot of swine with those pearls of wisdom, Mike. Since I’m on a metaphoric roll (hey, that’s one, too), red herrings all stink. That’s why the paid prevaricators use ’em.
mespo – since you brought up the subject of paid provocateurs, I actually wondered as I read “your” article if you had been paid to submit it here.
Free NYC Pics:
I would like to reduce government spending to the minimum but it isnt going to happen. So the next best thing is to get people to understand that lowering the tax rates is a good thing.
Most people do not understand money so what do you expect. A part of the requirement for graduating from high school should be starting and running a small business. Making a profit is how you pass.
America is a country of merchants and inventors, we should encourage people to take advantage of our system.
Jim and Paul,
“Plus, he had and has a Congressional opposition party whose expressed goal was to make sure nothing he proposed made it into law.”
I made it as far as that sentence and knew there would be zero chance for objectivity. To be honest, I don’t expect much objectivity from any weekend blogger other than Darren and Mespo did nothing to change that.
Olly – evidently the first two years of the Obama administration went up in smoke.
Interesting that people are reinventing current history. I understand the revisionist there group mind set, what I don’t understand is how people get sucked into John Maynard at all. It’s a proven failure that has not withstood the test of time.
“I know….math is haaaaard but it is important if you want to be informed and be accurate. Again comparing like to like in the methodology is extremely important.”
But it is not that hard. If you read the Forbes article, previously cited, it is easy to see the cockamamie nonsense they are pushing.
For example when referring to decline in the labor force participation rate he says “That means that under President Obama nearly 5 million Americans have fled the workforce in hopeless despair.”
The fact is that there are many reasons why people leave the labor force including retirement. It is likely some workers left because they were discouraged. But the split between discouraged workers, retired baby boomers and workers who left for many other reasons is controversial and an active area or research.
In another part of the Forbes article the author attempts to mislead by adding the total decline in LFPR to the number of unemployed to come up with an unemployment rate of 11%: “If they were counted, the unemployment rate today would be a far more realistic 11%, better reflecting the suffering in the real economy under Obamanomics.”
The fallacy the author is using to mislead the reader is that everyone who left the labor force did so involuntarily and was ready willing and able to work. Nothing could be further from the truth.
If the author were truly interested in informing us by presenting an unemployment rate that included both those unemployed, and those discouraged from looking for work he could have easily looked up U4 the Special Unemployment Rate: Unemployed and Discouraged Workers. If the author had checked for January 2012 he would have found that rate was 8.8% not the 11% that he so carefully constructs.
Finally much has been made by commentators here that the U3 – Civilian Unemployment Rate, currently at 5.9%, is misleading because it ignores discouraged workers.
For those who are concerned that U3 at 5.9% is misleading should check BLS U4 Total unemployed plus discouraged workers, which is also reported by the FRED web site of the Federal Reserve Bank of St Louis as Unemployed and Discouraged Workers. That rate is currently 6.4%, actually not far off the U3 – Civilian Unemployment rate of 5.9%.
BTW, I would love to compare Obama’s U4 rate with Reagan’s U4 rate but FRED only documents U4 back to 1995.
Math is hard. But it is not that hard if you ignore the propaganda and check the time series at FRED, Federal Reserve of St Louis, or Bureau of Labor Statistics. .
Time will tell, who will be the violinist is the only remaining issue.
Think of all the creative side betting, Darren.
A novel approach to economics reporting. When I was in college I might have taken more financial classes if Monetarist vs. Keynesian celebrity death match was required viewing.
@Byron, supply side works because supply side acknowledges why people supply (work) to begin with….to better themselves. It applies to income tax rates, investment rates, even the concept behind carbon taxes. Taxes invariably do two things: 1. allocates resources to the government and 2. reduces the marginal utility/benefit of the activity/thing taxes (No exceptions)….With respect to maximizing government revenues, I am completely uninterested ab initio. I don’t want to maximize government revenue at all, I want to minimize government expenditures based on the concept of necessity.
Republuican/Democrat. The difference is obvious on social issues, on fiscal issues, their differences are more or less on the margin. The economist Warren Nutter said, “There’s nothing so rare as a shrinking government.” And small government mantra notwithstanding, the Republicans have never actually decreased government spending. Government spending measures as a percentage of GDP hovered in the 1/3 range, reaching a local nadir under the Democrat, Bill Clinton, since then it has exploded to 40% of GDP
That has been tested and worked each time; lower income tax rates and more money goes to the federal government.
Liberals are too phucking caught up in their soak the rich, class envy meme and too in love with power [a vibrant middle class and a rising class of poor dont need government help] to allow for prosperity and a strong safety net.
Capitalism [read individual incentive] is so powerful that there can be both. They are not mutually exclusive.
so that nobody misses the interesting part, here it is again:
“In 1921, when the tax rate on people making over $100,000 a year
was 73 percent, the federal government collected a little over $700 million
in income taxes, of which 30 percent was paid by those making over
$100,000. By 1929, after a series of tax rate reductions had cut the tax
rate to 24 percent on those making over $100,000, the federal government
collected more than a billion dollars in income taxes, of which 65 percent
was collected from those making over $100,000.10″
“What actually followed the cuts in tax rates in the 1920s were rising
output, rising employment to produce that output, rising incomes as a
result and rising tax revenues for the government because of the
rising incomes, even though the tax rates had been lowered. Another
consequence was that people in higher income brackets not only paid a
larger total amount of taxes, but a higher percentage of all taxes, after
what have been called “tax cuts for the rich.” There were somewhat
similar results in later years after high tax rates were cut during the John
F. Kennedy, Ronald Reagan and George W. Bush administrations.9 After the 1920s tax cuts, it was not simply that investors’ incomes rose but that
this was now taxable income, since the lower tax rates made it profitable
for investors to get higher returns by investing outside of tax shelters.
The facts are unmistakably plain, for those who bother to check the
facts. In 1921, when the tax rate on people making over $100,000 a year
was 73 percent, the federal government collected a little over $700 million
in income taxes, of which 30 percent was paid by those making over
$100,000. By 1929, after a series of tax rate reductions had cut the tax
rate to 24 percent on those making over $100,000, the federal government
collected more than a billion dollars in income taxes, of which 65 percent
was collected from those making over $100,000.10″
from the article linked above
http://www.tsowell.com/images/Hoover%20Proof.pdf
Good article by Thomas Sowell [one of the top economists in the world today in my opinion]. Well worth the read of 19 pages.
Maybe Mespo and others would learn something?
Annie,
All it takes for some to come to a decision about whether a post is dumb or worth reading is looking at the name of the person who wrote it.
Elaine – I usually wait to see what the topic is. After the 2nd para I could tell it was a propaganda piece. It isn’t dumb but it is poor researched and poorly supported, but it does follow a theme of articles that Mark has been writing lately.
“It’s a dumb post”? Yet he admits he didn’t read it. Brilliant!
Hyperbole is hyperbole.
The only real criticism I have of this post is its claim that Obama had no influence on the level of federal spending in 2009. This is not true.
From factcheck.org:
Ordinarily, an incoming president has little or no influence over spending that was approved under his predecessor. So in normal circumstances, all spending for fiscal year 2009 would have been rightly tied to Bush, and fiscal 2010 would be the first year for which Obama would have prepared a budget and signed the major spending bills. And for the most part, big spending programs that require no yearly appropriations, including Social Security and Medicare, did indeed continue to operate during fiscal 2009 under the policies in effect under Bush.
But in Obama’s case, he quickly pushed through Congress and signed a large economic stimulus measure containing a combination of tax cuts and new spending in fiscal 2009. And while Bush had signed full-year appropriations for the Pentagon, the Department of Homeland Security and veterans programs, he had left the remainder of government agencies that need annual appropriations funded only through March 2009.
Obama’s spending levels indeed didn’t rise very much above their 2009 values, but the 2009 budget included a lot of bailout money that was intended as a one-time event. Obama’s subsequent budgets replaced what was probably around $1 trillion in one-time expenditures with spending on other items.