Bizarre, Congress, Politics

Best Out Of Three Rounds: Obama vs. Reagan On The Economy

By Mark Esposito, Weekend Blogger

Film Promises to Take a Controversial New Look at Government SpendingIn 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:

Unemployment Reagan v Obama

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:

Investment Returns Reagan v Obama

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.

190 thoughts on “Best Out Of Three Rounds: Obama vs. Reagan On The Economy”

  1. David Stockman’s Contra Corner on the Obama deficit:
    “Regardless of what has been proffered by the White House, the Congressional Budget Office, and others, the total gross national debt outstanding of the US of A hit $17.824 trillion in fiscal 2014 ended September 30. A jump for the fiscal year of $1.086 trillion.

    The fact that the total debt taxpayers will have to deal with in the future soared by $1.1 trillion in fiscal 2014 is in part due to last year’s debt ceiling charade in Congress.

    Since 2002, the US government borrowed $12 trillion, or two-thirds of the total debt outstanding! Since 2008, the government borrowed $8.8 trillion, or about half of the total debt outstanding, at an average rate of $1.26 trillion per year. Come to think of it, not all that much as changed in fiscal 2014. “
    Source

  2. Tyger:

    The national debt continues to rise but the annual deficits do not:

    “The U.S. Treasury announced last Thursday that the federal deficit was $128.7 billion in August. That’s 13 percent lower than it was during the same month last year.

    Washington typically records a budget surplus in September and $80 billion or so in black ink is in fact projected for next month. If that occurs as expected, the deficit for all of 2014 will be about $500 billion. That will be more than 26 percent below 2013 and the smallest federal deficit by far since 2008.”

    ~Forbes

    Looking at national debt as a raw number is not really as helpful as looking at as compared to GDP. As national debts go, the US’s is in line with the Western democracies at about 73% of GDP and less than say Canada and the UK.

    1. Mespo, a decline in annual deficits is nothing to get excited about unless it’s a huge negative percentage, which it never is. It’s like driving at high speed toward a tree and being happy that your speed isn’t increasing as much as it was when you started. Unless you apply the brakes and slow down, at least enough to steer in a different direction, or come to a complete stop, you are going to experience a crash, big time.

      I understand the comparison of Public Debt to GDP. It’s like comparing how much a person or family owes as a percentage of how much their income is. The more they earn, the more they can borrow for things they want. But if they are spending more on their rent or mortgage, car loan, groceries, medicine, insurance, and everything else than they are taking in, eventually they are going to be in real trouble. They can get a second mortgage, personal loans, run up credit cards, and so on to cover expenses, but there will be a limit as to how much that can happen. And in the process, the interest being paid on the indebtedness keeps getting higher and higher. The amount of interest being paid as a percentage of their income is an even more relevant number. The greater the debt, the greater the interest due on it. As it is now, the entire amount of personal income tax taken in by the federal government does not even cover the interest on the Public Debt.

      And, it depends upon who is doing the calculations as to what the resulting percentage of Public Debt to GDP is. For example, the CIA shows it one way:
      http://en.wikipedia.org/wiki/Government_debt#mediaviewer/File:Public_debt_percent_gdp_world_map.PNG
      and the IMF shows it another, much worse, way:
      http://en.wikipedia.org/wiki/Debt-to-GDP_ratio#mediaviewer/File:Government_debt_gdp.jpg
      So, which is “correct”?

      A certain amount of Public Debt may be inevitable in order to operate and maintain government programs. What percentage of debt to income is most productive and necessary is subject to differing opinions. But in any case, money being spent on interest could be spent on better things if the debt did not exist. The way things are now, with the debt levels as high as they are, it seems to me that only the rich banksters are the ones benefiting the most.

  3. Darren,

    I think this may be the report you’re referring to:

    Richest 1% of people own nearly half of global wealth, says report
    http://www.theguardian.com/business/2014/oct/14/richest-1percent-half-global-wealth-credit-suisse-report

    Excerpt:
    The richest 1% of the world’s population are getting wealthier, owning more than 48% of global wealth, according to a report published on Tuesday which warned growing inequality could be a trigger for recession.

    According to the Credit Suisse global wealth report (pdf), a person needs just $3,650 – including the value of equity in their home – to be among the wealthiest half of world citizens. However, more than $77,000 is required to be a member of the top 10% of global wealth holders, and $798,000 to belong to the top 1%.

    “Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile hold 87% of the world’s wealth, and the top percentile alone account for 48.2% of global assets,” said the annual report, now in its fifth year.

    1. Elaine – you know even the British consider the Guardian a Socialist paper?

  4. Steve H 5. Most of these battles are being fought in red states that went for Romney.

  5. What a bunch of hooey. Rather than take the time to rebut in detail I’ll simply say in response to the 3 points of the article:
    1) Checkout workforce participation. Reagan’s decrease in unemployment came at a time of increasing participation, Obama’s decreasing. Reagan clear winner.
    2) $1 Trillion of quantitative easing under Obama. He’s betting on being out of office when it’s time to pay the inflation piper. And why are we congratulating him for making the rich richer at the expense of non stock-owning classes anyway? Reagan clear winner.
    3) Ahh the old “rate of increase” sham. Obama, handed the highest federal spending of all time by a huge margin and including a “one time” stimulus package, takes credit for not increasing the spending “much”. Compare nominal spending instead of the “rate of increase” and you’ll see it’s no contest. Furthermore, Reagan won the Cold War with his spending increases. What do have to show for the insane spending of the Obama administration? Reagan wins in a unanimous decision of any panel of judges that doesn’t include Obama apologists.

    1. “2) $1 Trillion of quantitative easing under Obama. He’s betting on being out of office when it’s time to pay the inflation piper.”

      Why there’s a money-saver right there. If Obama is going to set monetary policy for the FED then what do we need Bernanke or Yellen for?

      That Obama guy is lookin’ better all the time.

      When did Reagan ever set monetary policy? I mean except for money laundering with the Contra’s.

      Uh Oh. My bad. My very dear friend tells me that presidents don’t set monetary policy. How embarrassing!!!

  6. Further predicting Mespo and the rest of the libs come up with 4 solid excuses for the miserable showing of Dems and the Toxic Obama in the mid-terms: 1. Koch brothers bought election; 2. Reps stole election with voter ID and other scummy tactics; 3. Corporate money; 4. Bad weather.

  7. Hey, while I’m at it….

    Predicting Reps 53, Dems 47. Predicting Reps gain more statehouses. Predicting Millennials trend toward Reps, away from Dems. Predicting African-Americans stay home in droves.

    Round 4 goes to Reagan.

  9. Lowering the percentage of increase of the national debt each year is not the same as lowering the total national debt. By the time the current president leaves office, it is projected the total will be 90% more than what it was when he took office. This chart (Red=Rep. Blue=Dem.) shows the total by president:
    http://www.TygerGilbert.com/National-Debt-Chart.htm
    Clearly, it does not matter which party the president is from, but the parabolic curve of the increasing total debt should be of much greater concern to everyone in the country than it seems to be.

  10. If the unemployment rate is so low how come the number of welfare recipients has more than doubled under Obama? The national debt didn’t double under Regan. anyone could make the economy improve by printing over $80 billion a month. Under Obama the debt went from 9 trillion to 18 trillion and it’s still climbing. He’s doing such a poor job even the Kenyans are saying he was born in the United States.

  11. David Stockman on the Obama economy:
    “Hackneyed as it sounds, the jobs market is increasingly populated by hamburger flippers, barhops, shoe clerks and bed pan changers. These jobs are almost never full-time, and as a result average weekly hours have been sinking for decades. Accordingly, the 9 million new jobs created during the Reagan era recovery represented far more than 9X the embedded economic output in the 1 million jobs gained during the Bush-Obama cycle.

    Specifically, the Great Recession resulted in the loss of 5.7 million or 8% of all breadwinner jobs in the US economy. As is evident in the graph below, all of the gains since the recession ended in June 2009 are born-again jobs, representing barely half of the original loss. The truth is, the American economy still had nearly 3 million fewer breadwinner jobs in September than it had at the 2007 peak and almost 4 million fewer than the high water mark back in 2001.

    A decade and one-half of rampant money printing—-during which the Fed’s balance sheet exploded from $500 billion to nearly $4.5 trillion or 9X—-has thus been no blessing whatsoever for main street households, even as Wall Street has been gifted with opportunities to scalp prodigious windfalls from two giant financial bubbles.

    By contrast, in the goods producing economy the US lost 3.6 million jobs during the Great Recession—- or one-seventh of all jobs in construction, manufacturing and mining/energy production. As shown below, only 21 percent of those lost jobs have been “born again”. Indeed, the 19.2 million goods producing jobs are still 5.5 million or 22% lower than they were at the turn of the century.

    At the end of the day, the US economy has not generated a single net new job outside of the HES Complex since mid-2001. There were 107.8 million non-HES jobs then and there were 107.6 million reported last Friday. Worse still, we are still 1.5 million jobs below the 2007 peak.

    Stated differently, during the Greenspan Bubble of 2001-2007, the US economy at least gained several million non-HES jobs from the prior peak. This time we are still peddling backwards.”
    Source

  13. I read somewhere that a person having a net worth of around $3,500 would be wealthier than half the world’s population–that is around three and a half billion individuals.

    Perhaps we should consider ourselves fortunate.

  14. Paul C, Yep, due to favorable tax policy, the top ten percent is bringing home far more money than ever. The top 1% has accumulated the wealth which is continuing to earn money in the markets and thus is getting richer every day.

  18. Pete, ha! Every time I hear that “You’re dead to me!” comment I envision an old grizzled man pulling his silver frazzled hair with both hands, eyes bugged out and spittle flying from his mouth as he screeches those words. Paul’s “forgiveness” is something I can live without, lol. It is surprising he was so ‘hurt’ though. It makes me want to pat his head and give him a cookie.

  19. Paul C. Schulte
    Annie – I have not forgotten nor forgiven your behavior while JT was in Italy. Mark enabled that behavior. I refer you to DBQ’s response.
    =================================================

    Annie

    Has he given you the “You’re dead to me” speech yet?

    Oh wait, that’s tweedle dumber.

Comments are closed.