Going Home to the Reagan Years
The economy's rapid growth in recent quarters has scrambled these assumptions, and now the White House is pitching the Reagan comparison to political reporters in Washington.
Unfortunately for this narrative, the Q4 data for 2014 is now in, and real economic growth was just 2.2 percent. This means that the annual series for 2014 is complete, and the real growth rate for the year was 2.4 percent -- effectively equivalent to 2010 (2.5 percent), 2012 (2.3 percent), and 2013 (2.2 percent).
Odd, this doesn't seem like "rapid growth," especially when compared to Reagan. During Reagan's first year in office, when the economy was in a tailspin after the Carter disaster, real GDP growth was only 2.6 percent -- and yet this growth rate is higher than any of Obama's six years in office.
Other than 1982, when the U.S. economic retracted 1.9 percent (which Obama "outdid" with a 2.8 percent retraction in 2009), annual economic growth during Reagan's two terms never dropped below 2.6 percent, and from 1983 to 1988 it averaged 4.6 percent -- never dropping below 3.5 percent and peaking at 7.3 percent in 1984. As a reminder, over the past three years Obama's economic growth has averaged 2.3 percent, peaking at 2.4 percent.
And the White House is seriously "pitching the Reagan comparison to political reporters in Washington"? If anyone is buying it, they shouldn't be involved in journalism.
Stuart Stevens, Romney's presidential campaign manager, is quoted in the New Republic's article:
I don't think Republicans should be -- I don't think anybody should be, right now -- taking credit for the economy... What the mood of the country is will dictate what the politics are. If you continue with five percent GDP growth, that'll be a different conversation than if we're at 2.4.
Stevens is both right and wrong. The G.O.P. should not be taking credit for the economy because the economic growth is not impressive enough to want to take credit for. The U.S. is not at five percent GDP growth. In 2014, there were two quarters (Q2 at 4.6 percent and Q3 at 5.0 percent) of solid economic growth sandwiched between two quarters (Q1 at negative 2.1 percent and Q4 at positive 2.2 percent) of substandard economic growth.
Thus, we don't have a clear trend. Given the large inter-quarter variability in GDP growth that is a constant throughout the historical record, drawing conclusions at this point -- with the American economy yo-yo-ing around from quarter to quarter -- is a textbook definition of premature. Best for conservatives to just sit back and say nothing positive about the economy under Obama. Play the waiting game instead. This is especially true since Q1 of 2014 was the worst quarterly GDP performance outside of a designated recessionary period in the past three decades.
Getting back to those pesky facts, it is important to keep updating the progress of real per capita disposable personal income, per capita GDP, and total GDP over the course of the Reagan and Obama administrations.
Obama will never catch up to Reagan in terms of core economic performance. There may be short periods where the current administration's economy is near that experienced during the Reagan years, but the key difference is that the Obama economy can only keep that level of growth up for very short periods before relapsing, whereas the Reagan economy had a full head of steam for the entire last six years of his presidency.
The legacy of the Obama years will be one of "what could've been." Following the deepest point of the recession in Q4 of 2008, the opportunity was there for Reaganesque type reforms starting in 2009 that would have led to rapid economic growth. Rather, Obama and his colleagues in Congress chose to ignore the Reagan model, instead pursuing the drive into radical socialism and big government statism. The results are clear for all to see: a mistake.
America can go home again, and that home is the economy and culture of the Reagan years. Times were better then all throughout the West. Those who purposefully avoid repeating the successful lessons of history are fools, and historians will judge them as such. "Progress" away from success is no progress at all -- it is negative regress.