Obama’s economic plan? Back to the ’70s!

Barack Obama has a major problem with what’s been happening in America over “the last few decades.” Here’s Obama during his Osawatomie speech:

 … there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes—especially for the wealthy—our economy will grow stronger. … But here’s the problem: It doesn’t work. It has never worked. … Over the last few decades, huge advances in technology have allowed businesses to do more with less, and it’s made it easier for them to set up shop and hire workers anywhere they want in the world. … In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year. …  And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class—33 percent. … And yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. … This is about the nation’s welfare. It’s about making choices that benefit not just the people who’ve done fantastically well over the last few decades, but that benefits the middle class, and those fighting to get into the middle class, and the economy as a whole.

1. Obama clearly thinks the “last few decades” have been a disaster for the U.S. economy, that America’s 30-year economic experiment in enhanced economic freedom—lower tax rates, less regulation, freer trade—has been a failure. Indeed, Obama says that although the “theory fits well on a bumper sticker … it has never worked.” Reagan and Clinton blew it. (Tax cutting JFK, too, apparently.) Time for a different formula. Time to raise taxes and create more rules for business with a goal of “shared prosperity and shared responsibility.”

2. But what Obama is really saying is this: “Let’s go back to the 1970s.” It was a Golden Age of Equality, with the top 1 percent’s share of national income at its lowest level of the 20th century. And the nostalgia surely doesn’t stop there. It was also a time of strong unions, expensive oil, regulated industry, and high tax rates. This is exactly the Obamacrat agenda. Of course, the 1970s were also a time of economic chaos and stagflation that led voters in 1980 to reject Jimmy Carter by a crushing landslide. Yet Obama wants give that formula another shot.

3. Back during the success-punishing 1970s, the top marginal tax rate was 70 percent. And guess what? Liberal economists such as Paul Krugman, Brad Delong, and Peter Diamond—whose nomination by Obama to the Federal Reserve thankfully failed in the Senate—think the top tax rate should zoom back there again. More evidence that Clintonomics is dead in today’s Democratic Party. Then again, Obama, like many Democrats, never thought the Reagan tax cuts made much sense. As Obama wrote in The Audacity of Hope: “The high marginal tax rates that existed when Reagan took office may not have curbed incentives to work or invest … but they did lead to a wasteful industry of setting up tax shelters.” So the only downside was excessive tax planning?

4. Here is the real record of cutting taxes and regulation: The U.S. economy grew at an average pace of 3.3 percent from 1983-2007, inflation—the scourge of the 1970s—was slayed, and the stock market rose by 1,400 percent. Median middle-class incomes rose by roughly 50 percent. (These numbers are even more impressive when you recall that heading into the 1980s, experts were predicting a dystopian, Solyent Greenesque, Age of Limits future for America.) Obama would be lucky to fail like this.

18 thoughts on “Obama’s economic plan? Back to the ’70s!

  1. Obama’s much-vaunted economic stimulus package was supposed to keep unemployment from going above 8 percent. It didn’t = it failed = Obama failed.


  2. Here’s recap of Hope and Change since President Obama took office in Jan 2009. Comparing economic indicators starting in Jan 2009 to present day:
    1. Federal debt has increased by 43% from $10.6 trillion to $15 trillion.
    2. Americans living in poverty have increased by 16% from 39.8 million to 46.2 million.
    3. Total unemployment (U6) has increased by 68% from 13.7 million to 23 million.
    4. Price of gasoline has increased by 80% from $1.86/gal to $3.35/gal
    5. Americans on food stamps have increased 42% from 31.8 million to 45.2 million
    6. Home foreclosures per year have increased by 34% from 850,000 to 1,140,000
    7. Total bankruptcy filings per year have increased by 42% from 1,117,641 to 1,593,081.
    8. Median Household incomes have declined by 4%.
    9. Average selling price of new homes has declined by 10%.
    10. US dollar compared to foreign currencies has declined by 8.7%. [US dollar index of 85.9 in Jan 2009 to 78.5 in Dec 2011.]
    11. US dollar compared to gold has declined 105%. [ $855/ounce to $1750/ounce]
    12. US credit rating downgraded by S&P for first time

    • Rich-m
      Will you please send your stats to every candidate for Pres an implore them to publish this!!! It is simple and understood by everyone who hates all the rhetoric.

    • Number eleven is incorrect.Something cannot go down by more than 100% without going negative.restate yurt fact or delete it. It makes you seem like an idiot.

      • Acutally, number 11 is correct in a sense. The price of gold has more than doubled, and has infact increased by 105%. I think that is what he was trying to say. So the value of the dollar compared to gold is about 52-55% less powerful, which is the true statistic. I think that’s what he meant to say

  3. I’m a Kansas farmer granddaughter, and I greatly resent, via the Osawatomie speech, imposing his values or rather co-opting Kansas values for his political purposes. My Grandfather joined the Navy and served in Teddy Roosevelt’s Great White Fleet, which toured the world with the famous “walk softly and carry a big stick” foreign policy. Grandfather’s tour ended with service in San Francisco, including “shoot-to-kill” orders to deter looting, following the 1906 San Francisco earthquake. The Navy were sent in to maintain order. Grandfather then farmed successfully, made it thru the progressive movement, the depression, the heat, drought, grasshoppers, tornados, you name it, and Grandfather and Grandmother persisted. They persisted successfully using something the President fails to recognize — INDIVIDUAL responsibility. Grandfather, and Teddy Roosevelt from the stories I recall hearing, took individual responsibility seriously.
    So, with all due respect, Mr. President, stay in Washington D.C. with your “government is the solution” positions.

  4. Tea Parties like James P. love to talk about the 1970s and Carter as if a return to the pre-Reagan values that made this country an economic powerhouse would end up like 1979 and 1980 (rather than the 30 years previous) and then conveniently end their analysis in 2007 (because it would destroy their narrative that the Republican GW Bush presided an even worse disaster than Carter’s).

    Here is the broader picture over the past 60 years showing average economic growth per president. Please note that aside from Reagan slightly edging out Carter, ALL Democratic administrations rank higher than ALL Republican ones. End of story.

    1948-1952 (Harry S. Truman, Democrat), +4.82%
    1953-1960 (Dwight D. Eisenhower, Republican), +3%
    1961-1964 (John F. Kennedy / Lyndon B. Johnson, Democrat), +4.65%
    1965-1968 (Lyndon B. Johnson, Democrat), +5.05%
    1969-1972 (Richard Nixon, Republican), +3%
    1973-1976 (Richard Nixon / Gerald Ford, Republican), +2.6%
    1977-1980 (Jimmy Carter, Democrat), +3.25%
    1981-1988 (Ronald Reagan, Republican), 3.4%
    1989-1992 (George H. W. Bush, Republican), 2.17%
    1993-2000 (Bill Clinton, Democrat), 3.88%
    2001-2008 (George W. Bush, Republican), +2.09%

  5. There’s a growing body pf thought that believes Obama’s administration has been a great success. His aim all along was to destroy the economy so that the unwashed would come whimpering to Washington for more and greater handouts. Of course, the gatekeeper would be entitled to take his due from the largesse.

  6. Unelected and self interested by design, the American Business Mind has promised to deliver a better America and failed for 30 years (1981-2011). The American Public has given the Laissez Fair Business Experiment thirty years of effort with increasing labor productivity and support by schools, families and communities. Ninety Nine percent of schools, families and communities have felt the pain of business’s low yield national leadership. Thirty years of poor economic data is irrefutable. “Business planners do not make good public planners,” says Thad Cummins of Thirty years of the pro-business agenda has produced a falling US GDP since 1981. For America to grow beyond this malaise we must attribute these low-grade outcomes with the pro-business planners and open Democratic Capitalism to all working Americans not just the NeoCons and their plutocratic MBA corps.

    • Laissez faire? Hardly. What we have and have had is crony capitalism, supported by regulators and legislators. You are correct in criticizing government’s pro-business agenda. Government has no legitimate role in being pro- or anti- anything. The legitimate function of government is to maintain rule of law, a “level playing field,” as it were. All you need to do is look at MF Global with more than a billion dollars of customer money missing, and the only reponse is Jon Corzine’s appearance before Congress to offer his very deepest apology. Does that sound like a “level playing field?”

  7. Bleedingheart67: your points is well made, however the fact is that the GOP candidate, whoever he or she may be, will not be running against all democrats over the last 60 or so years. They will be running against this abjectly unqualified, naieve ideologue who you geniuses were duped into putting into office even though he was unvetted, had no voting record, no college transcripts or papers, and generally no history of accomplishment whatsoever. I don’t think that attending a radical black militant church for years qualifies one for POTUS, but these days the left is bizzaro world where up and down, etc., so who knows? I note your statistics and (assuming they are accurate) I would point to Rich M’s stats about your annointed one’s performance and say to you that either the dems should pony up another Truman/JFK type as a stand in candidate, otherwise shut the **** up.

    • Your point assumes that presidents are responsible for the business cycle, when in fact they are largely subservient to it. The Federal Reserve Board has a great deal more influence than any American president.
      The rest of your post deserves no response

  8. What’s the deal with this “Obama is incompetent” talking point. Did Frank Luntz come up with this one? Is this really something the party of Palin and W Bush wants to go with? I guarantee that the last thing that went through Osama Bin Laden’s mind was not the thought “Boy, that American president sure is incompetent.” (Actually, the last thing that went through Bin Laden’s mind was a round from an M16…)

  9. The best econometric analysis that I’ve seen indicates that, historically, economic growth rates have been best when the top marginal rate (on extremely high incomes) is close to 70 percent. Top rates closer to 90 percent were counterproductive, but more recent lower rates also have been counterproductive, speaking strictly in terms of generating economic growth. Importantly, however, dividends were taxed as ordinary income and the tax code encouraged firms to avoid taxes by spending and investing to expand/improve themselves. Owners would defer extracting much of their income until it could be taxed later at lower rates as long-term capital gains.

    This history suggests that, assuming growth-encouraging tax “loopholes” for firms, and considering that state income taxes have gone up, a top rate of roughly 65 percent on ordinary income and dividends (on income above a million or two) probably would be best for economic growth rates. Maybe this strategy wouldn’t work today, but it seems that it ought to be given consideration.

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