Obama was quick to defend his seven years of economic oversight in his final State of the Union, citing job growth and the rebirth of America’s automotive industry. While it’s true that jobs have been created and the automotive has bounced back, there was really nowhere to go but “up” when he assumed office in the midst of the largest recession since the Great Depression.
After all, the man did inherit a pretty shitty economy, which makes judging his job performance exceedingly difficult – things ain’t great, but they are better than they were. But could they have been even better?
Fortunately another President, the modern conservative icon Ronald Reagan, likewise inherited an economy in turmoil. By comparing some basic facts of his economy with Obama’s, we can hopefully judge the latter’s performance against Republicans’ favorite economic bellwether and thus arrive at some conclusions as to how effective the current President’s policies have been.
This analysis assumes, of course, that Presidents exercise sufficient influence over the American economy, a point many will be unwilling to concede. But arguments have to begin, and bucks must eventually stop, somewhere. I’ll use a return-on-investment approach: how much did we spend, and what did we get in return?
Let’s begin with the national debt, and if you want to liven this admittedly dry exercise up a bit, take a shot every time a percentage is mentioned, but please don’t drive afterwards. Trust me, after the reality of this administration’s numbers set in, you’ll need a drink to stop from moving to East Germany.
Spending versus growth
As Democrats love to point out, despite his reputation as a small-government tightwad Reagan did actually grow the government debt. Of course, this isn’t surprising given the conditions under which he entered office. In fact, the man that famously played the Gipper grew the debt by nearly $3 trillion (or roughly 190 percent) during his eight years in office, while Obama’s is projected to grow by a “mere” ten trillion (100 percent), roughly. So on the surface, percentage-wise, Obama looks pretty good.
Not so fast. There is a fundamental difference between roughly three and ten trillion, and one administration’s borrowing antics will almost certainly bleed over into the next. For starters, that $3 trillion would equal roughly $6 trillion in today’s inflation-adjusted dollars, not ten. And as far as future administrations are concerned, massive entitlement increases such as Obamacare and the food stamp enrollment increases will almost certainly haunt the next, if not the next few, Presidents. After all, could Clinton have balanced the budget post-Obama? Possibly. And then again the Cubs could win the World Series next year.
But the debt metric is even more telling when put into perspective against the nation’s GDP in the sense that a bustling economy makes debt easier to eventually pay down.
According to Forbes, whereas Reagan grew the economy by 32 percent during his tenure as commander-in-chief, Obama had yet to hit the ten percent mark as of September 2014. So by borrowing 2.5 times more money while only growing the economy at a third of the pace, the Obama recovery, and by extension economy, is light years behind Reagan’s. And because the rapid surge in entitlements will continue to hamper growth, Obama’s long-term economic legacy looks even worse.
But economies are more than just debt and GDP. The real measure of an economy (and country for that matter), at least in my amateur opinion, is jobs.
Work work work
While Obama reduced his unemployment rate from ten to just around five percent, Reagan’s began at 7.5 percent and peaked at 10.8, but was down to 5.4 by the time he left. Similar numbers indeed, until you consider the Labor Force Participation Rate (LFPR), a.k.a. the number of people actually working. You see, the unemployment rate so often cited by the administration comes with many qualifiers, the most serious of which is that to be included you have to be “looking” for a job. On a good day there are plenty of people dodging that demographic; following the recession in 2007-2008 those dodgers, completely discouraged by the lack of job prospects, almost certainly multiplied. To be clear, this phenomenon can hardly be blamed on Obama, but the LFPR numbers seven years after his assuming office most certainly can be.
Whereas Reagan’s LFPR grew by roughly three percent, Obama’s declined by the same amount. That’s about a six-point swing, folks.
While the current administration is (partially) correct to blame the horrific LFPR on retirees and other various and sundry causes, the figures are less than flattering. The current numbers of Americans not working is at an all-time high, which, given the fact that there are now more Americans than ever, isn’t particularly surprising on its surface. But the steep rise in the LFPR under Reagan versus the steep decline under Obama cannot be explained away by “retiring baby boomers.” For the $10 trillion Obama will have borrowed by the time he leaves office the retirement of boomers should have been but a blip on an otherwise robust job market.
But Obama isn’t entirely off base here. One likely reason for Obama’s abysmal LFPR number is that people simply gave up looking for work in an unfavorable employment environment; kids went back to school and boomers that had planned on working a few more years simply retired early, because THEY WERE BASICALLY FORCED TO!
So there you have it—for the trillions borrowed we got slow growth and horrible employment numbers. Reagan achieved much more bang for the economic buck, at least by way of this admittedly elementary, yet pretty cut and dry, analysis.
Obama can talk about what a great economy he created all he wants to, but numbers don’t lie. The cowboy from California kicked his ass.