While Americans across the country are holding celebrations to
mark the 100th anniversary of the birth of President Reagan,
President Obama and his media allies are peddling the line that he
is just like Reagan. So let’s try this thought experiment. Suppose
Obama did follow in the tradition of Reagan, Thatcher, and what
could have been his ideal mentor, Jack Kemp.
Suppose as a result that President Obama embraced reducing
tax rates, cutting spending, slashing unnecessary regulatory
burdens and restrictions, and maintaining a strong dollar,
anti-inflation monetary policy. And suppose as the inevitable
result of those policies, the economy took off in a generation long
boom, just like it did under Reagan.
How would conservatives, the Tea Party, and America have
responded? We would have loved Obama like no other political
leader, even Reagan. That is because his reach would have been even
broader than Reagan.
Instead of the Tea Party forming in opposition to Obama’s
policies, Obama would be leading the Tea Party in opposition to the
Republicans, discredited because they fumbled away Reaganomics. The
Democrats would consequently rout the Republicans for a generation,
like they did under Roosevelt.
In the process, Obama would have accomplished what no
other political leader could have possibly accomplished. He would
have led African Americans, Hispanics, and the poor firmly into the
Reagan Coalition, creating a new consensus encompassing the vast
majority of Americans.
That would have been the foundation for a new explosion of
prosperity, vaulting a newly unified America another generation
ahead of the rest of the world. But the unique contribution of
President Obama to that could have been the extension of
Reaganomics into the empowerment agenda that would ensure that his
base of African Americans, Hispanics, and the poor would ride that
wave to their own breakthrough of personal prosperity and full
participation at last in the American Dream. (Exactly how that
could have worked is explained in full detail in my new book
forthcoming from Harper Collins in the spring,
America’s Ticking Bankruptcy Bomb.)
If Obama had followed this course, I myself would be
joining Obama’s campaign for what would be an inevitable
re-election à la Roosevelt 1936, and there would be talk
of Mt. Rushmore.
But it was not to be. For President Obama chose, indeed
his whole life represents, just the opposite course. Instead of
throwing open the doors to the American Dream to African Americans,
Hispanics, and the poor, President Obama’s retro New Left vision
arising out of the 1960s is on a course to abolish the American
Dream, for all.
The Anti-Reagan
Exactly contrary to the party line peddled in the Democrat
party–controlled press, President Obama, his philosophy, and his
policies are doggedly, thoroughly, and comprehensively the polar
opposite of everything Reagan stood for, fought for, and
accomplished during his life and as President. If President Reagan
was alive today, he would be leading the Tea Party on his way to a
historic victory in 2012 perfectly analogous to the victory of
Roosevelt and the Democrats in 1932.
Contrast Obama as president with Reagan. Reagan came into
office riding the wave of his campaign pledge to reduce income tax
rates across the board by 30%. That means for everybody. In 1986,
he led Congress to adopt a historic tax reform. As a result, the
top income tax rate of 70% when he came into office was reduced all
the way to 28%. The tax rate for the middle class was reduced to
15%. The working poor were removed from the income tax rolls
altogether.
President Obama came into office promising to increase the
tax rates for virtually every major federal tax on the nation’s
employers and investors — income taxes, capital gains taxes, taxes
on corporate dividends, death taxes. While he has deigned to delay
that tax piracy for two years, allowing some semblance of an
economic recovery to flower now, he is vowing to go ahead with it
as scheduled under current law in 2013. And while President Obama
got away with telling Bill O’Reilly and the nation in his pre-Super
Bowl interview that he didn’t raise taxes once in his first two
years, his Obamacare legislation did manage to raise payroll tax
rates, capital gains tax rates, and dividend tax rates, on the
nation’s employers and investors, now scheduled for 2013, in
addition to all the tax rate increases above.
While America suffers from the highest corporate tax rate
in the industrialized world, President Obama has also already
raised taxes on business in the Obamacare bill and other
legislation. Obama further pledges to double tax the foreign
earnings of American companies, which will only ensure that
American business will be uncompetitive in today’s globalized
economy. (This is all discussed in further detail in my book
published last year by Encounter,
President Obama’s Tax Piracy.)
In President Reagan’s first year in office, he led
enactment of the then much vilified Reagan budget cuts. Since
spending cuts are popular today, the Democrat party–controlled
press has pushed that history down the memory hole, but those
Reagan budget cuts slashed federal spending by close to 5% in the
first year. In constant dollars, non-defense discretionary spending
declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to
1983. Moreover, in constant dollars, this non-defense discretionary
spending never returned to its 1981 level for the rest of Reagan’s
two terms! By 1988, this spending was still down 14.4% from its
1981 level in constant dollars. Even with the Reagan defense
buildup, which won the Cold War without firing a shot, total
Federal spending declined from a high of 23.5% of GDP in 1983 to
21.3% in 1988 and 21.2% in 1989. That’s a real reduction in the
size of government relative to the economy of 10%.
In sharp contrast, in President Obama’s first year in
office, he led enactment of nearly $1 trillion in increased
spending in the so-called stimulus bill, which didn’t stimulate
anything except increased government spending. He followed that a
month later with an omnibus spending bill providing for an
additional $410 billion in federal spending in his first year. That
included an 8.3% increase in discretionary spending in a year with
no inflation. In his first two years alone, he increased federal
spending by 25%, to its highest levels in history as a percent of
GDP, except for World War II.
President Obama tries to tell us today that all this
increased government spending was necessary to revive the economy.
But that just reflects his fundamental Keynesian fallacy that
economy growth is powered by increased government spending, which
has been proven wrong over and over throughout history. It has been
proven wrong once again by the incredibly weak recovery America has
suffered over the Obama years. But what we have learned from
experience with President Obama is that he doesn’t learn from
experience.
$100 A Barrel Oil
President Reagan came into office leading a wave of
deregulation that saved consumers hundreds of billions. On energy
in particular, Reagan’s policy was to “unleash the private sector”
to provide increased American energy production. Reagan’s first
executive order, in fact, eliminated price controls on oil and
natural gas. Production soared, and the price of oil declined by
over 50%.
President Obama, by sharp contrast, came into office
leading a wave of reregulation that has crushed job growth.
Obamacare’s employer mandate in particular imposes a costly new
burden on jobs that has scared off new hiring. On energy, the Obama
Administration is shutting down domestic energy production across
America, with the price of oil soon to soar over $100 a barrel,
portending ominous consequences for the economy if history is any
guide. Obama pushed cap and trade, which would have added trillions
in energy costs for the U.S. economy, and which even the most
liberal/left Congress in American history would not pass. So now
Obama is pursuing the same thing through EPA regulation.
President Reagan promoted a strong dollar monetary policy
to counter the roaring inflation of the time, which the
establishment elite was assuring America could not be stopped, at
least not without unacceptable costs. But under Reagan’s policies,
the roaring inflation that had increased prices by 25% in the two
years before Reagan entered office was cut in half by 1982, and in
half again by 1983, never to be heard from again, at least until
this year.
Under President Obama, by sharp contrast, the Fed has
returned to the discretionary monetary policies of the 1970s, under
which the Fed tries to guide the real economy with the futile tool
of printing money. Milton Friedman proved long ago that cannot
work, but all of his learning has also been thrown down the memory
hole. If the Fed foolishly revives inflation this year, as the
commodity markets have been flashing, another recession to stop it
will be inevitable. With a deficit already at $1.5 trillion, a
renewed recession will leave America where Greece was, but with
nobody who could even conceivably bail it out.
President Reagan’s national defense policies were Peace
through Strength. Even while reducing total federal spending by one
tenth relative to GDP, Reagan pursued a defense buildup that forced
the Soviet Union into dissolution, winning the Cold War without
firing a shot. Central to that was Reagan’s much vilified Strategic
Defense Initiative missile defense program.
President Obama by contrast is cutting back on defense,
and missile defense in particular. His foreign policy is speak to
apologize for America and carry no stick. Under President Reagan,
authoritarian rulers of three American allies, the Philippines,
South Korea and Chile, were guided into retirement, and replaced
with robust democracies that remain allied with America to this
day. At least one of those, Chile, has been better governed
recently than America. Let’s see if President Obama’s policies on
Egypt are remotely as successful.
