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A Further Perspective
Economic Advice for Obama
He’s going to have to be more like Ronald Reagan — and find better friends than the Fortune 500 crowd.
For Mr. Obama to avoid being a one-term president, he should start operating more like Ronald Reagan and forget about seeking economic advice in the editorial pages of the New York Times.
Job creation promises to be the top issue in the upcoming presidential campaign and what hasn’t worked is the trillions in stimulus money and a flood of red ink. The U.S. economy has lost 2.2 million jobs since President Obama took office.
What Reagan delivered was real “Hope” and “Change,” not just two words on a campaign poster with nothing to back them up.
Shifted into high gear by a 25 percent across-the-board tax cut, the economic expansion during the Reagan years, 1981-1989, created 17 million new jobs. Unemployment dropped from 7.6 percent when Reagan came into office to 5.5 percent when he left.
Real family income per year, adjusted for inflation, grew by $4,000 during the Reagan years, after no growth in the pre-Reagan Carter years.
For the poor, stagnation, and joblessness turned into upward mobility. The Treasury Department reported that 86 percent of the poorest 20 percent of households in 1980 had moved to higher income quintiles by 1989.
Further increasing economic well-being, paychecks increasingly held their value as inflation dropped from 13.5 percent in 1980 to 4.1 percent in 1988.
In the June 6 edition of the Weekly Standard, David Smick, editor of the International Economy magazine, quotes what Ronald Reagan stated in late 1979 in an economic strategy meeting for his upcoming presidential campaign.
Reagan was told that rival candidate John Connally, former governor of Texas, was gaining support from the nation’s corporate CEOs.
“Let him have the Fortune 500,” replied Reagan. “I want our campaign to stand for Main Street, not Wall Street. I want us to stand for the worker, the shopkeeper, the entrepreneur, and the small businessman.”
Obama takes the opposite stance, surrounding himself with the titans of Wall Street, the same people who nearly drove the nation off a cliff in 2008.
In January, President Obama tapped General Electric CEO Jeffrey Immelt as his top outside economic advisor to guide him in his efforts to boost lackluster job creation. General Electric cut 34,000 jobs from its payroll from 2000 to 2009.
“The 2012 presidential race should put the ‘small’ and the ‘new’ against the ‘large’ and the ‘well connected.’ It should be a contest between the small town populist and the corporate elitist models of America’s future,” states Smick in his Weekly Standard article.
“With one exception, every economic player in Washington has a lobbyist,” says Smick, “The one exception? Those innovative, job-creating firms that are yet to come into being. They exist only in people’s dreams and imaginations. These innovators are America’s only hope of pulling out of today’s economic mess, and they desperately need someone in Washington to champion their cause.”
Rather than seeking answers from Goldman Sachs and General Electric, President Obama should be taking advice from the small business community, the sector that employs half of the nation’s private sector workers and consistently creates the vast majority of the economy’s new jobs.
About the Author
Ralph R. Reiland is the B. Kenneth Simon professor of free enterprise and an associate professor of economics at Robert Morris University in Pittsburgh.
Letter to the Editor View all comments (44) | Leave a comment
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Appleby| 6.21.11 @ 7:04AM
Obama hates small town America except as a backdrop for his princely tours, for the same reason my cat dislikes other cats: because it reminds him who he really is and not who he pretends to be.
Ronald Reagan WAS small town America; he loved the America where he grew up and the people who grew up beside him thought *If he can do it, I can do it!* and were encouraged by him.
And in my own circle of friends, we were enormously relieved to see a President in office again who knew how to behave in public.
Alan Brooks| 6.21.11 @ 8:34PM
"He's going to have to be more like Ronald Reagan"
Of course! Clinton had to do it, so will Obama.
I live in the Midwest and know how corny the Heartland is. not conservative-- CORNY.
Handy| 6.21.11 @ 7:12AM
It's a Big Government, Big Business and Big Labor daisy chain. Them feller smellers make pornogaphy look clean.
wodiej| 6.21.11 @ 7:15AM
His thinking is simply warped by being raised with not one single rational, sane, responsible adult mentoring him.
Mimi| 6.21.11 @ 7:37AM
WODIEJ....You would think, the historical house he lives in NOW, with it's ambience Of former PATRIOTS of honorable, self-giving nature would somehow rub off , and ignite at the very least, some WONDER at the GREATNESS of this NATION. We still await that change of ATTITUDE...to no avail. NO sympathy or admiration for greatness HERE ! When Winston Churchill's Bust returns to the WHITEHOUSE....We'll know were finally BACK !
Leave it to the " AMERICAN PEOPLE" to self- correct. !!!
Maddox| 6.21.11 @ 7:47AM
The premise of your article is wrong in your assumption that Obama wants the economy to improve. His presidency has been successful beyond his dreams.
I believe he is willing to accept one term in order to implement his plan of destruction. Even though many of us here saw his hatred during the campaign, it is happening faster than any of us could have imagined.
ronlsb| 6.21.11 @ 10:16AM
Maddox--I think you are only partially right. The destruction of the nation is Obama's goal only insofar as he can put a daggar in the heart of our capitalist system in order to steal from the capitalist and give what is stolen to the downtrodden and minorities, the rightful owners of all our wealth. This fits perfectly with his world-view that white Anglo-Saxon males have essentially made their wealth on the backs of the poor and minorities. He'll be perfectly happy with the America that is left--far less prosperous, powerful, and with a population radically dependent of big government for survival. The perfect recipie for the entrenchment of the democrat party--masses of people who will vote for them in order to continue to receive the wealth of the nation.
Maddox| 6.22.11 @ 8:37AM
I understand what you are saying but that will destroy America. When there are too many takers to be supported by the doers, the system will implode and poverty will create violence.
Without freedom, there is no America. Without America the world is descending into chaos.
MoeBlotz| 6.21.11 @ 9:08AM
Barry blew his encounter with a blue collar American on a plumber's lawn in Ohio during the 2008 campaign. Where have you gone,Joe Wurzelbacher?
Steve A| 6.21.11 @ 9:24AM
Barry's problem is that he still has not figured out that ; "Spread the Wealth = Spread the Misery." Asking him to be like Reagan is like asking Keith Olberman to be Glen Beck. Ain't gonna happen.
kurt2088| 6.21.11 @ 10:21AM
I'm forty eight years old and I have never seen the economy worse than now! We have had thirty plus years of sellouts in Washington DC, and if things do not improve soon, and they more than likely won't, we are going to see rioting in the streets! I think most rebublicans and democrats are just different wings of the NWO cabal, and this must be stopped if a free America has any of chance of continuing!!!
Mike| 6.21.11 @ 11:56AM
Let's look at some arguments around government spending and employment:
Government Spending Destroys Jobs
Case # 1: The Bridge to Nowhere. Bad idea (unless you are in construction in Alaska), but unless the government has found a way to materialize bridges out out of thin air, constructing that bridge would have created jobs.
Case #2 The airplane. The government purchases an airplane from Boeing and it destroys jobs. If the airplane is military hardware that is destroyed and must be replaced, theoretically this destroys even more jobs. American Airlines purchases an airplane and creates jobs. Really?
The Recovery Act Created No Jobs
CBO: $600 billion in spending and $200 billion in tax cut created at least 1.3 million jobs. Since conservatives argue that tax cuts are the way to grow jobs, they have to concede that the Recovery Act tax cuts created some jobs.
Government Spending Raises Tax Rates and Crowds Out Private Investment.
Classic Keynsian economics, but hardly applicable today when the Fed has held interest rates at historic lows.
Large deficits lead to uncertainty which leads to little investment and little or no job creation. We have uncertainty. Growth has been a paltry 2.3% over the past 4 quarters, but investment has increased by 14.7%. Jobs have been created, but, admittedly not enough.
Indiana Alex| 6.21.11 @ 12:58PM
Ahhhh, no. It's very hard for liberals to understand. They just think differently.
The government spending from the Obama stimulus essentially took that money out of the private, productive sector, and blew it on political favors.
This seriously weakens the economy, which is what we are seeing right now.
To liberals these must be ideal economic conditions, but the result was easy to predict based on the past performance of trusting government to spend "wisely".
Of course to liberals it would of worked if it weren't for Bush.
What a bunch of seriously disturbed individuals.
Indiana Alex| 6.21.11 @ 1:19PM
While we're at it, lets clear up another one that liberals just don't understand.
Conservatives in general believe that changes in tax RATES will cause individuals and businesses to change behavior.
Simply mailing a check to people and calling it a "tax cut" certainly won't change behavior, and may do more harm than good in the overall economy.
Mike| 6.21.11 @ 4:19PM
Alex,
Your second paragraph is a restatement of the "Government Spending Destroys Jobs" argument.
What is your definition of "political favors?" Any spending with which you disagree? Irrelevant to the argument about spending and job creation. Many people think Haliburton received "political favors" from the Bush administration, but the government contracts created jobs.
Al Adab| 6.21.11 @ 5:10PM
I'll defend Alex here. Political favors are delivered on both sides of the aisle as you note mentioning Haliburton. Not unlike mandating the purchase of a light bulb manufactured by a company which contributes to one's campaign. Whether government contracts, not government spending, destroys jobs I'll defer to Thomas Sowell. Nonetheless, by taking large amounts of capital from the overall private sector and rewarding favored companies, we do retard overall expansion and perhaps ingenuity as well. Buggy whips remember?
Mike| 6.21.11 @ 5:51PM
"Whether government contracts, not government spending, destroys jobs....."
Al Adab, how can there be contracts without spending?
Al Adab| 6.21.11 @ 6:06PM
The funding of ACORN, LaRaza, Urban League; the financing of various "studies" and the agencies like EPA. OSHA etc which are detrimental to the overall economy. Those are spending, not contracts.
TrueBlue| 6.21.11 @ 6:37PM
And contrary to popular liberal belief, any jobs created in those organizations do not help the economy at all, since they exist entirely on government funds.
Government does not create wealth! It only absorbs wealth from the private sector and ineffectively distributes it where it deems best. ONLY private sector jobs actually create wealth. Government contracts to private companies doesn't even truly help, since the companies that are awarded those contracts is based more on how much is contributed to certain campaigns that actual cost effectiveness.
The government needs to operate on a zero-budget like everyone else. If they aren't making it in tax revenue, they shouldn't be spending it (and taxes are too high as it is).
Mike| 6.21.11 @ 7:13PM
Wrong, funding of the type you list is a contractual agreement.
Mike| 6.21.11 @ 7:16PM
You may completely disagree for whatever reasons with the contract being executed , but it is a contractual agreement.
Mike| 6.21.11 @ 8:39PM
And, it creates jobs.
Al Adab| 6.21.11 @ 12:28PM
To bring an end to this three year old depression policy should:
1. lower government spending
2. lower taxes
3. allow wages to seek their own level
4. promote business investment aqnd expansion
That, not stimulus spending and incresed debt will fix it.
axbucxdu| 6.21.11 @ 1:27PM
“Liquidate labor, liquidate stocks, liquidate farmers.”
Andrew Mellon to Herbert Hoover at the start of the Great Depression. We know the rest.
Al Adab| 6.21.11 @ 1:53PM
Yeah we know the rest. They didn't take Mellons advice, passed the Smoot- Hawley tarriff and elected Roosevelt in '32. As we know from Paul Rubin, "We now know that FDR's policies likely prolonged the Great Depression because the economy never fully recovered in the 1930's, and actually got worse in the latter half of the decade." Lets try that again, right?
Mike| 6.21.11 @ 4:37PM
This bit of economic history revisionism received wide attention because of Monica Crowley's appearance on Fox. The problem with the "research" is that it focuses on one year when the economy did become worse. The year was 1937-1938 when FDR was convinced by conservatives to reduce government spending and to balance the budget.
Al Adab| 6.21.11 @ 5:04PM
Just quoting Paul Rubin, Mike. You can read about it in Garland Tucker's book.
Mike| 6.21.11 @ 5:54PM
Thank you, Al Adab. I think the premise and the "research" supporting it is spurious.
Appleby| 6.21.11 @ 1:52PM
A two step program to get rid of big government and massive "programs" overnight.
1. Get rid of the withholding of taxes from paycheques; make people pay the whole shot on April 15.
2. Change Election Day to April 16.
Al Adab| 6.21.11 @ 3:19PM
Appleby:
Sorry it took so long to respond but I've been rolling on the floor laughing.
That plan would fix it for sure.
Mike 3/505| 6.21.11 @ 3:27PM
Appleby for Galactic Commander!!
Pat| 6.21.11 @ 4:05PM
Being dragged kicking and screaming into the present reality, today U. S. News and World Report is the first of the old guard media to publicly admit unemployment within our country is extremely serious because it’s growing worse, not getting better. Going even further, USN & WR also admitted actual unemployment is much higher than the official government numbers, dismal as even those numbers are, would tend to indicate. But this long serving publication’s editors couldn’t screw up the collective courage to blame Obama – “bad things sorta just happen” is their reluctant conclusion to what mysterious forces are at work here. And, exactly as in past eras, this business publication warns that our Congress and President must “do something” – although the editors aren’t the least bit specific as to what exactly government should do.
The Great Recession has “officially” wiped out all new jobs created since the year 2000, the labor market is presently in shambles, but no major company within the U. S. is currently experiencing a labor strike – which is the only reportable “good news”. For Americans who, for generations, have been told it’s the role of our government to stimulate job creation, this situation is indeed shocking, psychologically similar in some respects to learning John Wayne was a Communist or that Lyndon Johnson was actually a closet Conservative. Massive government mandated wealth transfers, even with the usual hefty commissions extracted by “Friends of the Democrats”, haven’t worked to stop the economic bleeding.
In the past, recessions have dutifully ended on schedule, the economy then roared back and the politicians took all possible credit for the resurgence. But, this time around, no one has stepped forward to claim any of the blame for failure.
It’s almost impossible to give up those cherished “depend on the government” lessons learned at our fathers’ knees, but it looks like no one can explain what is presently happening and, what’s even worse, no one knows what to do going forward.
Still, most Americans remain ever optimistic - the times, they assume, will eventually get better, our government is still the “Main Man” when it comes to fixing whatever ails the economy and “we’re only here to help” continues to soothe those Democratic voters who deliberately try their best not to acknowledge ugly reality or simply refuse to accept the blindingly obvious. So Obama retains a good chance of re-election, the “I Want to Believe” crowd will never give up and, apparently, can never give in.
Rick| 6.21.11 @ 6:13PM
Your a rasist!
Mike| 6.21.11 @ 8:36PM
As stated before, this is why I read AmSpec. Witty repartee and brilliant analysis.
Mike Gabel| 6.21.11 @ 7:14PM
It is absolutely killing Obama that the one thing he could do to revive the economy, thus ensuring him a second term, is against his core belief; empower We the People over the government.
WL| 6.21.11 @ 10:18PM
As much as I agree with the article and most of the comments....
There is just something dis-heartening about reading columnist's articles about "advice to Obama"....
As is he really does give a crap about any policies that will help the country...
If you just have to write them...at least write them in earnest such as "Advice: on how to once again fool the American fools that you are God incarnate...while sticking it to them."
That's what he's about...
weddingdresses | 6.22.11 @ 5:45AM
As stated before, this is why I read AmSpec. Witty repartee and brilliant analysis.
Johnny| 6.22.11 @ 6:27AM
What most of the people of the U.S. fail to see is that our economy and way of life will probably never "recover" and return to the good ole days. We, as a nation have been living beyond our means for an awful long time and now we have hit the end of that road. The rest of the world can no longer support our standard of living and we're going to have to tighten our collective belt. The first place to start is the ridiculous idea of a minimum wage, what does it do but increase the cost of everything we consume? Doesn't that just negate any increase that the wage earner just received? That is the first basic argument to get the government out of the economy.
Aarradin| 6.22.11 @ 7:07PM
There's zero chance Obama will adopt any policy that could possibly improve the economy. He's an idealogue. He's absolutely convinced that his current policies are correct.
Its not that your advice is wrong, its just that it will certainly fall on deaf ears. Focus on offering economic advice for the next Republican President - whoever that is will face the daunting task of reversing all of Obama's catastrophic policies.
Paul C| 7.31.11 @ 8:23AM
Obama should be more like Reagan? Really?
Reagan and his buddy Don Regan started the ball rolling with deregulation in the 80s which resulted in the S&L crisis, the Internet bubble and the 2008 sub prime collapse.
nice | 8.6.11 @ 5:56PM
obama should be more like sri mulyani i think :D