10/03/2010
Vice President Joe Biden recently announced that "there's no possibility to restore 8 million jobs lost in the Great Recession." In essence, Biden is admitting that despite all the profligate spending and redistribution of wealth that are the hallmarks of the Obama Administration—with its massive inter-generational deficits—Obamanomics is a failure. When will liberal Democrats learn that prosperity is created by unleashing the free market, not smothering it?
I was only two years old when President Reagan left office. While I may not remember his term, between listening to my dad’s radio show and reading multiple books about his presidency I know Obama could do well to implement some of the same ideas Reagan had when it comes to tackling harsh economic issues.
Unlike Obama, Reagan rightly believed that these miserable conditions were created by too much government spending, taxing, and regulating. So, he immediately took steps to unravel these policies in order to promote wealth creation, investment, capital formation, and ultimately jobs.
Reagan fought for the passage of the Kemp-Roth bill, which cut federal income tax brackets by 25% over three years, he indexed the rates against creeping inflation, he encouraged capital investment by instituting a 10% credit investment tax credit and he accelerated the ability of businesses deduct the depreciated value of their equipment to make it less expensive to build and expand.
As Reagan often said, and as the magnet on my refrigerator reads: Government is the problem not the solution. And he understood the solution to a recession was not more government but more capitalism. Inflation dropped from 13.5% in 1980 to 4.1% in 1988. Interest rates fell from 18% in 1981 to 8% in 1987. Unemployment went from nearly 10% during Reagan's first year to 5.5% when he left office. The Reagan economic plan created millions of jobs and trillions of dollars in wealth.
In stark contrast, Obama's reliance on Big Government has been a disaster. He has exploited the recession to "justify" a rash of horrendous spending and entitlement bills that have further weakened the private sector and obstructed future economic growth.
For example, Obama's $787 billion stimulus plan was supposed to keep unemployment from exceeding 8%. Today, four months after the bill’s passage, unemployment is nearly 10%. And virtually all employment growth has occurred in the federal government, much of which includes temporary census jobs. In addition, Obama's budgets will result this year in a record-breaking $1.56 trillion deficit, beating even last year’s then unprecedented $1.41 trillion gap, and this does not include "emergency" spending bills to cover Medicare reimbursements to doctors, mortgage assistance, and further unemployment compensation.
Meanwhile, Obama has signed into law the biggest entitlement program ever—Obamacare. Even now, all the details and consequences of this 2,700 page bill are not fully understood, but this much we do know: it's a job and business killer.
Since most businesses will be required to pay more on health benefits for their employees, or pay a tax if they fail to do so, the cost of hiring new employees or maintaining existing workforces will be extremely difficult as this recession continues. And many of the worst aspects of this law, including new taxes and tax increases, kick in over a period of years. This means people are not investing as they might have out of fear Obama will continue to tax, regulate and otherwise penalize them.
The most serious problem, of course, is that Obama's policies are not aimed at improving the economy. They are intended to expand government. And this is why Obama is no Reagan. Reagan was a hugely successful President and Obama will not be, and this recession shows no signs of waning any time soon. Reagan believed in the people, private property rights, and adherence to the Constitution.
Obama believes in taxing, spending, and acquiring power.
Though my generation may not be old enough to actually remember what President Reagan did for our country, we can still learn from his legacy and use his example as a guidepost for future leaders of this nation, rather than elect people like Obama to ruin it.
Levin, a senior at George Mason University, is an intern at the Clare Boothe Luce Policy Institute.
Human Events
