Lessons to be Learned
by Tom Donelson on April 18, 2010 at 5:24 PM
Here is a stat for consideration; United States growth between 2002 and 2007 surpassed the entire size of China. While China is being touted as the new economic giant and their “percentage” of growth rate is higher, this rate is coming off a smaller base. From 1980 to 2008, we have lived in the era of Reagan, an era that has brought upon economic growth in the United States and throughout the world and saw millions worldwide move from poverty to Middle Class status.
We have lived through our golden age of economic renaissance and the real issue is whether we will live through a period of stagnant growth, high unemployment and become a declining nation, no longer great, or will we learn the right lesson of history and move back toward Reagan’s economic strategy?
While Obama has claimed that we averted a depression with his policies, what he has done is set in motion future limits to economic growth. We are witnessing a low interest, a ton of cash in the economy type of recovery, but what is missing are policies that will keep growth going beyond 2010. With Bush’s tax cuts due to expire in 2011, the productive aspect of our economy will see taxes going up with the economy still weak plus most businesses are fearing increase regulations, a possible VAT and a health care plan that add additional cost for hiring new workers. This translates into less hiring.
We have seen this act before. Japan embarked on similar plan in the 1990's and saw slow growth plus increased national debt. The Clinton economy did not take off until the Republicans took over Congress and passed a capital gain tax cuts after the 1996 election. The first two years of the Clinton years saw a tax increase and an attempt to pass a massive Health care bill but the failure to pass the Health care plan saved the Clinton’s administration along with Newt Gingrich becoming speaker. (Gingrich may have been a partisan but he did manage to push Clinton to the right with policies that included balancing the budget, welfare reform that actually reduced government size, prevented any further tax increases to go with Capital gain tax cut. Those who tout bipartisanship may view how Gingrich used bipartisanship to promote a conservative agenda.)
Even the much maligned Bush years saw progress and significant per capita increase when the Bush’s tax cuts become fully implemented, but the failure to reform Fannie or Freddie pushed the financial sector toward collapse. (There was much to criticize about the Bush years when it came to controlling spending but the first two years of the Obama years have exceeded anything that Bush or the Republicans did when it came to excessive spending.)
We know what creates wealth and what doesn’t. The Reagan era saw growth and increase in wealth for a greater number of people and for the GOP, it is not just enough to talk about Obama failures but explain the why. For the GOP, it is important to understand the success of the Reagan years so they can argue more effectively against Obamanomics.
The Tea Party movement is a reflection that many Americans get when it comes to the failure of Obamanomics and the fiscal disaster that is rolling toward us as a result. This is setting the stage for a political tsunami, and we may yet get the opportunity over the next three years to repeal the worst of Obama economics. And we may get a second opportunity to replace Obama economic failures with proven policies that work. Like Reaganonomics.