The Left howls in protest over this comparison. Obama, they claim, inherited a financial crisis that was deeper than anything Reagan ever saw. Obama, by his own admission, saved us from a “second Great Depression,” blah, blah, blah. Of course, the economy really was flat on its back in 2009 when Obama walked into the Oval Office.
But how was that different from 1981? I would say the wreckage that Reagan inherited from Nixon-Ford-Carter might well have been worse: Obama didn’t have to deal with 14 percent inflation, 20 percent mortgage interest rates, an America that was rapidly deindustrializing, and a twelve-year bear market in stocks.
Let’s just accept the proposition that both presidents inherited terrible economic crises. What was different was the policy remedies. Reagan cut tax rates, slashed regulations, trimmed excess money supply (with the help of Fed chairman Paul Volcker), and let the private businesses — the supply side — grow their operations less hindered by government interference.
Obama did, well, pretty much the opposite. At the time of the mighty economic recovery of 2003–09, liberals explained the ferocious burst of growth and employment by saying it was a “classic Keynesian recovery” financed by debt spending. Except if that was the case, why is it that after Obama borrowed twice as much money, this Keynesian recovery has proceeded at half that pace? I’ve never heard an answer to that one. Never.
I’m not saying that the economy would be growing twice as fast and be $2 trillion bigger if Obama had gotten it right. But even if we had had just an average recovery, the economy would be $1.4 trillion larger today. These kinds of counterfactuals are impossible to prove. But it’s a pretty fair bet that things would be a lot better today for middle-class families if we had done Reaganomics, not Obamanomics.