Why The Reagan Recovery Was Much More Impressive Than Obama's

James Pethokoukis, The American Enterprise Institute Blog

Read more: http://www.businessinsider.com/why-the-reagan-recovery-was-much-more-impressive-than-obamas-2012-1#ixzz2jOpJoXeiMy pal Joe Weisenthal over at Business Insider just wrote a piece – in response to a post I wrote earlier today — with the delightfully provocative and contrarian headline, “Why The Obama Recovery Has Been Much More Impressive Than Reagan’s.”
Nope, I’m not making this up. See for yourself.
Let’s be perfectly clear, the Reagan Recovery (RR) has been far stronger than the Obama Recovery (OR). I think that is beyond dispute, really.
– In the first ten quarters of the OR, GDP is up a total of 6 percent. During the first ten quarters of the RR, GDP rose 15 percent.  Point for Reagan.
– In the first ten quarters of the OR, the economy created 790,00 jobs. During the first ten quarters of the RR, the economy created 7.5 million jobs  Point for Reagan, especially given the U.S. workforce is a third bigger today than it was in the early 1980s.
– In the first ten quarters of the OR, real disposable personal income rose at an annual average pace of 0.8 percent. During the first ten quarters of the RR, real disposable personal income rose at annual average pace of 5.4 percent. Point for Reagan. Game. Set. Match.
But Brother Weisenthal is making a subtler, more subjective point. He is arguing that, for a number of reasons, the Obama Recovery is more impressive than the Reagan Recovery. Not stronger, more impressive because Obama was dealt a worse hand. Among Weisenthal’s points:
1. “There are at least some economists who argue that post-financial crisis economies experience unusually slow growth for years and years.”
Me: Indeed, there are. But there are also some who disagree.  A Federal Reserve study released last November found the following:

Whether a recession is associated with a banking or financial crisis does not have a statistically significant effect on the pace of growth following recession troughs. … Banking and financial crises are associated with more severe recessions – deeper in the case of emerging market economies and longer in the case of the advanced economies – but do not appear to impose additional restraint to recoveries beyond the depth and duration.

2. “The problem is that Pethokoukis is … defining housing bust purely in terms of housing construction, while ignoring the real elephant in the room: The collapse in home prices, and the knock-on effects it has had on the economy.”
Me: I don’t disagree that the “knock on effect” such as loss of wealth may well be a drag on growth. That Fed study makes the same point:  … “recoveries from recessions associated with severe housing downturns are found to be slower.” Well, there is a difference between slow and virtually non-existent, right? Again, the Reagan  Recovery 10-quarter growth rate was 6 percent vs. 4.6 percent for the average post-WWII recovery vs. 2.4 percent for the Obama Recovery. And
And the impact of a deleveraging and a reverse wealth effect are not as clear as Weisenthal contends. Note that personal consumption as increased for 10 straight quarters and the savings rate remains extraordinarily low. But I think this chart, from the NY Times, raises big questions about the deleveraging argument:

Where is the deleveraging? It looks like debt has shifted from private to public. Let me quote a Michael Pento piece from BI, of all places: “Although it is certainly true that after decades of overly speculative borrowing, individuals and corporations are paying down debt, rebuilding their savings, and generally repairing their respective balance sheets. But these activities cannot be faulted for our economic malaise. In fact, as a country, we haven’t deleveraged at ALL. All the moves made by the private sector have been vastly outpaced by the federal government’s efforts to add leverage to the economy.”

3. If you really want an apples-to-apples comparison, it’s hard to fathom why Reagan doesn’t have to answer for a recession happening so soon on his watch, and why he only gets measured on those two years. What’s mor …  the 1984-1988 period was pretty average, so we’re really just talking about two years of really impressive morning-in-America growth.
Me: I think Paul Volcker cranking interest rates through the roof might have had a role in the recession as he attempted to squeeze out the inflation of the 1970s. The 1981-82 recession was the culmination of really 16 years of economic mismanagement. One sign of this: The Dow industrials fell by two-thirds when adjusted for inflation from 1966-1982. (From 1983-1988, the S&P composite notched a real return of 13 percent a year.) The entire previous decade marked by tremendous economic volatility, high unemployment,high inflation. Reagan inherited a mess.
As for GDP growth, it averaged 4.4 percent from 1983-1988 vs. roughly 3.3 percent since WWII. So I am pretty sure growth was markedly above average.  A recent IMF forecast, by the way, predicts sub-3 percent US GDP growth through 2016.

4. “We could of course go on, and point to several other factors in Obama’s favor, such as the fact that tax rates had already been lowered quite a bit heading into his presidency, taking away one easy form of stimulus, or the fact that a major trading partner, Europe, has been in crisis virtually the whole time of Obama’s Presidency, or the fact that Obama faced a Congress who threatened to cause the U.S. to default, or the fact that interest rates were ultra-low already, again taking away one form of stimulus from Obama.”
Me: Gosh, I wonder what U.S. GDP growth would have been in the 1980s had China been the second largest economy in the world growing at 10 percent a year, boosting global growth. Instead, it was the stagnating Soviet Union in the number two spot.  In the 1980s, one-third of the planet lived under communism sapping all that human vitality and creativity (and trade) out of the world economy. And I am not sure about JW’s point about taxes and interest rates. Is he saying that Obama has a much more constructive tax and rate environment and still couldn’t get the economy cooking?
 Bottom line: People were amazingly pessimistic heading into the 1980s after the economically tumultuous 1970s. America seemed to be in decline both economically and militarily. And corporate America was desperately in need of restructuring. (Thanks, Bain!) Obama inherited a much healthier non-financial private sector.
This is what the American people had just gone through, by the way (via MeasuringWorth):

Imagine going back in time and showing these economic statistics from the next 25 years:

Growth up, stocks up, inflation down. Oh, and the Soviet Union gone. Safer, Stronger. Better. Instead of the Soylent Green future of diminished expectations people were predicting in the 1970s, we got something more like the shiny, growthy one shown in Back to the Future II.
Obama has some big shoes to fill.

This post originally appeared at The American Enterprise Institute Blog. Copyright 2013.

Read more: http://www.businessinsider.com/why-the-reagan-recovery-was-much-more-impressive-than-obamas-2012-1#ixzz2jOp2ldK2

Comments on Trayvon

I found this post and wanted to comment on it, but found the Comments closed (Don't you HATE when that happens...), so I decided to re-post it on MY blog, so I could comment on it....

From "The Audacity of Despair, collected prose, links and occasional venting from David Simon"

The article titled simply, "Trayvon" posted on July 13th, 2013

You can stand your ground if you’re white, and you can use a gun to do it. But if you stand your ground with your fists and you’re black, you’re dead.
In the state of Florida, the season on African-Americans now runs year round. Come one, come all.  And bring a handgun. The legislators are fine with this blood on their hands. The governor, too. One man accosted another and when it became a fist fight, one man — and one man only — had a firearm. The rest is racial rationalization and dishonorable commentary.
If I were a person of color in Florida, I would pick up a brick and start walking toward that courthouse in Sanford. Those that do not, those that hold the pain and betrayal inside and somehow manage to resist violence — these citizens are testament to a stoic tolerance that is more than the rest of us deserve.  I confess, their patience and patriotism is well beyond my own.
Behold, the lewd, pornographic embrace of two great American pathologies:  Race and guns, both of which have conspired not only to take the life of a teenager, but to make that killing entirely permissible.  I can’t look an African-American parent in the eye for thinking about what they must tell their sons about what can happen to them on the streets of their country.  Tonight, anyone who truly understands what justice is and what it requires of a society is ashamed to call himself an American.

What gets me about this article is the fact that it's nothing but raw emotion.  The Author doesn't care about justice, who is right, who is wrong or the facts about anything.  The verdict didn't go the way he wanted so let's destroy the system.

First let's look at the "Stand Your Ground Law".  About 1/3rd of all the claims on Stand Your Ground were filed by African Americans in Florida, even though they make up only about 1/6th of Florida's Population.

Second, let's look at the "Race Issue".  George Zimmerman isn't "White", he's half Peruvian and Half Jewish, hell he went to Prom with a black girl that he had dated in High School.  From the time he was 6 to 11 he lived in a Black household, his Business partner is black and so is his grand father.  To top it off, he tutored black kids for free in an after school program, after it was officially cancelled by the State.  Does this sound like the kind of guy that "hated" black people?

Finally, let's talk about Trayvon, he wasn't some little, tiny, innocent 12 year old as he was portrayed by the big media outlets.  He was a towering over 6' tall, fully developed teenager constantly getting into trouble.  He lived in Miami with his mother, but his mother sent him nearly 4 hours north to stay with his Father in Sanford, after he got suspended from School (AGAIN), for writing Graffiti on a wall in school and because they found a bag with traces of Marijuana in it.  At the time, they also found a bunch of jewelry in his backpack with a screwdriver, which Martin had said was given to him by a "friend" which he wouldn't name.

Draw your own conclusions, but from what I see, the African American community enjoys protection from "Stand Your Ground" at a disproportionate rate to the rest of the population, Zimmerman was anything BUT racist and Trayvon was anything BUT an innocent bystander.  People want to make this about race, but it's not.  It's simply a tragedy of circumstances and no amount of Bricks, Race Baiting or Punditry will ever change that fact.

Obama Administration Set to Deport Christian Family Fleeing Persecution

In 2010 a U.S. Immigration Judge granted the Romeike family political asylum, based upon the fact that the German Government was attempting to remove their kids from them.  What was their hideous crime that would cause the German Government to take the draconian measures of removing the Romeike Children from their home?  Why they were Home Schooling their children, and even worse teaching them Christian Values.  These are things that are currently illegal in Germany and will no longer be tolerated.

Fast forward to 2013, and if you listen to the Obama Administration while making the following proclamation on Religious Freedom Day, you would think they would be on the Romeike families side right?:

“Today, we also remember that religious liberty is not just an American right; it is a universal human right to be protected here at home and across the globe. This freedom is an essential part of human dignity, and without it our world cannot know lasting peace.”

“As we observe Religious Freedom Day, let us remember the legacy of faith and independence we have inherited, and let us honor it by forever upholding our right to exercise our beliefs free from prejudice or persecution…”

Yet at the same time U.S. Attorney, Eric Holder is moving to have them deported!  The Administration claims that the families fundamental rights have not been violated by the German Government's law forbidding families from homeschooling, so they've asked the courts to withdraw the families political asylum and have them deported back to Germany!

The Home School legal Defense Association (HSLDA) is representing the Romeikes family and are doing what they can to have them stay in the US.  The HSLDA issued the following statement:

“The U.S. law of asylum allows a refugee to stay in the United States permanently if he can show that he is being persecuted for one of several specific reasons. Among these are persecution for religious reasons and persecution of a ‘particular social group.’”

“In most asylum cases, there is some guesswork necessary to figure out the government’s true motive—but not in this case. The Supreme Court of Germany declared that the purpose of the German ban on homeschooling was to ‘counteract the development of religious and philosophically motivated parallel societies.’”

“This sounds elegant, perhaps, but at its core it is a frightening concept. This means that the German government wants to prohibit people who think differently from the government (on religious or philosophical grounds) from growing and developing into a force in society.”

“The Romeikes’ case is before the United States Court of Appeals for the Sixth Circuit. The case for the government is officially in the name of the Attorney General of the United States. The case is called Romeike v. Holder. Thus, the brief filed by the U.S. Department of Justice is filed on behalf of the attorney general himself—although we can be reasonably certain he has not personally read it. Nonetheless, it is a statement of the position of our government at a very high level.”

“We argued that Germany is a party to many human rights treaties that contain specific provisions that protect the right of parents to provide an education that is different from the government schools. Parents have the explicit right to give their children an education according to their own philosophy.”

“While the United States government argued many things in their brief, there are three specific arguments that you should know about.”

“First, they argued that there was no violation of anyone’s protected rights in a law that entirely bans homeschooling. There would only be a problem if Germany banned homeschooling for some but permitted it for others.”

“A second argument is revealing. The U.S. government contended that the Romeikes’ case failed to show that there was any discrimination based on religion because, among other reasons, the Romeikes did not prove that all homeschoolers were religious, and that not all Christians believed they had to homeschool.”

“This argument demonstrates another form of dangerous “group think” by our own government. The central problem here is that the U.S. government does not understand that religious freedom is an individual right. One need not be a part of any church or other religious group to be able to make a religious freedom claim. Specifically, one doesn’t have to follow the dictates of a church to claim religious freedom—one should be able to follow the dictates of God Himself.”

“One final argument from Romeikes deserves our attention. One of the grounds for asylum is if persecution is aimed at a “particular social group.” The definition of a “particular social group” requires a showing of an “immutable” characteristic that cannot change or should not be required to be changed. We contend that German homeschoolers are a particular social group who are being persecuted by their government.”

If returned to Germany, the Romeike family will be torn apart by the German Government, facing fines, Jail time and the removal of the children. 

To Many Hands Out, How Will We Pay?

When we look at what's going on with our economy, one has to wonder.  How will the United States pay for so many people on the Federal Dole?
Let's consider for a moment that we have about 10,000 people per day that are signing up for Food Stamps, or roughly 300,000 per month.
On top of that we have thousands on a daily basis signing up for Welfare.
On top of that we have around 10,000 people per day retiring and collecting Social Security (which is a pay as you go program, there is no trust fund)
On top of all these handouts to non producers, we also have the Federal Government adding about 100 new employees per day.
So you might be sitting there saying, Yeah, we're a big country, what's the big deal.  Here's the big deal.  We're only adding around 150,000 jobs a month to the economy.  Yes, you heard that right.  We have around 300,000 new retirees per month collecting Social Security and over 300,000 NEW people collecting Food Stamps plus who knows how many collecting Welfare EVERY month and yet only 150,000 new jobs a month to support all of this.  How will we pay for it all?  I just don't see it happening.

Sanchez and Others Further Goals of Political Elites

Yesterday I was driving along to a Job site when I heard Rick Sanchez on the Radio talking about how Millionaires get away with only paying 10 and 15% in income taxes.  So I promptly called up WIOD and explained to him that he was mistaken, when people invest.... oops, he cut me off and hung up on me and proceeded to say "... In the Cayman Islands and other places to hide their money and keep from paying taxes".

Wow, I thought to myself.  Is this guy REALLY this misinformed or is he just trying to gain a Populist position to increase his ratings.  After all, he did just recently take up the 3PM to 6PM slot on WIOD.  I was heartened to hear that many of those calling tried to set him straight on how income earned ANYWHERE in the world, had to be paid by U.S. Citizens.  Even if that income was earned outside of this country and we are one of a very few countries that actually does this.  As an example, a French or British citizen living and earning money in the U.S. isn't subject to French or British taxes, but the reverse is not true!  We REALLY have one of the worst taxing structures in the country.  Back to the story though, next thing you know there was a guy that called and agreed with Rick.  He proclaimed that he worked for a Private Equity Fund, where the Millionaires did nothing but try to avoid taxation by "hiding" funds in other countries.

I tried calling back but of course they wouldn't take my calls anymore so I guess I'll have to rage against the machine here on MY format.

So here's what I would have said, if I had actually had a chance to talk.

First of all Rick, getting a paycheck is not the same as investing in a Private Equity Fund, Mutual Fund or any other kind of investment.  Why?  Because just as you didn't walk into WIOD and hand them over a Million dollars to invest in their operation, the average working stiff doesn't INVEST in his employer.  He's just there with his hand out at the end of the week asking to get paid for the time he put in.  You see Rick, once you get your paycheck and AFTER you've already paid your taxes on that paycheck (which for you probably averages around 30+ Percent) you can now choose to invest that leftover money in some sort of Mutual Fund or other investment that will hopefully create jobs somewhere.  Rick, are you telling me that we should tax that money which you are essentially GAMBLING in some sort of investment, at the same levels of taxation as regular income?  

Of course not, this is why we have preferential treatment for investments, because otherwise what's the point in taking a gamble, if when you win the Government is going to take half?  As for "Hiding" investments in other countries, I think that people are making business decisions based upon the confiscatory nature of our Federal Government.  If Norway is charging their companies HALF the taxes that we do, doesn't it make business sense to move some of your manufacturing there?  Ask the guys that made the two biggest cruise ships in the world, and they would probably tell you that they wouldn't be able to compete if they made those ships in the U.S. because of the tax and regulatory hurdles.  The same goes for almost any manufacturing operation.  Just look at what Canada is doing.  Even though their dollar has risen by almost 40% in the past 10 years, manufacturing in Canada is up.  Why?  They've lowered Corporate Rates to around 25% (15% Federal and around 10% Provincial).  Here's the kicker.  Even with the lowered rates, revenue is up from all the additional economic activity.  To top it off, even though we, their biggest trading partner have been mired in a deep recession, they've managed to maintain an unemployment rate of around 2% lower than we have, despite the fact that historically Canada has had an unemployment rate of around 3% HIGHER than we have!

Dial Back Spending to 2005 Levels and it will match our Revenues

So here's the thing, STOP empowering Politicians by repeating their claims as facts.  Corporate tax rates in the U.S. are higher than all G7 Nations, tax collection in the U.S. is projected to be 2.7 Trillion, a record, yet as usual they're spending a Trillion over that amount!  The real problem isn't tax collection, it's the insane levels of spending.  Does anyone even realize that since his first year in Office, Obama has spent nearly a Trillion dollars each and every year MORE than what Bush spent for 7 out of 8 years?  We RARELY see reporters talk about how cuts are NEVER cuts, the politicians create a baseline budget of 3 to 10% above the previous year and if the number is less than that it's called a cut, even though it's actually an increase.  The ONLY reason they're able to get away with this lie over and over again is because of people like Rick Sanchez and other media types that REPEAT the lie.

The King is Dead, Long Live the King

Hugo Chavez was a hero to the poor in Venezuela, and many here in the U.S.  What most fail to realize however is that the progress that he made in helping the poor will be short lived.  Why?  Plain and simple, he got lucky.  He took over just at the time that Oil started to skyrocket.  He used those petro dollars to improve the lives of those in Venezuela, but did nothing for the rest of the economy.  Compared to the rest of the region, the Venezuelan economy is in shambles.  To top it off, Venezuela today is even more dependent on Oil dollars than it was before, just as the world is starting to move away from oil.  Ford, GM and Chrysler are all making trucks that run on Natural Gas, cheap and plentiful here in the States and long before it runs out, the move will be to solar and Fuel Cell technology.

Instead of investing in the future, Chavez used oil as his cash cow to finance his socialist dreams.  Even worse, Chavez lavished over 100 Billion dollars on his buddies, while putting at least 1 to 2 Billion in his own pocket of the estimated Trillion Dollars in oil wealth generated since he took over.  What will happen to Venezuela in 10 years when more and more cars, buses, trucks and Power Plants are converted to run on Natural Gas and as Solar continues doubling in efficiency every few years.  Even worse, what would happen to Venezuela if a Conservative takes over the White House in 4 years, and removes most restrictions on drilling, and increases permits on Federal lands, thereby flooding the market with cheap oil?  The U.S. has  the largest untapped reserves in the world.  Just look at what happened during the Reagan era when he conspired with the Saudi's to make oil super cheap, bankrupting the Soviet Union.

Unfortunately, history will look upon Chavez as a short sighted opportunist who beat the populist drum of vilifying the U.S. and Capitalism.  He spread the disease of Socialism in Venezuela and set them up for a major fall.  The King is Dead, Long Live the King.

Climate Reconstruction Shows Long Term Cooling Trend

Climate in northern Europe reconstructed for the past 2,000 years: Cooling trend calculated precisely for the first time

Calculations prepared by Mainz scientists will also influence the way current climate change is perceived / Publication of results in Nature Climate Change

An international team including scientists from Johannes Gutenberg University Mainz (JGU) has published a reconstruction of the climate in northern Europe over the last 2,000 years based on the information provided by tree-rings. Professor Dr. Jan Esper's group at the Institute of Geography at JGU used tree-ring density measurements from sub-fossil pine trees originating from Finnish Lapland to produce a reconstruction reaching back to 138 BC. In so doing, the researchers have been able for the first time to precisely demonstrate that the long-term trend over the past two millennia has been towards climatic cooling. "We found that previous estimates of historical temperatures during the Roman era and the Middle Ages were too low," says Esper. "Such findings are also significant with regard to climate policy, as they will influence the way today's climate changes are seen in context of historical warm periods." The new study has been published in the journal Nature Climate Change.

Was the climate during Roman and Medieval times warmer than today? And why are these earlier warm periods important when assessing the global climate changes we are experiencing today? The discipline of paleoclimatology attempts to answer such questions. Scientists analyze indirect evidence of climate variability, such as ice cores and ocean sediments, and so reconstruct the climate of the past. The annual growth rings in trees are the most important witnesses over the past 1,000 to 2,000 years as they indicate how warm and cool past climate conditions were.

Researchers from Germany, Finland, Scotland, and Switzerland examined tree-ring density profiles in trees from Finnish Lapland. In this cold environment, trees often collapse into one of the numerous lakes, where they remain well preserved for thousands of years.

The international research team used these density measurements from sub-fossil pine trees in northern Scandinavia to create a sequence reaching back to 138 BC. The density measurements correlate closely with the summer temperatures in this area on the edge of the Nordic taiga. The researchers were thus able to create a temperature reconstruction of unprecedented quality. The reconstruction provides a high-resolution representation of temperature patterns in the Roman and Medieval Warm periods, but also shows the cold phases that occurred during the Migration Period and the later Little Ice Age.

In addition to the cold and warm phases, the new climate curve also exhibits a phenomenon that was not expected in this form. For the first time, researchers have now been able to use the data derived from tree-rings to precisely calculate a much longer-term cooling trend that has been playing out over the past 2,000 years. Their findings demonstrate that this trend involves a cooling of -0.3°C per millennium due to gradual changes to the position of the sun and an increase in the distance between the Earth and the sun.

"This figure we calculated may not seem particularly significant," says Esper. "However, it is also not negligible when compared to global warming, which up to now has been less than 1°C. Our results suggest that the large-scale climate reconstruction shown by the Intergovernmental Panel on Climate Change (IPCC) likely underestimate this long-term cooling trend over the past few millennia."

No Deal Pending on Sequestration, Because of the Opportunity it Presents

Joe Scarborough got it got it right, when he said that America won't remember the Sequester of 2013 "as some cataclysmic fiscal event", but when he goes on to say about the Republicans that "you would think its leadership would have taken to heart Mr. Obama’s warnings and struck a deal before their abysmal approval ratings sank even lower", he fails to see the point.  Obama had absolutely no intention of striking a deal.  These cuts after all, amount to a paltry 2% of PROJECTED spending (which is always a MINIMUM of 3% higher than the previous year).  As the former White House Chief of Staff to the President, Rahm Emanuel used to always say, "You never let a serious crisis go to waste".  This issue literally presents the President with yet another opportunity to slam the Republicans and get more public support for his programs, his methods, his tax increases and so on.  So what was Obama's end game?  Blow this up to an issue, even though he knew it's a non issue, then blame the Republicans!

 

Think about it, Joe himself reported on how the Republicans wanted to give the President control over exactly what would be cut, yet he refused?  Not only did he refuse, he actually threatened to VETO any bill that gave him that kind of authority and responsibility!  Why would he do this?  Simple, the President doesn't want ANY cuts whatsoever, no matter how small and no matter how much waste is pointed out, but more importantly he wants to have another issue to beat up the Republicans over.  The plan is to hype up the damage to the economy over the next year so the Republicans lose in the Midterm elections.  Obama ends up with Nancy Pelosi in charge of Congress again and he can go back to pushing things like his Climate Change agenda and other tax increases.

DEBT LIMIT - A GUIDE TO AMERICAN FEDERAL DEBT MADE EASY.

For those with short attention spans:
Total Household Debt:                          $140,000.00
Household Income:                                 $21,000.00
Household Spending:                              $38,200.00
New Debt:                                             $16,500.00
Amount Cut:                                                $385.00

Translated to the Federal Government:

Total Federal Debt:             $14,000,000,000,000.00
Federal Income:                    $2,100,000,000,000.00
Federal Spending:                 $3,820,000,000,000.00
New Debt:                            $1,650,000,000,000.00
Amount Cut:                              $38,500,000,000.00

Either way you look at it, it's only about 1% of the budget.  Let's keep in mind this video was made about a year ago with the original budget deal.  The new budget deal calls for "800 Billion" in cuts... [over 10 years], or about 80 Billion a year.  Pretty much all the other numbers are about the same, except the income has increased to around 2.3 Trillion a year.  The new "cuts" will amount to only around 2% or about double the original budget deal a year ago.

If the new numbers were put into the video the amount the guy had "cut" from his budget would be around $800.00 a year, instead of $385.00 a year.  Either way we're talking about tiny, insignificant "cuts" that only perpetuate the incredible levels of spending.