Hillary Clinton claims the economy does better with a Democrat in the White House–that’s simply false.
Unless a president presides over an absolute disaster—as did George W. Bush or Herbert Hoover—comparing one with another is tricky business. Too much depends on the domestic circumstances each inherits and conditions in the wider global economy.
The best recent apples to apples comparison is between the tough situations Ronald Reagan and Barack Obama faced when they assumed high office and how the fortunes of America’s families subsequently progressed—with Reagan relying on conservative prescriptions and Obama on activist government to fix things.
Obama took office during a punishing financial crisis and recession. Unemployment peaked at 10 percent but under his tutelage, the economy has reclaimed more than 14 million jobs and employment is up 11 percent.
The Gipper faced tough times too—a bruising recession, double digit interest rates and unemployment reaching 10.8 percent. Subsequently, the economy added more than 19 million jobs and employment increased 22 percent.
Reagan accomplished so much because he lowered taxes, curbed the growth of non-defense spending and relied on private decision making to guide recovery. He cleared a path for businesses, large and small, to invest as they deemed fit and raise wages as they needed to compete for good workers.
Obama increased taxes and micromanages businesses through an avalanche of new regulations. To pacify a middle class under siege and Americans underemployed or not working at all, he offers more government giveaways, such as writing down college loans and mortgage debt, and incessant preaching that many ordinary folks are victims of racism, sexism and the evil machinations of the well-off.
Through the first 26 quarters of Mr. Obama’s recovery, GDP growth has averaged 2.1 percent, whereas during the comparable period for Reagan, GDP advanced at a 4.6 percent annual pace. And whereas Reagan’s social safety net assisted the unemployed, Mr. Obama’s pays the unemployed to be idle.
The 7 million men between the ages of 25 and 54 who are neither employed nor are looking for work are rewarded with food stamps, the earned income tax credit if their spouse is a low-income worker and federal health care subsidies—and even virtually free health care through Medicaid in many states.
For many folks refusing to do much to work at all, he offers an even more attractive benefit—free money in the form of a government pension.
Nowadays, Americans are living longer and healthier lives and work is generally less physically challenging, yet adults ages 16 to 64 certified as permanently incapable of working by the Social Security Disability Insurance program now stands at 5.1 percent—about double the figure in Reagan’s day.
A broken appeals system offers a decided advantage to those crafty applicants who hire a lawyer — a situation the Obama administration expresses no real interest in fixing.
On the campaign trail, Clinton is offering Americans more of the same—$1 trillion in higher taxes to pay for free college tuition, daycare for pre-K children, bigger Obamacare subsidies, extending Medicare to Americans as young as 50, and several other initiatives. To further micromanage the economy, she proposes to generalize to the national level the California Fair Pay Act, which requires even the smallest employers to justify to government supervisors pay and hiring decisions.
For hard working families, the difference in results is remarkable. During the Reagan years, annual family incomes rose for white Americans and minorities alike—about $3,900 overall.
During the Obama presidency, those are down $1660 overall and about $2200 for African-Americans.
The social indicators are terrible—the middle class is shrinking, suicides and drug abuse are up, fertility is falling precipitously, millions of college graduates are in low paying jobs, and home ownership is at a 48 year low.
Quite simply, Clinton’s pronouncements that the economy runs better with a Democrat in the White House, and Americans would be better off doubling down on Obama’s economic policies, simply don’t bear the test of facts.
It’s time for change, time for a Republican in the White House.
Peter Morici served as Chief Economist at the U.S. International Trade Commission from 1993 to 1995. He is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He is the five time winner of the MarketWatch best forecaster award.