- - Wednesday, May 4, 2016


President Obama continues on the scout for a legacy. He’s defending his economic record, which isn’t much of a legacy, by jabbing at the ghost of Ronald Reagan and the bright economic record he left. Mr. Obama insists that the Gipper’s tax cuts and boom times is a myth. That’s not the way everybody else remembers it.

“We must puncture the mythology that’s been built up around the Reagan revolution,” he told The New York Times, “where somehow people genuinely think that he slashed government and slashed the deficit and that the recovery was because of all these massive tax cuts, as opposed to a shift in interest-rate policy.”

No one argues that it was only the Reagan tax rate reductions — which cut the highest income tax rate from 70 percent to 28 percent — that produced the prosperity of the 1980s. Mr. Reagan further deregulated key industries in energy and transportation, cut domestic spending, sweated out Jimmy Carter’s 14 percent inflation, and governed with a business-friendly emphasis.

The new leftist argument about the 1980s, parroted by Mr. Obama, is that it was the Federal Reserve that set off the boom, not Mr. Reagan. Selective memory can be comforting, and nearly all liberal economists in 1981 opposed the sound and stable money policies Mr. Reagan implemented with Paul Volcker, who was then the chief at the Fed. The Keynesians all thought the Reagan/Volcker anti-inflation policy would destroy the economy, and in fact the policy rebuilt the economy. Now Mr. Obama and his cohort see that the very policies they said would never work were the story of the success.

Reaganomics proved decisively is that it’s possible to bring down inflation and build a booming full-employment economy at the same time. Jimmy Carter and the liberal economists settled into “malaise” until the Gipper proved that he could do it even if they couldn’t.

The monetary policies snuffed inflation and the tax-rate cuts ignited real economic growth, increased work and investment, and even increased tax revenue paid by the wealthy. In the 1980s, the nation enjoyed calendar quarters with 8 percent growth and months with a million jobs created. Mr. Obama and his administration haven’t come within a mile of that.

The latest GDP report recorded 0.5 percent growth in the first quarter of 2016. The growth rate since the Obama recovery began is 2 percent. Under Reagan the growth rate over a similar stretch was closer to 4 percent. In the first six and a half years of the Obama era the economy has expanded about 15 percent. Under Mr. Reagan the economy grew more than 34 percent. This has created a $3 trillion growth gap.

Mr. Obama blamed the low growth rate since 2009 on Republicans who wouldn’t let him spend and borrow more. But does anyone actually believe that if only the Obama administration had borrowed $10 trillion, rather than $8 trillion, the nation and the economy would be better off today?

President Obama says he saved the economy from a second great depression, and the economy has in fact grown, but only slowly, in nothing anyone would call a boom. Many Americans have not felt a real recovery. Middle-class incomes have fallen by about $1,000 for median income households since January 2009. Almost all of the income and wealth gains have gone to the top 10 percent. Mr. Reagan’s recovery benefited every income group.

Mr. Obama’s recovery is not as fair as the Reagan recovery. Most Americans — by a ratio of 3 to 1 — say the economy is on the wrong track after nearly two terms of Obama economics. Barack Obama would love to trade his record for the Gipper’s. Such wishes and dreams comprise the only economic legacy he has to leave.

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