The public policy blog of the American Enterprise Institute

Subscribe to the blog

Discussion: (37 comments)

  1. Max Planck

    Without delving into the accuracy of the numbers (always suspect with anything emanating from the AEI) these comparisons are utterly meaningless because they presume all recessions or depressions are alike.

    They’re not. Not by a long shot.

    In fact, Reagan had one hell of an advantage: when Volcker raised the Fed Funds rate from 11.2% in 1979, when Carter was in office, to a whopping 20% in 1981 after Reagan was sworn in, the economy ground to a halt. Unlike Mr. Pethokoukis, I lived through that recession, and while it wasn’t as brutal or dramatic as this meltdown, it was no easy time. I was lucky to have kept my job. The CPI was at 17.9% in 1979, apparently having been undeterred by President Ford’s “Whip Inflation Now” buttons. Ny 1982, it dropped to 3.8%. Volker’s intended strangulation of the economy had provided the bitter medicine the economy needed.

    Later, Volcker eased rates back down. No doubt it comes to a shocking suprise to any “economist” working at the AEI that drop kicking the overnight rate by 1300 basis points might spur things like home lending, auto buying, and business lending, and get the economy going again.

    But to this day, the myth is maintained that it was Reagan’s (Laffer’s) tax policies that did the trick. But compared to interest rate policy, among other factors, like the cratering price of oil, Mr. Laffer’s policies barely mattered. He has spent the rest of his life reliving this myth.

    1. Mother656

      There are countless theories as to why
      The economy took off under Reagan and lasted till 2006, my personal favorite is the downfall of the USSR when Americans grasped the notion that nuclear holocaust was no longer eminant in 30 minutes and kids colleges, your first home and planning for retirement was a good idea.
      But tell me, of all of Obama’s policies, which one has been the most effective in spurring the economy?
      Cash for clunkers, which effectively illiminated 600,000 potential home loan borrowers off the market?
      The payoff to the unions and bankers, and corporations, and foreign govenments called the “stimulas”?
      How about Dodd Frank which gave the government veto power over any lrisky” investment with our money yet didn’t keep Solyndra from happening w/our money?
      The Keystone pipeline?
      The “health care” bill?
      The new consumer agency that he illegally commissioned while congress was in recess?
      How about the new immigration law?
      Don’t tell me gays in the military??

  2. Shoshana Bryen

    It is telling is that Cutter believes the Obama administration created those private sector jobs. Shades of “you didn’t build that,” is that private sector businesses didn’t create private sector jobs.

    1. Max Planck

      Can we please get off this “you didn’t build that” childishness? It’s embarrassing, and apparently the RNC decided that shaping their convention based on a misintepreted remark taken out of context is all they need to run on.

      Grow up.

      1. Shoshana Bryen

        Would you please get over the phony outrage? “You didn’t build that” was an unscripted piece of genius and is now simply shorthand for the belief that government gets credit for the goods/jobs/services produced by private business. The President’s “context” was his belief that things work better when managed by government – nothing wrong with that, except it hasn’t/doesn’t/can’t/won’t work.
        The economy is the result of billions (trillions?) of individual decisions about what to do, make, buy and sell. Government just can’t stick its finger in there and stir the pot and shouldn’t a) pick winners and losers with tax money or b) make it harder than necessary for people to pursue their goals. Broad regulations, OK – no child labor, no discrimination, safety regs. Fine. But choosing Solyndra when we already knew the Chinese were doing it cheaper? Choosing Volt buyers to get $7,500 of other people’s money on a car that costs around the median US income? Choosing GM unions over GM shareholders? Choosing Obamacare over Medicare – that $500+ billion switch that is supposed to be covered by slashing reimbursements so a different set of people gets coverage by the USG? They may be great choices – I don’t think so, but you may – but they are beyond the scope of the government’s expertise and some of them are extra-Constitutional.

        1. Max Planck

          How interesting that from four words, you can extropolate every silly meme you got from Breitbart that appeared in your inbox.

          You complain about Solyndra- oddly, the billions that Exxon-Mobil gets in subsidies – one of the largest and most profitable corporations on the planet- doesn’t bother you. (The Chinese scorched solar panels AFTER the loan, BTW)

          You complain about “the unions” of GM being favored over “shareholders.” First, as an economic expert who follows this site, you should already know that a common stockholder is wiped out in a bankruptcy. You are referring to the bondholders who were placed second in line to preserve the pensions of hundreds of thousands of workers who would be condemned to a life of penury if the deal wasn’t structured the way it was. Care to comment? In the meantime, most of the bonds owned had already defaulted and were gobbled up by speculators. “Picking winners” indeed.

          What “you didn’t build that” means is that government provides the skeleton- the entrepreneur or businessperson brings the skin. Without rules or regulations, or the framework you take for granted every day – courts of law to enforce contracts, a reliable and safe transportation system (where would FedEx or UPS be without the government) safe food and water, strong law enforcement, etc. nothing else works. And I’ve traveled the world enough to see this with my own eyes.

          Nothing happens by itself.

          1. Shoshana Bryen

            What makes you think you know what’s in my in-box? That’s sort of creepy.

          2. Max Planck

            Let’s just say some people are straight out of Central Casting.

          3. Chetco Bill

            “Nothing happens by itself” Is another message to give Obama. His main failure is “blaming” rather than leading.

            Again, your version of history is bereft of accuracy. It was well known and frequently discussed on all the financial and stock news media that the Chinese were aiming to take over the solar panal production by low cost, even below cost pricing. Look back to the stock news of as early as 2007, even rumored earlier.

          4. Max Planck

            Actually, Chinese imports of solar panels did not take off until well into 2010. A year after the Solyndra loan was approved.


  3. Michael Stein

    Unfortunately, Ms. Cutter’s claim is not refuted by the data cited. Ms. Cutter did not claim that _total_ job growth was better, only that _private sector_ job growth was better. The nonfarm payroll statistics cited include both private and public sector jobs; public sector payrolls have fallen during Obama’s tenure.

    In order to fully evaluate Ms. Cutter’s claim, she has to come clean as to how she arrived at her figures. In the absence of that information, my best evaluation is that she’s full of you-know-what when comparing to Reagan, but might well be correct when comparing to Bush. The correct BLS series identifier would be one of the following: CES0500000001, CEU0500000001, EES00500001, or EEU00500001. These data series are for private sector only, which is what Ms. Cutter was referring to. Your 129,244,000 figure appears in series CES0000000001, which includes public sector employment.

  4. The HISTORICAL record is clear. Republican presidents are AWFUL at creating economic prosperity.

    One thing the republicans know how to do is start big recessions. Here is a list of recessions since 1929:

    (R) Herbert Hoover 4 years 7 months (Aug 1929 – Mar 1933)

    (D) FDR 13 months (May 1937 – June 1938)

    (D) Harry S Truman — 8 months Feb-Oct 1945 + Nov 1948 – 11 months Oct 1949

    (R) Eisenhower – total 2 years – 4 months 10 months (July 1953 – May 1954) + 8 months (Aug 1957 – April 1958) + 10 months (Apri 1960 – Feb 1961)



    (R) Nixon – Ford total 2 years – 2 months11 months (Dec 1969 – Nov 1970) + 1 year 4 mos. (Nov 1973 – Mar 1975)

    (D) Carter – 6 months (Jan – July 1980)

    (R) Regan – 1 year 4 months (July 1981 – Nov 1982)

    (R) Bush Sr – 8 months (July 1990 – Mar 1991)


    (R) W Bush – ) total 2 years – 2months plus 5 months into Obama’s FIRST TERM8 months (Mar 2001 – Nov 2001) + 1 year 6 months (Dec 2007 – June 2009

    (D) Obama – 5 months (ended the Bush Depression June 2009) GDP growth over 3 years to present

    The Dow by Presidential term, from best to worst

    Coolidge. 8/2/1923 to 3/4/1929. Start 88.2 End: 313.85. Gain per year: 25.48%

    Clinton. 1/20/1993 to 1/20/2001. Start: 3241. End: 10578. Gain per year: 15.91%

    Obama. 1/20/2009 to now. Start: 7949. 5/24/2012: 12444. Gain per year:14.35%

    Reagan. 1/20/1981 to 1/20/1989. Start 950. End 2235. Gain per year: 11.27%

    FDRoosevelt. 3/3/1933 to 4/12/1945. Start 53.8 End 158. Gain per year: 9.32%

    Johnson. 11/22/1963 to 1/20/1969. Start 711. End 931. Gain per year: 5.35%

    Kennedy. 1/20/1961 to 11/22/1963. Start 634. End 711. Gain per year: 4.12%

    Carter. 1/20/1977 to 1/20/1981. Start 959. End 951. Gain per year -0.22%

    Nixon. 1/20/1969 to 8/9/1974. Start 931. End 777. Gain per year: -3.20%

    GWBush. 1/22/2001 to 1/20/2009. Start 10578. End 7949. Gain per year:-3.51%

    Hoover. 3/4/1929 to 3/3/1933. Start 313. End 53.8. Gain per year: -35.64%

    1. I’ll just pick on one of your so called “recessions” comments
      Unfortunately Clinton’s recession started over 9 months before Bush took office. He attempted to hide the numbers to assist Gore during the election.

    2. Jeffrey Roberts

      You left out George HW Bush, under whom the Dow did well above average.

      GHWBush 1/20/1989 to 1/20/1993. Start 2235. End 3241. Gain per year: 9.74%.

      Should have included Truman and Eisenhower to be fair.

      Lumping Ford with Nixon shows a very small gain for 1969 to 1977.

      But it remains true that GWBush did spectaculary badly compared to all other post-WWII presidents.

    3. Chetco Bill

      I don’t know where you get your highly biased numbers, but here is history: The worst year of the great depression was 1937, the first year of FDR’s SECOND term. He was 5 year’s into his presidency, and only the production runup to WW II turned the economy around. Carter ended his administration in an economic mess with 25% interest rates. Reagan turned it around in 2 years, dragging the Democrats along kicking and screaming.
      Just before the end of Clinton’s tenure, the “dot com” crash took place and the markets recovered only because of Bush, Jr.

      That! my friend is real history. Easily checked.

      1. Max Planck

        This narrative is utter nonsense, and is a true specimen of the myopia people adopt to con themselves into adopting a political identity . First, FDR’s error in 1937 is well documented, and fortunately, was quickly rectified. But that was a long time ago, anyway.
        Secondly, Fed funds (and interest rates) peaked in early years of Reagan’s first term. Carter inherited the inflation problem from President Ford, whose “Whip Inflation Now” lapel buttons didn’t seem to have the desired effect. President Carter appointed Volcker, who proceeded to bleed the inflation out the economy by squeezing it to death. Mortgage rates went into the high teens, and I owned bnak CD’s that paid over 14%!
        It took more than three years for Reagan to “turn the economy around” (sic) and that is evidenced by the employment figures coming up the 1984 election. They are about the same as today.

        For someone who claimed this “real history” could be “easily checked” it appears you didn’t do any checking at all. I do have the advantage of actually having lived through those time, however, so the romantic histories people like to tell really don’t amount to much.

        1. Chetco Bill

          I lived through them as well. In fact, much of it as a federal employee in Wash DC, and my brother was first Treasury Corespondent, then State Dept corespondent for Associated Press during those years. Your rendition of the “facts” is about as inaccurate as any well spun bunch of left biased BS.

          1. Max Planck

            Sir, if you want the facts, I pulled them off the web, and the interest rate figures are easily verifiable on over a dozen sites. Secondly, if you don’t remember the inflation numbers, here’s a site where you can check the inflation rate by year and trend it:


            What you dismiss as “liberal BS” is in fact, empirical data- which is the LAST thing you care about.

          2. Chetco Bill

            Nice diversion Change from the discussion about recoveries to inflation.
            Have a nice day!

          3. Max Planck

            I’m not diverting anything. Interest rate policy was geared to curtailing inflation, which Volcker didby ratcheting rates in the high double digits. Once that was dealt with, rates were lowered quickly, and business and lending activity took off. To this day, this is credited to Reagan’s policies, which is utter nonsense.

            You people need to look at some hard data and let that drive your knowledge.

          4. Chetco Bill

            “We People” undoubtedly some sinister cabal no doubt. You sir are a victim of being totally immersed in only one thought and can’t see reality for all your bias.
            As I said: Have a good day!

          5. Max Planck

            Sir, if you can’t back up your statements with
            e-v-i-d-e-n-c-e, don’t resort to insults.

          6. Chetco Bill

            The evidence is everywhere. I’m sorry you consider it an insult to be called a liberal. I would too.

          7. Max Planck

            Sir, if you have evidence to counterpoint me, I will thank you to present it. Otherwise, I presume you’ve conceded the point by finding yourself incapable of answering back to the hard data I presented. I cannot change history.

          8. Chetco Bill

            I choose to not waste further time with someone who is so heavily biased. You can read as well as I can. Go do it!

          9. Max Planck

            Sir, you’re deflecting from the fact you can’t answer for yourself. I have presented the raw data to prove my points, you cannot counterpoint and you have the nerve to claim that YOU’RE impartial. That’s ridiculous. You lost the debate. Live with it.

        2. Marginal tax cuts?

  5. Thomas Sullivan

    Comparisons of GDP growth are more fair than job growth, since in 1981 the population was 230 million, compared to today’s 314 million, 36% more than 1981.

    In both jobs and GDP growth Obama’s jobs and economic performance stinks by comparison.

    No wonder. Obama is at war with our economic system and job creators by means of tax hike promises, supporting unions, huge borrowing, new regulations, war on the top 2%, and statements like “the private sector is fine”, “you didn’t build that”, and his narrative on “Life of Julia” the welfare ward.

    Obama is trying to leverage the economic catastrophe of big government into installing even bigger government.

    1. Max Planck

      Government has in fact SHRUNK under Obama, but the mantras play on despite the evidence. Amazing. People are sick with pathologies/

      1. Obama has shrunk government? Only if you count reduction of the US military and NASA? But not in bureaucratic control freaks and IRS agents

    2. iNTERESTING…No jobs,,,more welfare, medicaid,medicare,food stamps,subsidized housing, to people who do not deserveit. I mean people who are here illegally and living off our system—has driven the need for more money, BUT WE WILL NEVER GET OUT DEBT IF WE CONTINUE BORROWING TO FUND the illegals, to hell with the seniors is how I see it!!!!!

      1. Max Planck

        Sir, Obama didn’t tank the economy so more people would be pushed into food stamps, and you can thank “institutions” like the AEI for turning a blind eye to illegal immigration for DECADES. Illegals didn’t drive the deficit to these levels. Seventy percent of the deficit can be traced to Bush’s tax cuts, the rest to the two wars he never even budgeted for, and then of course, the subsequent cratering of tax receipts thanks to men like Glenn Hubbard.

        You want to cure this deficit: raise taxes and now.

        1. I do agree that he inherited a lot, but so did Clinton and left office with at least a 2million surplus. I don’t give a damn what he did with his sexual life. I am not so perverted that it interested me while it was going on, besides he was not the first, and it is still going on with people in powerful positions They just have not been “set up by the opposition or the paid hos that perpetuated it!!!!!

        2. I agree he personally did not tank us, but he did support the paople who tried to enforce our strict immigration laws. Instead he gives “amnesty” for thousands that have no jobs do not pay taxes, and makes sure they have all the amenities that natural born American citizens do not have and cannot qualify for!!!

          1. Max Planck

            That is nonsense. Look, illegal immigration has been winked at by everyone for decades. One of the very first pieces ever done by the show “60 Minutes” was on “anchor babies” although we didn’t call them that then.

            If anything, you can give credit to Obama for being the ONLY President who stepped up and deported – and I mean PHYSICALLY- deported 400,000 illegals a year since he took office. He also enforced employment regulations that were already on the books be placing stiff fines on companies that hired the undocumented.

  6. Chetco Bill

    Regarding your “facts” about the Chinese vs Solyndra, First you are wrong about the timing of the Chinese entry into the market. And second, if you were correct, then what is the excuse for Solyndra’s failure?

    1. Max Planck

      Sir, I provided a link showing China’s rate of entry into the US market? Did you bother to read it?

      The Chinese are doing what the Japanese did to us in the 70s. Then, we called it “dumping,” except they did it with cars and electronics.

Comments are closed.

Sort By:

Refine Content:


Additional Keywords:

Refine Results

or to save searches.

Refine Content