Faltering Economy Staggers To a Standstill

If we’ve learned nothing else from the Obama economic experiment we should have learned that the core doctrine of progressive economics, that prosperity results from activist government intervention in the private economy, is a fallacy.

In late April the Democrats’ leading pollsters Stan Greenberg and James Carville advised the party’s candidates to:

…bury any mention of [economic] “recovery.”  That message was tested in the bipartisan poll we conducted for NPR and it lost to the Republican message…The Democratic [“recovery”] message missed how much trouble people are in, and doesn’t convince them that policymakers really understand or are even focusing on the problems they continue to face.

This proved to be prescient advice advice a few days later when the Commerce Department’s Quarterly GDP report was published.

In the first quarter of 2014 the US economy grew 0.1%. 

It was the weakest quarter in three years and the second weakest since the technical end of the recession, June 2009.  As the chart shows we’re suffering through the worst post-recession economy or “recovery” since World War II.GDP-through-2014Q1Two recoveries in the chart, 1949-54 and 1970-75 were interrupted by a second recession.  The lines turn downward for three quarters, marking a brief recession, then resume their upward progress.  Even those two recoveries were stronger than our current, lifeless economy.

When allowed to operate without excessive government interference the American economy has always been a spectacular prosperity machine, unequaled in all of human history.  But under President Obama and the so-called “progressives” he leads, government seems to have mounted enough intervention into the private sector to throw sand in the gears.

It doesn’t have to be this way.  Based on the lessons of history we know what government can do to help stimulates economic growth.

Like President Obama, President Reagan inherited a severe recession. The 1981-82 recession was caused by a monetary crisis and was in some ways worse than the 2008-09 recession.  Unemployment spiked higher, interest rates soared into double digits and home and stock prices crashed.  Yet as the chart shows the economy grew more than twice as rapidly as our current “recovery.”

Reagan’s economic program, based on his commitment to liberty, was the opposite of Obama’s:

  • Sweeping tax cuts that left wealth in the hands of those who had created it and were best equipped to reinvest in the American economy;
  • Release the creative and productive energies of The People by eliminating the restraints of excessive government regulation.

Unfortunately, President Obama and the Democrats simply ignore history, adhering to the seductive, “progressive” promise of prosperity through expanded central government power and intervention.  Obama’s program includes:

  • Record high deficits;
  • A government take-over of health insurance;
  • tax increases, especially on small businesses the primary job creators;
  • An aggressive regulatory agenda.

The results speak for themselves.  It now appears likely that in November voters will elect a Republican majority to the United States Senate.  While the Republican economic record is far from perfect the party does seem to be grooming an emerging generation of realists who are not seduced by progressive promises of miracles delivered by a more activist and powerful federal government.

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