On November 6, 1984 voters rewarded President Ronald Reagan with a record shattering reelection victory. Twenty Eight years later November 6, 2012, President Barack Obama’s reelection odds appear to be even at best.
The Commerce Department has released it’s quarterly report. Gross Domestic Product (GDP) was up 2% during the third quarter, 2012. While the Obama campaign tries to spin this as happy news, it’s way below average and tens of millions of Americans feel acute pain in an anemic economy. [continued below the chart]After a campaign based on the broad themes, appealing to all demographic groups Reagan won 49 states and the largest electoral college vote tally in history.
Today, Obama’s campaign team is so desperate to attract the attention of micro segments of potential voters, they produced an ad targeting only the least informed and most politically naive young women with pure emotional appeal. It seeks to make first time voting seem more interesting by comparing it to first time sex: “you want to do it with a really great guy.” It even tries to plant the preposterous perception that the President guarantor of contraceptives, which would no longer be available if Obama is not reelected.
Presidents Reagan and Obama each inherited a deep recession, each caused by a financial crisis. By most measures the Eighties recession was worse than 2008-09. During 1981 and 1982:
- Mortgage rates topped 16%, compared to 5% during the 2008-09 recession.
- Unemployment spiked up to 10.8% and remained above 10% for ten months compared to a one-month peak of 10% in 2009.
- Inflation soared above 10% in 1981 compared to slightly negative in 2009 and 1.6% in 2010.
- Thousands of banks and Savings and Loan institutions went out of business.
- Similar to the current downturn, house prices plummeted and the foreclosure reate hit record highs.
Yet voters propelled Reagan to a landslide reelection victory while Obama’s campaign is reduced to scratching for improbable votes with eleventh-hour appeals to tiny demographic groups in certain counties of three or four battle ground states.
Incumbent Presidents start their reelection campaigns with major advantages. There have been 24 Presidential elections in which incumbents were running for second terms. Seventeen or 70% of those incumbents defeated their challengers. Why, with all the advantages of incumbency and the overwhelming support of the national media, is President Obama likely to lose his reelection bid? The chart above summarizes the answer.
The big difference between the 1980s post-recession economy and the current situation is the government response. Presidents Bush and Obama responded to the downturn that began in 2008 by launching several interventionist initiatives that enhanced the power and control of government over the economy. Bush initiated bailouts of insolvent banks and Wall Street firms and “stimulus” in the form of a small tax rebate. Obama continued and greatly expanded Bush’s strategy with ObamaCare, masses of new regulations, subsidies to politically favored industries and bailouts of unionized car companies.
President Obama, a disciple of Keynesian economic theory launched the largest non-military spending increase in US history, to “stimulate” the economy. His supporters now say tepid economic growth and failure replace millions of lost jobs was not because “stimulus” through government spending is a bogus economic theory but because Obama didn’t spend enough!
To satisfy their Leftist political supporters Obama and the Democrats have scheduled several tax increases, mostly targeting small business, to begin at the start of 2013. Businesses appear to be scaling back in anticipation of these new burdens but Obama does not seem inclined to do anything to prevent them.
In 1982 President Reagan responded to recession with historic tax cuts and by scaling back government regulation and intervention. Insolvent banks and companies went through the normal bankruptcy processes and either ceased to exist or emerged stronger.
Obama has diverted resources from private investment to subsidies for companies engaged in politically favored businesses such as battery powered cars and solar energy production. Some of those companies are owned by politically connected, Obama campaign donors. Several of them have gone out of business after wasting billions of tax dollars that will never be recovered.
Reagan allowed the private sector to operate on it’s own with investors and entrepreneurs deciding how to deploy economic resources in the most effective ways possible, without regard to politics.
The economic results, in the form of GDP growth displayed in top chart speak for themselves. After four years voters demonstrated their approval of Reagan’s roaring economic victory with a decisive victory at the polls.
Obama’s aggressive government intervention into the private sector has been an economic failure and is likely to yield an election day failure as well.