Economist and former U.S. senator Phil Gramm says this recovery really is different: If Barack Obama matched Ronald Reagan's post-recession recovery rate, 15.7 million more Americans would have jobs.
“A compelling case can be made that Reagan's tax cuts, Social Security reforms, regulatory reforms, and limits on the growth and power of the federal government not only helped the economy shake off the malaise of the 1970s but generated an economic growth premium that bore dividends for Americans until 2007,” Gramm writes in The Wall Street Journal.
“Had the U.S. economy recovered from the current recession the way it bounced back from the other 10 recessions since World War II, our per-capita gross domestic product (GDP) would be $3,553 higher than it is today, and 11.9 million more Americans would be employed.”
“If the Reagan policies of the 1980s were sufficiently different from those of the previous decade to generate a growth premium, cannot a case be made that the policies of the Obama administration are sufficiently different from those of the previous quarter-century to alter the growth trend and impose a growth discount?” he asks.
The problem, says Gramm, is not just the weak recovery but increasing evidence that the economy is now on a growth path far different from the previous quarter century. Despite the largest monetary and fiscal stimuli in American history, in 2009 the capital stock of the nation actually shrank for the first time in the postwar period.
Had Obama’s recovery rate matched Reagan’s, Gramm points out, 1982 today annual per-capita income would be $4,154 higher than before the recession.
“That's an extra $16,600 for a family of four” says Gramm, and some 15.7 million more Americans would have jobs.
“That's enough jobs to employ 100 percent of the 13.5 million Americans currently classified as unemployed,” Gramm notes. “In addition, we would have provided jobs for 30 percent of both the 2.4 million discouraged or marginally attached workers and the 4.8 million who have totally dropped out of the work force since January 2008.”
Fits News reports that the International Monetary Fund says America’s failure to control its rampant deficit spending could be the undoing of the global economic recovery.
According to the IMF’s most recent World Economic Outlook the U.S. government not only lacks a “credible strategy” for dealing with its skyrocketing debt, but is continuing to expand deficit spending at a time when it should be contracting.
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