A couple weeks ago, Stephen Moore contributed an interesting WSJ editorial where he compared/contrasted Obamanomics vs. Reagonmics. On the morn of President Obama’s much anticipated speech to Congress, where he’ll unveil his “jobs” plan, I thought the article offered some good for thought on a potential path forward (disclaimer: I am an independent that voted both left and right during the last election cycle).
As some of you may recall, both Presidents inherited economies on the edge of collapse – high unemployment, low growth (“stagflation” in the case of President Reagan) and poor consumer sentiment. However, that is where the similarities end. Where they differ is in their respective approaches for combating the crises at hand. While I won’t bore you with talk of Keynesian theory (that stuff really makes my head hurt), what I will highlight are the strategies both implemented:
President Reagan: stimulate the “supply side” of the economy via the biggest tax cut in history, deregulation, tight monetary policy (to combat inflation) and spending controls
President Obama: stimulate (primarily) the “demand side” of the economy via a $1T stimulus package which included tax cuts, direct spending on projects and aid to states and additional funds for entitlements (e.g., unemployment and heath insurance subsidies)
While I’m not here to armchair quarterback on the could have, should have, would haves of their approaches, what I will say is I’m eagerly looking forward to President Obama’s speech to understand how much Reagan-esque supply side economic goosing he’ll propose this time around. Therein may lie the path forward to economic growth and job creation.
No comments:
Post a Comment