The 1982 recession and the 2008 financial crisis were not the same. In the early-1980s, the country was fighting a decade of stagflation. Paul Volcker, the chairman of the Federal Reserve, decided to wring inflation out of the economy by sharply raising interest rates. The medicine worked to cure inflation, but it threw the economy into a deep recession. Recovery came when the Federal Reserve lowered interest rates again and sparked an investment boom.
In contrast, the 2008 financial crisis was the result of a credit bubble. It came when the Federal Reserve was already trying to stimulate the economy with low interest rates. It was — and is — global in nature, and for the economy to recover, households need to dig themselves out of debt such that they can begin spending again. Unlike the Federal Reserve lowering interest rates, that takes time. A long time. To attach some numbers to this story, in 1982, household debt amounted to about 45 percent of GDP. In 2009, it was 100 percent. Those numbers imply very different recoveries.
The 1980s were not all about Reagan. The effect Volcker’s policies were having on the economy was well understood. Here’s the New York Times, in 1983: “As the recession deepened in 1982, the United States and the rest of the industrialized world focused on high interest rates as the cause - and on Paul A. Volcker as the culprit.” The House majority leader, Democrat Jim Wright, called for Volcker to resign. Reagan officials were unhappy, too. “A question that seems to be in the minds of many people in the Reagan Administration and the business community is whether the Federal Reserve should pull back a bit from its restrictive monetary policy and let the President’s economic recovery package have its intended stimulative effect on the economy.”
Be very skeptical of any discussion of the recession or recovery of the early-1980s in which Volcker — or at least the Federal Reserve -- is not a primary actor. You’re likely reading a piece that deifies Reagan rather than a piece of actual economic analysis.
The 2000s are not all about Obama. Key decisions about regulating financial derivatives were made under Clinton. The credit bubble built under Bush. The initial response to the financial crisis — which set us on a path that was hard to reverse after-the-fact — was made by Bush’s Treasury Secretary, Hank Paulson, and Federal Reserve Chairman Ben Bernanke. The pace of recovery has been substantially slowed by the European debt crisis and the rise in oil prices that resulted from the Arab Spring.
Contrary to popular belief, taxes are lower under Obama than they were under Reagan. In 1983, when Reagan was trying to get the economy out of recession, revenues were 17.5 percent of GDP. In 2010, when Obama was trying to guide the economy into a recovery, revenues were 14.9 percent of GDP.
Taxes are so low under Obama in large part because of the Bush tax cuts and the effects of the financial crisis. But they’re also low because of the tax cuts passed by Obama in the stimulus bill. And remember — Obama’s number here is for 2010. In 2011, Obama further extended and enlarged the Bush tax cuts in the 2010 tax deal.
Obama’s policies have temporarily increased deficits. Reagan’s policies permanently increased them. Reagan’s policies were notable for increasing structural deficits. That is to say, he passed permanent, deficit-financed tax cuts. Long after the recession was over, his tax cuts remained, necessitating the deficit-reduction bills passed by George H.W. Bush and Bill Clinton. Obama’s major deficit-financed policies -- the stimulus and the 2010 tax deal -- have both been temporary. Obama has, in other words, been much more concerned with out-year deficits than Reagan ever was.
When Reagan entered office, taxes were unusually high. When Obama entered office, taxes were unusually low. In 1980, taxes were 19.6 percent of GDP. That was higher than they had ever been outside of wartime. When Obama entered office, taxes were below 15 percent of GDP -- lower than they had been since before the creation of Medicare and Medicaid. This helps explain why Reagan sought a long-term tax cut, while Obama is seeking a long-term tax increase.
The political system is vastly more polarized today than it was in the 1980s. This rarely gets much attention, but it matters. Reagan negotiated his policies with the Democratic Speaker of the House, Tip O’Neill. Many Democrats voted with Reagan to cut taxes, and Reagan subsequently signed multiple pieces of legislation raising taxes to cut down on deficits. If the political system today was more similar to the political system of the 80s, it’s likely that we would have seen both more short-term stimulus and more long-term deficit reduction. Under both Keynesian and non-Keynesian models, that would have helped the recovery. It is hard to say what Reagan’s record would look like if he had faced a divided Congress in our more polarized moment.
During the Recession of the 80's we never saw banks going under, we didn't see housing crash, we didn't see the auto industry come apart, we didn't have two wars going on. Had Obama NOT acted immediately on the issue, we'd have fallen into a depression far worse than the 1930's and it's had Global effects. If you don't grasp that then your partisanship is overwhelming your common sense.
Extremism: A threat at home, a threat abroad.
"The National Bureau of Economic Research, the arbiter of U.S. business cycles, last year determined the recession started in December 2007. The private group is based in Cambridge, Massachusetts,
Yesterday’s updates are part of comprehensive revisions that take place about every five years and are more extensive than the changes announced at this time each year. Figures as far back as 1929 can be revised.
Over the most recent period, the third quarter of 2008 underwent one of the biggest changes, going from a 0.5 percent decrease in GDP to a 2.7 percent drop. The new reading better illustrates the effect the September collapse of Lehman Brothers Holdings Inc. had on the economy and credit markets.
The deeper deterioration last year underscores why Federal Reserve Chairman Ben S. Bernanke and his colleagues at the central bank cut the benchmark rate to a record low and extended credit to non-banks for the first time since the 1930s."
Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children. ~ Ancient American Indian Proverb
Early voting in Georgia. On the 20th of October this old Goldwater conservative voted against both Donald Trump and Hillary Clinton by casting my vote for Gary Johnson. Neither Trump or Clinton belong within a million miles of the Oval Office.
You're simply making excuses for this. Another conservative justificationist in full bloom.
You know what? That's tough crap. This is the presidents choice for Def. Sec. He's qualified and they all know it. Just because he doesn't square with the Republicans is beside the point. They didn't win the election. The president did. They aren't going to support anything that Obama wants, so are you expecting him to put in a guy that they want?? Why?Hagel has shown he doesnt have the same ideas about foreign policy as most republicans, so when he supports a policy republcans dont like all you will hear is Hagel this and that.
No, Not just the surge. The entire war. It was created on a bed of lies. Hegal reaslised that and stood up against it. They hate him for having a conscience which they clearly lack.The surge was the worst mistake since Vietnam?
No he doesn't. The war was a lie. You're saying that he deserves to be hit because he was right and they were wrong? That war cost over 4,000 American lives. For what?? Hegal has a military background. He knows what it's like to have shrapnel floating in your chest unlike the idiot Cruz who has no idea about war but is intent on re-cycling Joe McCarthy.Hagel deserves to get some political slings and arrows from an outrageous comment like that.
That might explain the pathetically low approval rating for congress. And who do you think that low approval is aimed at? The GOP, that's who. Party over country. Identity philosophers. Loyalty to the group over the truth. And I really don't care to hear your tu quoque argument about "they do it too". As most of us learned from our mothers growing up as children....two wrongs don't make a right". Your comment is simply justificationist babble.The reast of your claptrap happens in both parties, party loyalty does tend to mean something in the pecking order and support you recieve from the party. Thats nothing new. Its also not limited to one side of the other.
Extremism: A threat at home, a threat abroad.
QUOTE=Fenton;1061484549]Lol....it's happening now. With 60 million idiots voting Obama back into office.
Or was that a good thing ?[/QUOTE]
Anything would be preferable to the wingnuts from the Right, anything....................[sorry
Unemployment was lower on every day of the GWB administration than it has been on any day of the BHO administration.
"It's always reassuring to find you've made the right enemies." -- William J. Donovan