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Obama should act more like Reagan

By Raymond Keating
Dolan Media Newswires

Long Island, N.Y. — Here we are at the beginning of 2010, and President Barack Obama marks the completion of his first year in office. To paraphrase former New York City Mayor Ed Koch: How’s he doing?

According to recent poll numbers, not so well.

In early January, Gallup reported that Obama’s approval rating among adults was 50 percent. That was down from 68 percent at the start of his administration. Meanwhile, 44 percent disapproved of his job performance, compared with 12 percent when he took office.

Gallup provided a historical perspective: Since 1954, Obama has the second-worst approval rating at the start of a president’s second year in office.

Who was worse? In January 1982, Ronald Reagan had an approval rating of 49 percent, with 40 percent disapproving.

Should this encourage Obama? After all, Reagan bounced back nicely, winning a second term in 1984 in a landslide.

For good measure, two presidents had solid approval ratings after their first year in office, yet went on to lose re-election. George H.W. Bush’s approval rating was 80 percent in January 1990, and he went on to lose to Bill Clinton in 1992. And Jimmy Carter had good numbers in January 1978 — 55 percent approving and 27 percent disapproving — and he got beaten badly by Reagan in 1980.

The point is that circumstances can change quickly and dramatically in politics.

A striking similarity also exists between Obama and Reagan in that they both inherited very bad economies. For Obama, the recession had started in December 2007, and the credit mess exploded in September 2008.

Meanwhile, Reagan entered office in the midst of stagflation, that is, a stagnant economy combined with high inflation.

In each case, it was widely asserted that the economy was in the worst shape since the Great Depression.

But the similarities end there. Reagan’s policy focused on deep, broad-based tax relief, deregulation and tighter money to get inflation under control.

Obama’s agenda features higher taxes on personal income, capital gains, dividends and estates. He is looking to expand government intervention and regulation wherever possible, most glaringly in the energy, health care and financial sectors.

While the Reagan agenda helped the economy by relieving some of the burdens placed on risk takers, the Obama agenda seems designed to restrain or derail economic recovery.

U.S. entrepreneurs, investors, businesses and workers are resilient. That they will lead us out of this economic quagmire, I have no doubt. Unfortunately, the Obama agenda has hampered and will continue to hamper their efforts.

That’s ironic, given that Obama’s approval rating and hopes for re-election ultimately are tied to the ability of businesses and investors to get this economy growing robustly and creating jobs.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

One comment

  1. Several differences and similarities you didn’t mention.

    Reagan inherited an economy creating jobs; half million jobs were created in the first six months Reagan was in office.

    In both cases, they signed major tax cuts, and in both cases, massive job losses followed. And by the way, taxes are lower today in all dimensions than in any time Reagan was president, ….

    (other than for Social Security, which has higher taxes and higher benefits, thanks to Reagan.)

    Let’s remember that the deregulation in the 80s led to the S&L crisis.

    Deregulation since led to the even worse crisis as well as the following tax cuts driving up the deficits even as Bush increased entitlements.

    Let’s not forget the currently active tax cuts:
    06/07/2001 Economic Growth and Tax Relief Reconciliation Act of 2001
    03/09/2002 Job Creation and Worker Assistance Act of 2002
    05/28/2003 Jobs and Growth Tax Relief Reconciliation Act of 2003
    10/04/2004 Working Families Tax Relief Act of 2004
    10/22/2004 American Jobs Creation Act of 2004
    05/17/2006 Tax Increase Prevention and Reconciliation Act of 2005
    02/13/2008 Economic Stimulus Act of 2008
    10/03/2008 Tax Extenders and Alternative Minimum Tax Relief Act of 2008
    02/17/2009 American Recovery and Reinvestment Act of 2009

    If tax cuts are so great for the economy, why was the decade of the greatest number of tax cuts, one after another, the worse economy since the Great Depression?

    Let’s not forget all the tax hikes Reagan signed in order to stimulate the economy:
    09/03/1982 Tax Equity and Fiscal Responsibility Act of 1982
    01/06/1983 Highway Revenue Act of 1982
    04/20/1983 Social Security Amendments of 1983
    08/12/1983 Railroad Retirement Revenue Act of 1983
    07/18/1984 Deficit Reduction Act of 1984
    04/07/1986 Consolidated Omnibus Budget Reconciliation Act of 1985
    10/22/1986 Tax Reform Act of 1986
    12/22/1987 Omnibus Budget Reconciliation Act of 1987

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