Unemployment was 7.6% in January 2009. The February figures come out tomorrow at 8:30 AM EST. If you measure your self esteem by the Dow Jones Industrial index, look for a depressing day tomorrow [at the end of a depressing week].
As I was looking at the top graph, I recalled how the unemployment skyrocketed in the recession that got Reagan elected, but I’d forgotten how high it rose. So, because the Internet is so wonderful [Thanks Al!], I went back and looked at the Reagan years:
While I’m not really trying to make a giant analogy here between then and now in that our "fundamentals" are in way worse shape now than then, there’s a point in this that bears looking at. Reagan’s way of dealing with the recession was to make big tax cuts [for you know who] and to increase military spending. As you can see, the response was slow. Stocks fell 30% in the first year and a half and unemployment rose for the first two years. But things turned around finally after two years. This is the model the Republicans are suggesting we follow now. But the problem with their idea is in the lower graph. Reagan started with a National Debt that was at 26% of the Gross Domestic Product. In 2009, we’ve got a different situation altogether.
In fact, the Reagan, Bush I, Bush II legacy is a National Debt that they increased by ~46% of the GDP. These three Presidents staved off dealing with the problems in our economy by cutting taxes and doing nothing to address the fundamental problems in the economy itself. Now, there’s no way we could use their methods – lowering taxes and messing with the interest rates. Federal Interest Rates are near zero and the National Debt is staggering.
Obama is forced into the position of escalating the National Debt further because of the Keynsian Economy he inherited, but at least he has the good sense to direct the spending towards investing in our future economy instead of perpetuating our flaws and contributing to further increases in wealth inequity with nothing to show for it. Listening to the Republicans howl about fiscal responsibility, after 20 years of their malignant Deficit Spending is a bit much…
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