Regan vs. Obama Economy
IT tenure are any American Presidents won will go down In nelsons, teen snouts D Ronald Reagan (1981-1989) and Barrack Obama (2008 – Present). They both assumed office at a time when America’s economy was slumping. The American electorate voted them in office with the hope that they would recover the economy. Sure enough they did keep their promise to the American electorate, but still amidst a few challenges. Their approach to recovering the economy appeared quite dissimilar.
While Reagan concentrated on cutting taxes and removing economic growth adolescent, Obama on the other hand focused on raising the reach and size of government. These are Just some of the differences between the Reagan and Obama economic eras. Much of this paper is devoted to comparing and contrasting the economic era of these two presidents. This paper will also see how the Reagan economic era paved the way for today’s, Obama economy. In addition, we will identify some of the errors in Ronald Reggae’s policies.
When Ronald Reagan sat at the helm of presidency in 1981, a strong beam wind that had driven the American economy into a slump turned into a tailwind. Three worsening economic slumps were threatening the economy. For instance, oil prices dropped from 70 dollars to 20 dollars in the period between 1982 and 1988 (Reagan & Denny, 2011). By contrast during the Obama era, oil prices increased from 55 dollars to 90 dollars in the period between 2008 and 2012. In addition, during Reggae’s stint as the president, the global economy enjoyed the positive aspect of globalization. Europe and Japan seemed to have benefited the most from the globalization.
This globalization saw America’s economy under Reagan being stimulated. The same case has been witnessed during Beam’s stint as the president. Second, when Reagan sat at the helm of presidency, the FED enjoyed a lot of credibility (Mistaken, 1988). Immediately after containing the high inflation in the Carter period, Paul Blocker, the FED chairmen, had adequate room to change course, slashing interest rates from 18% to 6% in 1988; down from 20% in 1982. By contrast, when Obama took office, the FED had come under rigorous censure for doing little to avert the blowing housing bubble.
It is worth noting that the FED is currently under ensure for launching many quantitative easing rounds with uncertain effects to the American economy. Moreover, the enormity of short-run interest rate decreases under the Obama regime is less than that of the Reagan regime; a 4. 5% decline in short-run interest rates under Obama regime versus 13. 5% decline under Reagan regime. ‘ Third, Reagan, like Obama, became heir to Carter’s economic mess. Reagan was particularly beleaguered when unemployment rose to a staggering 9. 5%. He dreaded that he would not be re-elected.
Presidents Reggae’s goal was to execute economic policy dubbed ‘Ergonomics’. This policy aimed at stimulating America’s economy through tax credits, accelerated depreciation, and tax cuts. Reggae’s core catalyst to attain this goal was the enactment of the ERRATA (Economic recovery Tax Act) in 1981. The ERRATA brought in phased-in cuts in marginal duty levels that were extensive. RE IA, never, was a too Tar errors Ana Taller despondently creating huge budget deficits as well as weakening America’s economy. This resulted in an economic slump that lasted through the better part of 1982.
Luckily, Reagan saw the fault, and with enactment of DEFEAT (Tax Equity and Fiscal Responsibility Act) in late 982. America’s economy embarked on a path to recovery. DEFEAT acted as Errata’s remedy. In fact, it came to be known as the most extensive peacetime tax rise to be ever enacted in the history of America. Ironically, Reagan, a Republican, had signed the bill. DEFEAT began presumably the most considerable bull series in the economic history of America. This cycle lasted for close to half a decade. Reagan deserves much of the credit for endorsing DEFEAT and particularly, for its great economic outcome.
However, few people recognize that it was Peter Stark, a Democrat, who backed DEFEAT. Worth noting is the fact that Reagan played a very instrumental role by Joining forces with fellow Democrats. The DEFEAT perhaps explains why Reagan was reelected for a second term. On the other hand, Obama became the heir to the worst financial mess of any president since Roosevelt acquired the disaster from Herbert Hoover (1929 – 1933). As Obama took office he was bequeathed with the task of signing the RARE (Lecturing, 2009). Dubbed the ‘Stimulus’, this act established a ground that would prevent financial markets from declining further.
During president Bush’s last tint as the president, the American stock market witnessed loss of a staggering 58%. Under Beam’s tenure as president, Americans have witnessed an impressive resurgence in equity markets. This has compensated for the losses made during president Bush’s regime. Obama has outperformed most of his predecessors, including Reagan and Clinton, when it comes to financial markets stewardship as well as other economic indicators. For instance, the average yearly returns for the NASDAQ, DOD, and S were 31 . 7%, 17. 2%, and 25. 3% respectively in Beam’s first three years as president.
In contrast, the first three years for the NASDAQ, DOD and S&P500 during Reggae’s presidency were 7. 02%, 6. 68%, and 6. 16% respectively. President Reagan is also said o have presided over a major economic slump in American history, on that lasted for nearly 16 months. By contrast, the economic slump under Obama took only 5 months. America has also witnessed positive employment growth for two years under Obama as president (Bamboo & Blinder, 2012). Although this has been very painful, it is worth noting the Americans are recovering from a deep economic slump.
For 10 out of 16 months during president Reggae’s economic slump, unemployment rate hit a record high of 10. 8%. By contrast the highest ever-recorded unemployment rate now is 7. 9%. Actually, one of the reasons why president Reagan was reelected in 1984 was because Americans saw that Job growth was improving. True to their conviction, unemployment rate took a downward spiral until it fell below 7% in 1986. Looking at average unemployment, corporate profits, industrial production, inflation, length of recession, financial markets, and income inequality, president
Obama outperforms Reagan in all of these economic indicators. The challenge now for Obama is if he can match Reggae’s Job growth that spiked to a staggering 3. 9 million new Jobs in 1984. This can be seen as a stretch, however, Americans can only wait and see how Beam’s second term will turn out. Beam’s results not surpass Reggae’s result In II out AT 12 AT ten Key economic Inhalators. I Nils may appear a good Job for a president who has often faced a lot of criticism for his economic policies. Mitt Rooney, his republican challenger, has labeled him an economic apprentice.
Away from these pundits and critics, it is worth noting that during Reggae’s era Americans had the notion of working together. Americans would need to go back to those golden days, where compromise and statesmanship were routine and considered indispensable. For now, Obama should be given credit for his stewardship of the American economy. On the other hand, Reagan should be praised for impacting economic lessons that no other President could. The major mistakes he made were the implementation of the tax cuts and the measures he put to decrease government spending, which he believed would recover a slumping economy.
His policies send the American economy in one of the greatest recessions. Succeeding presidents that include Clinton, Bush and Obama, would learn not to follow a similar path. In conclusion, this paper has looked at the similarities and differences between the economic era of president Reagan and president Obama. While both presidents took office at a time when America’s economy was slumping, they both assisted to steer the economy to high growth rates. Reggae’s policies have particularly shaped Beam’s policies in one way or another.