After the last few weeks of horrible economic news, its worth asking if the Obama administration’s economic record is more like the stagflation of the Carter-era or the spending, mass unemployment and regulatory imposition of the Hoover administration. While both comparisons have been made quite a bit, perhaps a deeper look at these comparisons is in order.
The Democrats and administration released an exiting new plan for growth and the recipe is simple; raise taxes on those making over $100,000. This obviously is nothing new. What is new is the rate that taxes would be raised. The Heritage Foundation reported last week that the Democrat’s budget bill will raise incomes to on the highest earners to levels unseen in thirty years.
The HF's article id intended to imply Carter-era tax rates, or Carter-Era economic doldrums. That may not be a bad comparison with the inflation concerns of today and the 70’s and high unemployment in both eras.
But let’s remember some other factors which will put Obama and Carter in separate company: Carter kept the marginal tax rate steady at 70% in his years in the Whitehouse, Carter also saw the national debt as a percentage of GDP drop under his leadership. He also began to deregulate several industries such as financial institutions, and Carter resisted the tendency to implement protectionist policies. On these points Carter and Obama are from very different places. In the last three years, regulation on industries like the financial sector have increased markedly. The administration has increased regulations on the health Care industry; greater regulation on business and health care are unapologetically major elements to the Health Care Reform bill signed last year. And The Obama administration has also increased national debt at a rate at more like the levels of the 1930’s.
Protectionist policies are not something the Obama administration opposes. While the Bush Administration signed several free trade agreements and had a few in the works when Obama took office, the progress on signing these agreements has largely been halted. Add to that fact the imposition of tariffs on Chinese imports early in 2009 and buy American clauses to the stimulus package, and Obama looks less like Carter and more like Hoover.
In 1992 Bill Clinton made the regular claim that the economy under G.H.W. Bush was the worst economy since the Great Depression. Clinton’s attack dog James Carville made the now famous statement “it’s the economy, stupid.” Oh…the days of overselling economic troubles. Remember the time John F. Kerry (Vietnam veteran) claimed that G.W. Bush’s record of job creation was the worst since Herbert Hoover. Now under the Obama economic troubles what would Kerry, Carville, Clinton and Gore say if they were stuck with an injection of objectivity serum?
Hoover raised the rate of income taxes, new regulations at one of the fastest rate in the last century. He also signed the Smoot tariff which was a sweeping levy on several vital imports. Most haunting is the marginal income tax rate which Hoover imposed during his administration: 63%, is the rate Hoover imposed and is the number which the HF’s article projects in the Democrat growth plan. The result of Hoover’s actions were utter disaster with the highest recorded unemployment rate in the twentieth century. Obama’s unemployment rate may actually be worse than what’s been reported due to the way unemployment is recorded today versus the 30s.
No matter which former President Obama is most like, Carter and Hoover were both punished for their poor economic records and high unemployment. Obama’s unemployment and economic record is also pretty miserable (9.1% under today‘s form of recoding the number). There is one place where we can hope Obama’s presidency shares one important trait with both Hoover and Carter…A one-term presidency.
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