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Friday, September 07, 2012

Barack Obama & Bush, Reagan & Jimmy Carter- Labor Force Participation

By Susan Duclos

An earlier report showed that the official unemployment report came out and unemployment dropped to 8.1 percent because 368,000 people left the work force. For every job added, nearly four people stopped looking for work.

CNS News reports that under Barack Obama the "number of Americans whom the U.S. Department of Labor counted as “not in the civilian labor force” in August hit a record high of 88,921,000."

It is the concluding paragraph that caught the eye:

The Bureau of Labor Statistic also reported that in August the labor force participation rate (the percentage of the people in the civilian non-institutionalized population who either had a job or were actively looking for one) dropped to a 30-year low of 63.5 percent, down from 63.7 percent in July. The last time the labor force participation rate was as low as 63.5 percent was in September 1981.

Jimmy Carter was President from 1977 to 1981. Ronald Reagan had a huge mess to clean up after winning the presidential election.

Now, Barack Obama is fond of telling anyone and everyone that he inherited a fiscal mess from George Bush and he says that often to justify the weakest recovery seen since the Great Depression.

Ronald Reagan also inherited a fiscal mess from Jimmy Carter in 1981, but looking at the recovery by Reagan from the Carter term and by Obama from Bush's and we see a stark contrast on what policies worked and what policies did not.

Click to enlarge

As the chart shows, the shaded areas indicate recessions.

Another chart:

Via Washington Examiner

Obama's surrogates, specifically his top campaign aide Stephanie Cutter, claimed recently that "In the past 27 months, President Barack Obama has created more private-sector jobs than "in the Reagan recovery." PolitFact had a field day fact checking that assertion, called it false and found that "Reagan’s recovery was more than four times bigger than Obama’s has been."

The comparison is even more unflattering to Obama if you use a less cherry-picked time frame than the one Cutter used -- one that starts when the recoveries officially began, rather than the low point for jobs.

Using this formula, Obama’s numbers change quite a bit, since he’s suffered from the growing pattern of recoveries creating fewer jobs, and more slowly, than was typical in past recoveries.
The recession under Obama officially ended in June 2009. That means that the number of jobs continued to fall for another nine months before hitting rock bottom. Counting these nine extra months of job losses, Obama’s private-sector job creation total falls to 3.4 million over three years and one month.

By contrast, using this formula actually boosts Reagan’s private-sector job-creation totals. The recession under Reagan officially ended in November 1982, almost simultaneously with the low point in jobs. Over the next three years and one month -- the comparable period under Obama -- the number of private-sector jobs increased by 9.1 million.

Taking into account the growth of the workforce overall, employment has grown by 3 percent during the Obama recovery, compared to 13 percent under Reagan.

Chalk up an even stronger win for the Gipper.

Reaganomics Vs Obamanomics:

Reagan's solutions, aka Reaganomics, was a four point plan, via Forbes:

1.  Cut tax rates to restore incentives for economic growth, which was implemented first with a reduction in the top income tax rate of 70% down to 50%, and then a 25% across-the-board reduction in income tax rates for everyone.  The 1986 tax reform then reduced tax rates further, leaving just two rates, 28% and 15%.

2.  Spending reductions, including a $31 billion cut in spending in 1981, close to 5% of the federal budget then, or the equivalent of about $175 billion in spending cuts for the year today.  In constant dollars, nondefense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983.  Moreover, in constant dollars, this nondefense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms!  Even with the Reagan defense buildup, which won the Cold War without firing a shot, total federal spending declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2% in 1989.  That’s a real reduction in the size of government relative to the economy of 10%.

3.  Anti-inflation monetary policy restraining money supply growth compared to demand, to maintain a stronger, more stable dollar value.

4.  Deregulation, which saved consumers an estimated $100 billion per year in lower prices.  Reagan’s first executive order, in fact, eliminated price controls on oil and natural gas.  Production soared, and aided by a strong dollar the price of oil declined by more than 50%.

Compared that To Obama's policies aka Obamanomics, via Forbes:

Instead of reducing tax rates, President Obama is committed to raising the top tax rates of virtually every major federal tax.  As already enacted into current law, in 2013 the top two income tax rates will rise by nearly 20%, counting as well Obama’s proposed deduction phase-outs.

The capital gains tax rate will soar by nearly 60%, counting the new Obamacare taxes going into effect that year.  The total tax rate on corporate dividends would increase by nearly three times.  The Medicare payroll tax would increase by 62% for the nation’s job creators and investors.  The death tax rate would go back up to 55%.  In his 2012 budget and his recent national budget speech, President Obama proposes still more tax increases.

Instead of coming into office with spending cuts, President Obama’s first act was a nearly $1 trillion stimulus bill.  In his first two years in office he has already increased federal spending by 28%, and his 2012 budget proposes to increase federal spending by another 57% by 2021.

His monetary policy is just the opposite as well.  Instead of restraining the money supply to match money demand for a stable dollar, slaying an historic inflation, we have QE1 and QE2 and a steadily collapsing dollar, arguably creating a historic reflation.

And instead of deregulation we have across-the-board re-regulation, from health care to finance to energy, and elsewhere.  While Reagan used to say that his energy policy was to “unleash the private sector,” Obama’s energy policy can be described as precisely to leash the private sector in service to Obama’s central planning “green energy” dictates.

Last night Barack Obama gave his Democratic convention speech asking for four more years, but offering no change in his economic policies.

Mitt Romney's economic plan include fairer, flatter and simpler taxes, cutting regulations, smaller, simpler and smarter government by cutting spending and more.

 All remarkably similar to Reagan's policies which led to such success.

In February 2009, Barack Obama said he would be held accountable and that if he didn't have it done [turning the economy around] in three years, then he would be looking at a one-term proposition.