The date in this Bloomberg article is telling: U.S. Economy Shrank 6.2% Last Quarter, Most Since ’82. Why? It definitely sets up a competition between ideologies, between President Reagan, and his vision for America, and President Obama’s vision for America. Both Presidents faced similar issues — a horrible, deep recession and contraction. Their approach to dealing with it from a federal level couldn’t be more different. One used supply side economics to cut the heck out of taxes and cut non-defense spending fairly deeply, and the other is increasing taxes on the upper class, not cutting taxes anywhere else, and massively increasing spending in non-defense areas of the budget. In Reagan’s case, the economy recovered strongly fairly quickly, and went on to grow for 25 years with only two mild recessions.
We won’t know how our current President’s plan affects things in the economy for years to come, unfortunately. Will it be like the effects of President Johnson’s Great Society, ushering in a decade of pain and economic hardship? That’s my bet, but there are so many factors and variables that cannot be compared to any American era, that it’s only a guess. The thing to remember, of course, is that no matter how smart your leaders sound about their predictions of the future and how program X will have effect Y over time span Z, they don’t know either. Budget predictions four years in the future have never been correct. Ever.