Drew, at his blog “Notes from Off-center” wrote, in criticizing the current Bush Administration that “Just like Reagan, Bush II has taken a balanced budget and screwed it up.” I suppose everyone is entitled to a little bit of re-writing history, but to argue that Reagan started with a government that had a balanced budget is, well, a fantastic stretch.
For the four years preceding Reagan (better known as the “Carter Years”) there was a deficit run each and every year. Reagan did not inherit a Balanced budget. Not even close. I always thought it an interesting bit of history that prior to 1999, the last “balanced budget was in 1969, and that was only after “using” the Social Security surplus to balance the books.
Just thought you might want to know.
And now, having dispensed with that myth, let’s look at some other economic indicators from the Carter Era.
In addition, Reagan started with double digit inflation (12.5% for 1980), double digit interest rates (the federal reserve, or PRIME was at 13.35 in 1980), and unemployment was at a more “reasonable” 7.1% level.
So, since Drew opened this, let’s take a look, shall we, at how our current “bad economy” compares to the one Jimmy Carter handed to Reagan.
Inflation:12.5% Carter, 4.1% Bush
Prime Interest Rates: 13.35% Carter, 5.02% Bush (and have dropped more since the final ’07 figures)
Unemployment: 7.1% Carter, 4.6% Bush
So. what lessons can we draw from this? Well, certainly we can learn that we should check facts before making statements like “Just like Reagan, Bush II has taken a balanced budget and screwed it up.”
But we should also learn from this that we should place our current economic situation in historical perspective. While we are flirting with a recession (defined as 2 consecutive quarters of “negative growth” in the GDP), we have, by many measures a strong economy. Some would argue that it is built on a deck of cards, and that all these indicators are simply castles in the sand. Perhaps. Or perhaps economies always have troubles, and challenges, and growing and declining markets.
Perhaps we have had it so good, for so long, that we lose sight of how good we still are doing today, compared to even 30 years ago.