Comparing Economies: Reagan, Bush, Clinton and Obama

Economics is one of the eternal battlegrounds between the right and left. Liberals condemn Reaganomics and praise former Presidents Clinton and Obama. Conservatives herald Reagan as the greatest president of all time and condemn Obama as possibly the worst.

Is it possible to cut through the partisan politics and get a realistic view?

In modern history, the U.S. has seen four economies, each led by a two-term president. Let’s look at raw numbers, actual policy and its impacts to see if one side really is better at economics.

Before we talk about Reagan, we’re actually going to start with George H. W. Bush. Because Bush only had one term, it’s difficult to compare his economic impact to these other two-term presidents. Instead, we’ll summarize that Bush’s trends largely followed Reagans.

With that out of the way, let’s talk about Reagan and why he is still so loved. Known largely for his “Reaganomics,” he was a staunch believer in supply side economics. In short, this means that he believed innovation and new markets were the key to economic growth.

His philosophy was reflected in policy, and here’s how it worked. Reagan saw the largest overall GDP growth of any U.S. President. Ever. He saw the GDP cross $3 trillion for the first time, and then he more than doubled it.

That GDP growth was paired with record job growth (at the time) to the tune of more than 15 million new jobs during his 8 years. He also dramatically changed trade deficits. When he started, the U.S. had a then record trade deficit at $20 billion a month. Reagan completely reversed it and brought the deficit to 0 before he left office.

This was all accomplished with economic policy that has since formed the backbone of the Republican Party. He slashed taxes across the board. He heavily deregulated many industries, and he followed America-first trade policy. The results weren’t just a bunch of economic records. He left the economy so strong that it took another decade to undo Reagan’s success.

Bill Clinton

Now we can analyze the other side of the coin. Clinton is mostly remembered for his endless controversies, not least of which was bombing a foreign country to distract the media from his impeachment. Class act!

Clinton should go down in history for his economic policy. He was handed a booming economy that was set up to ride the tech boom of the 90s. He reversed as much of Reagan’s impact that he could, but the effects took time to show.

Clinton raised taxes on the upper and middle class while slashing them for low-income households. He paired that with increased tax credits for the poor, and he overhauled banking regulation.

The most important thing Clinton established during his presidency was the Affordable Housing Act. Even while he rode the .com bubble, he set up the housing bubble that would eventually crash our economy.

Overall, Clinton’s numbers look pretty good. The GDP increased by a factor of 1.5 (not quite as good as Reagan), he created roughly 20 million jobs and increased the trade deficit to over $60 billion. Side by side, Clinton and Reagan seem comparable, but we need to discuss the .com bubble in a little more detail. The tech boom was a classic example of supply-side economics, and it created massive wealth largely because no one knew how to regulate it. By the time Clinton’s administration started to get involved, it set up a collapse that was just in time for the next president.

George W. Bush

Bush gets a bad rap on economics. His numbers were poor, no doubt, so let’s start there. For Bush, economic growth slowed to a 1.36 increase over 8 years. It’s a small decline from Clinton. He also saw job growth fall substantially, creating only a net increase of 2 million jobs. Despite this, he managed to reduce total trade deficit by about two-thirds.

Now, let’s give Bush a fair chance. Within a few months of taking office, Bush got to oversee the collapse of the tech bubble. This had nothing to do with his policies (he hadn’t signed anything yet), but it was the biggest recession since WWII (at the time).

Just as he was starting to bounce back, 9/11 happened. Let’s remember that the terrorist attack was so severe that it crippled stocks for over a month and caused every major airline carrier to go into bankruptcy. It also created never before seen volatility in oil. Still, Bush was able to use sound economics to keep the U.S. afloat and growing — only to be hit by the housing bubble collapse. Remember, the housing bubble was set into motion by Clinton’s Affordable Housing Act.

So, Bush was hit with the two largest recessions in U.S. history, neither of which were caused by his policies, and he still saw net gains. Overall GDP growth was very near Clinton’s, and overall the U.S. was better in the worst days of the Great Recession than before Bush took office.

Barack Obama

And, finally, we get to Obama. Obama was the crowned prince of Keynesian economics. All of his policies followed tight regulation and control of interest rates. How did it fair? Not well. Obama was handed an economy that was already recovering from the housing bubble. Remember that. In his first year, his excessive regulation and unilateral action crashed the recovery, shrunk the GDP and killed millions of jobs.

Still, the economy had nowhere to go but up. There were no new bubbles to worry about and the foundations of American growth were still there. Obama, having an easier path than Bush, still saw less economic growth at 1.29. He did oversee large job growth, to the tune of 10 million, but it was dwarfed by his predecessors. All of this was paired with trade deficit growth that hit record levels.

The biggest reason so many complain about Obama’s economy, despite its net gains, is that it grew slower than any other president in history. And, it behaved that way despite Obama having super majorities on both sides of Congress and with an economy that had literally nothing to lose.

Now, we have President Trump. His policies are extremely similar to those of Reagan, and in a single year he launched economic growth back to what we saw in the 80s. The policies of the President have a large impact on economic growth, and Clinton and Obama together proved that liberal policy is stagnant at best and devastating at worst.


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