Is Obama Admin. "Laser-focused" on Creating Jobs?

Dude, I know you're a googlist and don't like to read but you really should attempt Robert Samuelson's "The Great Inflation and Its Aftermath". Here's Samuelson discussing Reagan, Volcker, and inflation:

LESSONS FROM THE GREAT INFLATION

...

How Inflation Was Subdued

The subjugation of inflation was principally the accomplishment of two men: Paul Volcker and Ronald Reagan. If either had been absent, the story would have unfolded differently and, from our present perspective, less favorably. Reagan, president from 1981 to 1989, and Volcker, chairman of the Federal Reserve Board from 1979 to 1987, forged an accidental alliance that was largely unspoken, impersonal, and misunderstood. There was no particular personal chemistry between the men. Nor was there any explicit bargain—you do this, and I’ll do that. Although Reagan supported Volcker, many officials in his administration openly criticized him. Even while the alliance flourished, it sometimes seemed a mirage.

But the alliance was genuine, a compact of conviction. Both men believed that high inflation was shredding the fabric of the economy and of American society. The country could not thrive if it persisted. Buttressed by these beliefs, they broke with the past. Each had a role to play, and each played it somewhat independently of the other.

Volcker took a sledgehammer to inflationary expectations. He raised interest rates, tightened credit, and triggered the most punishing economic slump since the 1930s. In December 1980, banks’ “prime rate” (the loan rate for the worthiest business borrowers) hit a record 21.5 percent. Mortgage and bond rates rose in concert. By the summer of 1981, consumers had trouble borrowing for homes and cars. Many companies couldn’t borrow for new investment. Industrial production dropped 12 percent from mid-1981 until late 1982. In many industries, declines were steeper. In autos, it was 34 percent (from June 1981 to January 1982), and in steel it was 56 percent (from August 1981 to December 1982). By 1982 the number of business failures had tripled from 1979. Construction starts of new homes in 1982 were 40 percent below the 1979 level. Worse, unemployment exploded. By late 1982, it was 10.8 percent, which remains a post–World War II record.

It is doubtful that, aside from Reagan, any other potential president would have let the Fed proceed unchallenged. Certainly Carter wouldn’t have, had he been re-elected, nor would his chief Democratic rival, Sen. Edward M. Kennedy (D-Mass.). Both would have faced intense pressures from the party’s faithful, led by unionized workers—especially auto- and steelworkers—who were big victims of Volcker’s austerity. Nor is it likely that any of the major Republican presidential contenders in 1980 would have acquiesced, including George H.W. Bush, Howard Baker, and John Connally. Reagan’s initial economic program promised to reduce the money supply to curb inflation. He was the first president to make that part of his agenda, and he never retreated from it. As the economy deteriorated, he kept quiet. He refused to criticize Volcker publicly, to urge a lowering of interest rates, or to work behind the scenes to bring that about.

When the president did speak, he supported Volcker. At a press conference on February 18, 1982—with unemployment near 9 percent—Reagan called inflation “our No. 1 enemy” and referred to fears that “the Federal Reserve Board will revert to the inflationary monetary policies of the past.” The president pledged that this wouldn’t happen. “I have met with Chairman Volcker several times during the past year,” he said. “We met again earlier this week. I have confidence in the announced policies of the Federal Reserve.” Reagan’s patience enabled the Federal Reserve to maintain a punishing and increasingly unpopular policy long enough to alter inflationary psychology.

There was an outpouring of bills and resolutions to impeach Volcker, roll back interest rates, or require the appointment of new Fed governors sympathetic to farmers, workers, consumers, and small businesses. Rep. Jack Kemp (D-N.Y.), a prominent Republican “supply-sider,” wanted Volcker to resign. In August 1982, Sen. Robert C. Byrd of West Virginia, the Democratic floor leader, introduced the Balanced Monetary Policy Act of 1982, which would have forced the Fed to reduce interest rates.

Reagan’s popularity ratings collapsed. In May 1981, early in his presidency, Reagan’s approval had reached a high of 68 percent. By April 1982, it was 45 percent (46 percent disapproved); by January 1983, it was 35 percent, the low point (56 percent disapproved). As the economy sank, Reagan was advancing an economic program of across-the-board tax cuts, widely portrayed as favoring the rich, and spending cuts, widely portrayed as hurting the poor. He was portrayed as spearheading an economic assault against ordinary Americans.

On inflation, Reagan was clear-eyed. “Unlike some of his predecessors, he had a strong visceral aversion to inflation,” Volcker later said. Reagan was “influenced by people like Milton Friedman and understood that inflation was always a monetary phenomenon,” that it was “too much money chasing too few goods,” said William Niskanen, a member of Reagan’s Council of Economic Advisers. “He was the first president who understood that.…He knew that controlling inflation by regulation [controls] was absurd.”

Even now, the social costs of controlling inflation seem horrendous. Over a four-year period (1979–82), the U.S. economy’s output barely increased. It nudged ahead in the first two years and then fell back in the last two. Since 1950, there had been nothing like that. Unemployment peaked in 1982 near 11 percent—a figure that, a few years earlier, would have been widely judged inconceivable. Although lower inflation benefited most people, the casualties were numerous and broadly dispersed geographically and socially: small business owners, overextended farmers, industrial workers. The number of business failures in 1982 (24,908) was nearly 50 percent higher than in any other year since World War II, and it would double to 52,078 by 1984. From 1979 to 1983, farm income declined almost 50 percent.

But against these heartbreaking costs, there were larger long-term gains. Once the recession lifted, the economy and productivity growth revived impressively. When Reagan left office, Americans still worried about inflation, but it no longer gripped them with fear. Inflation was one problem among many, not a scourge shredding the social fabric. The taming of inflation reinvigorated the economy as nothing else; the expansion lasted from early 1983 until the late summer of 1990. At the time, it was the second longest peacetime expansion in U.S. history.

The Volcker-Reagan campaign discredited many of the ideas that had misgoverned national economic policy for nearly two decades. The notion that the Federal Reserve couldn’t control inflation was discredited. The notion that a little less unemployment could be exchanged for a little more inflation was discredited. In their place, a consensus slowly developed that “price stability”—a vague term that both Volcker and his successor, Alan Greenspan, defined as inflation so low that it barely affected people’s decisions—was desirable and would promote a more stable and productive economy.

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Give me oatmeal brained zombie Reagan over this current administration any day.



http://www.zazzle.com/sweasel/gifts?cg=196178753273777158

 

Carter put Volcker in charge of the Fed, who cranked interest rates. Bold move and it cost him the election. That, and the 444 day hostage crisis which Carter could not manage.

The roots of inflation were from Nixon's policies. The roots of taming inflation were from Carter's. Reagan effectively managed tax reform, but did not effectively manage the budget. Bush I did nothing. Clinton gave us a surplus. Bush II trashed everything in site. Obama has his work cut out for him, but indicators are trending in the right direction.

Patience and hard work, just like with resolving inflation, are needed now.

 

There's one writer at The National Review right now, Kevin Williamson, who has been saying as much. His recent writings on supply-side economics have caused a fair amount of stir among conservatives, because he calls conservatives on their own bullshit. It's pretty interesting and well-argued stuff.

That Samuelson piece is interesting, but I disagree strongly with the notion that Carter wouldn't have reacted in much the same way as Reagan. Carter appointed Volcker, after all.

 

From what I understand about the history (I wasn't even born at the time), Volcker initially pursued inflationary policies thinking he could stimulate his way out of the looming recession. It was a year or two after he had been appointed before he decided to raise rates substantially. Maybe I'm wrong, but that is how I have heard it told.

 

Reagan smash... oh wait, does that mean I can apply the same question to how FDR or Obama single-handedly saved the US from economic doom?

Also, you have yet to answer my investment question. I'm not holding my breath though.

 

And there aren't Democrats who are doing what is good for the country. Fact, the Democrats are in charge. End of story.

 

Thank god. Things are better and I'm hiring.

 

See how Reagan single handedly took down the Soviet empire.

 

How is the deficit? How much do you want to bet we are going to have a double dip recession?

Look, I am willing to blame the republicans for some of this mess. Why won't posters on here do the same when it comes to the democrats. Stop being in denial. Start looking at the facts. Once that happens we can starts to attack these problems. Of course, with your continued denial about the true reasons for our problems, I doubt things will get better.

 

I don't know why you keep saying this about a double dip. True, we could get swept under by foreign markets as we saw with Greece. But, just based on what we have going on here, what makes you believe we are in for another recession. Consumer confidence is going in the right direction. Jobs are going in the right direction. Manufacturing is going in the right direction. The stock market (which is predictive about 6 months out) is going in the right direction. So what indicators suggest to you that we will see a shrinking economy soon?

I'm willing to look at republicans and democrats. Obama endorsed a bi-partisan senate commission on debt that both parties rejected. That HAS to be the starting point, no?

 

We don't know what is going to eventually happen in Europe. The bailout for Greece may or may not prevent the contagion. Then you look at China's property bubble. I am not a gloom and doomer but I want some real action. What good is a bi-partisan senate commission? Our political leaders not some commission need to make some tough decisions. The democrats have only spent money and might I add not very wisely. The sad fact is our political leaders need to be honest with the public. Instead the current administration and congress are telling us everything is turning around. Stop drinking the damn kool aid. Banks are still failing. Deficits are still rising. Ultimately we are going to have to pay for all of this spending.

 

You are too harsh. If this bi-partisan commission proposes spending cuts it will have been a success.

But I doubt Obama would accept spending cuts as a solution. He is looking to implement a VAT and that is what we will get out of this commission.

 

Sometimes... if it is targeted, well thought out, and temporary. What you are witnessing now is none of those things.

 

Oh, please. Obama is not the obstacle to spending cuts, and the bipartisan commission's recommendations will almost certainly do nothing in that regard. Current high levels of spending are supported by the overwhelming majority of the US public, and are strongly supported by both political parties (although one party lies about it).

Did you see where John McCain announced that he's proposing legislation to make Medicare spending reductions impossible through the 51 vote reconciliation process? The same Medicare program that is by far the biggest threat to the USA's long term fiscal balance? Anyone who ever touted McCain's "small government" credentials - or those of the GOP more broadly - should feel kind of foolish about that at this point.

 

Wow, no WOW! Are you not paying attention to the current political climate?

 

I assure you that I am (it's part of my job). What about the current political climate contradicts anything I said?

 

Oh I don't know, perhaps the entire backlash to big government solutions that require massive debt? You should get a new job.

 

As anyone with an elementary awareness of US public opinion trends knows, Americans overwhelmingly express support for maintained or increased levels of spending on almost everything that the federal government spends money on. Every single poll that I've ever seen shows this.

Americans, as they always have, tend to express support for "small government" in principle, even as they forcefully demand big government in practice. This contradiction is due to the fact that Americans are largely ignorant about what the government spends its money on (a reality that's also universally apparent in opinion polls), plus the fact that "small government" serves as a code word for various types of identity politics that have little to do with overall levels of government spending.

 

i.e. This tea party movement is nothing but Astroturf.

Ugh, another clueless government bureaucrat. No wonder we are in such financial trouble

 

the Greeks are the same way, though to a much worse degree. But basically all humans are the same way. They want all the benefits the government provides, as though it owes them because they paytaxes. At the same time, they want smaller government and lower taxes. In other words, keep spending on the programs that benefitme, but cut those that don't. This is no contradiction at all. It's simple human selfishnes.

 

No, it's just the same ignorant 20% that supported Bush to the bitter end.

http://andrewsullivan.theatlantic.com/the_daily_dish/2010/04/why-cutting-spending-is-hard.html

Care to comment?

 

No, not really. While some of the script and the funding for the tea partiers comes from wealthy interests, I have no doubt that the actual people at the rallies are sincere when they call for smaller government. They just often don't know what that means, or necessarily care very much.

We see this pretty clearly in the fact that John McCain, in trying to fend off a primary challenge from the right, decided to very publicly push for legislation that would make the growth of Medicare even harder to restrain than it already is. Making an explicit commitment to indefinite spending increases in fiscally unsustainable entitlement programs seems like a strange way to appeal to voters who genuinely want smaller government above all (good way to appeal to old voters, though).

But, perhaps you don't like my explanation for why the erstwhile fiscal conservative John McCain has apparently decided to build a campaign around the sanctity of ever-growing Medicare spending. If so, what's your explanation for that turn of events?

I teach, actually (at a private institution).