Neil Cavuto waxed nostalgic this morning over prospects of an economic boom, thanks to Barack Obama’s actions last week in reaching a compromise and then reaching out to the model of triangulation, Bill Clinton. Cavuto says that the actions of Obama may well presage a repeat, and that Obama will reap the benefits of a resurgent economy if he continues to find common ground with Republicans in Congress. But just how realistic is this comparison?
This might be true — if we had similar economic circumstances, similar Presidents, and similar Congressional leadership, none of which we have. First, the Clinton “boom” started before Clinton got elected. The recession of 1990-91 was over before the election, with GDP growth rates in each of the last three quarters of 1992 over 4%. The Clinton economic boom was also bubble-based, first in the dot-com industry and later in housing markets. The Republican Congress more or less prevented Clinton from getting in the way of economic growth and forcing an end to deficit spending, at least as defined by government.
In this case, we’re in an economic trough caused by the collapse of the latter bubble. Obama’s economic plan has already failed, but he shows no sign of changing course. Indeed, Obama has already declared that he will fight the deal he just made when it expires in two years. Meanwhile, Democrats still control the Senate and will help Obama fight any efforts to reduce government (as Clinton did with welfare reform) and regulation.
The only achievement in this deal is the opportunity to stop even more serious economic damage, not to touch off an economic boom. Economic booms do not get created from a temporary deal to keep tax rates at current levels. A boom won’t materialize until the federal government reduces its regulatory burden on American business and ends the uncertainties created by ObamaCare and unrestrained federal agency rulemaking. That won’t happen under Obama, which means we will have at best a status-quo stagnation for the next two years — which will certainly be attributed to Obama, as it should be.
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