Obama's Failed and Tired Ideas From the Past:
Obama has repeatedly told us in recent days that he will not return to the old, failed, tired ideas of the past to address America's economic problems. But that is exactly what he is doing in subjecting America to the outdated, failed theories of Keynesian economics from the 1930s. He even proposes now to bring back FDR's old Works Progress Administration (WPA), which spent the equivalent of hundreds of billions today building the infrastructure of the 1930s. As we saw above, it did not work to revive the economy."
He refuses to try tried and true policies from the past:
By the end of the 1970s, Keynesian economics was killing the American economy, with double-digit interest rates, double-digit inflation, and soon double-digit unemployment. It was called stagflation -- stagnant economic growth along with roaring inflation. According to Keynesian theory, this result was impossible. You couldn't be both overspending to cause inflation and underspending to cause stagnation.
Reagan did the right thing for all concerned, and put Keynesian economics out of its misery. He adopted tight, anti-inflation monetary policies that worked spectacularly to reduce inflation to 3% by 1983. Then to get economic growth booming, he adopted sharp cuts in marginal tax rates, reducing the top marginal income tax rate from 70% first to 50%, then cutting it further all the way down to 28%, with just one more rate of 15% for middle income workers and below. He also adopted sharp cuts in corporate income tax rates and capital gains tax rates, as well as a thorough program of deregulation reducing business costs.
The Keynesian economists of the time all laughed, with one of the smartest making the celebrated comment that the Reagan economic plan was the equivalent of tying locomotives to both ends of the same train facing opposite directions and sending them both forward full throttle. Under Keynesian analysis, this is, indeed, what it was.
But besides the rapid elimination of serious inflation, the result was what economists Art Laffer and Steve Moore have recently explained was a 25-year economic boom, from 1982 to 2007, disrupted only by two short, shallow recessions. In their new book, The End of Prosperity, Laffer and Moore write,
"We call this period, 1982-2007, the twenty-five year boom -- the greatest period of wealth creation in the history of the planet. Adjusting for inflation, more wealth was created in America in the twenty-five year boom than in the previous two hundred years."
Indeed, the result was a worldwide boom lifting many nations towards greater prosperity, aided by spreading global adoption of the same policies. These policies were called "supply-side" economics, because they focused on increasing supply instead of the Keynesian focus on increasing aggregate demand.
