How Should We Handle Pretend History?
on JULY 9, 2012
Earlier this week, President Obama gave listeners a history lesson on why he was running for higher office. “The reason I ran for president,” Mr. Obama said, “the reason I ran the first time for a state senate seat [in 1996] on the south side of Chicago, was because . . . we had gone through a decade where people were working harder and harder but we didn’t see an increase in income. . . . Jobs weren’t growing fast enough. And the cost of everything . . . kept going up faster than people’s income.”
Was high unemployment, high inflation, and low growth what the U.S. was experiencing in 1996, or in the decade before that? No. That describes the 1970s–a decade of big government with price controls, the war in Vietnam, price fixing in oil, and massive inflation of the currency by the Federal Reserve. The Dow Jones Industrial Average, which topped the 1,000 mark in 1966, was at about 800 fifteen years later. The 1980s, however, began a change. We saw a more stable currency, tax rate cuts, decontrol of oil prices, and relative peace abroad (and the collapse of the Soviet Union).
In 1996, the year President Obama ran for the Illinois state senate, President Clinton downsized government through welfare reform. By cutting welfare benefits, the welfare rolls were cut by almost 50%, and President Clinton had budget surpluses his last two years in office. In 1996, the U.S. saw 2,500,000 new jobs created and only 3% inflation. Americans, contrary to the president’s statement, experienced massive job increases, and they watched their growing incomes outpace inflation. The U.S. economy had strong decades in the 1980s and 1990s.
So, why the pretend history? Because pretend history is the only way to make increases in debt and in the size of government appear to be the correct political move. In this case, President Obama is copying what President Roosevelt did in the 1930s.
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