When Sen. Cruz spoke before a meeting of the Greater Houston Partnership, he blamed President Obama for four years of weak economic growth coming out of the Great Recession.
“If President Obama coming into office inheriting the same lousy economy Ronald Reagan inherited, had implemented the same economic policies, and if the same economic growth had resulted, by today we would have an additional 7 million new jobs.”
Rice University Political Science professor Paul Brace says there are two key differences between the sluggish recovery of today, and the quicker one of the early 1980s. They have to do with increased globalization and different tax rates. In 1981, taxes were higher, and that gave President Reagan more room to cut them — thus giving people more money to spend.
“Mr. Obama doesn’t have the same options. He couldn’t cut taxes anymore — some would say he could. And his revenue base isn’t as sound, so it’s going to promote more debt and more deficit when he chooses to pursue a stimulus path.”
Brace says today’s globalization means much of the stimulus money and tax cuts that go to ordinary Americans are often used to buy things that are not made here.
“And so the consequences of that aren’t to necessarily create more jobs, as they once did. Thirty years ago, when you stimulated the economy with government spending or with a tax cut, a lot of that money was spent domestically on products that were produced domestically, and there were substantial spillover effects. It’s much harder to turn around an economy right now when, really, our economy is so much more globalized.”
And Brace says today’s political environment is so much more polarized. In the 80’s, Democrats worked with President Reagan. But …
“When Mr. Obama decided to reach across the aisle, he tried very hard to reach across the aisle, I think, and the Republicans rebuked him at every turn.”
Professor Brace also notes that some of the policies credited for the economic turnaround during the Reagan years, like the deregulation of the trucking and airline industries, were actually the product of the Carter administration. But, he says, President Obama didn’t inherit any policies from President George W. Bush that could’ve helped him.
“If tax cuts were a great idea, then the ones initiated during the Bush administration seemingly would’ve allowed us to avoid this economic catastrophe.”
When contacted, Sen. Cruz’s office did not offer any rebuttals to the professor’s specific points. But it said that President Obama is still pursuing “anti-growth” policies.