Barack Obama

How Ronald Reagan Described the Economy in His 7th-Year State of the Union

Comparing the rhetoric of two presidents who inherited economic messes reminds us of the wide gap between their respective recoveries.


His hair was perfect. |||

Two years ago I compiled a list of commonalities found in the State of the Union addresses from the last seven presidents* in the first year of their second term. As I concluded then:

Mining through the State of the Union archive can teach valuable lessons for those willing to learn. It's not just that presidential speeches all tend to sound the same, with their calls for "energy independence" and hosannahs to America's leadership of the free world. But the repeated failure of grand legislative schemes, the persistent references to underperforming areas of American life (usually in provinces, like education, that are dominated by the government), and the relentless rhetorical urgency to act now for the sake of action, all remind us that politics is a messy and generally ineffective way of addressing problems, and that politicians are not a small bit ridiculous.

But upon closer inspection, the presidency that was by far the most analogous to Barack Obama's in terms of the miserable economic conditions inherited was that of Ronald Reagan. And comparing the Gipper's 1986 address to Obama's 2014 was a startling exercise in contrast, illustrating the wide gulf between their competing economic recoveries. As I noted last year,

Obama last year. |||

Here's how Reagan described it in his 1986 State of the Union address: "I am pleased to report the state of our Union is stronger than a year ago and growing stronger each day. Tonight we look out on a rising America, firm of heart, united in spirit, powerful in pride and patriotism. America is on the move! The United States is the economic miracle, the model to which the world once again turns." […]

Obama, in his State of the Union address, spoke not about any economic "miracle" already in progress but about turning the corner any day now. "I believe this can be a breakthrough year for America," the president said, lamely. "After five years of grit and determined effort, the United States is better positioned for the 21st century than any other nation on Earth."

So as Obama embarks on what will certainly be more of a chest-thumping exercise than in previous years, here's a reminder of how Reagan was characterizing the economy in 1987:

Six years ago I was here to ask the Congress to join me in America's new beginning. Well, the results are something of which we can all be proud. Our inflation rate is now the lowest in a quarter of a century. The prime interest rate has fallen from the 21 1/2 percent the month before we took office to 7 1/2 percent today. And those rates have triggered the most housing starts in 8 years. The unemployment rate—still too high—is the lowest in nearly 7 years, and our people have created nearly 13 million new jobs. Over 61 percent** of everyone over the age of 16, male and female, is employed—the highest percentage on record. Let's roll up our sleeves and go to work and put America's economic engine at full throttle. […]

We've had great success in restoring our economic integrity, and we've rescued our nation from the worst economic mess since the Depression. But there's more to do.

Note that the measurement of the labor-force participation rate has changed over time; the Bureau of Labor Statistics now puts the rate as of January 1987 at 65.4 percent, whereas in December 2014 it's at 62.7 percent, a 36-year low. See Nick Gillespie on what this number indicates.

And since I was trash-talking presidential speechcraft yesterday, I'd like to highlight this nice little bit from Reagan's speech:

Over the years—I won't count if you don't—nothing has been so heartwarming to me as speaking to America's young, and the little ones especially, so fresh-faced and so eager to know. Well, from time to time I've been with them—they will ask about our Constitution. And I hope you Members of Congress will not deem this a breach of protocol if you'll permit me to share these thoughts again with the young people who might be listening or watching this evening. I've read the constitutions of a number of countries, including the Soviet Union's. Now, some people are surprised to hear that they have a constitution, and it even supposedly grants a number of freedoms to its people. Many countries have written into their constitution provisions for freedom of speech and freedom of assembly. Well, if this is true, why is the Constitution of the United States so exceptional?

Well, the difference is so small that it almost escapes you, but it's so great it tells you the whole story in just three words: We the people. In those other constitutions, the Government tells the people of those countries what they're allowed to do. In our Constitution, we the people tell the Government what it can do, and it can do only those things listed in that document and no others. Virtually every other revolution in history has just exchanged one set of rulers for another set of rulers. Our revolution is the first to say the people are the masters and government is their servant. And you young people out there, don't ever forget that. Someday you could be in this room, but wherever you are, America is depending on you to reach your highest and be your best—because here in America, we the people are in charge.

* I included LBJ in the list—so sue me!


NEXT: Join Reason Tonight at 9 P.M. As We Tweet Obama's State of the Union Address!

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  1. I can’t believe Matt Welch just suggested that Ronald Reagan was a werewolf.

    1. I thought he was the Anti-Christ? Ronald Wilson Reagan, right?

      1. Ron Reagan. Dancing about in his skivvies.

  2. Whatever Reagan’s flaws, there’s no question that he largely believed in the American system–freeish markets, limited government, self-reliance, pragmatism, rule of law, and so on.

    The same can’t be said for Obama or, frankly, for most Democrats these days.

    1. You’re full of shit as usual. Capitalism is in better shape than ever before and Obama praises free markets and is working on the two biggest free trade treaties in history with Europe and the Pacific Rim.

      Quit watching Fox News.

      1. your a fool

        1. Look up the TPP and TIPP. Obama is about to reshape trade into freer and more open systems.

          1. Don’t lock eyes with ’em, don’t do it. Puts ’em on edge. They might go into berzerker mode; come at you like a whirling dervish, all fists and elbows. You might be screaming “No, no, no” and all they hear is “Who wants cake?” Let me tell you something: They all do. They all want cake.

          2. Balls. Obama may praise free markets, but they get freer by reducing regulation (a concept wholly alien to Obama) and eliminating treaties which regulate trade. If it was *free* trade we were after, we would simply have an agreement that says, “We trade!”. Done, right there.

          3. There is nothing “free” or “open” about these agreements. They always cost America jobs, productivity, GDP, etc.

      2. Quit lying.

      3. “You didn’t build that!”

      4. Is the treaty called Solyndra?

      5. Oh fuck you weren’t even alive when Reagan was president.

      6. Capitalism is in better shape than ever before

        As we can see by the movements in the Heritage rankings (and I’m confident similar figures would be generated by the other major economic freedom ranks from Fraser and the World Bank), we can see that the Obama administration has seen severe downturns in Monetary Freedom, Financial Freedom, Investment Freedom, Government Spending, and Property Rights, and small declines in Freedom from Corruption (which spiked under Clinton and basically held steady) and Fiscal Freedom.

        They’ve done well at protecting Labor Market Freedom and Trade Freedom, but there’s not upward movement much movement to be had there.

        We’ve been declining in all indexes, and it’s not…..untry-year

        1. We’ve been declining in all indexes, and it’s not

          It’s not because the whole world is on some sort of capitalism binge and we’re simply being overtaken. Obama’s (and the several states’) policies have plenty to do with it.

      7. Obama doesn’t praise free markets. But that’s not relevant. The fact is he works to restrain markets in every avenue possible.

        1. The cronyism system that people like Obama love and promote isn’t capitalism. In fact capitalism is anathema to this system, because it means you can’t use the power of government to secure your monopolistic business venture.

      8. Capitalism is in better shape than ever before

        Apparently, the success of capitalism is measured by the tonnage of regulations applied to it.

      9. Capitalism is in better shape than ever before

        Capitalism doesn’t necessarily mean free markets, moron. Unless you’re trying to say that Obama has freed up the market, which I don’t think that even you could write with a straight face.

      10. Please name ONE trade pact that US has entered that has delivered on promised benefits to American workers, jobs, GDP, etc.

        — crickets —

        Thank you.

        We should not sign them.

  3. Did Kennedy force you to write this, as part of your severance?

  4. Ah yes. Reagan. The patron saint of fiscal conservatism who set the precedent for presidents to double the debt while in office.

    1. Yes, Ronald Reagan, who could pass laws and budgets without any input from the Democratic Congress. That Reagan.

    2. Something that Reason’s writers and regular readers are no doubt wholly unaware of, since it’s not like they’ve written about it ad nauseam.

  5. I notice that many of the indicators Reagan mentioned are better now including inflation, interest rates, UE decline, and market gains.

      1. Words are not your strong suit.

        1. Sometimes that Derptard, he looks right into you. Right into your eyes. You know the thing about a Derptard, he’s got… lifeless eyes, black eyes, like a doll’s eye. When he comes at ya, doesn’t seem to be livin’.

        2. And thoughts are not your’s.

    1. gov inflation numbers: lies
      gov unemploment numbers: lies

      If you are saying that a lying Obama is a better liar than a lying Reagan, I’ll agree with that.

      1. Its all smoke and mirrors these days, and things are far worse than they even seem.

    2. I feel like I just went back in time. This is the same shit that central bank clowns were saying in 2006.

    3. It used to be that such indicators were met with cynicism by liberals, as signs that the 1% was being enriched. Now it’s all Rah-Rah Obama!

      1. Weren’t they just occupying Wall St.? Now they’re performing fellatio on it?

    4. I’m so sorry that you are unable to recognize lies and propaganda.

      Inflation has stopped counting the things we all need to live, such as food, gas, housing, etc. in order to hide just how high it is.

      Interest rates. How much can you get on your savings?

      Unemployment no longer counts those who have run out of benefits, but are still looking for work in order to hide how high it is.

      And this market is a rigged game. It used to be that as companies came up with innovations and produced more and better products, their stock would rise. We produce practically nothing now. Try to find products made in the USA. The stock market is a bubble and it’s gonna blow.

  6. many of the indicators Reagan mentioned are better now including inflation, interest rates, UE decline, and market gains.

    Inflation, unemployment comparisons are apples to oranges, given the changes in methodology.

    Zero-bound interest rates are not a sign of a healthy economy. They are a way of admitting that your money has no/very little time value. Yay?

    Market gains? The five year annualized return in 1986 was 19.87%. In 2014 it was 15.45%.

    1. Janet Yellen said she’d raise rates after… a… considerable period.

      1. Reagan didn’t tame inflation back then. Carter appointment Paul Volcker did.

        1. Shrieky, didn’t you just get done saying how “The President Sets the Agenda” or some such crap?

          1. Aw, come on. You know how it works.

            Things go bad for your TEAM’s president, blame the other TEAM’s predecessor.

            Things go good for the other TEAM’s president, give credit to your TEAM’s predecessor.

            Things go good while your TEAM’s president is in office, he gets all the credit.

            Things go poorly while your TEAM’s president is in office, blame the other TEAM’s control over Congress.

            Heads you win, tails they lose.

        2. So why do you credit Obama with the current asset bubble?

        3. Yeah but Volker was really a Reagan implanted mole. Because he sure didn’t do shit about taming inflation during Carter’s Reign of Mediocrity.

          1. So the inflation Carter inherited that started under LBJ and Nixon or Ford couldn’t tame should have been immediately stopped by Carter.

            Volker let interest rates rise to their market level which caused the recession. That was what Volcker did. It just took 4 years for the inflationary expectations of people to end.

      2. So Yellin is jellin’ – good to know

        *runs out and buys a $kabillion of Stock Market Index funds*

  7. All this shrieking is making it hard to hear non-retards. I’m only getting about 8% of the discussion.

    1. The raccoon will always come back to the garbage bin with the loosest lid.

      1. Thanks, Sug. I am totally using that one in my next meeting on physician compensation.

        1. My friend’s mother makes $61 an hour on the internet . She has been without a job for ten months but last month her pay was $15622 just working on the internet for a few hours.
          over here. ????????

          1. But does she open garbage bins alongside raccoons?

          2. Pimpin ain’t easy, but its necessary…

  8. In our Constitution, we the people tell the Government what it can do, and it can do only those things listed in that document and no others.

    I laughed.

    I cried.

    It’s too early to start drinking, dammit.

    1. It’s too early to start drinking, dammit.


  9. The Obama cheerleaders are all saying how much better things are, but if Obama were to say the same thing he would be laughed out of the Capitol. And he knows it.

  10. $89 an hour! Seriously I don’t know why more people haven’t tried this, I work two shifts, 2 hours in the day and 2 in the evening?And i get surly a chek of $1260……0 whats awesome is Im working from home so I get more time with my kids.
    Here is what i did

  11. Obama had to kill capitalism in order to save it. When someone like PB says capitalism is in better health than ever, that’s what they really mean.

    1. No, he’s referring to Zombie Capitalism. The undead corpse of a former, living system. If you compare Zombie Capitalism to the rotting carcass of European style social welfare-ism, why yes, Zombie Capitalism is in pretty good health.

  12. I thought all you libertarians read Murray Rothbard. Even he admitted that Reagan was just a buffoon in the right place at the right time.

    Reagan’s policies of destroying the American middle class are at the root of our problems now. Reagan also had the advantage of new sources of jobs since the PC and semiconductor industries were maturing. People weren’t working for crap wages then unlike now with most of the manufacturing jobs having been shipped to Mexico and China thanks to Reagan’s free trade policies or the educations of college graduates being devalued by Reagan’s guest worker policy and the wages of unskilled and semi-skilled workers being ground to nothing by an endless flood of legal and especially illegal immigrants while Reagan looked the other way.

  13. The author appears to equate the economic downturn of 1979-1982 to the Great Recession that started in 2007/8, a comparison serious economists cannot and do not make. In addition, 1986 is better remembered for Contragate.

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