The times when Reagan took office were in many ways similar to today. In the late 70s and early 80s, the nation witnessed its most severe recession since the Great Depression. Unemployment reached 10.8 percent and the labor force participation rate fell to approximately 60 percent, which is exactly where we are today. Deficits soared fueled in part by the largest peacetime military expansion in United States history to counter the Soviet Union’s massive military build up of the previous decade. However, Reagan’s $1.9 trillion in debt over eight years, adjusted for today’s dollars, still puts him over $2 trillion less than Obama’s $6 trillion total in four.
Social Security, then as now, was on a path to insolvency and the nation’s tax system had become so burdensome (with a top marginal rate of 70%), antiquated and complicated that America struggled to compete in the global economy. Add to these challenges soaring gas prices, double-digit inflation and interest rates, and trying to work with a divided Congress, and Reagan faced a task every bit as great as Obama’s upon taking office, if not more so.
Bill Clinton proclaimed during his nomination speech of Obama a few weeks ago that neither he, Clinton, nor any other President could have turned around an economy as bad as the one Obama inherited in just one term. Actually that is not true: Reagan did. By his re-election year of 1984, the nation’s economy was humming again with a 7.2 percent GDP growth rate, adding over 4 million jobs in that year alone and 9 million during his first term.