My goal with this piece is to be as objective as possible in ranking the actual economic performances of the six most recent Presidents, without letting my own political biases slip in.
In determining performance, more than just the raw numbers matter. For example, what was the situation inherited by each President? And did they leave the country heading in the right direction at the end of their Presidency?
Among the six most recent Presidents, clearly the best two in terms of economic performance
The two worst were Jimmy Carter and George W. Bush.
George H.W. Bush and Barack Obama are in the middle.
My ranking of the six most recent President from best to worst in terms of economic performance are as follows:
1) Ronald Reagan
2) Bill Clinton
3) George H.W. Bush
4) Barack Obama
5) George W. Bush
6) Jimmy Carter
Ranking Purely by the Numbers
If you looked purely at GDP growth under these respective administrations, the ranking would be as follows:
1) Bill Clinton: 3.6% annual GDP growth on average
2) Ronald Reagan: 3.4%
3) Jimmy Carter: 2.65%
4) George H.W. Bush 2.17%
5) George W. Bush 1.98%
6) Barack Obama 1.1%
If we calculate Presidential rankings by saying the first year’s GDP growth of the next Administration really belongs to the previous Administration, the rankings look like this:
1) Ronald Reagan: 3.54%
2) Bill Clinton 3.53%
3) Barack Obama: 2.3%
4) Jimmy Carter: 2.02%
5) George H.W. Bush: 2.0
6) George W. Bush 1.4%
The Case for Ranking Ronald Reagan Ahead of Bill Clinton
Objectively, you would have to say Ronald Reagan and Bill Clinton are tied in terms of the performance of the economy under their watch.
So why do I rank Reagan ahead of Clinton?
The reason is the economy Reagan inherited from Jimmy Carter and the Democrat-controlled Congress.
The U.S. economy shrank in the final year of the Carter Administration. Inflation also reached a high of 14.8% in March of 1980 under Carter, while the prime interest rate hit a peak of 18% that year.
“Stagflation” and “Misery Index” became part of the national lexicon.
The economy grew just .4% during Reagan’s first two years in office before his economic program of tax cuts and deregulation kicked in. Although Reagan’s tax cut program passed in 1981, Reagan’s tax cuts did not begin kicking in until the following year and were phased in over three years.
Reagan’s 1981 tax cut bill cut the top income tax rate from 70 percent to 50 percent.
Reagan then enacted a second round of tax cuts in 1986 that cut the top rate from 50% to 28%. If we omit the first two years of the Reagan Presidency from the GDP growth calculus, average annual GDP growth under Reagan becomes 4.3%
Remember also that Reagan had a Cold War to fight.
He engaged in an enormous defense build-up and bankrupted the Soviet Union. The price for that was to run up large budget deficits.
Bill Clinton had the luxury of no Cold War to fight. He had the benefit of the so-called “Peace Dividend.”
Not only was he free to scale back America’s military. But peace always helps the economy.
You also have to give a lot of the credit to the Republican-controlled Congress, which started in 1994. For six years of his Presidency, Clinton was boxed in by Republicans controlling both the House and the Senate.
Newt Gingrich and the Republicans simply would not allow President Clinton to spend as much money as he would have if it were up to him. Clinton even signed Newt Gingrich’s welfare reform into law, declaring that the “era of big government is over.”
Clinton is a pragmatist. So you have to give him credit for going along with Gingrich and the Republicans. But you can’t really call the good economy of the late 1990s Clinton’s economy either.
The economy certainly performed well under Bill Clinton. But you would be hard-pressed to point to any Clinton policy that caused the economy to perform so well. His primary legislative initiative — HillaryCare — was defeated.
Mostly, Clinton did nothing, or went along with what Newt Gingrich and the Republican-controlled Congress wanted.
Often doing nothing is great policy. The rule of good governance is: “First, do no harm.”
The U.S. economy was also rebounding in George H.W. Bush’s final year as President, growing at 3.4% in 1992 after shrinking .2% in 1991. So Bill Clinton inherited an economy that was gathering speed after a brief slowdown.
Bill Clinton had the good fortune of inheriting the Reagan economic boom and then a Republican Congress that protected Clinton from himself by not letting him change course.
Keep in mind also that Reagan’s economic growth numbers are dragged down by Jimmy Carter’s economy not just during Reagan’s first year, but really for the first two years of the Reagan Administration.
It’s fair, I believe, to call the first two years of the Reagan Presidency Jimmy Carter’s economy.
The economic boom America experienced in the final six years of his Presidency was clearly triggered by the Reagan tax cuts and massive deregulation.
Reagan turned the country around — transformed the Carter disaster into the longest period of continued economic growth(without a recession) in America’s history. Bill Clinton was more of a caretaker President. A Republican-controlled Congress forced Clinton to keep Reagan’s economic policies mostly in tact.
So the good economy kept rolling.
The Case for Putting Jimmy Carter and George W. Bush at the Bottom
Similarly, you would have to say that at least the first year of the Obama Presidency belongs to George W. Bush – when the U.S. economy shrank by 3.5%.
I’m certainly no fan of Barack Obama’s policies. I think his economic policies are wrong, are hurting the economy. But the 3.5% shrinkage of the U.S. economy in 2009 objectively belongs to Bush, not Obama.
So, objectively speaking, at this point we would have to rank Barack Obama’s economy ahead of both Jimmy Carter’s and George W. Bush’s. You could also make the case that George W. Bush left America in even worse shape than Jimmy Carter.
Here’s why I think Carter is the worst of the last six Presidents in terms of economic performance.
Jimmy Carter inherited a healthy economy.
Economic growth during the first two years of his Presidency was 4.6% in 1977 and 5.6% in 1978.
Economic growth during his final two years was 0.7% in 1979 and minus 0.3 percent in 1980. Inflation spiked up to 14.8%, the prime interest rate zoomed up to 18% so people could not buy homes or start new businesses.
So Jimmy Carter took a good economy and quickly turned it into the worst economy since the Great Depression.
George W. Bush also did this, inheriting a strong economy from Bill Clinton along with a balanced budget and turning that into an economy that shrank by 3.5% in 2009 and trillion-dollar annual budget deficits. It would be tough to get much worse than Bush. You can certainly make a strong case for putting Bush at the bottom, behind Carter.
At least Jimmy Carter did not get America into a trillion-dollar war by mistake.
The multi-trillion-dollar Iraq War certainly hurt the American economy and cost thousands of American lives. We would be far better off today with Saddam Hussein in power in Iraq than what we see going on there now. Saddam was a counter to the even worse Iran and a bullwark against al Qaeda-Isis-style terrorism.
Reagan sided with Saddam in the Iran-Iraq War — for good reason.
I’m starting to persuade myself that W. Bush might have been even worse than Carter.
But I remember the Carter economy. The 14% inflation rate, the 18 percent prime interest rate, people waiting in line to buy gasoline, and the unemployment rate at 7.5 percent and heading toward 10% as he was leaving office felt a lot worse than the W Bush recession.
Why I Rank George H.W. Bush Ahead of Obama
You can reasonably make a case for putting Barack Obama ahead of George H.W. Bush in the economic performance rankings.
George H.W. Bush turned a booming Reagan economy into a mediocre 2% growth economy – about what the economy is growing now under Barack Obama. He did this, in part, by increasing taxes, reregulating the economy, and undoing parts of the Reagan economic program.
He also launched an expensive war in Iraq that put a further drag on the U.S. economy.
Both HW Bush and Obama presided over an economy that’s growing at a rate of about 2% annually on average. The difference is Obama inherited a terrible economy from W, while Bush senior inherited a booming economy from Reagan and turned that into a mediocre 2% economy.
So that would seem to be “Case Closed” for ranking Obama over HW Bush.
But there’s also the natural business cycle that needs to factor in.
I would make the case that there is always a natural cooling of an economic boom, and that HW Bush had the misfortune of being in office on the downside of the business cycle.
Conversely, economies tend to rebound sharply after a recession, as should have happened after the Great Recession of 2008, but didn’t because of ObamaCare and massive regulation of the U.S. economy by Obama and his bureaucracy.
The so-called “recovery” under Barack Obama has been just 2.3% per year from 2010 on forward, since coming out of the recession. Typically, the U.S. economy grows 5%+ in the year following a recession.
Under Reagan, the economy grew 7.2% in 1984, following the Jimmy Carter recession.
That’s what should happen in a recovery.
That’s why I rank Barack Obama behind George H.W. Bush.
Bush did not do nearly as much as Obama to actively harm the economy.
Barack Obama is taking a sledge-hammer to the economy in the form of ObamaCare and massive regulation.
So far the U.S. economy is showing some resilience. At least it’s mustering some growth.
But recent signs are that even this meager 2% growth we’ve been experiencing might be coming to an end.
The economy in the first quarter of this year shrank a stunning 2.9%. This will make it very difficult to reach even a 2% growth level for 2014. If we have another consecutive quarter of shrinking GDP, America will be back in a recession.
This would put Obama down in Jimmy Carter and George W. Bush territory in terms of being among the worst Presidents in America’s history for the economy.
Also, the ObamaCare drag on the U.S. economy, I believe, is just beginning. The 2.9% Q1 2014 shrinkage of the U.S. economy occurred exactly in the same quarter that ObamaCare started taking effect.
I don’t think that’s a coincidence.
It’s also important to note that if we were measuring inflation the same way we measured inflation in 1980, the annual inflation rate is not 2%, but closer to 10%.
The true 10% annual inflation rate we are now experiencing is in Jimmy Carter Land.
The government keeps changing the way we measure inflation, unemployment, and GDP growth to make the government look like it’s not doing quite as miserable a job as it really is.
The reason I rank Obama behind George H.W. Bush is also my view that he’s moving America in the wrong direction. HW Bush was moving America in no direction. But no direction is better than the wrong direction.
I’m confident we would have had a much stronger economic recovery if it were not for all the uncertainties introduced by ObamaCare and the massive regulation of the economy, much of it by the EPA. We could be doing much better if the Obama Administration would allow more oil exploration on federal lands and would approve the Keystone Pipeline.
Also, much of the growth in GDP under Obama has been brought about through massive deficit spending.
So the meager GDP growth we’ve seen is phony — more like a sugar high, soon to be followed by a crash. I can live better and buy more if I run up massive credit card debt. But that’s temporary. Eventually, the piper must be paid.
So I would take HW Bush’s 2% GDP growth over Obama’s 2% GDP growth – because at least HW Bush was not generating this growth with massive deficit spending, at least nowhere near on the level of Obama’s deficit spending.
HW Bush ran up $1.03 trillion in debt during his four hears in office — not good.
HW Bush ran up the same amount of debt in four years in office that Reagan ran up in eight years.
But Obama makes HW Bush look like a piker on deficit spending. Obama has added $7 trillion to the federal debt so far — in just five years. The $7 trillion in borrowed money Obama has pumped into the U.S. economy is making Obama’s economy look better than it really is. Not that Obama’s 2% GDP growth is anything to boast about even if this were not an artificially high number inflated by massive deficit spending.
A big factor for me in ranking the Presidents is the direction the country is heading when they finish their term in office. Jimmy Carter and George W. Bush are at the bottom because the U.S. economy was clearly dramatically worse off at the end of their Presidencies, due in large part to their policies.
We still don’t know what America will look like after another 2 1/2 years of Obama.
Given ObamaCare, the mountain of new regulations he’s piling onto business and entrepreneurship, the unprecedented deficit spending, the steady devaluation of the dollar by the Fed’s printing press, plus a foreign policy in shambles on every front — the prognosis for Obama’s economy can’t be good.
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