by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Across his remarkably successful presidency, Ronald Reagan repeatedly made the link between the U.S. economy and U.S. international security and defense. He consistently argued that weakness at home leads to weakness abroad.
Reagan was aiming at the dismal Carter years. But he understood for all times that economic strength at home sends a powerful signal for international security overseas. …
… [Vladimir] Putin may recognize that Russia’s economy is a thin deck of cards. But he surely doesn’t fear the weak American economic position. Ditto for the broken economic dictatorships in North Korea, Iran, and Venezuela, and the rising economic dictatorship in China. They don’t fear us.
In fact, America’s economic weakness is so worrying, one suspects our friends are losing respect for us too. Whether in Europe, Asia, Latin America, or Israel, our allies know that America has been the backstop for freedom. If not us, who?
But can they say that now?
As I testified [last] week before the congressional Joint Economic Committee, at 2.1 percent average real growth, the U.S. is lagging far behind the 4.1 percent average recovery pace of the post-war business cycles. The Reagan recovery averaged 5 percent annual growth at the same point as the Obama recovery.
Obama’s stock market from the depth of the meltdown does beat Reagan’s market and the post-war average for equities. But here’s a very worrisome trend. Over the entire post-war period, average yearly growth has been 3.2 percent. And in the 1980s and ’90s, growth was 3.7 percent. Since 2001, however, under Republican and Democratic presidents and congresses, as the dollar lost over a third of its value growth has dropped to only 1.8 percent annually. Something has clearly gone very wrong.