Inheriting Recessions

The historical record shows that recessions are often inherited. The severity of the 2007-2009 recession was uniquely large. On the other hand, no president enjoyed the tailwind of loose monetary policy on the scale provided by Bernanke’s Federal Reserve, nor the massive debt-financed government stimulus that continues to this day. As for unique challenges, no presidents aside from Franklin Roosevelt and George Bush suffered attacks on American soil like Pearl Harbor and 9/11. Certainly the current Federal Reserve supportive policies are a sharp contrast with what Reagan faced. As for policy actions, no other president since Herbert Hoover in 1932 responded to a recession by raising taxes as aggressively as Obama. The results to date confirm that the high-tax, high-spend policy approach is failing to generate a real recovery, and worse, has created a new normal that is 12 million jobs below the old normal.

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