1981 (reprise)

Just finished watching Obama’s press conference. As I suggested last October, Obama plans to replay the New Deal, when Roosevelt used the failures of his predecessor, large Democratic majorities, and a heightened sense of national crisis to transform America into an economy run by Washington intellectuals/bureaucrats instead of the businesspeople that conservatives know actually generate jobs.

But the parallels between Obama today and February 1981, the time Reagan took over, are striking as well--as I also said last October. Reagan had a Republican senate and a house with enough “Boll Weevils” (southern Democrats) to provide him a working majority. Reagan’s enemy was inflation, the crisis that empowers Republicans the way job loss empowers Democrats. His predecessor produced the problem that Reagen called in his early February first TV address to America on the economy, “the worst economic mess since the Great Depression.” Reagan, a great communicator like Obama and Roosevelt, would use his persuasive powers and political strength to downsize government and cut taxes—as Obama will upsize government and, eventually, raise taxes.

Reagan’s sledgehammer approach drove unemployment up to 10.8%, and cost Republicans in the 1982 congressional election. But by 1984, the economy recovered, Republicans had licked inflation, and Reagan won a massive re-election victory. “Morning in America.”

It’s likely Obama knows the history pretty well.