A Look Back At Failed Presidential Promises On The Economy
When it comes to job growth, has President Barack Obama kept all the promises he's made to the American people? Will he be able to keep the promises he will surely make Tuesday evening, in his latest State of the Union speech?
If he hasn't, he's at least in good company. A review of presidential promises in the last thirty years suggests that talk about job-creation has rarely been accompanied by action. Whether the results of policy fall short of the expectation, or whether the promised legislation simply doesn't get passed, presidents in recent history have rarely seen their promises become real.
Three presidents in the past thirty years promised to cut taxes to create jobs, and two presidents promised to invest money in job-creation. Ronald Reagan and George W. Bush were both able to get their tax-cut agendas through Congress, but both saw less-than-desired results. Bill Clinton and Barack Obama pledged to spend money directly. Obama passed legislation, but didn't see the results he had promised; Clinton, overseeing a decade of historic growth, broke his spending promise when keeping it became unnecessary.
In terms of getting promised legislation passed, Reagan's record is strong. His message was simple: tax cuts would lead to job growth. In his 1980 speech accepting the Republican nomination for president, Reagan laid out his vision.
"Every major tax cut in this century has strengthened the economy, generated renewed productivity and ended up yielding new revenues for the government by creating new investment, new jobs and more commerce among our people," he said. "I have long advocated a 30 percent reduction in income tax rates over a period of three years."
Later, in an October 1981 speech before the National Alliance of Business, when the unemployment rate neared 8 percent, Reagan made the jobs focus even clearer.
"Our economic program is designed for the very purpose of creating jobs," he said. "Let us make our goal in this program very clear -- jobs, jobs, jobs and more jobs."
Within its first year, Reagan's administration passed the Economic Recovery Tax Act, which was nearly as generous as Reagan had promised.
"He got the legislation that he wanted," said Gary Burtless, a labor economist and senior fellow at the Brookings Institution. "He succeeded within a few months of taking office in getting one of the most massive tax reductions in U.S. history."
Two decades later, George W. Bush promised something similar, and also succeeded in passing his jobs agenda through Congress.
"We will reduce taxes, to recover the momentum of our economy and reward the effort and enterprise of working Americans," Bush said in his first inaugural address.
He followed that promise with new laws. In his first term, he signed two pieces of tax-cut legislation, designed to stimulate job growth. As far as matching his job-creation rhetoric with governmental action, Bush initially found success.
But both Reagan and Bush Jr. could not ultimately make good on their promises. Unemployment soared to 10.8 percent under Reagan's watch. It later fell dramatically to 5.4 percent, but at a high price: The Federal deficit, $42.6 billion at the time Reagan took office, nearly tripled to $115.4 billion by the time he left. At its peak in 1986, the deficit hit $210.9 billion, an almost five-fold increase. Just as Reagan had promised to promote employment, he had also said that tax cuts would reduce the deficit.
The second president Bush found less success than Reagan and failed to see his tax cuts translate into jobs. While his administration was in power, the unemployment rate went from 4.2 percent to 7.8 percent, with the country falling into the grips of recession.
As for the first president Bush, he both failed to keep his campaign promise and didn't see hoped-for results. In his 1988 speech accepting the Republican nomination, he said, "read my lips: no new taxes," and promised 30 million jobs in eight years. But under his administration, Congress raised taxes, and the unemployment rate grew from 5.3 percent to 7.3 percent. He left office after one term.
Clinton's agenda, by contrast, focused on raising taxes and investing in job-creation. But he failed to see it fully implemented. In 1992, when he was running for president, he described his plan for fostering job growth.
"My national economic strategy puts people first by investing more than $50 billion each year for the next four years, while cutting the deficit in half," he said in a June campaign speech. "These investments will create millions of high-wage jobs and help America compete in the global economy."
As it happened, Clinton focused on deficit-reduction. The economy, emerging from a recession, entered a period of historic growth. The unemployment rate, at 7.3 percent when Clinton took office, fell to 5.3 percent by the end of his first term. When he left office in early 2001, it had fallen as low as 3.9 percent.
None of that was thanks to this $50 billion per year plan. With the economy humming, the plan was never implemented.
"He did not deliver what he proposed, which is why he had such a great decade," said Allen Sinai, chief global economist at Decision Economics. "He delivered the results, but he delivered them in a different way."
If Clinton saw results, Obama has been less fortunate. He entered office with the economy mired in the worst downturn since the Depression. Right away, he passed the American Recovery and Reinvestment Act, which, among other things, was designed to create and save jobs. He followed it with a series of other job-creation acts the following year.
The real-economy results of Obama's jobs legislation have been disappointing. Even though the recession officially ended in 2009, the unemployment rate remains high. Last month, with 9.4 percent of the workforce unemployed, 16.7 percent of workers either couldn't find enough work or had given up looking.
The Obama administration's promises turned out to be too optimistic. In a January 2009 report, Christina Romer, who was soon to become the chair of the Council of Economic Advisors, and Jared Bernstein, the vice president's chief economist, said the stimulus package "should save or create at least 3 million jobs by the end of 2010."
In a chart, the economists projected that the national unemployment rate would remain below 8 percent with the stimulus. That hasn't held true, largely because their counter-factual baseline -- what would have happened without the stimulus -- misrepresented how wounded the economy really was, many economists believe.
"Broadly speaking, the policy response to the recession was very good," said Mark Zandi, chief economist at Moody's Analytics. "I don't know that we could have done much better, with regard to economic policy navigating through the worst financial panic and downturn since the Depression."
The Romer-Bernstein paper, after all, was just a prediction, not a promise. But as Obama pledged in his speeches that millions of jobs would be saved or created, the distinction between forecast and promise became irrelevant.
"If an administration seems to be saying, 'If you do what I ask, the result will be 'x',' and then, if the Congress does what the administration asks, and the result is not 'x,' then you have a big political problem," said William Galston, a former Clinton advisor and a senior fellow at the Brookings Institution.
"The difference between a forecast and a promise, politically speaking, is inconsequential."