Assuming History

Obama, speaking on cutting taxes and regulation in 7/24/12: "But here’s the problem -- we tried that and it didn’t work."

Certainly he's not talking about G. Bush here--one would think, if serious, he would be more specific--but he probably is referencing an administration and a man who became president with the distinct policy of smaller government, lower taxes and less regulations.

Reagan.

So what is the economic information from that time?

From December 1982 to June 1990 over 21 million jobs were created—and another 26 million in the 1990s. The stock market rose relentlessly. From July 1982 through August 2000, the S and P 500 stock price index grew at an average annual real rate of over 12%. The unfunded liabilities of the Social Security system declined as a share of GDP, and the famed Carter "misery index" fell to under 10%.

Peter Ferrara, writing in Forbes says the economy “took off on a 25-year economic boom from 1982 to 2007,” citing National Bureau of Economic Research reports. “During the first seven years of that boom alone, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third largest in the world at the time, to the U.S. economy.”

Arthur B. Laffer, a member of Reagan's Economic Policy Advisory Board (though hardly a disinterested observer), and Steven Moore, chief financial writer and senior economics contributor at The Wall Street Journal, summarized Reagan's economic record in their 2008 book, The End of Prosperity: “We call this period, 1982-2007, the 25-year boom — the greatest period of wealth creation in the history of the planet. In 1980, the net worth — assets minus liabilities — of all U.S. households and businesses ... was $25 trillion in today's dollars. By 2007 ... net worth was just shy of $57 trillion. Adjusting for inflation, more wealth was created in America in the 25-year boom than in the previous 200 years.”

$25 trillion. These are big numbers. Very big.

However, contrary to current thinking, cause and effect are very difficult to establish. Was this success from cutting taxes? Regulations? Both? Was the American economy just a coiled spring waiting to recover from the Carter years? What about the rise of the Internet; did that help? Did it help so much that nothing Reagan did was a major factor? What about the housing market? What about the Fed, did their behavior make a difference? 

This is hard stuff. But dismissive statements, wildly partisan cries and vague generalities do nothing but alienate thinking people. This is especially true in someone who presents himself as a thoughtful conciliator.