As the United States takes the measure of Barack Obama's first year in the White House and looks beyond to what could be a difficult new decade, it might be useful to first stop and extract some lessons from the 2000s, which proved to be a lost economic decade for many Americans.
For the first time since the Great Depression, the United States experienced zero job growth in a decade. Zero. And zero is actually worse than it sounds since none of the preceding six decades registered job growth of less than 20 percent.
By comparison, the 1970s, which are often bemoaned as a time of economic stagflation and political malaise, registered a 27 percent increase in jobs. Yet, in part because of that relatively slow rise in jobs down from 31 percent in the 1960s American voters turned to Ronald Reagan and his radical economic theories of tax cuts, global "free markets" and deregulation.
Reagan sold Americans on his core vision: "Government is not the solution to our problem; government is the problem." Through his personal magnetism, Reagan turned taxes into a third rail of American politics. He convinced many voters that the government's only important role was funding the military.
Yet, instead of guiding the country to a bright new
day of economic vitality, Reagan's approach accelerated a de-industrialization
of the United States and a slump in the growth of American jobs, down to 20
percent during the 1980s.
Hard-line Reaganomics returned with a vengeance under George W. Bush more tax cuts, more faith in "free trade," more deregulation and the Great American Job Engine finally started grinding to a halt. Zero percent increase.
Despite the painful statistics of the past three decades, Reaganomics remains a powerful force in American political life. Anyone tuning in CNBC or picking up the Wall Street Journal would think that these economic policies had enjoyed unqualified success.
Though the downward economic spiral can be traced over the past three decades, the facts are especially stark for the 2000s, the so-called "Aughts" or perhaps more accurately the "Naughts."
"For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households," wrote Neil Irwin in a Jan. 2, 2010, review of comparative economic data for the Washington Post. "But since 2000, the story is starkly different."
As the Post article and its accompanying graphics show, the last decade's sad story wasn't just limited to the abysmal job numbers.
U.S. economic output slowed to its worst pace since the 1930s, rising only 17.8 percent in the 2000s, less than half the 38.1 percent increase in the despised 1970s. Household net worth declined 4 percent in the last decade, compared to a 28 percent rise in the 1970s. (All figures were adjusted for inflation.)
As grim as those numbers were, the overall economic legacies of Ronald Reagan and George W. Bush may be even worse.
Not only did the Great American Job Engine grind to a halt in the past decade, but the dire economic numbers were accompanied by massive increases in federal debt, part of a risky right-wing strategy to hamstring the government's ability to ever address domestic problems in the future.
When Reagan took office, the total federal debt was still under $1 trillion ($909 billion). By the end of the 12-year Republican reign of Reagan and George H.W. Bush, the total debt had quadrupled.
The rise in the red ink leveled off under Democrat Bill Clinton. Amazingly, he left office with the federal budget in the black by $236 billion and with a projected 10-year budget surplus of $5.6 trillion.