Reagan Knew

Reagan had it right in 1980, because he knew some economic truths.

He knew that in an open global marketplace, when net exports are significantly and persistently negative, there is high leakage by definition, which means a relatively low multiplier for additional secondary/tertiary economic activity. Being able to put two and two together correctly, he also knew then that demand-side stimulus would be a waste, simply putting additional dollars in the pockets of foreign industries. He knew that supply-side investment was the better approach, because it would drive GDP growth and that other factors of the economy (like job growth) would follow.

History proved he was right.

But Obama doesn't seem to be able to make the connection. Not only does he continue to spend trillions of dollars in ineffective supply-side stimulus and government programs, he's putting the nation in deeper and deeper debt to do so, compounding the problem.

History is already beginning to prove just how wrong he is.