In his book The New Reagan Revolution, Michael Reagan examined six great economic crossroads of the 20th and 21st centuries. These six critical junctures in the history of the United States serve as economic laboratories to test two contrasting economic theories. One theory consistently produced economic expansion and sustained growth. The other theory invariably produced failure and misery. Here are Michael Reagan findings:

1. The “Forgotten Depression” of January 1920. During the last year of Woodrow Wilson’s presidency, the economy nosedived. GNP fell 17 percent; unemployment soared from 4 to almost 12 percent. This was the “Forgotten Depression” of 1920. Wilson’s successor, Warren G. Harding, came into office and immediately cut tax rates for all income brackets, slashed federal spending, and balanced the budget. Long before the world ever heard of Ronald Reagan, Harding practiced “Reaganomics.”

“President Harding applied the principles of Reaganomics,” Michael Reagan observed, “even though Ronald Reagan was at that time a nine-year-old boy living in Dixon, Illinois. Harding was not following an economic theory. He was following common sense. He treated the federal budget as you would treat the family budget: When times are tough, cut spending and stay out of debt. Harding also treated his fellow citizens with commonsense compassion: If folks are going through tough times, government should ease their burden and cut their taxes.”

The Harding recovery was astonishingly rapid, beginning just half a year into his presidency. Unemployment fell to 6.7 percent by 1922, and to 2.4 percent by 1923. Harding’s successor, Calvin Coolidge, maintained Harding’s program of low tax rates, balanced budgets, and limited government. The Harding-Coolidge era of prosperity became known as “the Roaring Twenties”—a time of soaring prosperity, stable prices, and boundless optimism.

Obvious conclusion based on the evidence: Reaganomics works.

2. The Great Depression. Coolidge was succeeded by Herbert Hoover. In the eighth month of Hoover’s presidency, the stock market crashed—the infamous Crash of 1929. Many factors led to the Great Depression, but the Crash was the precipitating event. Hoover had failed to learn the lessons of the Harding-Coolidge years, so he responded by raising taxes (hiking the top marginal rate from 25 to 63 percent), imposing protectionism (the Smoot-Hawley Tariff Act), and boosting government spending by 47 percent, driving America deep into debt. Hoover’s actions worsened the Depression. A defeated Herbert Hoover bequeathed a ruined economy to Franklin Delano Roosevelt

FDR took office at a time when 25 percent of the nation’s workforce was unemployed. He, too, ignored the lessons of the “Forgotten Depression,” and doubled down on Hoover’s failed tax-and-spend policies, applying the economic theory known as Keynesianism (after British economist John Maynard Keynes). The Keynes-FDR approach involved deficit spending, soak-the-rich tax policies, and big-government make-work programs (the New Deal). FDR and a compliant Congress hiked personal and corporate income tax rates, estate taxes, and excise taxes.

Michael Reagan wrote, “From 1937 to 1939, the stock market lost almost half its value, car sales fell by one-third, and business failures increased by one-half. From 1932 to 1939, the U.S. racked up more debt than in all the preceding 150 years of America’s existence. By early 1939, as the Great Depression was in its tenth year, unemployment again climbed past the 20 percent mark.”

Many Americans credit FDR with “getting America through the Depression.” In reality, FDR’s policies prolonged the Depression. In a time of catastrophic unemployment, Roosevelt made it prohibitively expensive to hire people, making a terrible human tragedy even worse. While thousands of U.S banks failed under FDR’s policies, across the border in Canada, not one bank failed—because Canadian banks were not hamstrung by FDR’s foolish over-regulation. In FDR’s Folly, historian Jim Powell questions the disturbing FDR legacy:

Why did New Dealers make it more expensive for employers to hire people? Why did FDR’s Justice Department file some 150 lawsuits threatening big employers? Why did New Deal policies discourage private investment without which private employment was unlikely to revive? Why so many policies to push up the cost of living? Why did New Dealers destroy food while people went hungry? To what extent did New Deal labor laws penalize blacks? Why did New Dealers break up the strongest banks? . . . Why didn’t New Deal public works projects bring about a recovery? Why was so much New Deal relief spending channeled away from the poorest people?

In May 1939, a demoralized and defeated Henry Morgenthau, FDR’s treasury secretary, told the House Ways and Means Committee, “We are spending more than we have ever spent before and it does not work. . . . I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. . . . After eight years of this administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”

Many people mistakenly believe that World War II lifted America out of the Great Depression. Not true. What WWII did was take 12 million men out of the workforce and send them into war, which ended unemployment. But all the other signs of a damaged economy remained during the war: low stock prices, depressed private investment, and depressed consumer demand.

Roosevelt and his successor, Harry Truman, had a post-war plan to impose an even bigger Second New Deal after the war. Fortunately, Congress refused, and chose instead to cut taxes and cut spending—the same commonsense “Reaganomics” approach that had produced prosperity during the 1920s. The result: a post-war economic boom from the late 1940s through the 1950s. Had FDR and Truman gotten their way, the country would have slipped right back into recession if not a second Great Depression.

Obvious conclusion based on the evidence: Keynesianomics fails, prolonging economic hardship and misery, while Reaganomics works again.

3. The Recession of 1960 and 1961. When John F. Kennedy came into office, he faced a jobless figure of 7.1 percent. Wanting the economy to keep up with the growing workforce, JFK addressed the Economic Club of New York in December 1962 and proposed a bold notion: “It is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. . . . The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

Those are the words of John F. Kennedy—and he was preaching Reaganomics. Kennedy was assassinated less than a year later, but his successor, Lyndon Johnson, lobbied hard for the JFK tax cuts, and he signed them into law in 1964. As a result of JFK’s Reaganesque economic plan, the economy experienced a dramatic 5 percent expansion and personal income increased by 7 percent. Gross national product grew from $628 billion to $672 billion, corporate profits by an explosive 21 percent, auto production rose by 22 percent, steel production grew by 6 percent, and unemployment plummeted to 4.2 percent—an eight-year low. The Kennedy-Johnson tax rate cuts produced a sustained economic expansion for nearly a decade.

Obvious conclusion based on the evidence: Reaganomics works again.

4. The Recession of the 1970s. This recession began in November 1973 under Nixon and ended (technically) in March 1975 under Gerald Ford—a 16-month recession. According to the graphs and charts of the economists, real GDP was on the rise by the spring of 1975, yet unemployment and inflation remained painfully high throughout rest of the 1970s. Americans continue to suffer joblessness amid spiraling prices after the recession officially ended.

In 1976, Ronald Reagan narrowly lost the primary race against Gerald Ford. Reagan was convinced that he knew how to solve the long and painful recession of the 1970s, but he was forced to watch from the sidelines as Gerald Ford and Jimmy Carter—two befuddled, clueless Keynesians!—battled each other for the White House. On October 8, 1976, at the height of the presidential race between Carter and Ford, Reagan outlined the principles of Reaganomics in a syndicated newspaper column entitled “Tax Cuts and Increased Revenue.” He wrote:

Warren Harding did it. John Kennedy did it. But Jimmy Carter and President Ford aren’t talking about it. The ‘it’ that Harding and Kennedy had in common was to cut the income tax. In both cases, federal revenues went up instead of down. . . . Since the idea worked under both Democratic and Republican administrations before, who’s to say it couldn’t work again?”

Reagan had majored in economics at Eureka College and had spent years studying the great free market economists such as Adam Smith (The Wealth of Nations), Friedrich Hayek (The Road to Serfdom), and Milton Friedman (Capitalism and Freedom). While Reagan’s opponents ignorantly wrote him off as an “amiable dunce,” it is clear that Reagan correctly and insightfully diagnosed the ailing economy of the 1970s. Unfortunately, Reagan would have to wait more than four years for the opportunity to put his prescription into practice.

Obvious conclusion based on the evidence: Keynesianism fails again.

5. The Jimmy Carter Stagflation Recession of 1980. After Jimmy Carter was inaugurated in January 1977, he inflicted the failed FDR-style Keynesian approach on the country—an approach which says the federal government can spend its way to prosperity. The result of Carter’s policies was an economic disaster called “stagflation”—slow economic growth coupled with the misery of rampant inflation and high unemployment.

By the 1980 election, America under Carter was in a full-blown recession. The American people had suffered years of double-digit interest rates, double-digit inflation, and double-digit unemployment, plus blocks-long lines at the gas station. Ronald Reagan defeated Carter in a landslide. Newsweek observed: “When Ronald Reagan steps into the White House . . . he will inherit the most dangerous economic crisis since Franklin Roosevelt took office 48 years ago.”

Reagan moved confidently and quickly to slash tax rates and domestic spending. Under his leadership, the top marginal tax rate dropped from 70 percent to 28 percent. Michael Reagan described the results:

Tax cuts generated 4 million jobs in 1983 alone and 16 million jobs over the course of Ronald Reagan’s presidency. Unemployment among African-Americans dropped dramatically, from 19.5 percent in 1983 to 11.4 percent in 1989. . . .

The inflation rate fell from 13.5 percent in 1980 . . . to 3.2 percent in 1983. . . .

The Reagan tax cuts nearly doubled federal revenue. After his 25 percent across-the-board tax rate cuts went into effect, receipts from both individual and corporate income taxes rose dramatically. According to the White House Office of Management and Budget, revenue from individual income taxes went from $244.1 billion in 1980 to $445.7 billion in 1989, an increase of over 82 percent. Revenue from corporate income taxes went from $64.6 billion to $103.3 billion, a 60 percent jump.

This was the fulfillment of the “paradoxical truth” that John F. Kennedy spoke of in his 1962 speech: “Cutting taxes now . . . can bring a budget surplus.” Both JFK and Ronald Reagan predicted that lower tax rates would generate more revenue. This “paradoxical truth” worked exactly as predicted.

At a White House press conference in 1981, President Reagan took reporters to school, explaining that the principles of Reaganomics have been known for centuries. Lower tax rates invariably bring more money into the treasury, he explained, “because of the almost instant stimulant to the economy.” This principle, Reagan added, “goes back at least, I know, as far as the fourteenth century, when a Moslem philosopher named Ibn Khaldun said, ‘In the beginning of the dynasty, great tax revenues were gained from small assessments. At the end of the dynasty, small tax revenues were gained from large assessments.’”

The principles of Reaganomics have been proved true—and Keynesian theory has been exposed as a fraud once more.

6. The Obama Recession. To be fair, what I call “The Obama Recession” actually began under George W. Bush, triggered by the collapse of the housing bubble. I think it’s fair to call it The Obama Recession because, when Barack Obama took office, he threw $814 billion of stimulus money at the recession (plus billions more in corporate bailouts, “Cash for Clunkers,” Solyndra-style green energy boondoggles, and other prime-the-pump schemes). He promised to jump-start the economy and hold unemployment below 8 percent. This was weapons-grade Keynesianism, practiced on a scale never before witnessed in human history. After spending so much money on the “cure,” Obama now owned that recession.

If Keynesian theory works at all, the Obama stimulus plan should have completely turned the economy around. But the stimulus plan—officially known as the American Recovery and Reinvestment Act of 2009—not only failed to make a splash, it didn’t make a ripple. Even after the government pumped nearly a trillion dollars of borrowed money into the economy, unemployment nudged up toward the 10 percent mark. Today, unemployment is officially below 9 percent—but the actual jobless rate is much higher.

In 2010, the Population Reference Bureau calculated the workforce to be at just over 157 million people. The Bureau of Labor Statistics reports that there are 131 million jobs in America. That would leave 26 million people jobless—or about 16 percent of the total workforce. But it gets worse: Many of those jobs are just part-time jobs, and many people hold two or more of those jobs, so the actual jobless number is certainly far higher than 16 percent—maybe 20 percent or higher.

Obvious conclusion based on the evidence: Keynesianomics fails catastrophically.

Unfortunately, the high priests of the Keynesian religion refuse to see the light. President Obama clings to his delusional Keynesian faith, insisting that all we have to do is throw more money at the economy with another stimulus bill! That is economic insanity. Former Reagan aide Peter Ferrara wrote in the Wall Street Journal:

The fallacies of Keynesian economics were exposed decades ago by Friedrich Hayek and Milton Friedman. Keynesian thinking was then discredited in practice in the 1970s, when the Keynesians could neither explain nor cure the double-digit inflation, interest rates, and unemployment that resulted from their policies. Ronald Reagan’s decision to dump Keynesianism in favor of supply-side policies—which emphasize incentives for investment — produced a 25-year economic boom. That boom ended as the Bush administration abandoned every component of Reaganomics one by one, culminating in Treasury Secretary Henry Paulson’s throwback Keynesian stimulus in early 2008.

Mr. Obama showed up in early 2009 with the dismissive certitude that none of this history ever happened, and suddenly national economic policy was back in the 1930s. Instead of the change voters thought they were getting, Mr. Obama quintupled down on Mr. Bush’s 2008 Keynesianism.

Keynesian theory is every bit as superstitious as believing in astrology or a flat Earth or the good-luck powers of a rabbit’s foot. The facts of history are beyond dispute. The old Keynesian superstition has failed every time it was tried. But Keynesian fundamentalists like Barack Obama continue to live in a state of denial.

We know what works. Nearly a century of economic history proves it. Now we need a president and a Congress with the common sense to apply the lessons of history to the economic crisis of today.

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The Laffer Curve, Part III: Dynamic Scoring