The major policy that Bush has managed to pass so far is his large tax cut. Tax cuts are not recessionary. The one argument that can be made about a tax cut is that it drives up the deficit, which in turn drives up long-term interest rates.
Long-term rates have not really increased much. So there was no discernable negative effect from the tax cut. On the other hand, there isn’t much short-term economic benefit either. For one thing, the tax cut was ‘back loaded’, and most of it takes effect in the out years. But also, it’s rather small potatoes. A trillion dollars over ten years is less than 1% of the economy. And if the government kept the money, it would still be spent, albeit less efficiently (so we free marketers would claim). So the stimulative effect in the short run is very small - the stimulus comes from the compounding effect of increased investment, year over year.
All this is a long-winded way of saying that Bush’s presidency deserves no responsibility for the recession. Chalk it up to a tech bubble bursting, followed by a major terrorist attack, the ‘fog of war’ leading up to Iraq, and now SARS is threatening the world economy. A quadruple whammy.
Interestingly, consumer confidence has increase 20 points from 60% to 80% since the war ended. That would suggest the long run-up to war had a profound effect on demand. If that’s gone now, we could be poised for a major recovery. One of the nice things about demand-driven recessions is that you often get a good bounce coming out of them, because there is a lot of immediate excess productive capacity waiting to fill the demand.
I wasn’t claiming myself, that Bush single-handedly messed up the economy.
That is the impression I’ve gotten from many people.
I was curious as to why they thought it so and what a President could really do to help it.
Because partisans always claim that the good times are due to their great policies, and the bad times are because the other guy screwed up.
Thus it will always be. If we were in a big economic expansion right now, it would be the ‘Clinton expansion’, and Democrats would be trying to tell you that it’s because Clinton left the economy poised for huge growth due to his brilliant policies.
And if a Democrat is elected next time around, then if the economy tanks the Republicans will claim it’s because off his horrible new policies. And if the economy takes off, it will be because of the Bush tax cuts.
My advice: Ignore this nonsense from both sides, and make up your own mind.
Bush is an utter failure as a cheerleader. He started poor-mouthing the economy during the 2000 election as part of his campaign strategy. (Does no one remember this?) Clinton pointedly warned at the time that the poor-mouthing could become a self-fulfilling prophesy.
Bush changed his tune after taking office (as you might expect), but it was too little too late. The slide in consumer confidence (which he helped instigate) was underway.
Loudly promoting tax cuts weighted toward the rich has done nothing to promote consumer confidence. And most consumers found that their piddling $300 or $600 tax rebate did little more than pay down the balance on their credit cards.
Don’t forget the major accounting scandals & the resulting massive corporate bankruptcies. That makes five whammies. (quintuple?) I think the fact our economy is still doing as well as it is, is amazing.
I don’t attribute this to Bush, but to the fact we have a very strong economy.
Whoops. You ended up on a slightly different page than I did. What you want to do is go one page up, here and download the Historical Tables files (2.3 MBytes).
Well, that’s a good question. The answer to your question of whether there were specfic facets that I was referring to would be no, although you came up with a few examples that might qualify. But, what I was really saying is that it seems likely that the costs of the tax cut will get distributed to the poor and working class in some way. To some extent, this will be due to cuts in services that affect them. (It seems rather unlikely to me that there will instead be cuts in corporate welfare or more aggressive enforcement of tax cheating by the wealthy, …) To some extent, it is likely to be due to the way revenues that are needed will be raised down the road.
In other words, my point is that there is no free lunch here. The money that isn’t coming in from taxes on the wealthy must come from somewhere and while I know it is not exactly a zero-sum game and that there are some small gains that can be made from running things more efficiently, I think in the end what you are going to end up with is a transfer of wealth from the poor and working class to the rich.
I think I actually saw a nice explanation somewhere of how the poor and middle class will effectively end up worse off after the Bush tax cuts despite receiving some small cuts in their income taxes but I can’t honestly remember where it was. (Someone like Krugman, perhaps?)
Oh…Here’s one example of this sort of effective wealth transfer that is likely to occur: If Bush cuts federal income taxes rather than using the monies to help bail out the states, they are going to have to do some combination of cutting services and raising taxes. Traditionally, the way states get their tax revenues is with much less progressive forms of taxation than the federal income tax, which is just about the most progressive tax around (with the exception of the gift and estate tax that Bush is also phasing out).