Although I’m attempting to ask a factual question, I suspect there is going to be disagreement about the answers, so I’m starting this in GD.
Clinton governed during the dot com bubble. Bush is President during the housing crisis. Is it just a matter of dumb luck that makes a President “good” or “bad” for the economy, or are there factors within their control that influence the economy? Is the whole process cyclical, so anybody who is elected in '08 will be credited with an upturn in the economy, or are things like rampant government spending (a GOP trait nowadays) reasons for ongoing economic problems?
In short, can I say that Clinton was a good President because the economy soared during his time in office, and can I add a horrible credit crisis to my reasons for disliking Bush*?
*I suspect that the 90s “boom” didn’t neatly coincide with Clinton’s presidency, and that there was some economic expansion during these last 8 years, so I think the answer to this question is no.
How much credit and blame does the Prez get? Most if not all of it. If the economy is booming the President gets all the credit pretty much…if it’s in the dumpster then they get all the blame.
How much credit SHOULD they get? Very little IMHO. Mostly the economy takes care of itself without much help. It’s cyclical so it tends too go up and down…again, all on it’s own. The President really has extremely limited effect on the economy…which is why our Federal system is setup the way it is, so politicians can’t fuck with it very much for political reasons.
I’d say the main impact a President can have is psychological. If the economy is doing poorly, a strong and confident President can get us over the hump. Not by anything he may or may not do…but in the same way that taking over the counter cold medicine will reduce your cold from a whole week to a mere 7 days.
Also, Presidents have a tangential effect based on the policies and programs they are pushing. And how they structure the limited effect they have on the current tax structure (tax cuts vs tax increases…though really it’s Congress that has their hands on the purse strings so this is a very small effect a President can exert).
Yeah, I think one important aspect to this question sf how much a President controls Congress, which will obviously vary from administration to administration. Surely things like tax policy, spending levels, trade agreements, minimum wage, health policy, etc. have a significant effect on the national economy (if only in the long-term).
The public gives the current president way too much credit/blame for the state of the economy. Congress (which was Republican for 3/4 of Clinton’s administration) deserves as much credit/blame as the president. And since the economy doesn’t turn on a dime, past government actions are often causes of current conditions. Finally, forces outside of government (like the dot com boom) dwarf all of these.
I would qualify that last sentence by asserting that a president’s ability to harm a good economy is greater than his ability to fix a poor economy (E.g., is there anyone who thinks the huge federal deficits under LBJ didn’t cause at least part of the poor 1970s economy?) So part of the credit Clinton receives is justified in that he didn’t screw the fortuitous 1990s economy up.
The president should get credit or blame if you can point to something he actually did and show how it affected the economy in a good/bad way.
For instance, if the President pushed for and got massive trade tariffs and the economy went in the dumper, you could blame him for that. Or if he pushed for and got a massive increase in the minimum wage, or major tax increases on capital, or other destructive policies, you could blame him for that.
But the general business cycle has nothing to do with presidents. The current financial crisis has more to do with local and state government and lending rules than it does with the President. Clinton had nothing to do with the Dot-Com boom, and Bush has nothing to do with the real-estate crisis, and those are the two features dominating the economies of those two presidents.
Of course, the real answer is that a Republican president will get no credit from Democrats for a good economy, and all the blame for a bad one. A Democrat president will get none of the credit for a good economy from Republicans, and all the blame for a bad one. Thus it has ever been.
They haven’t been doing so, even though the administration’s lax enforcement and oversight of lenders probably contributed to the mortgage loan crisis, imho, ymmv.
Presidents submit budget proposals to congress. Sometimes these budget proposals are stupid and lead to big defecits, and sometimes they can be reasonable and lead to surpluses or balance. The presidents gets MOST of the credit or blame for the government budget, which has a profound impact on the rest of the economy.
I’d say that presidents can definitely do a lot of harm to the economy, by running an inapporopriate budget. Their ability to fix broken stuff is probably not as big, though.
There is another factor - how the Administration deals with crises. During the Clinton Administration there was the Asian meltdown and the hedge fund crisis, both of which got dealt with well, letting the boom continue. Now I doubt Clinton himself had much to do with this, but the people he appointed did.
I also recall the market reacting very favorably to the joint Clinton/Republican Congress tax-increase/cooperation in the early '90s. The markets gained confidence that Washington knew what it was doing for once, and that had a big psychological effect.
It is hard not to attribute the growing wealth gap to the Bush tax cuts. I don’t think they deserve much if any blame for the credit crunch, though. There were a lot of other factors, and slamming on the brakes for aggressive mortgages before now might have caused an earlier slowdown. There was some iffy lending going on, but a lot of it was well advertised, and I think the bond rating agencies are more at fault for not assigning risk properly.
That is a great example of why crediting or blaming one person / party is hard.
The wealth gap growth is very related to the unintended consequence of the cap on CEO salary deduction by corporations. In 1993 companies lost the ability to deduct as an expense CEO pay above $1 million UNLESS it was somehow tied to performace. This was in response to rapidly increasing CEO salary levels.
In response, some firms created bonus programs. Others took the easy way out and started issuing stock options. Tie THAT with a great stock market boom of the 90s, and you get HUGE pay levels for the top officers through stock-based (and therefore performance based) compensation. Options and performance share plans, not Bush, led to a lot of that growth.
Other issues with convential measures of wealth gap are explored by G Reynolds over at Cato, and a summary of his upcoming research is here in the WSJ: