I pose this as a question because I really don’t know one way or the other.
I know I hear people blaming him a lot, but never the arguement as to why?
If you read a little bit about dealing with recessions, the main advice from economists seems to be:
- Deal with it immediately.
- Focus more on fixing the problems and less on sending good money after bad. Though, this isn’t as important as item #1.
Bush failed on both these fronts. The dotcom crash happened around summer of 2001, followed shortly by Enron. He didn’t really start trying to do anything to reboot the economy (if I remember right), until summer 2002 or so. His solution was, then, to cut taxes at the same time as he was going to start massive government spending on the military, thereby depriving the US of lots of young workers and running up the government’s debt and hence their credit rating.
In total, the economy mostly began returning on its own. When the mortgage crisis plus Detroit crumble came into effect, he was pretty much a lame duck. The leadership for dealing with these came from the legislative branch and was hence not terribly pointed nor timely. Plus, the government was (and is still) in massive debt due to the two wars being fought, and still depriving the US of lots of good, young workers.
So pretty much he fumbled the ball, wasted resources, and ran up a debt to do it.
True, he certainly was hit with lots of economic crises, between dotcom, Enron, Katrina, 9-11, mortgage, and Detroit. But it could never be said that he handled any of these with any particular haste nor ability. The White House was predicting the mortgage crisis, according to their own rhetoric, and everyone has just been waiting for Detroit to fall, so theoretically these two could have been dealt with pre-emptively if he’d had the wisdom.
Not particularly. Bush didn’t initiate the idea of letting corporations do whatever they want with minimal oversight - although he gave it his full support while in office.
I agree. He let it happen through inaction, and by not breaking with conservative orthodoxy until it was too late. I think it would be giving him credit to say he actively caused any of the problems. The tax cuts for the rich is the only thing I think he might actively pushed for. It could have been worse - his social security plan might have passed.
Perhaps a simpler view;
There’s an odd thing about economics, it all seems to be about perception. If people think it’s good, then it’s good. If people think it’s bad, then it’s bad. This is a trait which seems shared by all things imaginary.
I think the economy is relies on the people’s willingness to suspend their own disbelief about the absurdity of the entire concept. Bush’s extreme stupidity led many to worry about wether the people at the top really had it all under control. As a result, they began to look too closely at certain things. This caused an unwelcome injection of reality into the fantasy of the financial world, and all the current problems result from that.
It will take a few years of reassuring nonsense from a skilled liar to return the american people to their ‘let’s go shopping’ stupor.
I agree with this. The nonsense about the magical invisible hand of the economy is that it will all sort itself out. Yes, and in the long run all of us are dead. We’d like to have some predictability to break up the excitement of “solitary, poor, nasty, brutish and short” and the government is always the biggest player in an industrial economy, so big that what a government does or does not do has an enormous effect.
I found this article from Time magazine on “25 People to Blame for the Financial Crisis”. George W. Bush comes in at #15, as voted by readers. Christopher Cox, however, is #2. He was chairman of the Securities and Exchange Commission from August of 2005; so you can decide how much of his blame should also be carried by the president who nominated him to the position.
Bill Clinton is on the list too for repealing the glass-steagal act, which was enacted during the depression to separate investment banks from commercial banks. and they are spot on to give bill his due. But he’s one of 25. I’d rank Bush pretty high up on the cupability scale as I would Greenspan.
The foundation for the problem was laid in the deregulation madness of the 80s. The S&L crash should have been a warning. The reason for bank regulation in the first place was that the “irrational exhuberance” of the 20s led directly to the Great Depression and regulation was supposed to prevent this from happening again. But bankers argued successfully that the regulations were hampering their innovations–exactly as they were supposed to. Greenspan (an Ayn Rand disciple) contributed mightily to the madness, but so did both parties in Congress. Bill’s budget surpluses probably put a damper on the damage for a time. It is hard to recall that among the “problems” facing the incoming president in 2001 were the surpluses that were getting to several hundreds of billions a year.
Well W figured out what to do with the surpluses. First tax cuts, which went mainly to the wealthiest people and then start a totally unnecessary war that blew the budget out of the water. Recall, if you will, that while Roosevelt ran a gigantic deficit during the war, he also raised taxes enormously. The highest marginal tax rate was 91%. IIRC correctly it was on income above $200,000 (think $2 million today). One result was there was no point in paying fantasy salaries to top executives. These rates stayed in effect until Kennedy lowered them by which time the national debt had been lowered from about 120% of the GDP to somewhere in the 40-50% range. But there was a war on and few were quibbling about the deficits in the early 40s.
Instead W managed to keep the costs of the war mostly off the books (and also off people’s minds). He kept trying to cut taxes even more and also eviscerate what regulations remained.
I think it is fair to say that W’s policies certainly encouraged behavior that made things worse, but does not bear primary responsibility.
It brewed to disaster on his long, sleeping, eight year watch. He bears massive responsibility for doing nothing.
People still repeat the myth of “Bill Clinton’s surpluses”. Please, they were projections, and would not have held up pretty much due to the dotcom bust.
I’d say that Time article is a pretty good review of the people responsible, though I’m sure all of us have our own rankings of them.
Cite, please?
You seem to be confusing “elimination of the government debt” with “surplus.” Surpluses occur in any given year where government income is greater than expenses. Surpluses existed in 1998, 1999, 2000, and 2001. graph and raw data.
The repeal of the glass-steagal act ranks high up there IMO. However, I’m not sure I would lay it all at Mr. Clinton’s feet. Didn’t congress have to help repeal the act?
I think we will see that act re-instated or one like it rather soon.
Except:
- source Wikipedia article on the Glass Steagall Acts.
Assuming the above is true, it’s sort of tough to lay this at Clinton’s feet, unless he actively lobbied Congress to repeal the Act.
Quite. And another example of the flagrantly dishonest debating tactics the Right has to engage in (not addressing an individual poster here as pinning this to Clinton has been a growing conservative meme). The veto could not be sustained.
That said, Clinton didn’t veto Gramm’s Commodity Futures Modernization Act of 2000 which deregulated credit-default swaps and may have been more key to this mess. From what I can find it was also veto proof, but it deserved at least a symbolic veto.
I think Time may have (amazingly) gotten it right by putting a lot of the blame on Phil Gramm. I’m happy to blame a Texan jackass.
The biggest economic crime of the Bush years was the gigantic increase in spending that was paid for by borrowing. And now when we’re in a recession and want to borrow money we find that it’s very difficult because we’re already borrowing so much. We’re like the guy who spends every penny of his paycheck and maxes out his credit cards because he’s got a good job. Then he gets fired and finds that he has no savings so he figures that he can pay his bills by credit card for a few months. But his credit cards are maxed out so he can’t borrow enough, so he ends up on the streets, where the only way to numb his pain is alcohol and eventually he starts to pray for death.
Well, we’re not exactly at that point. The government hasn’t lost it’s job, it can still collect taxes, and we haven’t maxed out our credit card, we just have to agree to pay more later.
If we run a surplus or a balanced budget during normal years then we are well positioned to borrow money during a crisis, which can be paid back when the crisis is over. If we borrow like crazy during normal years we have to borrow like double-dog-crazy during crisis years, and we still have to pay it back when the crisis is over. That’s no way to run a railroad.
This is exactly right. Bush increased the deficit during good times, inflated the economy and now that it is crashing down around us we find it much harder to deal with.