SharedThought

I’ve been engaged in a little exchange with Therapy Sessions regarding to what extent President Bush is responsible for the weak economic recovery we are experiencing.

Therapy Sessions pointed out that job creation is one of the last elements of a recovery. I agree. However, never before has employment lagged this long. The recovery started in 2001 and is in its 9th quarter without any job growth. In fact, more than a million additional jobs have been lost during the recovery. The other factor that will hamper this recovery, as opposed to the Clinton recovery, is the weight of the growing budget deficits. The higher interest rates that will inevitably result will be a continuing drag on the economy.

Therapy Sessions says it is a myth that the president controls the economy. I respectfully disagree. After all it is not my original thought to hold the president accountable for the current economic environment. Republicans spent almost a generation blaming Jimmy Carter for the nation’s economic woes. In fact some Republican groups found time away from Whitewater and Vince Foster conspiracy theories to attack the weakness of the “Clinton Recovery.” I find that a bit ridiculous when you consider the facts.

But I don’t give all the credit for the 90s expansion to Clinton. I think a great deal of the credit should go to George H.W. Bush. It was his tax increases and spending restraints in 1990 that laid the foundation for the later growth. The spending restraints, referred to as PAYGO (pay as you go) required OMB to identify spending offsets or revenue increases for any new legislative proposal. The increased taxes and spending restraints began bearing fruit when the economic recovery started in the spring of 1991, too late to earn George H.W. Bush a second term.

Clinton took office with an economic recovery already underway, but to his credit he stuck to what was already working. The policies that he pursued played to the bond market. Influenced by Leon Panetta and Alan Greenspan, Clinton pursued balanced budgets over spending programs. These policies led to the first budget surplus in over 30 years. With government finances in order, private enterprise had greater access to capital. In that healthy financial environment, the United States had the longest economic recovery in its history. Clinton deserves credit for this.

In contrast, when George W. Bush took office the economy was at the tail end of the recovery. It did not enter a recession until after he took office, and I don’t think he should be blamed for that. However, what he has done in response to the recession he should be held accountable for. During the campaign he promised tax cuts and balanced budgets. In office and faced with a recession, he delivered on the tax cuts but at the same time increased spending. And then faced with homeland security issues, wars in Afghanistan and Iraq and a lame economic recovery he again increased spending and cut taxes. As a result we have a job-loss recovery and a record federal deficit. So Therapy Sessions is right. I think George Bush deserves to be blamed for this.

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This entry was posted on Thursday, September 11th, 2003 at 11:37 am and is filed under Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.