His presidency is almost over. But what is the true George W. Bush economic record? (Hint: It's not what most of the MSM are telling you.) First, here is a look at the President's own somewhat defiant (and, yes, a smidge self-serving) take on the matter during his final press conference:
In terms of the economy, look, I inherited a recession, I am ending on a recession. In the meantime there were 52 months of uninterrupted job growth. ... Now, obviously these are very difficult economic times. ... The question facing a President is not when the problem started, but what did you do about it when you recognized the problem. And I readily concede I chunked aside some of my free market principles when I was told by chief economic advisors that the situation we were facing could be worse than the Great Depression.
Now the President makes some valid points, but he also left out a lot. Here is some of that, both good and bad:
1) Sorry, but it's the truth: Bush was as unlucky as his immediate predecessor, Bill Clinton, was lucky. Clinton a) inherited an economy (revamped and re-energized in the 1980s) that had been growing for seven-straight quarters when he took office in 1993; b) benefited tremendously from the the Internet revolution; and then c) left office just months before a recession began and America was hit by the worst terrorist attack in human history. And then there was the Federal Reserve chairman. While Alan Greenspan played the economy like harp during the Clinton years, "The Maestro" hit a series of bum notes this decade, to say the least -- especially his decision to keep interest rates too low for too long.
2) "Economy Made Few Gains in Bush Years", declared the Washington Post earlier this week. And while the story grudgingly acknowledged the 52-straight months of job growth, it dismissed any economic gains as the ephemeral product of the housing bubble and wild-spending consumers. Except ... that worker productivity -- the most important long-term indicator of the core health and competitiveness of an economy -- has risen at a really impressive 2.6 annual rate during the Bush years vs. 2.0 percent for Clinton and 1.6 percent for Reagan. (That factoid from the Wall Street Journal.) This is important stuff. It's one big reason why the World Economic Forum says the U.S. has the most competitive economy in the world. The economic rebound after the pro-growth 2003 tax cuts was no mirage.
3) Bush certainly didn't do much to shrink the size of government. He actually created another entitlement with the prescription drug plan. And those projected (and Social Security-enhanced)surpluses from 2000 turned into actual deficits. But economist James Glassman notes the economic challenges Bush faced:
By 2004 the surplus of 2000 had turned into a budget deficit of about 4% of nominal GDP. But the bold fiscal response [to the 2001 recession] hastened the recovery and by 2007 the deficit had declined to 1% of GDP. The government’s books would have recorded a small surplus in 2007 had it not been for the $200 billion tab for the commitments in the Middle East and the aid to the New Orleans area that is recovering from the damage from Hurricane Katrina in the fall of 2005.
4) Bush certainly didn't change America's long-term fiscal situation by fixing Social Security or Medicare. And the drug benefit materially worsened it. Bush tried solving the Social Security mess but failed. It is what it is. (Probably should have tried fixing healthcare first.) Nor did he push fundamental tax reform, such as moving toward a flat or consumption tax. These are black marks.
5) Wage stagnation? The real average hourly wage for workers, as calculated by the Labor Department, is just 1 percent more than it was at the end of 2000. Yet many economists, including those at the Fed, think the government has been overestimating inflation by nearly a full percentage point. If true, then workers have actually seen wages rise by about 10 percent over the decade. And you don't even have to tweak the inflation data if you combine wages, salaries, and benefits.
6) Income inequality? A recent University of Chicago study found official income inequality statistics fail to take into account that lower-income Americans tend to consume more inexpensive Asian goods. As the study's authors conclude, "This price effect offsets almost all the rise in inequality measured by official statistics." And whatever slight rise in inequality that's left over can easily be explained by technology and the expanded global market for CEO talent.
7) The past four months have been terrible. You had the money-sucking leviathan that is the poorly implemented Paulson Plan -- and Bush's failure to push better alternatives. You had the Detroit bailout. You had a failure to vigorously defend the free-market approach that, when implemented 25 year ago, saved the imploding economies of the West and helped win the Cold War. We really needed the Explainer-in-Chief to bring his A-game. Didn't happen.
Bottom line: Bush's successes are destined to be overshadowed by the imploding housing and credit bubbles. They are the economic equivalents of IEDs, and they blew up at the end of his second term. The causes? Everything from Fed monetary policy to government housing policy to cultural dysfunction on Wall Street and Main Street. But as teenagers like to say, "Too bad, so sad." Bush was president, and Big Media has already declared its summary judgment: Failure.
Reaching such a mistaken conclusion, though, requires an almost purposeful misreading of the past eight years. But the key question, at least to me, is whether Bush cemented and extended the Long Boom policies -- low taxes, smaller government, less regulation -- that ignited a quarter century of amazing economic growth. Given that we are about to embark upon a multi-trillion dollar new New Deal and, perhaps, a new era of high taxation -- all to some degree enabled by Bush -- I think the answer is "no." But please, he's no Hoover. That rap will go to anyone who tries to raise taxes or trade barriers during the current downturn. You're up to bat, #44 ...