Decision ‘08

Bush Successful? Believe It…

George W. Bush, a successful president? So says William Kristol, and he’s right, in at least one area:

Let’s step back from the unnecessary mistakes and the self-inflicted wounds that have characterized the Bush administration. Let’s look at the broad forest rather than the often unlovely trees. What do we see? First, no second terrorist attack on U.S. soil — not something we could have taken for granted. Second, a strong economy — also something that wasn’t inevitable.

And third, and most important, a war in Iraq that has been very difficult, but where — despite some confusion engendered by an almost meaningless “benchmark” report last week — we now seem to be on course to a successful outcome.

The economy first: After the bursting of the dot-com bubble, followed by the attacks of Sept. 11, 2001, we’ve had more than five years of steady growth, low unemployment and a stock market recovery. Did this just happen? No. Bush pushed through the tax cuts of 2001 and especially 2003 by arguing that they would produce growth. His opponents predicted dire consequences. But the president was overwhelmingly right. Even the budget deficit, the most universally criticized consequence of the tax cuts, is coming down and is lower than it was when the 2003 supply-side tax cuts were passed.

Bush has also (on the whole) resisted domestic protectionist pressures (remember the Democratic presidential candidates in 2004 complaining about outsourcing?), thereby helping sustain global economic growth.

Well, the first point is definitely true - regardless of your political affiliations, you cannot deny that there has not been a second 9/11 in America. Some people seem to think that’s a small thing, but it is in fact a major accomplishment. I’m definitely not as hopeful as Kristol about the third point, Iraq, and it may end up being so catastrophic that it drowns out Bush’s other accomplishments if it implodes.

But as for the economy - well, move over Bill Clinton, it’s George W. Bush who has presided over one of the biggest booms ever. Well, okay, that’s not exactly true…domestically, we have seen better growth rates at times in the past, to be sure. But globally, the economy is moving forward at a blistering pace:

Just how red-hot is the current worldwide expansion? “This is far and away the strongest global economy I’ve seen in my business lifetime,” U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune’s offices.

…While the current pace isn’t quite a record - according to the IMF the world grew at a 5.4% average annual rate from 1970 to 1973, vs. a projected 4.9% from 2003 through 2007- there’s really no contest. When our ties were fatter and we were thinner, total world GDP was $13 trillion in constant dollars. Today it’s more than $36 trillion. Not to mention, as investor Jim Rogers notes, “there are three billion people in places like Eastern Europe, Russia, India, China, and all of Asia who weren’t participating last time around but who now are.” Back then, Germany and Japan led the charge. Now the emerging markets are running fastest, along with Europe, which has - for the first time in years - pulled ahead of the U.S. in GDP growth.

Now, what does this have to do with George W. Bush? After all, the U.S. is falling behind all of these countries in many areas, as the excerpt states.

Well, true…but here’s the thing. The foundation of all that prosperity is the American consumer. Without question, the booms in China and India, for example, are largely a by-product of our seemingly endless desire for new goodies. Who knows how much of this boom is due to the Bush tax cuts? It’s hard to say: the housing bubble provided a big lift (and its still-unfolding bursting is still a huge danger), and without a doubt, China’s willingness to finance our lack of thriftiness is both a blessing and a curse (my biggest economic nightmare these days is that China quits buying Treasury notes, and it’s already shifting a lot of its investment into euro-dominated securities)…but clearly, the tax cuts played a role.

Now, consider this: we are now in a world of seemingly permanent higher oil prices, and we have a subprime real-estate meltdown that threatens to pull the economy into a recession…yet almost every Democratic presidential candidate wants to repeal all or part of the Bush tax cuts. What effect do you think that will have on American consumers…and as a result, on the global boom?

Worse, they want to repeal the tax cuts to finance…universal health care. As in, another HUGE government financial obligation, at a time when we are already running deficits because of the war.

Liberals used to be fond of calling themselves ‘the reality-based community’ - but when it comes to the economy, that’s never been further from the truth. Protectionism, tax hikes, and huge new government obligations are not the recipe for a booming economy - they are the ingredients for disaster. Keep this in mind when you evaluate Bush’s term in office, and the upcoming election…

16 Responses to “Bush Successful? Believe It…”

1 Ryan Bonneville Says:
July 15th, 2007 at 11:03 am
Two things:

1) “After all, the U.S. is falling behind all of these countries in many areas, as the excerpt states.”

Who cares? This is what globalization should look like. The US almost certainly shouldn’t dominate the world economy if we want to maximize efficiency.

2) “What effect do you think that will have on American consumers…and as a result, on the global boom?”

My guess is none. Marginal tax rates in the US aren’t even close to the levels they’d need to be to be majorly distortionary. It never ceases to amaze me how many Republicans are willing to just plug their ears and shout “TAX CUTS ARE GOOD” no matter how many times actual professional economists tell them that the levels we’re talking about really aren’t that big a deal. You’ve hit the mark far better than you realize: the current “boom” has a lot more to do with continued globalization than it does with tax cuts.
2 Mark Says:
July 15th, 2007 at 12:58 pm
But my point is, though the effect of the tax cuts may be hard to quantify, it IS there…and even a marginal decline in U.S. consumer behavior will have an outsized effect on the global economy…
3 Ryan Bonneville Says:
July 15th, 2007 at 1:50 pm
You can claim it all you want. There’s a pretty good consensus among people who actually study these things that your analysis isn’t right, though.
4 Mark Says:
July 15th, 2007 at 2:23 pm
No, there’s a pretty good consensus that tax cuts don’t completely pay for themselves - I don’t know of a single economist of any political persuasion who would claim that tax cuts don’t increase consumption…if you can find one, please let me know. That would be quite remarkable…
5 too many steves Says:
July 15th, 2007 at 6:02 pm
Despite all the angst about the war in Iraq today, the long-term negative effect on the perception of the Bush Presidency over time will largely depend on what happens over the next few years. If there are no more attacks on the US nor large-scale attacks on foreign US targets then I think the worst case assessment is neutral. Even if we leave Iraq and it devolves into even greater civil strife than exists now, the negative impact on the opinion of Bush’s Presidency will be marginal, at worst. I suspect he will eventually be held in high regard much like Clinton or Ford, but certainly not like Lincoln, Washington, or FDR.
6 southdakotaboy Says:
July 15th, 2007 at 7:14 pm
The big question in the future of the Dems is “What will happen to them if their economic plan leads to a major economic depression?” They have tied themselves to two main ideas : the Iraq war is a failure and that Bush’s economic plan is bad.
If sometime after 2008 (if the Dems win controle) the economy goes into free fall and we suffer another 9/11 type attack I think the Dems will be doomed as a party. This will happen even with the huge msm spin to blame everything on the Republicans. The 2006 election wasn’t so much an endoresment of liberal policy but more of a punishment slap to the Republicans for straying to far from their principles.
7 Scott Says:
July 15th, 2007 at 8:59 pm
Ladies and Gentlemen start your spin machines! When we do get hit again by the terrorists, Republicans will say that it was because we didn’t fight them there, so they followed us home. Democrats will say that we didn’t put sufficient resources into finding bin Laden and provided them with a great recruiting tool. Many of you will dismiss the analysis in the Washington Post, while I will dismiss the analysis in Rupert Murdoch’s Wall Street Journal .

Neither party will collapse. Republican’s will support Bush, Democrats will blame him. Red states will write one version of history into their public school curriculums and Blue states will write another. What a country we have!!! Bush campaigned as a “uniter;” imagine what we would have gotten from a divider.
8 southdakotaboy Says:
July 15th, 2007 at 10:22 pm
Scott the two things I don’t think you are taking into account are the internet and fragility of the Dem coalition.
The internet will prevent the Dems from being able to control the news. People will be able to see what the Dems said and will hold them to account. The internet is now giving third parties the ability to cheaply reach large numbers of people and to get their messages out to a wider range of people. As an example look at Ron Paul in the Republican party being able to now have more money on hand then MacCain. I know that Ron Paul isn’t technically a third party candidate, but he is close enough to illistrate my point.
Also look at the fact that Cindy S. has basically announced that she will challenge Nancey P. for her seat if she doesn’t move to impeach Bush and Chenney. Combine that with the unhappyness of the anti war left you have a big crack that will not take much to split open.
This split after some future attack will be between those on the left who will blame ourselves (anti war crowd) and those who will want to strike back (moderate Dems).
9 mikebdot Says:
July 16th, 2007 at 7:56 am
Only to someone like William Kristol would a FIRST 9/11 not mean a thing. If we sent our troops into Iraq in 2000 we could have prevented the FIRST 9/11 as well I reckon…

The internet alone has far greater responsibility for the booming global economy than any one man.
10 Mark Says:
July 16th, 2007 at 7:00 pm
The first 9/11 Bush’s fault? Hmm…maybe you need to study the timelines of the 9/11 Commission Report a little better, Mike. As for the Internet being the source of the global boom, that’s straight out of 1999. The Internet can be a great boon to productivity, but most of those gains have been realized years ago. It’s the American consumer who is driving the global boom…
11 mikebdot Says:
July 16th, 2007 at 9:23 pm
I didn’t say anything about it being Bush’s fault. Technically I’m saying it’s Clinton’s fault since 2000 would be his administration. I was making a comment that it’s easy to prevent terrorist attacks at home when the enemy is perfectly willing and able to kill us off one by one in Iraq. They’ve killed more of us over there than they have over here. What Bush should say is “They’re attacking us over there instead of over here, where we might be able to stop them”.

As for the economy, I think you are giving the American consumer far too much credit. When I say the internet, I’m really talking about the infrastructure surrounding it. The communications industry has really stepped up and the internet is a very large part. Yes, “internet” includes ISPs and the whole nine yards, not just the dot coms. Speaking of which, it’s not as though every single one went bust, Mark…
12 Mark Says:
July 16th, 2007 at 10:38 pm
No, but the graveyard is littered with tech company corpses - EBay, Amazon, Google…the survivors are huge, but few in number…
13 mikebdot Says:
July 17th, 2007 at 8:52 am
Also, to claim “most of those productivity gains were realized years ago” is akin to saying the gains realized by the assembly line were mostly realized 100 years ago. We’re STILL making gains there. We’re being FORCED to by NAFTA and the like, but we’re doing it. Hopefully the Evansville manufacturing plant for Whirlpool will be around long enough for me to think seriously about retirement. Fortunately, I work in the Tech Center so I could potentially move to corporate if it did close, but still, productivity gains within a system always increase over time. Then a new system comes along. The internet is such a system.
14 Mark Says:
July 17th, 2007 at 10:25 pm
What exactly is NAFTA forcing us to do, and does it outweigh the fact that NAFTA has contributed hundreds of billions of dollars since its inception to our economy and that of our neighbors?…
15 mikebdot Says:
July 18th, 2007 at 7:09 am
NAFTA is forcing the manufacturing sector to find productivity gains in order to keep their shops open. When you hit a certain number of man hours per product it is no longer attractive to invest $500M+ (in our plant’s case) in moving the plant south of the border. I am not claiming this to be a “bad” thing, just providing evidence that we are STILL realizing productivity gains on the assembly line.
16 Stan Peterson Says:
July 19th, 2007 at 5:46 pm
Bush has been a president with True Grit. The Last president that displayed that same quality was demeaned during his term in Office, and forced to not seek re-election.

But he believed in what he was doing, and stood by it to the day he left office.

Harry Truman was a Great president in retrospect. As for temporary popularity, Truman had an approval rating of just 18%, roughly half of what Bush still has where it has appeared to be at rock bottom. His opponents are down where Truman’s ’s numbers were at half his approval rating.

Truman too prosecuted an unpopular war just like Bush as was derided as a party hack and couldn’t do anything right as “…to err is Truman.” . There are few things that Bush has done that he did not promise to do in his campaigns for Office, including addressing illegal alien assimilation. He promised to cut tax rates and did; he promised to spend federal money on primary education and did; he promised to reform entitlements and he tried but failed. He promised to be a Free trader and did. He promised to reclaim the Judiciary from the socialists and has had a modicum of success there as well.

His foreign policy has been criticized but in the GWOT he won in Algeria, Libya and Morocco without firing a shot. He knocked over the Taliban at little cost in Afghanistan.

He turned out a UN violator and managed to create a coalition of the willing, for Iraq. How that will eventually turn out is still up in the air.

His diplomacy in engaging Communist China, Russia, Japan, and South Korea has apparently succeeded in isolating and pressuring and having the North Koreans close the barn door of Young-bin. Maybe after the horses have escaped. Still it also means there are not a lot of nuclear weapons to hand to terrorists either. North Korea is a success.

Iran is still an open question, but Persia is heavily over extended. Like the Soviet Union when Reagan bankrupted them, it just can’t afford to continue to fund all of Hamas, Hezb’Allah, Syria, the Taliban, Sadr’s Mahdi Militia, and also fund a domestic Manhattan Project that strained the USA when it did it. The sanctions may not be much, but the combined pinch, is certainly evident. Who would have thought an oil producing country would be rationing gasoline? And have riots amid soaring inflation.

Up to 1989, did you really expect or forsee the Soviet Union to just collapse?