In the comments section of a previous post about the economy (yesterday we had good news- today we get bad employment news), it was stated that Bush was never accused of talking down the economy after being elected (yes- he was elected) in 2000. One more time, let’s go through one of the most idiotic charge the Democrats have ever made about Bush.
After being elected on a platform of tax cuts, Bush started to note that not only were Americans overtaxed in these times of huge budget surpluses, but that the bubble had burst, the glow was off the economy and had been for a while, and that tax cuts might be necessary to serve as a stimulus:
Mr Bush has said he sees “warning signs of a possible slow-down”, and has proposed tax cuts of $1.3 trillion over a 10-year period.
“I believe strongly that tax relief is part of the prescription for any economic ill that our nation may have,” he said.
Democrats responded with all the sound and fury that they could muster on an issue as horrifying to them as tax cuts (too bad Hussein didn’t try to cut taxes in Iraq- we might have even had Kucinich and Pelosi onboard), and claimed that Bush was talking down the economy for partisan gain:
On Thursday, US Treasury Secretary Lawrence Summers (ed.- under Clinton) rejected bleak Republican predictions, saying the economy was “healthy and poised for moderate growth”.
President-elect Bush and his team are actually talking down our economy, (and) injecting more fear and anxiety
His remarks followed accusations made by Democrats and economists that Mr Bush and his staff were attempting to “talk down” the economy for political ends.
Some commentators suggest Mr Bush is seeking to bolster the case for his proposed $1.3 trillion tax cut and to pin the blame for any further economic downturn firmly on the outgoing administration.
“What you’re seeing is President-elect Bush and his team actually talking down our economy, (and) injecting more fear and anxiety into the economy than is justified,” said Gene Sperling, an economic advisor to President Clinton.
Newsmax had this coverage:
The Clinton White House on Thursday warned President-elect Bush to watch what he says about a possible economic downturn because such statements might become a self-fulfilling prophecy.
The White House claimed that most experts predict solid but modest growth and not a recession.“When most experts are still projecting solid growth and a soft landing, a new president should not be hurting confidence by talking down his economy,” White House National Economic Adviser Gene Sperling said…
“It is important to be guarded and measured in what you say about the economy,” White House Press Secretary Jake Siewart said Thursday. Siewart said that most analysts agreed the economy would grow by around 2.5 percent next year and that statements to the contrary could be detrimental.
“It is important for an economic team that is part of the government to be careful about what they say,” Siewart said. “People take these comments very seriously.”
White House officials said privately that Bush was trying to lower expectations on the economy
Kimmitt
Some of Bush’s economic failures are technocratic; his Treasury Secretaries, in particular, have engaged in basically incompetent behavior. I’ll be honest — I only mostly understand why they screwed up in many cases, but a lot of people much farther along than me are quite livid.
Others are more straightforward — when you want to increase Aggregate Supply, you cut taxes to the wealthy to stimulate investment. When you want to increase Aggregate Demand (which is what we want now), you cut taxes to the relatively less wealthy to stimulate consumption. Bush’s tax cuts had nothing to do with the economy, though; they were faith-based, rather than theory-based.
Mark L
Yup. Bush’s tax cuts were faith-based. Bush had faith that cutting excessive tax rates would help the economy. He cut taxes. The economy improved. Boy, isn’t Mr. Bush looking like an ideological looney today because of his foolish, foolish faith that cutting excessive tax rates would help the economy?
No doubt Bush’s blindness contributed to the stunning losses experienced by GOP candidates in Mississippi and Kentucky yesterday. And we can, no doubt, expect more of the same in 2004.
Dean
Yup, Kimmitt, folks “farther along” like Paul Krugman, Max Sawicky, and Brad DeLong, I’m sure, were all livid. QED.
BTW, doesn’t spending on investment (e.g., CAPITAL investment) constitute spending? Which in turn represents an increase in demand?
No, it’s not the same as CONSUMER spending, but if I spend on new factories, new lathes, new robots, is that investment, spending, demand, or all of the above?
Kimmitt
“He cut taxes. The economy improved.”
1) You are correct that the tax cut was stimulative, if not very.
2) WE HAVE TO PAY IT BACK SOMEDAY. This continues to baffle me — when we borrow money, we have to pay it back! At some point, we will have to have taxes be higher than expenditures — cutting programs or increasing taxes — in order to retire some of the debt. The question is, does the small improvement to the economy which the tax cuts engendered make up to the economic loss they have caused/will cause in the long run?
“BTW, doesn’t spending on investment (e.g., CAPITAL investment) constitute spending?”
It would if businesses had any reason to make capital investment, but in the absence of markets for their goods, the money simply sits around, driving down the interest rate. Which is nice for the mortgage refinancing industry, but doesn’t do much for the unemployment rate.
Mark L
The economy improved? You call a mere 7.2% growth in the economy an improvement. Why that figure is *easily* matched. Even Reagan did it. Back in ’83-’84,right after his tax cuts, which were just as foolish as Bush’s tax cuts.
Why the growth in Reagan’s economy only continued until 1990, when they passed the luxury tax, and the economy tanked. (Although I am sure that was simply a coincidence. Given Reagan’s foolish tax cuts, the economy was due for a downturn sooner or later.)
As for the deficit — yeah. We gotta worry about the deficit. And there IS NO OTHER WAY to pay down the deficit than raising taxes. Cutting spending? What type of fool would think that is a useful exercise? Why government spending is essential. We could not possibly cut spending in such essential programs as NPR, PBS, DARE, Head Start, and other such programs that need more time to produce results. Really. Head Start has only been around for 35 years. We need another 35 or maybe 70 years before we can evaluate its effectiveness. So forget cutting spending. Taxes. Yup. Higher taxes. That’s the ONLY solution.
Kimmitt
NPR, PBS, DARE, Head Start, and most other social programs amount to, in total, maybe 1/10th of 1% of your tax bill.* Saying that they’re bad ideas is all good — heck, I agree on DARE — but saying that we could save any significant amount of money by cutting them really isn’t supportable.
*The big money’s in Social Security and Medicare, of course. TANF is real money, but it’s still well below 1% of Federal expenditures. If you want to cut expenditures significantly, you really have to cut defense, SS, or Medicare (I assume that defaulting on the national debt is not on the table). Everything else is just Good Government on General Principle, not Saving Lots of Taxpayer Money.
steve
kimmitt, How much of my income do want to take at gunpoint? And when you give me some of my money back…thats a loan? Please tell me you dont have a position of responsibilty anywhere!