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George W. Bush's Economic Policies: How to Create Debt and Depression
When George W. Bush became president, the national debt had been reduced, the budget was reasonably balanced, and the economy, though softening after he was elected and before he took office (probably in anticipation...) had not yet tanked. Bush claimed that his economic policies--specifically, cutting taxes for corporations--would quickly reverse the softening and produce a strong economy.
He pressed Congress to pass his economic package quickly, and concentrated on this (instead of paying attention to the increasing reports of terrorist activity) right up until 9/11. Central to his program was large tax cuts for businesses and the wealthy, smaller ones for those of modest means. He said that tax cuts would create more jobs by increasing the corporate profit margin.
Yet, in spite of a promise of tax cuts to businesses large and small, corporations large and small were cutting jobs by the tens of thousands through early 2001, and the passing of the tax cut legislation did nothing to stop the hemorrhage. In August of 2001, during his "vacation" in Crawford, he hosted an economic conference at Baylor University in Waco, Texas, a conference of his wealthy business supporters, mostly closed to the media, at which they could all stroke each other's egos. The small part of that conference which was documented by local media made it clear that these people were perfectly willing to take the tax cuts and fire their employees--anything before cutting their own inflated incomes. The Enron (and other scandals) emerging in 2001 were overshadowed by 9/11, but the unemployment and loss of retirement investments caused by these companies certainly damaged the economy. Bush insisted that all the economic problems were the result of Clinton's policies (even Enron--because, he said, Clinton's "lax moral standards" had infected the pure nobility of the energy industry.)
In the aftermath of 9/11, Bush economic policy continued (and continues) to pamper big business and the rich. The extra costs of a new cabinet-level department (Homeland Security), of war in Afghanistan and Iraq, of all the other new costs his Administration has imposed on the American people, have swollen the national debt to record levels, higher than any so-called "liberal" Administration, and this national debt is increasingly borne by smaller numbers of employed workers. Bush's response is to push towards ending or severely curtailing social programs such as Social Security, aid to the poor and disabled, etc.
As the news got worse through 2002 and 2003, Bush intervened to prevent the government agencies responsible from reporting the numbers of jobs lost, and switched to the less accurate "new unemployment claims" as a measure of economic success. On that basis, with millions out of work, he could claim that things were improving because there were fewer new unemployment claims. Moreover, he failed to extend federal unemployment benefits even when it was clear that there were no jobs available for the workers seeking them.
In addition, Bush vastly increased federal expenditure without providing any offsetting source of income. He insisted on creating a new federal department (Homeland Security) which like all bureaucracies eats up money before it actually does any work: office space, desks, chairs, letterhead paper, office machines, etc. This department (as the 9/11 Commission found out later) did not include the agencies which should have been included, the CIA and FBI. Now it's going to take another, new, expensive government department .
Bush has taken no responsibility for the results of his economic policies. At first, he blamed all the problems on Clinton, and then on the 9/11 attacks, and then on Clinton and the 9/11 attacks. Later it was the war (the war he chose to start) and then his supporters began saying that no president could actually affect the job market so it wasn't fair to blame him. (Did they quit blaming Clinton?) Bush still believes, and says, that tax cuts lead to higher employment...though there is no evidence that this is true, and considerable evidence that companies have used their tax cut to do just about anything but hire more American workers. Bush does not seem to understand that a few hundreds of dollars of tax refund to a working class family (and few got that much) doesn't go far to pay the grocery bill and mortgage when no one in the family can find a job.
Bush and his supporters claim the economy is recovering strongly. The ordinary person whose house or car has been repossessed can be forgiven for thinking differently. Jobs are still being lost, still being outsourced to cheap labor overseas. People are still losing their homes, possessions, cars, having to move in with friends or relatives; people are still losing hope and dignity. Every family I know has had at least one layoff; those with more than one employed person have lost at least two. Those who have found new jobs (by no means all who are looking) are almost never finding jobs at the same salary level as before. None of the people I know have been re-hired at anywhere close to their salaries before, and their savings have been demolished by months to years of unemployment. The dollar has lost ground against foreign currencies, and is now losing ground against daily expenses. The cost of fuel has gone up enormously since Bush was elected, for instance. As fuel costs rise, so do the costs of everything transported by vehicle, from applesauce to zoology textbooks.
Bush as economist? Failing grade.
Contents of these pages ©1996-2016 Elizabeth Moon
This essay ©2004 Elizabeth Moon