Full Version: The Bush Economy
Since tomorrow night's debate is focused on domestic issues, I think we should discuss how Bush has handled the economy.
The Bush Economy
John Kerry has focused on jobs and outsourcing as evidence that the economy is soft. John Edwards said in his closing statement on Tuesday
At the same time, there is a new study that says there is a bias in the reporting of economic news: Partisan Bias in Newspapers?
Questions for debate:
Has Bush handled the economy properly?
What could he have done differently?
Is John Edwards correct in his assertion that the light is flickering in America?
Has the media had an impact on the perception of how the economy is doing?
The Bush Economy
QUOTE
The real question is how Bush handled the cards he was dealt. He did what any economist -- Keynesian or supply-sider -- would prescribe: cut taxes, increase spending and loosen monetary policy (really, the job of the Fed). All steps were taken quickly, and the economy has turned around.
The big job losses occurred at the start of the administration. The big gains have occurred in the past year.
The second theme that Kerry will push is outsourcing or offshoring -- the hiring of foreigners by American companies. This accusation makes Kerry the first major-party presidential candidate in decades to spout a protectionist line on trade.
Outsourcing is a non-problem. The latest statistics show that of the 1.5 million jobs lost last year in mass layoffs, less than 1 percent were sent abroad. Daniel Drezner of the University of Chicago also points out that while 4,633 workers were laid off from offshoring in the first quarter, Kodak laid off 15,000 because of the growth of digital photography.
It is technology and competition that are costing -- and gaining -- jobs for Americans. When we have an edge over the rest of the world -- as we do in many sectors, from entertainment to financial services -- we gain from trade. When other countries have an edge over us--as they do in textiles, for instance -- then we gain as well, as nearly 300 million Americans pay lower prices. That's the way trade works. It benefits both parties. Obstructing it would be a disaster.
The big job losses occurred at the start of the administration. The big gains have occurred in the past year.
The second theme that Kerry will push is outsourcing or offshoring -- the hiring of foreigners by American companies. This accusation makes Kerry the first major-party presidential candidate in decades to spout a protectionist line on trade.
Outsourcing is a non-problem. The latest statistics show that of the 1.5 million jobs lost last year in mass layoffs, less than 1 percent were sent abroad. Daniel Drezner of the University of Chicago also points out that while 4,633 workers were laid off from offshoring in the first quarter, Kodak laid off 15,000 because of the growth of digital photography.
It is technology and competition that are costing -- and gaining -- jobs for Americans. When we have an edge over the rest of the world -- as we do in many sectors, from entertainment to financial services -- we gain from trade. When other countries have an edge over us--as they do in textiles, for instance -- then we gain as well, as nearly 300 million Americans pay lower prices. That's the way trade works. It benefits both parties. Obstructing it would be a disaster.
John Kerry has focused on jobs and outsourcing as evidence that the economy is soft. John Edwards said in his closing statement on Tuesday
QUOTE
"Here's the truth: I have grown up in the bright light of America. But that light is flickering today.
Now, I know that the vice president and the president don't see it, but you do.
You see it when your incomes are going down and the cost of everything -- college tuition, health care -- is going through the roof. You see it when you sit at your table each night and there's an empty chair because a loved one is serving in Iraq or Afghanistan. What they're going to give you is four more years of the same. "
Now, I know that the vice president and the president don't see it, but you do.
You see it when your incomes are going down and the cost of everything -- college tuition, health care -- is going through the roof. You see it when you sit at your table each night and there's an empty chair because a loved one is serving in Iraq or Afghanistan. What they're going to give you is four more years of the same. "
At the same time, there is a new study that says there is a bias in the reporting of economic news: Partisan Bias in Newspapers?
QUOTE
Economists have been puzzled this year by the persistence with which perceptions about the economy have lagged behind the economic data. For the most recent 12-month period for which we have data, for example, the economy grew almost exactly as fast as it did during the best 12-month period during President Clinton's two terms. But the economic mood of the country has been much different.
It isn't just the economy that influences people's perceptions. In research we just released, we find that media coverage is also an important determinant. We found that newspaper headlines reporting economic news on unemployment, gross domestic product (GDP), retail sales, and durable goods tended to be much more frequently negative when a Republican was in the White House. And this was true even after accounting for the economic numbers on which the stories were based and how those numbers were changing over time.
We also found that positive headlines explained whether people thought that the economy was getting better more than the economic variables themselves. Newspapers are indeed important.
It isn't just the economy that influences people's perceptions. In research we just released, we find that media coverage is also an important determinant. We found that newspaper headlines reporting economic news on unemployment, gross domestic product (GDP), retail sales, and durable goods tended to be much more frequently negative when a Republican was in the White House. And this was true even after accounting for the economic numbers on which the stories were based and how those numbers were changing over time.
We also found that positive headlines explained whether people thought that the economy was getting better more than the economic variables themselves. Newspapers are indeed important.
Questions for debate:
Has Bush handled the economy properly?
What could he have done differently?
Is John Edwards correct in his assertion that the light is flickering in America?
Has the media had an impact on the perception of how the economy is doing?
Has Bush handled the economy properly?
I think he has. The economy was already faltering before 9-11, which dealt an incredible blow. The economic situation reduced the effectiveness of interest rate reductions as a tool to spur the economy (there wasn't a money shortage to begin with), and tax cuts have historically been an effective tool in promoting economic growth. I think the government did what it could to shore up the airlines and confidence in flying, which is essentially to business health.
What could he have done differently?
While I'll agree with those that might have wished for better results, I'm not sure what could have been done to achieve them. The economy has been growing, albeit in a slow and steady fashion. Given that, I don't think there was a need for any massive governmental jobs program (well, aside from the Dept. of Homeland Security
)
Is John Edwards correct in his assertion that the light is flickering in America?
No, I don't think so. The economy is growing (moreso than almost anywhere else). Is it glowing as brightly as desired? No...so there is room for dissatisfaction. I think all of the figures the Kerry/Edwards camp uses need to be considered in light of the events that have occurred--9-11 dealt a very severe blow to an economy which was already shaky.
Has the media had an impact on the perception of how the economy is doing?
Of course! But I'm not claiming any bias or conspiracy...bad news is just always going to get more print than good news. And, to be fair, I have seen reports of the economy recovering....I haven't really seen an attempt to cover it up.
I think he has. The economy was already faltering before 9-11, which dealt an incredible blow. The economic situation reduced the effectiveness of interest rate reductions as a tool to spur the economy (there wasn't a money shortage to begin with), and tax cuts have historically been an effective tool in promoting economic growth. I think the government did what it could to shore up the airlines and confidence in flying, which is essentially to business health.
What could he have done differently?
While I'll agree with those that might have wished for better results, I'm not sure what could have been done to achieve them. The economy has been growing, albeit in a slow and steady fashion. Given that, I don't think there was a need for any massive governmental jobs program (well, aside from the Dept. of Homeland Security
)Is John Edwards correct in his assertion that the light is flickering in America?
No, I don't think so. The economy is growing (moreso than almost anywhere else). Is it glowing as brightly as desired? No...so there is room for dissatisfaction. I think all of the figures the Kerry/Edwards camp uses need to be considered in light of the events that have occurred--9-11 dealt a very severe blow to an economy which was already shaky.
Has the media had an impact on the perception of how the economy is doing?
Of course! But I'm not claiming any bias or conspiracy...bad news is just always going to get more print than good news. And, to be fair, I have seen reports of the economy recovering....I haven't really seen an attempt to cover it up.
I have always tried to stay optimistic about the economy and still am, but I no longer try to convince others of it because of the rampant ideology of the ABB crowd. Even though the unemployment rate is the same as it was when Clinton was re-elected, also as stated above in a quote posted by Amlord, the economy has grown almost as fast as it did during the best 12-month period during President Clinton's two terms.
Considering the tragic events of 9-11 and the I believe Bush has handled the economy as good as anyone could have been expected under those circumstances.
Is the light flickering in America? Maybe the lightbulb over John Edward's head is, but America's light is still shinning bright.
There is an old saying in sales: It's not the deal you get, it's the deal you think you get.
And right now Kerry/Edwards are trying make you think you are getting a bad deal.
Considering the tragic events of 9-11 and the I believe Bush has handled the economy as good as anyone could have been expected under those circumstances.
Is the light flickering in America? Maybe the lightbulb over John Edward's head is, but America's light is still shinning bright.
There is an old saying in sales: It's not the deal you get, it's the deal you think you get.
And right now Kerry/Edwards are trying make you think you are getting a bad deal.
Has Bush handled the economy properly?
I wouldn't say properly, but he has handled the economy the way most presidents in the past would react in this situation. I'll also say that a lot of this has been covered in this thread, but there are some new questions here worth adressing. I only link the thread because there is a lot of good information and research there.
The problem with Bush's tax cuts (the tried and true remedy) is that they weren't the right tax cuts. So, the cuts Bush gave didn't really effect the economy at all. What did have an impact is the large amount of government spending we have done, the artificially low interest rates and the natural recovery cycle of the economy.
Of course none of this surprises me considering he made a "C" in his economics classes at Yale.
What could he have done differently?
In the post I linked above I cited a source from American Prospect that discusses the Bush tax cuts and the impact on the economy. As I said above, the problem is that the right tax cuts and policies were not put in place. Zanid has this to say about could have been done.
Is John Edwards correct in his assertion that the light is flickering in America?
That may be a bit dramatic, but the point is that we have some problems here and we need some new solutions. I'll respond to the comment about outsourcing in the article you cited Amlord as an example. You cited:
I believe in free trade as much as anyone, but outsourcing is a problem if you don't have the right policy in place. First, let's get off the misconception that it is a non-issue. Many of those jobs were high paying, high skilled white collar jobs and people spent 4 years learning those skills while spending 10's of thousands of dollars of their own money. That is not a trivial issue. The article cites an industry that is changing, but it doesn't cite places that are sending programmers, support, financial and accounting functions overseas. Secondly, last year isn't when most of this occurred, so this article is sugar coating the situation implying that only one company has sent workers overseas.
So, as Kerry states the first thing we need to do is fix the tax code so companies aren't given a tax incentive to outsource their workers. This makes absolutely no sense. If they think outsourcing is the best thing to do (and many times it is) then so be it, but you shouldn't get a tax cut for doing it. I also personally think that we need to serious cut back on H1-B visas, but that is just me.
But the larger issue here is the training and education aspect of things. You have kids going to school for 4 -5 years and learning skills that aren't really relevant and won't keep them in good jobs. To a certain extent the responsibility falls on the university system to fix this problem, but the government can also set policies to encourage and prod this along. There is also the question of all of those people in industries which are going away, that's great yeah progress, but they need to get retrained and put into something else. The government can help there too.
The comment that the light is growing dim for a lot of people has to do with far more than the economy, it is a combination of many things. The economy is certainly one of them but it is also cost of college, cost of health care, job security. All of these things are assualting us and given the status of the country we live in that just doesn't seem right to me.
Let's just take the cost of education as an example. Most of us probably paid somewhere between 30K and 40K for 4-5 years of school. Parents today can expect to pay 4 times or 5 times that in 10 to 15 years, maybe even more with the way things are going. At which point you have to wonder, is going to college even worth it when you are saddled with so much debt that your income is meaningless? If that isn't a "dimming" I don't know what is.
I wouldn't say properly, but he has handled the economy the way most presidents in the past would react in this situation. I'll also say that a lot of this has been covered in this thread, but there are some new questions here worth adressing. I only link the thread because there is a lot of good information and research there.
The problem with Bush's tax cuts (the tried and true remedy) is that they weren't the right tax cuts. So, the cuts Bush gave didn't really effect the economy at all. What did have an impact is the large amount of government spending we have done, the artificially low interest rates and the natural recovery cycle of the economy.
Of course none of this surprises me considering he made a "C" in his economics classes at Yale.
What could he have done differently?
In the post I linked above I cited a source from American Prospect that discusses the Bush tax cuts and the impact on the economy. As I said above, the problem is that the right tax cuts and policies were not put in place. Zanid has this to say about could have been done.
QUOTE
Zandi also analyzes the impact that a better policy response would have had, one that focused on immediate creation of more spending and jobs. His alternative package would have taken effect in the fall of 2001 and included a payroll tax holiday (50 percent of the package), a one-time family tax cut (22 percent of the package), extended unemployment insurance (11 percent of the package), and state fiscal relief (17 percent of the package). This alternative package would have cost the same over three years as the administration’s policies, roughly $300 billion over the fiscal years 2002-04. Yet this policy approach, which directs temporary tax cuts toward lower- and middle-income families, would have had a much larger economic pay-off. Had it been enacted, we would be enjoying two million more jobs and much higher GDP this year. This greater growth would also have led to more revenue and less spending, thereby lowering the fiscal deficit in 2004 by roughly $200 billion, or 45 percent, from what we now expect this year. With good policy we could have been in a much better economic situation now.
The progressive policy package that Zandi examines would have had another huge advantage. Its temporary alternative tax and spending measures would raise the deficit only in the first year -- unlike the Bush administration policies, which create a large and permanent deficit long into the future. Compared to Zandi’s temporary fiscal stimulus package, the permanent Bush fiscal plan is the gift that keeps on taking. The negative employment effect of the excessively large permanent deficits inherent in the Bush policies may be seen in Zandi’s analysis of the next ten years. Here he compared the economic effects of two scenarios. One has deficits declining as tax cuts expire and spending grows with inflation. The other scenario increases defense spending with the GDP and makes the tax cuts permanent (with adjustments to prevent more people from paying the alternative minimum tax). As a result of the excessively large, long-term fiscal deficits in the second scenario ($623 billion in 2014), interest rates would rise to slow growth so much that, ten years from now, we would have 3 million fewer jobs and 3 percent lower GDP.
The progressive policy package that Zandi examines would have had another huge advantage. Its temporary alternative tax and spending measures would raise the deficit only in the first year -- unlike the Bush administration policies, which create a large and permanent deficit long into the future. Compared to Zandi’s temporary fiscal stimulus package, the permanent Bush fiscal plan is the gift that keeps on taking. The negative employment effect of the excessively large permanent deficits inherent in the Bush policies may be seen in Zandi’s analysis of the next ten years. Here he compared the economic effects of two scenarios. One has deficits declining as tax cuts expire and spending grows with inflation. The other scenario increases defense spending with the GDP and makes the tax cuts permanent (with adjustments to prevent more people from paying the alternative minimum tax). As a result of the excessively large, long-term fiscal deficits in the second scenario ($623 billion in 2014), interest rates would rise to slow growth so much that, ten years from now, we would have 3 million fewer jobs and 3 percent lower GDP.
Is John Edwards correct in his assertion that the light is flickering in America?
That may be a bit dramatic, but the point is that we have some problems here and we need some new solutions. I'll respond to the comment about outsourcing in the article you cited Amlord as an example. You cited:
QUOTE
Outsourcing is a non-problem. The latest statistics show that of the 1.5 million jobs lost last year in mass layoffs, less than 1 percent were sent abroad. Daniel Drezner of the University of Chicago also points out that while 4,633 workers were laid off from offshoring in the first quarter, Kodak laid off 15,000 because of the growth of digital photography.
I believe in free trade as much as anyone, but outsourcing is a problem if you don't have the right policy in place. First, let's get off the misconception that it is a non-issue. Many of those jobs were high paying, high skilled white collar jobs and people spent 4 years learning those skills while spending 10's of thousands of dollars of their own money. That is not a trivial issue. The article cites an industry that is changing, but it doesn't cite places that are sending programmers, support, financial and accounting functions overseas. Secondly, last year isn't when most of this occurred, so this article is sugar coating the situation implying that only one company has sent workers overseas.
So, as Kerry states the first thing we need to do is fix the tax code so companies aren't given a tax incentive to outsource their workers. This makes absolutely no sense. If they think outsourcing is the best thing to do (and many times it is) then so be it, but you shouldn't get a tax cut for doing it. I also personally think that we need to serious cut back on H1-B visas, but that is just me.
But the larger issue here is the training and education aspect of things. You have kids going to school for 4 -5 years and learning skills that aren't really relevant and won't keep them in good jobs. To a certain extent the responsibility falls on the university system to fix this problem, but the government can also set policies to encourage and prod this along. There is also the question of all of those people in industries which are going away, that's great yeah progress, but they need to get retrained and put into something else. The government can help there too.
The comment that the light is growing dim for a lot of people has to do with far more than the economy, it is a combination of many things. The economy is certainly one of them but it is also cost of college, cost of health care, job security. All of these things are assualting us and given the status of the country we live in that just doesn't seem right to me.
Let's just take the cost of education as an example. Most of us probably paid somewhere between 30K and 40K for 4-5 years of school. Parents today can expect to pay 4 times or 5 times that in 10 to 15 years, maybe even more with the way things are going. At which point you have to wonder, is going to college even worth it when you are saddled with so much debt that your income is meaningless? If that isn't a "dimming" I don't know what is.
QUOTE
Has Bush handled the economy properly?
No. Any fiscal plan should maximize demand during a recession. The Bush tax cuts do not maximize demand. If you were fortunate enough to read the other thread about the Bush tax cuts, you would know (marginal propensity to save) that for every additional dollar a person makes, more and more of that dollar will go to savings.
QUOTE
The marginal propensity to consume income among the higher-income group who would benefit from the acceleration is below that of lower- and moderate-income groups.
2001 evaluation of Bush Tax plan
Bush did not maximize demand with his tax cuts. Why would business want to increase investment with their tax cut for products that no one is buying?
It always confused me that Bush encouraged citizens to "keep buying" when his plan could have provided them with more capital to do so. Obviously, he considered demand a pretty important function of the economy, I wonder why he didn't chose to maximize it.
QUOTE
What could he have done differently?
A bigger, temporary tax cut for individuals of lower economic standing.
QUOTE
Is John Edwards correct in his assertion that the light is flickering in America?
Maybe. If lower income workers have to pay $1000 for services they used to receive for free and only get a $300 tax break, the light may well be flickerin for a number of lower income earners.
QUOTE
Has the media had an impact on the perception of how the economy is doing?
Probably. If the media shapes peoples perception of the economy, sure. However, if the media is just a reaction to our current economic status, I wouldn't say that it is at all inaccurate.
Business investment, of course, has nothing to do with the media at all. They only invest if they see a big enough increase in demand to warrant more production.
Bushs economic plans were only good for the short term.
Now the short term period has passed, and the economy will continue to splutter or nose dive.
I beg to differ with the quote "the big gains have come in the past year". True there have been 1.7 million year added in the past year, but half of those come in a splurt during a 3 or 4 month period.
Have you seen the amount of jobs added in the past three months(June,July,August) which only average around 100,000 per month, give or take a few thousand.
That is not a average economy, must less a good economy which Bush espouses.
No this economy is nothing compared to Bushs explanation.
P.S. Most of the credit for the economy should be given to the refinancing of home mortgages and lower mortgage rates. That did a lot more than the small tax break that middle class Americans supposely received.
Now the short term period has passed, and the economy will continue to splutter or nose dive.
I beg to differ with the quote "the big gains have come in the past year". True there have been 1.7 million year added in the past year, but half of those come in a splurt during a 3 or 4 month period.
Have you seen the amount of jobs added in the past three months(June,July,August) which only average around 100,000 per month, give or take a few thousand.
That is not a average economy, must less a good economy which Bush espouses.
No this economy is nothing compared to Bushs explanation.
P.S. Most of the credit for the economy should be given to the refinancing of home mortgages and lower mortgage rates. That did a lot more than the small tax break that middle class Americans supposely received.
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