In the coming years I suspect that we will see increased comparisons between the Bush Administration's economic record that of the previous Clinton Administration -- one that will not be kind. A narrative will take hold of how the inferior Bush performance was the product of an unshakable, almost god-like, belief in the power of markets -- an era of laissez-faire and deregulation run amok with predictable results. The Clinton Administration, with Robert Rubin at the Treasury Department helm, managed to turn deficits into surpluses which -- for reasons never quite explained to me -- improved the economy (yes, some people say that it allowed Greenspan to cut rates -- but he cut rates under Bush 43 as well). It will be a narrative, I believe, that is largely based on fantasy.
Let's take a deeper look at both Bush and Clinton's respective records on the economy. After all, the economy under Clinton did not excel merely because he sat in the oval office, there has to be some type of cause and effect. Here are some of the major initiatives under his watch:
- 1993 -- The Family and Medical Leave Act of 1993
- 1993 -- Omnibus Budget Reconciliation Act of 1993: aised income tax rates; income tax, top rate: 39.6%; corporate tax: 35%
- 1993 -- Ratification and signature of the North American Free Trade Agreement
- 1994 -- Ratification of the GATT Uruguay Round that eliminated trade barriers
- 1996 -- Telecom Reform Act: eliminated major ownership restrictions for radio and television groups.
- 1996 -- Personal Responsibility and Work Opportunity Reconciliation Act, a welfare reform bill (this both reduced government expenditures and increased the labor pool)
- 1996 -- Minimum wage Increase Act (minimum wage increased 90 cents)
- 1997 -- Taxpayer Relief Act of 1997
- 1998 -- Digital Millennium Copyright Act
- 1999 -- Enactment of the Gramm-Leach-Bliley Act that repealed Glass-Steagall and deregulated financial services.
We also have to keep in mind that economic performance is not simply a product of legislative/government activity, with exogenous factors also coming into play. The 1990s was an era in which globalization took hold with renewed speed owing in part to the success of GATT but also to the end of the Cold War and the opening of markets around the world. This process was assisted by the rise of the internet and telecommunications in general, which culminated in a bubble at the end of Clinton's term. Energy costs were also low during Clinton's term, with gas at one point less than a dollar per gallon.
Now let's look at George W. Bush:
- 2001: Economic Growth and Tax Relief Reconciliation Act of 2001
- 2001: United States-Jordan Free Trade Area Implementation Act
- 2001: Internet Tax Nondiscrimination Act
- 2002: Job Creation and Worker Assistance Act of 2002
- 2002: Farm Security and Rural Investment Act of 2002
- 2002: Sarbanes-Oxley Act of 2002
- 2003: Jobs and Growth Tax Relief Reconciliation Act of 2003
- 2003: United States-Chile Free Trade Agreement Implementation Act
- 2003: United States-Singapore Free Trade Agreement Implementation Act
- 2004: United States-Morocco Free Trade Agreement Implementation Act
- 2005: United States-Australia Free Trade Agreement Implementation Act
- 2005: Class Action Fairness Act of 2005
- 2005: Bankruptcy Reform Act of 2005
- 2005: Dominican Republic-Central America-United States Free Trade Agreement
- 2005: Energy Policy Act of 2005
- 2006: United States-Bahrain Free Trade Agreement Implementation Act
These are all pieces of legislation that have an almost explicit economic orientation. If one takes a more expansive view of the Bush years, we also see growth of the welfare state via the Medicare prescription drug benefit.
As with the Clinton years the presidency of Bush did not occur in a vacuum. He took office at the onset of the collapse of the .com bubble, the attacks of Sep. 11 and the fallout from a series of corporate scandals. The tech bubble was replaced in short order by a housing bubble, the impact of which is now being acutely felt. Energy and commodity prices also surged under Bush's watch, driven in large part by economic growth in emerging markets, including perhaps most notably from China. (the flip side of course is that the U.S. was able to export more to overseas markets)
The elephant in the room, of course, are the wars in Afghanistan and Iraq. While I can not say with any real degree of certainty their impact on the economy, I suspect there is a reason that you hear the phrase "peace and prosperity" uttered a lot more than "war and prosperity."
How the Bush record should best be characterized in terms of ideology I will leave to the reader, but I hardly think it is one in which right-wing economic thought ran wild.
Bush and Clinton are only the two most recent presidents. Let's conclude with a comparison of George HW Bush and Jimmy Carter (I will leave Reagan aside because it's both a more lengthy subject and I think his economic record is pretty sound as evidenced by his overwhelming re-election and popularity upon leaving office -- I don't see him as an albatross that can be hung around the necks of Republicans).
Jimmy Carter, for all of the ire he inspires among Republicans, actually has some decent free-market credentials. On his watch he:
- broke with congressional Democrats and threatened vetos over pork-barrel spending
- vetoed a public works package that he deemed "inflationary" for its excess spending
- referred to the congressional tax committees as "ravenous wolves."
- signed the Airline Deregulation Act of 1978
- engaged in more limited deregulation of the trucking, rail, communications, oil and finance industries
- appointed Paul Volcker to head the Federal Reserve, who engaged in an aggressive campaign to combat inflation (some might say he took the wrong approach, but it is obvious that Carter made inflation a top priority)
If we take a look at George H.W. Bush meanwhile, we hardly see a paragon of conservative economic philosphy. This is a guy whose domestic legislative achievements consisted almost entirely of:
- raising taxes
- signing the Americans with Disabilities Act
- signing a Clean Air Act
- signing the Civil Rights Act of 1991