The Economy Under George Bush

[Tim Gratz]

Source: "The National Interest" column in the Jan 9, 2006 "US News & World Report":

Economic growth in the third quarter of 2005 was 4.1%.

That was the 10th consecutive quarter with a growth rate of 3.0 or higher.

The unemployment rate is 5.0%, lower than the average unemployment rate for the 1970s, 1980s and 1990s.

Since April of 2003 the economy has created 5.1 million new jobs.

Core inflation is only 2.1%.

Productivity growth for 2000-2005 is 3.4%, the highest of ANY five year period in FIFTY years!

Those are quite remarkable statistics.

There is no question in my mind George Bush would be handily re-elected if he was permitted to run for a third term (which of course he is not).

[John Simkin]

Source: "The National Interest" column in the Jan 9, 2006 "US News & World Report":

Economic growth in the third quarter of 2005 was 4.1%.

That was the 10th consecutive quarter with a growth rate of 3.0 or higher.

The unemployment rate is 5.0%, lower than the average unemployment rate for the 1970s, 1980s and 1990s.

Since April of 2003 the economy has created 5.1 million new jobs.

Core inflation is only 2.1%.

Productivity growth for 2000-2005 is 3.4%, the highest of ANY five year period in FIFTY years!

Those are quite remarkable statistics.

There is no question in my mind George Bush would be handily re-elected if he was permitted to run for a third term (which of course he is not).

You will also find the economy grew rapidly during the Second World War (much more of a factor than the New Deal) and the Vietnam War. The same is happening during the Iraq War. It is called the Military-Industrial Complex. The problem with war spending is that it creates a budget defecit. Maybe you should post details of the rising American debt. If I was an American I would be very concerned with this development. Especially when you end up owing such large sums to China and Arab states in the Middle East.

[Dalibor Svoboda]

A week ago did I find an interesting article which I red through and then saved thinking that it should be reread in the future.

I reprint some of its conclusions here in a hope that the content can bring at least some clarity into this debate though the main purpose of it was to compare Ronald Reagan economic policy with the economic policy of recent president.

Well, let’s take a look at the Reagan legacy on federal spending and deficits. In 1980, the last year of Jimmy Carter’s presidency, government outlays were running at 21.7% of GDP and the budget deficit was 2.7% of GDP. (The economy was also a basket case, which is when you would expect budget deficits to be at their worse.) In 1988, Reagan’s last year in office, outlays as a percent of GDP were running at 21.3% with a deficit of 3.1% of GDP. The budget deficit over Reagan’s eight years averaged 4.2% and ran as high as 6.0% in 1983.

Bush entered office with an economy that was booming: in 2000 government outlays ran at 18.4% of GDP with a budget surplus of 2.4%. But the stock market implosion, 9/11 and the war quickly changed the budget dynamics and the surplus switched to a deficit of 3.5% in 2003 and 3.6% in 2004. In 2005, the budget deficit came in at 2.6%, with government outlays running at 20.1% of GDP.

The point here is that there is lot of hyperventilating about the Bush administration’s spending and “out of control” deficits, much of it by folks who praise Reagan yet trash Bush. But the most recent “out of control” Bush deficit at 2.6% of GDP is far below the eight-year Reagan average of 4.2%.

This is not meant to disparage Reagan, only to provide perspective. When you look at the numbers on a proportional basis - which is the only way to honestly compare different eras - Bush’s federal spending is not “out of control,” at least in comparison to Ronald Reagan.

What is not fully appreciated in analyzing the Bush legacy is that the combination of the stock market implosion (Nasdaq: 5,000 – 1100, S&P: 1500 - 800 ) and the economic impact of 9/11 created a perfect storm of forces that came perilously close to tipping the economy into a deflationary depression. The tandem of the Bush tax cuts (and deficits) coupled with the FED’s fire hose of money led by a 1% FED Funds rate saved the economy from a real disaster. Given the circumstances Bush inherited in his first 18 months in office, the economic growth we have sustained over the last 4 years is nothing short of miraculous. And when it comes to talking about spending and deficits, growth is the most important factor – something critics of the President seem quick to overlook.

The whole article could be found at:

http://www.realclearpolitics.com/Commentar...7_06_JM_pf.html

What is also disturbing when we look at economy growth are Fareed Zakaria words I found in Newsweek at:

http://www.msnbc.msn.com/id/11298986/site/newsweek/

It's often noted that the European Union has a combined gross domestic product that is approximately the same as that of the United States. But the EU has 170 million more people. Its per capita GDP is 25 percent lower than that of the U.S. and, most important, that gap has been widening for 15 years. If present trends continue, the chief economist at the OECD argues, in 20 years the average U.S. citizen will be twice as rich as the average Frenchman or German. (Britain is an exception on most of these measures, lying somewhere between Continental Europe and the U.S.)

People have argued that Europeans simply value leisure more and, as a result, are poorer but have a better quality of life. That's fine if you're taking a 10 percent pay cut and choosing to have longer lunches and vacations. But if you're only half as well off as the U.S., that will translate into poorer health care and education, diminished access to all kinds of goods and services, and a lower quality of life. Two Swedish researchers, Frederik Bergstrom and Robert Gidehag, note in a monograph published last year that "40 percent of Swedish households would rank as low-income households in the U.S." In many European countries, the percentage would be even greater.

Edited February 25, 2006 by Dalibor Svoboda

[David Richardson]

"There are lies, damned lies, and statistics"

The problem about comparing one economy with another (even if it's the OECD that's doing it) is that you're almost never comparing like with like. The same goes for when you're comparing one period in the economic life of a country with another from the same country.

In my view, it ultimately comes down to political choices. Societies like Sweden's have, thus far, chosen not to have an 'hour-glass' economy, like the United States, where there's one group of relatively wealthy people, and another group of very poor people, with no mobility between them. If you average out the wealth in such an economy, I'm sure that, on average, everyone's doing alright. The only problem is that none of us is leading an average life.

I love quotes like the one from Bergström and Gidehag - just goes to show how unscientific economics is! The top-selling car models in Sweden last year were Volvo, Saab and Mercedes, in that order, and lots of new cars were sold. Not bad for such a poverty-stricken economy!

The fact that Reagan's chickens haven't come home to roost yet … and that Bush's are still out there in China (since the Chinese now own a major slice of the US economy, since they own so many US Treasury Bills) … is neither here nor there. You can waste money very quickly … but it takes a long time to earn it again (as we all find out when we max out our credit cards).

[Tim Gratz]

To John:

To call the sustained growth in the US economy which as the statistics pointed out is measured from 2000 to 2005 attributable to the War in Iraq seems a bit of a strectch, don't you think?

As I recall the US first attacked Iraq on March 20, 2003. Did I get the date right, John?

[John Simkin]

To John:

To call the sustained growth in the US economy which as the statistics pointed out is measured from 2000 to 2005 attributable to the War in Iraq seems a bit of a strectch, don't you think?

As I recall the US first attacked Iraq on March 20, 2003. Did I get the date right, John?

That is the date the war started. However, plans for the war began when Bush selected Dick Cheney as his running-mate.

In 1992 Dick Cheney, head of the US Department of Defence, gave a $3.9m contract (a further $5m was added later) to Kellog Brown & Root (KBR), a subsidiary of Halliburton. The contract involved writing a report about how private contractors could help the Pentagon deal with 13 different “hot spots” around the world.

The KBR report remains a classified document. However, the report convinced Cheney to award a umbrella contract to one company to deal with these problems. This contract, which became known as the Logistics Civil Augmentation Programme (Logcap), was of course awarded to KBR. It is an unique contract and is effectively a blank cheque from the government. KBR makes it money from a built in profit percentage. When your profit is a percentage of the cost, the more you spend, the more you make.

KBR’s first task was to go to Somalia as part of Operation Restore Hope. KBR arrived before the US Army. Over the next few months KBR made a profit of $109.7m. In August 1994 KBR made $6.3m in Rwanda. Later that year they received $150m profit from its work in Haiti. KBR made its money from building base camps, supplying troops with food and water, fuel and munitions, cleaning latrines and washing clothes.

The contract came up for renewal in 1997. By this time Cheney had been appointed as CEO of Halliburton. The Clinton administration gave the contract to Dyncorp. The contract came to an end in 2001. Cheney was now back in power and KBR won back the Logcap contract. This time it was granted for ten years. The beauty of this contract is that it does not matter where the US armed forces are in action, the KBR makes money from its activities. However, the longer the troops stay, the more money it makes.

KBR is now busy in Iraq (it also built the detention cells in Guantanamo Bay). What is more Halliburton was given the contract for restoring the Iraqi oil infrastructure (no competitive bid took place).

Iraq is only part of the story. The U.S. military budget was $288.8 billion, in 2000. This figure has increased dramatically under Bush.

2001 = $305 billion

2002 = $343.2

2003 = $396.1

2004 = $399.1

2005 = $420.7

Compared to the rest of the world, these numbers are indeed staggering.

Consider the following:

The US military budget is almost as much as the rest of the world's.

The US military budget is more than 8 times larger than the Chinese budget, the second largest spender.

The US military budget is more than 29 times as large as the combined spending of the seven “rogue” states (Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria) who spent $14.4 billion.

It is more than the combined spending of the next twenty three nations.

This spending has been combined with tax cuts for the rich. As a result this has led to a massive budget deficit. It always surprises me that conservatives like Tim Gratz are not concerned about this budget deficit. Nor do they seem to be concerned about the large number of Americans killed as a result of this policy (as Michael Moore pointed out they always make sure that their own sons are not killed on behalf of the Military Industrial Complex). Nor do they seem very concerned about the massive corruption that goes with this military spending. Very strange state of affairs.

[Brent Crosby]

One thing is for sure, the American two-party system is a dead horse with gov't doing nothing but growing and growing. I'm sure our fore fathers would love to hear individual liberties are constantly at the expense of an ever growing gov't that favors regulations and intervention. I personally am jumping off the Titanic. Sure, these two party's will carry on for another umpteen decades, centuries...but what for? Bigger gov't means bigger problems. How in the world Republicans think they can "reform" a party that preaches small gov't but practices nothing but big gov't and blames the Democrats as they do to them. Others will view things differently, but I guess I am a pessimist who says the only way to shake things up is vote counter to the norm. If enough of us did so, the two-party system might have to actually get something accomplished. I find it said the two-party mantra is simply about making sure the other party doesn't get elected, as if there is no real "vision". After three hard years of conservative radio, my bias shows against them. I hear time and again to vote Republican is to not be Democratic. That isn't good enough anymore. I'm not waiting another half century for them to fulfill "the promise" just as the "other" party says. You'll excuse me if I don't come in here with the keen intellect and detail of others. I watch a local news program every Friday, and it sickens me to see local House representatives if you will basically defending that negotiations from both the Dems and Repubs are at yet another stand still and have been pushed past Fridays deadline until next Monday or Tuesday, and they still haven't accomplished a thing! The rep is a wonderful and likeable person, but he's doing nothing but holding the fort down and protecting his job. All the while the whole system continues to shrink individual liberties and freedoms for the sake of more governmental power. The Repubs have claimed for history that they are for liberty and small gov't. Pfff! Someone show me where? From what I'm gathering, individual rights are continually eroding, and not just because of dem liberals. But yep, I'm jumping off this train. It's going nowhere. Another thing you might want to look into is the Republicans OWN ALL THREE BRANCES. If they are screwing up, who are they gonna blame now?

I leave you with a quote from Reagan I bumped into by accident today. It pretty well highlights the facade to me.

http://www.cato-unbound.org/issues/the-gop...uture-together/

But life under Bush has been less than a dream for conservatives who agreed with the Gipper when he said "government is not a solution to our problem, government is the problem."

[Brent Crosby]

You will also find the economy grew rapidly during the Second World War (much more of a factor than the New Deal) and the Vietnam War. The same is happening during the Iraq War. It is called the Military-Industrial Complex. The problem with war spending is that it creates a budget defecit. Maybe you should post details of the rising American debt. If I was an American I would be very concerned with this development. Especially when you end up owing such large sums to China and Arab states in the Middle East.

The sad part is gov't has no intention of reducing the nat'l deficit. I think Bush Jr. and Reagan's strength were/are the health of the economy in present terms. Nat'l debt doesn't detrimentally effect citizens today, but obviously tomorrow. The "good times" of today is somewhat illusory because it doesn't factor in the compounding problems of the debt. Can you imagine a day in American political history where the debt is so huge that we will not even bother looking at ways to pay it off? And then the thought that we are just going to print more money [we don't have] to lazily get rid of the problem.

I can almost predict that the Bush administration will wain in spending not on the basis of their ideological principles of "conserving" (which never existed to begin with), but on circumstance to get their party reelected in '08.

This article talks about how Bush is not vetoing bills so he can rewrite portions of laws to fit his purpose and bypass Congress. It's a smart move on his part, but the idea that some 750 instances of this is like a veto is incorrect. Going nearly 5 years without vetoing a bill equates to more and more gov't.

http://www.boston.com/news/nation/articles...laws/?page=full

[Brent Crosby]

Source: "The National Interest" column in the Jan 9, 2006 "US News & World Report":

Economic growth in the third quarter of 2005 was 4.1%.

That was the 10th consecutive quarter with a growth rate of 3.0 or higher.

The unemployment rate is 5.0%, lower than the average unemployment rate for the 1970s, 1980s and 1990s.

Since April of 2003 the economy has created 5.1 million new jobs.

Core inflation is only 2.1%.

Productivity growth for 2000-2005 is 3.4%, the highest of ANY five year period in FIFTY years!

Those are quite remarkable statistics.

There is no question in my mind George Bush would be handily re-elected if he was permitted to run for a third term (which of course he is not).

Impressive numbers despite the fact Bush Jr. and Reagan have increased the nat'l debt by twice what their Democratic predecessors had. In the name of economic prosperity, it was the Republicans who largely claimed national debt isn't a matter of importance. I think it also says something about Americans in general considering gov't lack of concern towards the issue is a reflection of its citizens. Tax cuts per say are awesome providing the administration is spending less, and since their ideologies agenda is to cut taxes no matter what their spending levels are, guess what that means gov't has to do to balance out the growing deficit? The same thing the Dems are labeled with, taxing.

The conservative principle in general seems to work, but since conservatives do nothing but spend, they are even poorer managers of the deficit than the Democrats. Atleast they spend AND TAX. Republicans spend and cut taxes and say, "See, look at all the money you got back on your tax rebate." But the part about the deficit growing faster than dem evil Democrats is left out. And gov't under either party will not stop spending. Some taxation is the only course, and America is primarily conservative currently and will continue to vote for immediate tax cuts while the deficit grows.

[Brent Crosby]

http://www.realclearpolitics.com/Commentar...7_06_JM_pf.html

It wasn’t Bill Clinton or the GOP Congress that ultimately balanced the budget in the late 90’s, it was the growth of the US economy and the corresponding tidal wave of additional revenue. Conservatives may harp on President Bush for increasing government outlays from 18½% to 20%, but the increase is almost exclusively spending on defense, homeland security and the war - all of which is a response to 9/11. The growth in non-security discretionary spending has been cut every year of the Bush presidency.

What they don't tell you is even if you remove military, Bush is still spending more than the liberal Clinton as a measure of GDP.

[John Simkin]

The conservative principle in general seems to work, but since conservatives do nothing but spend, they are even poorer managers of the deficit than the Democrats. Atleast they spend AND TAX. Republicans spend and cut taxes and say, "See, look at all the money you got back on your tax rebate." But the part about the deficit growing faster than dem evil Democrats is left out. And gov't under either party will not stop spending. Some taxation is the only course, and America is primarily conservative currently and will continue to vote for immediate tax cuts while the deficit grows.

Is this common knowledge in the United States? How do the Republicans defend this massive budget deficit?

[Robert Howard]

My response would be that the issue recieves some coverage (which is finally increasing] but not in proportion to the size of the deficit, why this is so, I could only speculate;

All American's whose circumstances allow it, [there are poor people in this country who, don't even have a TV or telephone; some have large families etc...] should be watching C-SPAN as much as possible, and be pro-active in reform politics. As much as I dislike the Republican neo-con situation, and the equally disturbing media state dynamic, these problems didn't arrive overnight. Some Senator's on both sides of the floor should have been having a fit after 1987, and if they did, it sure didn't make the papers.

A Case in Point, would be the 1992 Elections, George Bush Sr., William Clinton and Ross Perot; Although I am speaking generally, Bush and Clinton were the heavyweight's and Ross Perot was a longshot, but the public was, at that time intrigued by his ideas, especially regarding reform.

While I am sure that many will take exception to my comments, my personal feeling about Perot, in retrospect, is that the major issue which separated him from the other two, is that while they all 'talked about' reigning in the lobby machine [special interest's group's, typical corporate lobbying, foreign lobbying ad naseum] Perot was serious about getting rid of a totally corrupted mechanism in Washington, which, I surmise is why, the major media treated him like Oliver Stone, kind of like 'He would make a great King, but a lousy President.'

He did indeed display the typical 'outsider' difficulty in dealing with the media, some may remember this, all too well [referencing the NAACP audience as 'you people.' etc.. In the end, their were stories ranging the gamut of 'Hit teams from Cuba sent to assassinate him,' to Republican Dirty Trick's ie R.N.C. efforts to have his daughter's wedding crashed, with ahem, unwanted guests.

I believe all of that [foo foo]was intrinsically linked to the fact that 'everyone in good ole Washington' knew he was deadly serious about ending the lobbying party, that is raging even stronger today than it was in 1992. I mean, Bush and Clinton didn't even have to deal with him as a serious candidate because the media acted as the 'enforcer's.' Obviously, I don't buy the 'self-destructed' story, for the simple reason that if 41, can go to Japan and vomit on the P.M. ala halcion daze, and get, just some bemused reactions....Do the Math

CSPAN televised hearings yesterday about the budget deficit crisis and the easily frightened would have 'ran for the hills', I must say, the charts displaying the ascending deficit, looked like something out of an episode of the Twilight Zone, since the neo-con sheriff's arrived in D.C., the media dynamic in this country is a MAJOR part of why it looks like, (to anyone outside the United States) to quote Charlton Heston 'This is a Madhouse!'

[Brent Crosby]

The conservative principle in general seems to work, but since conservatives do nothing but spend, they are even poorer managers of the deficit than the Democrats. Atleast they spend AND TAX. Republicans spend and cut taxes and say, "See, look at all the money you got back on your tax rebate." But the part about the deficit growing faster than dem evil Democrats is left out. And gov't under either party will not stop spending. Some taxation is the only course, and America is primarily conservative currently and will continue to vote for immediate tax cuts while the deficit grows.

Is this common knowledge in the United States? How do the Republicans defend this massive budget deficit?

I don't know if it's common knowledge. I imagine the RNP defend it like they seemingly always have by larger tax returns. It works as far as I can tell. My speculation though is the hidden taxes that might get brushed under the table. You might get a bigger tax rebate at the end of the year, but your general bills and property tax might go up even more as a percentage. But because that aspect of economics is I imagine rarely analyzed, then they might be getting away with more? That could be overspeculation/conspiracy though and the debt just grows more. Someone would have to break down the debt and apply it to the taxpayer or whomever to get the accurate economic prosperity. They seem to outspend the taxes, atleast early, like during Bush's first term. But when you think about, why wouldn't any administration spend after they were without office for 8 years? You're satisfying the special interests, so things are bound to get a little bit chaotic. The flood gates kinda open, and in the case of this administration, they'll close the taps a bit to improve the chances of the next Republican administration winning the election on the basis of "fiscal responsibility". Again, I think their is some merit to what their doing, but they don't sincerely believe in fiscal conservancy and it is more a matter of political maneuvering.

And I guess that's my point: I'm not waiting another 50 years for the RNP or any big gov't to "reform" when it is not possible. The bigger gov't gets, the more outta control it is.