Monday, December 30, 2002

Bush's Bushwa The president and his aides keep lying about when the recession started. By Daniel Gross President Bush opened his final radio address of the year this way: "In 2002, our economy was still recovering from the attacks of September the 11th, 2001, and it was pulling out of a recession that began before I took office." Bush concluded 2002 with the same dishonesty that defined his economic policy throughout the year—a mendacity that ranged from denying the tax cut had anything to do with the re-emergence of the deficit to arguing that the terrorism insurance bill would create 300,000 construction jobs. In fact, there is no evidence that the economy was in recession when President Bush took the oath of office on Jan. 20, 2001. Yes, growth was slowing, and the longest expansion in American history was running out of steam. But the U.S. economy did not go into recession until Bush's presidency, according to both of the most accepted definitions.
I have gone well past the point of shock at the ability of the Bushies to flat-out lie about what they are doing and what they are responsible for. But, it is refreshing to see at least a few people finally starting to call them on it. I predicted a long time ago that if anyone started seriously calling the Bushies on their mendacity that Dubya's vaunted invulnerability would turn out to be one of the biggest glass-jaws in political history. I anxiously await the first one to take a serious swing at it.
Did the economy go into recession because President Bush came into office? Of course not. Had Al Gore become president, would the economy have entered a recession in March 2001? Certainly. In hindsight, it's clear we were heading for a recession in late 2000. President Bush caught the wrong end of the business cycle. This air of retrospective inevitability, combined with the bursting of the stock bubble and the sense that 2000 signified the end of one era and the beginning of another, lends credence to the false claim made by virtually every Republican—from Bush down to congressional backbenchers—that the economy was in recession when Bush came into office.
Here I disagree with Mr. Gross if only because I think he makes the mistake many make in thinking that a President or prospective President has no impact on the economy until such time as they take office. This is silly in the extreme. The business community tries take into account many variables that influence the future. One of these is who will be leading the government 1-2 years down the line. If there is a strong possibility that there will be a change in leadership, and this was abundantly obvious as far back as 1999, then that will have a serious impact on the economy. Indeed, it could be argued that the burst in the bubble was instigated by the business community starting to hedge their bets on the future. After all, Clinton/Gore were heavy representatives of the new economy while Bush is old economy to the bone. If Dubya came into power, the business community would naturally want to be more heavily invested in old economy stocks. Thus, the burst in the NASDAQ bubble in early 2000. Of course that is not to say that the tech market was not inflated beyond reasonable expectations nor that its popping wasn't inevitable. I just use this as an illustration that the state of the economy at the end of 2000 could be blamed, in part, on what was happening in the 2000 campaign. If Gore were to have been the clear front-runner from the beginning it is quite possible the slow-down in the economy may not have happened when it did. And, if Gore had been declared the winner, it is not beyond reason to believe that it might have reversed the downward trend and avoided the subsequent recession. I am not saying what would have happened. I am only saying that Mr. Gross' confidence in the inevitability of what did happen is unjustified.

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