Bush Economics

I always thought everyone complained that the us doesn't produce anything anymore bla bla. With a falling dollar other countries are gonna buy are crap cause its cheaper. Isn't that then a good thing then?

That'll lower the trade surplus as well as other countries choose to buy our goods instead of invest in our companies.

International economics is all a two edged sword.

The only real problems I see are the national debt (caused by reckless spending), and the higher concentration of wealth for the already super rich. That I can hardly blame on Bush, however, and more on the rise of hedge funds and the way wall street does business nowadays.

 

The problem with using a weak dollar to bolster our exports is that we have already transitioned away from being a manufacturing economy. Most things made here still have parts made in other countries, not to mention the raw materials etc.

I'm not saying a weak dollar doesn't have it's benefits, but they don't nearly compensate for the average person's loss of purchasing power, $100 dollar a barrel oil, and the risk of hyperinflation.

 

You seem to have forgotten about inflation. Allows Ron Paul to expand on this subject matter, which the mainstream does not seems to care.

http://www.youtube.com/watch?v=A4kxTkhwR_Q

PS: the guy being questioned is the head of the Federal Reserve.

The description of the issue at hand put forth by Paul is quite decent. But I'm still not convinced his solution to the problem is the best course of action. But then again, there does not appear to be any good solution at all. The negative-saving, always spending consumerism hole that we so willingly dig up, could well turns into our grave.

 

Which illustrates the point of the thead. The people who already made lot of money before Bush took office have done extremely well while the rest of us have not.

To counter your anecdotal evidence, I currently make $75 per hour less than when Bush was elected.

Yes, as mentioned in the article, if you were already wealthy, the Bush administration has done more to help you than you ever could have imagined. For the people in the middle and lower classes, not so much.

No, it is reflective of your own personal wealth. If you had plenty before, you have even more now.

No, they have been pro-rich.

You are right, they probably could not have done more to enrich the people and corporations that were already well off than they did without causing a major backlash from the people in the middle and lower classes. You know, the ones who have not seen an iota of benefit from the supposedly "booming" economy.

No, unless you look at the big picture rather than cherry picking two or three indicators (stock market gains, low unemployment) while ignoring the massive problems caused by Bush's policies.

As far as your impugning the source here, please show how you have more knowledge of the economy than a Nobel Prize winning economist.

 

With all due respect, I'm astonished that you would make that statement. The higher concentration of wealth with the "super rich" is directly tied to the policies of the Bush Administration. Bush and company passed countless tax cuts skewed towards the rich and his economic policy is predicated on low taxes for the wealthy supposedly producing economic growth and jobs, while increasing tax revenue, resulting in a balanced budget. He's pushed for deregulation, mergers, and other policies designed to help the very wealthy and Wall Street. His policies led to record budget and trade deficits, sucking revenue from the Federal budget by paying increasing interest on the vastly increased national debt, while leading to a weaker and weaker dollar. He never once vetoed a spending bill by the GOP Congress. Not one... nada.

Maybe you should read more.



D&D. Attempt Civility!

Impeach Bush.

 

Great article, I was going to make a thread about this. I have yet to read the whole article, but I've read the responses. My question is, will our economy recover or should I be planning my retirement in China now instead of ten years from now?

 

i stand corrected

 

thought you might enjoy this, which my siblings forwarded to me today:

http://www.chron.com/disp/story.mpl/metropolitan/5280060.html

My old man was in the famous life photo they reference in the article, in the back left of the picture, leaning in for a better look.

 

Groovy! It's hard to believe Cooley is 87. I met him several times (at the hospital, of course), and he was very impressive. Back then, he looked to be middle-aged, and I guess he was. I'm glad Cooley and his mentor have buried the hatchet after decades of acrimony. Both are amazingly brilliant. It's cool that your father worked with them. It's speaks well of your Dad. Both were (are) very, very picky as to who could, from all I've heard over the years.



D&D. Attempt Civility!

Impeach Bush.

 

he lived through 5 years of german occupation. i'm pretty sure his views were no different than my own.

 

been meaning to mention, your sig contradicts itself.

 

Dear Libs,
Please educate yourselves and quit lying about fiscal policy and it's ramifications. Gracias

http://www.bloomberg.com/apps/news?pid=20601039&sid=apaWHFbOgvyc&refer=home

Bush Tax Cuts Exploded Clinton-Era Deficit Myth: Kevin Hassett

Nov. 12 (Bloomberg) -- The debate over the Bush tax cuts is heating up, and the Democrats aren't making any sense.

If you wander into a rally for any of the Democratic presidential candidates, you are sure to witness a lengthy diatribe documenting the terrible damage that President George W. Bush's tax policies have done to the economy. Hillary Clinton said in a recent debate, ``I put fiscal responsibility first... We have to move back toward a more fair and progressive tax system and begin once again to move toward a balanced budget with a surplus.''

If you listen to Clinton, the restoration of ``fiscal sanity'' and resumption of higher tax rates will have a profound positive impact on every corner of the economy.

Clinton and her Democratic competitors have a big problem. The facts don't support their negative characterization of the Bush tax cuts. Indeed, everything Bush's opponents said would happen after taxes were reduced didn't happen.

Recall that supporters of marginal-tax-rate reductions argued that the lower rates would induce individuals and firms to work more and take more risks. This heightened activity would lift the economy and, over time, even help the Treasury recapture a good bit of the revenue lost when the rates were initially cut.

Opponents warned that increased deficits would limit or even overpower the effects of the tax cuts by driving up interest rates.

Both Right

Both schools of thought could, in theory, be correct. If individuals don't respond much to reduced tax rates, but debt markets respond a good deal to growing deficits, then tax cuts would provide little benefit.

Back in 2001, when the first Bush tax cuts were being debated, these arguments were laid out by numerous economists on both sides of the issue. One meme making its way through Washington was the assertion that a sustained increase in the deficit relative to gross domestic product of 1 percent would lift long-term interest rates by 50 to 100 basis points. That, the story went, would offset any positive stimulus from lower marginal rates.

Looking back at more than six years of economic history since the Bush tax cuts, two observations stand out. First, the deficit increased much more than was expected at the time Bush took office.

Even after accounting for the tax cuts, for example, the Congressional Budget Office forecast that there would be a cumulative surplus between 2001 and 2010 of $564 billion. Instead, including current projections, there was a deficit over that period of $3.7 trillion.

Rates Never Rose

Second, interest rates never rose. Even though the change in the fiscal situation was at least twice as large as the anticipated 1 percent of GDP, interest rates have been lower than they were in 2001 for almost Bush's entire presidency. Bush took office on Jan. 20, 2001, a time when the 10-year Treasury bond yielded 5.17 percent. Today, it yields about 4.28 percent and has been well below 5.17 percent on average every year in between.

Fine, a skeptic might say, but other things changed. True, but they also changed in a direction that would suggest interest rates should be higher. Inflation has surprised on the upside because of high energy prices. GDP growth during the past year has been 2.6 percent, compared with 0.8 percent in 2001.

Interest rates in the U.S. are low, of course, because rates everywhere else are, too. Government debt from the U.S. is a close substitute for debt from many other countries, and their rates move in tandem. A global savings glut and a flight to safety are far more important determinants of U.S. interest rates than the Bush deficits.

Missing Link

One can only conclude from such evidence that the link between swings in the U.S. fiscal situation and interest rates, never very strong to begin with, has become impossible to detect. As Harvard economist Kenneth Rogoff recently wrote in the Financial Times, ``Explosive financial globalization has made U.S. federal budget policy far less important as a determinant of global real interest rates.''

But if we accept that global markets have mostly severed the tie between deficits and interest rates, another question emerges. Exactly how is it that the Bush tax cuts have harmed the economy?

John Edwards seems to be the first of the Democratic candidates to look at the data and accept that deficits might not be so bad. Edwards's policy director, James Kvaal, recently commented, ``Investments in health care, energy and education... are more important for our economy, even if that means sustaining the deficit for a while.'' It shouldn't be long before Clinton and Barack Obama come to the same conclusions.

Up, Up, Up

This means if Democrats win, despite the utterances of the presidential candidates, the deficit is going to go up as tax dollars are steered toward health care and other Democratic favorites. Taxes will go up, too, as the Bush tax cuts expire, and the economy will suffer.

If, on the other hand, Republicans win, then they will extend the Bush tax cuts, and the deficit will go up. The extension of the low marginal tax rates will provide continued economic benefits.

Either way, you can be sure that the Bill Clinton-era dogma about deficits and interest rates will be a thing of the past.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in his bid for the 2008 presidential nomination. The opinions expressed are his own.)

 

This economy has some serious issues and in the short term it is Monetary policy that is the problem. We are going to be facing a credit crunch through next year.

 

Clinton inherited a huge federal deficit from Bush Sr. In 3 yrs, he turn it into a surplus. By the time he left office, he handed over a huge federal surplus to Dubya, who pissed it all away in 7 months.

BTW, Clinton raised taxes early in his first term; Bush did the opposite and proceeded to spent $$$ worse than a drunken sailor---the largest federal deficit in history.

 

This article ignores the longterm implications of the increased deficits and is essentially saying that deficits don't matter whether they come about through more spending or tax cuts. While over short term deficits don't matter but it ridiculous to believe that such a strategy could be maintained indefinately. This article argues that world globalization of debt is absorbing up most of the US debt which is why interest rates have remained low. That is very likely the case but that can't be counted as an endless spigot of credit to sustain the US economy. The problem is at what point does the rest o the World realize that US debt isn't worth it and stifle the flow of credit? Considering how we are far more dependent on credit now than we were in 2000 that could be devestating. In fact we are already getting a taste of that with the subprime mortgage crisis.

 

The tax cuts aren't what caused the problem--the spending was. At the end of the day the tax cuts probably had almost zero effect on the economy.

I always get uneasy when people talk about the evil rich. Rich is just whatever you define it as. According to Barak o Bama (or however its spelled) if you make 90 K you are "rich." While you certainly aren't poor, you can hardly afford to buy your own private plane with that sort of money.