Thursday, May 17, 2012

Fool Me Once, Shame On You...Fool Me Twice...

Via Paul Krugman/ThinkProgress, I learn that former President Bush (the Younger) will be publishing a book on, wait for it, strategies for economic growth. Sadly, this isn't a joke. Say what you will about President Bush, but you can't with a straight face proclaim that his economic policies were book-worthy. He and the current Republican nominee apparently think so though, seeing as how both of their recipes for economic growth entail much of the same stuff.

Anyways, a few words about the economy during the Bush years. The centerpiece of Bush's economic platform would most likely be the 2001 and 2003 tax cuts, which were supposed to deliver robust growth. In this post, I'll look at how his numbers measure up against the postwar average. Just to be clear, these numbers are all measuring the period between the official end of the 2001 recession (March 2001) to December 2007, just prior to the financial crisis. 

I don't have time to go too in-depth about this stuff, but this chart basically sums up just about everything that needs to be said:

More reading on the topic for those interested here, here, and here.

David Leonhardt puts it quite well:

"I mean this as a serious question, not a rhetorical one: Given this history, why should we believe that the Bush tax cuts were pro-growth?
Is there good evidence the tax cuts persuaded more people to join the work force (because they would be able to keep more of their income)? Not really. The labor-force participation rate fell in the years after 2001 and has never again approached its record in the year 2000.
Is there evidence that the tax cuts led to a lot of entrepreneurship and innovation? Again, no. The rate at which start-up businesses created jobs fell during the past decade.
The theory for why tax cuts should create growth and jobs is a strong one. When people are allowed to keep more of each dollar they earn, they are likely to work longer and harder. The uncertainty is the magnitude of this effect. With everything else that’s happening in a $15 trillion economy, how large of an effect on growth do tax cuts have?"

Naturally, the usual caveats apply: government policies aren't the only thing going on, etc, etc. But the fact remains that even if you take only the good years of 2003-2007, Bush's tax policies didn't exactly deliver robust growth in employment. And now Mitt Romney is promising another round of tax cuts that, like Bush's, disproportionately benefit the wealthy.     Haven't they ever heard of the diminishing marginal utility of money? Sheesh. If they want a tax cut that would help people, make it benefit the people who actually need it. 

Anyways, I don't really know why Bush is trying to tout his administration's economic policies as some sort of a resounding success story, when there isn't a whole lot of evidence of  that. The same goes for Romney, who is touting similar economic plans--what about the period between 2001 and 2007 makes his campaign think such economic policies will work this time around? Oh, and this is of course in addition to the huge costs of extending permanent tax cuts.

It's just like our former President says..."fool me once, shame on...shame on you, fool me...cant...can't get fooled again."

I sure hope we can't get fooled again.