Did Bush's Tax Cuts Work?

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http://www.cnn.com/2003/ALLPOLITICS/10/30/bush.economy/index.html

The United States' GDP (Gross Domestic Product), one of the clearest indicators of the strength of our economy, rose 7.2% in the third quarter, the highest it's risen since the 80's. George Bush is attributing this entirely to his tax cuts. Everyone can agree that the GOP are milking this for all it's worth, and dancing a big "I told you so!" to every left-winger within shouting distance. I can't say that I blame them; this is a major victory for the Republicans.

My question to you is: Can Bush really make this claim? Or did other factors contribute this surprising and sudden boom. which may very well be a temporary fluke? Or, did Bush's policies have any effect on it at all and he's taking credit for something that would've happended anyway?

Your thoughts. (Hello in advance to Chandos and Ragusa )

 

My belief is that a President gets entirely too much credit and blame for the economy.

I expect the 7.2% number to drop (as it always does no matter who is Pres) and end up at 6-6.5%, which are still very good numbers. I would anticipate naysayers pointing to job growth statistics but I'll preempt by pointing out that jobs lag GDP. This may be espescially true since inventories are down which should spur manufacturing.

I think this is undeniably good news. I don't think Bush gets the credit but then I don't think he got the blame heaped on him either (except for Steel Tariffs - what a horrendous idea).

 

So then, based on both your answers, is Bush wrong in taking the credit for it? It seems to be the case, but I may be missing something.

This also brings up a funny political arguement. Whenever the economy is going bad, the political party of the Pres (at the moment, the Republicans) say "People give way to much blame to the President..." But when things are going great, like now, they say "See? If only the Dems had listened to us. Stupid Democrats!"

The same goes on both sides.

 

Hello Death Rabbit,
growth is a nice thing but it isn't always a sign of improvement. In a free hour I yesterday went to an economics lecture, to learn that growth for example benefits from stuff like car accidents* (as they fuel lawyers, insurance companies, experts, repair works, hospitals ...). Insofar there is always the question of "quality" of growth ...

A part of the US growth is probably induced by the massively increased US government spending - in areas like iraqi reconstruction, and defence procurement especially. So the question is if the numbers actually hint on a qualitative improvement and if this growth is sustainable.

And as above, I wouldn't laude Bush for it. It is amazing how much trust people in their leaders. In Germany people regularly demand jobs from the chancellor - as if he could create them ... "Abracadabra ... there you are!"

* ... suggesting to actually build poorer and less safe cars and products for the future in order to boost the economy ...

[ October 31, 2003, 21:00: Message edited by: Ragusa ]

 

Bush is a politician for taking credit for it. Like Clinton took credit for the stock markets rising due to technology growth in the 90's. Bush has been under attack, as evidenced by these boards, for the economy so it shouldn't be surprising that when it starts to do well he will attempt to take credit for the good news.

It also isn't surprising that those who dislike Bush will quickly move to try to dampen the news and try to say that it isn't really good news for various reasons. It's politics. Those who dislike Bush will blame him whenever they get the chance and won't ever give credit. Likewise, those who like Bush will deflect criticism whenever possible and take credit whenever possible without ever admitting fault. (This goes generally and not at anyone specific)

It is, unfortunately, the nature of the game in this and every nation where officials are elected. To single out person X as being wrong in a particular instance is like saying it is wrong for a baseball player to slide spikes first into second - it isn't really nice but it's part of the game. Don't hate the playa', hate the game.

Edit to add:

Defense spending in the third quarter was flat. The surge was due to personal consumption and corporate expenditures.

[ October 31, 2003, 23:12: Message edited by: Laches ]

 

I dont think I have said it here before but I tend to say it a lot in real life to friends and relatives. The economy is more or less an entity of its own which goes wherever it pleases. Everything a government can do is to gently try to prod it a little bit and hope that it might affect it a little bit.

An easy way to see how little what government a country has affects its economy you can for instance compare Sweden and the US, two countries that have had vastly different political leadership with very different priorities but yet they have experienced roughly the same economic stages, when it is up in the US it is up in Sweden and when it is down in Sweden it is down in the US. The only thing a government can do is more or less to decide how the money they get is to be distributed, not how much money there is in the first place.

I like to see the economy as a global bull that tramples across the world with a bunch of people hanging on to its back trying to steer it, some are heavier than others and quite often the people cant agree on which way to try to steer it but the bull always brings all of them to roughly the same place.

So, no Bush doesnt deserve much credit for the rise of the GDP nor does he deserve much blame if there had been a decline. What he could be blamed for is how the money is distributed but that isnt what is discussed here.

 

Interesting thing about these tax cuts...they amount to no more that $5 to $10 per bi-weekly pay check. Hardly the fodder to fuel a stumbling economy. The tax credits are more substantial, but that basically is money that we are getting now, that we won't get when we file our taxes in 2004. I think that is when a lot of people will look at the reductions in the Child Tax Credit (because it has already been given) and think that they are being ripped off.

Tax cuts fueling the economy and the growth we have seen in the third quarter?...I don't think so. Can Bush take credit for it?...why not, he is at the helm, let him take credit as he will surely take the blame if things turn sour. In reality, I think that this "recovery" is America returning to the path it was on prior to 9/11.

I have seen so many facets of business picking up and moving on, facets that had ended abruptly with the terrorist attacks. In all truth, I don't think that the world has yet seen the immensity of a healthy and powerful American economy. It's all just business as usual, where we should have been two years ago.

 

Hello, DR -

I could care less about those numbers. The real concern many of us have is in several other areas, which the president and congress have a lot of influence over, despite the denial of some others who should know better:

1. How many childern are having to grow up and survive at, or below the poverty line. Many are childern of the working poor, such as single mothers, and they lack the very basic needs.

2. Can the elderly get decent health care and the medicines they need to spend their old age in a degree of comfort. Many of them are having to resort to buying medicines outside of the US where they are more fairly priced. The government goons are trying their best to stop them, probably at the behest of their large donating clients (the drug companies).

3. How many are still unemployeed and what are the wages and benefits that they have to support themselves and their families. This is always critical for those of us who are labled as "liberals and progressives." The numbers have little to do with the stock market and Wall St. cronies; but those large corporate fat cats who take care of themselves while laying off thousands of rank-and-file workers.

These numbers on uemployment showed great improvement during the Clinton years. But the wages were mixed, because many who were employeed had low paying jobs. Despite republican rhetoric, Clinton only has average grades from those of us on the left because of the wage situation and the increase of childern who fell below the poverty line during the 90s "boom years." He did try to help in terms of healthcare but was blocked by the large industry providers and their conservative minions in congress.

The numbers you cite are probably slick numbers for CNN and Fox News healines, but are wasted on those of us on the left who have larger economic concerns than Wall Street and Walmart profits.

[ November 02, 2003, 05:58: Message edited by: Chandos the Red ]

 

I tend to agree with Chandros here. What use is economic growth, what use is the rich becoming richer, if there are hordes of those living in poverty. A country should work at providing for all of it citizens, or even better, to structure things in such a way that all of its citizens are enabled to provide well for themselves readily, and encouraged to do so.

 

The average and median income in the US are at historic highs even when adjusted for inflation. Also, the number of uninsured is constant over the last few quarters with statistically insignificant fluctuations up and down but also at or near highs (Edit-or at lows I mean, what a putz I am). And the percentage of those below the poverty line has been steadily decreasing since 1996 and is this year at a historic low for all races and for each race individually.

I saw this from a WaPo chat a couple of years ago, still relevant:

Current unemployment is ~6%.

Edit - the edit ate the post, maybe it's fixed.

[ November 03, 2003, 15:17: Message edited by: Laches ]

 

Laches - If your post is in reply to mine, then let's get a few things clear up front: To begin with, I could care less what Kirk Johnson says. I have no idea who he is, but if he thinks the Reagan years were "boom years" then I would like some of what he's been smoking; it must be some strong stuff. Second, if you have some specific figures you would like to share to show how great this economy is for the working poor, then my all means post your sources so that we can see whose numbers they are, and if they are reliable or not. I have already discarded the ones on unemployment because its tenor diminishes the suffering of those thousands who have lost their jobs since Bush has become prez. Saying that they can't expect good times all the time is not an answer they should accept. I certainly don't think that what unemployment was 30 years ago adds anything to the debate, except to make excuses for Bush's poor performance as president. How many new jobs have been created since Shrub took office anyway?

The problem with using statistics is that it comments on the one using them more than on any test in reality. If any amount of childern are suffering in my country then it is unacceptable. If there is an amount of people who can't get healthcare then that is unacceptable. People are not statistics and neither is their suffering.

[ November 03, 2003, 01:26: Message edited by: Chandos the Red ]

 

Sometimes you have to look at the big picture - this isn't Nirvana. You can find the stats using the most recent census figures and department of labor figures.

* Twirls moustache.

 

Sorry, Laches - I've been very cranky from no sleep. The new baby has been keeping me up nights. But I think that using statistics in these terms diminishes the impact that economics have on the disadvantaged. To say things are better doesn't help those kids who go to bed hungry every night. And if things are better it is not likely the result of "conservative compassion." Or whatever it was that Bush labled it.

 

Hey Chandos, congratulations on a new baby. I gurantee that they can change your life...maybe even make you Conservative if you don't watch out

 

Thanks, HS. But this is my second and I'm more to the left than ever. But nice try.

 

From a very cynical point of view, I have to say that the tax cuts are working perfectly - realizing, of course, that the motivation behind them has nothing to do with spurring economic growth, and everything with getting Dubya re-elected.

 

Thank you, Rally...you've illustrated my point beautifully.

*tosses a rose her way*

 

Congrats on the new baby as well, Chandos. I have to weigh in here as well on the issue of statistics versus humanity. If the poverty rate drops from 15% to 13%, that's cause for a celebration, even though 13% is still a bad number. But the cut is still good!

As for the tax cuts, well, maybe they spurred growth, maybe they didn't, but as has been mentioned before, OF COURSE Bush will take credit for the improvement! He's a political animal, and any politician, Republican, Democrat, Communist, Fascist, Independant or whatever, is going to try to take credit when things go well. It's the nature of the beast.

 

Well, this thing was humming merrily along without much to disagree with but then I have to disagree with this:

I'll speak generally here. I think many, even most, politicians actually really do want what is best for the nation. They just disagree on what that is and how to get there. Now, they also want to be re-elected. It seems to me that you're far more likely to get re-elected if the economy is doing well. If you're a politician, it is not only good for the nation but in your own best interest to try to get the economy to do well.

The quote above makes it look like the tax cuts were enacted because it would lead to a reelection and not because they would help the economy. I personally believe that those favoring tax cuts really do believe they spur the economy. Helping the economy helps them win reelection.

Bush and his administration honestly believe, imo, that tax cuts will help the economy. There is no divergence in the aims of helping the economy and getting reelected - they go hand in hand.

Now, I don't know that Bush and his administration really believe the recent spike in the GDP are because of the tax cuts; there isn't any way to really know their sincerity. In October of 2001 though Bush was arguing for tax cuts saying they'd help spur the economy. Meanwhile Paul O'Neill was arguing for global tax stimulus plans to help the global economy at a G-7 conference.

I may be a little different than most - maybe I'm naive. I really do think most in Washington really do want what is best for the nation. I've had the opportunity to observe (not participate in) lobbying from the inside and talk to both sides regarding various issues. I really believe that Daschle wants what is best. I also really belive that Frist wants what is best. There is just disagreement about what 'best' means and how to get there.

Unfortunately, it is easier to assume those one disagree with wear black hats.