Questions about Bush's policies
ASK THIS | June 01, 2004
Economics professor and blogger Brad DeLong says reporters should be asking more about the goals of Bush administration economic policy – because the results have been abysmal. Second of a series (see the first).
By Brad DeLong
Q. How much bang for the buck did Bush’s tax cuts actually have? How many jobs were created, versus how much did the deficit grow?
Q. How did the Bush administration decide that these tax cuts were the right stimulus package to put forward?
Q. What have representative people who received big hunks of money from the Bush tax cuts done with it?
Q. What do those inside the Bush administration now think of their economic policy moves over the past four years?
The press needs to be asking about the making of Bush administration economic policy – and examining the results. So far in the twenty-first century the underlying structural basis of the American economy has gotten rapidly, surprisingly stronger: the productive potential of the economy has grown at an extraordinarily rapid pace. But the short-term performance of the economy – the part that government has powerful tools to affect in the short run – has been abysmal.
Two million jobs have been lost. The gap between real Gross Domestic Product and the economy's productive potential is larger than seen since the depths of the 1982 recession, if not since the Great Depression itself. Only the extremely positive structural tide of economic growth has kept the Bush era from being that of one long recession.
The Bush administration’s response to poor economic performance was enacting mighty tax cuts (and boosting defense spending). But the Bush tax cuts have had extraordinarily low employment-bang for the buck. And the Federal Reserve has found itself low on ammunition, and has preferred to hoard what stimulative ammunition it has left.
So we are still short two million jobs. Why have large tax cuts been accompanied by such lousy employment and economic performance? What have people done with their tax cuts to generate so little employment bang for so many deficit bucks?