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Saturday, October 23, 2010

Nostalgia for Republican Economics?

When George W. Bush inherited the White House in January 2001, the nation's unemployment rate was 4.2%. Eight years later, his administration's assortment of economic policies managed to turn that into 8%.**

That's an increase of 90% -- not quite a doubling.

Unfortunately, due to the Great Recession that began in 2008, unemployment levels have continued to increase during the Obama admininistration -- up now to 9.6% in September (the latest month with complete data). That's an increase of 20%.

It's bad, but it's dumb to blame Democrats exclusively -- especially since Republicans limited the stimulus, demanded much of it in the form of tax cuts, and won't agree to fund infrastructure projects and other spending at the level that helped the US exit the Great Depression.

Much of the debate in the 2010 midterm election is about government's role in the economy, but I assure all readers that this would simply be little more than background noise if unemployment was closer to 6 or 7%.

Incidentally, with a little help from Google, you can easily find wild (tea party) claims that the Obama administration has "quadrupled the national debt."

The U.S. government debt was $5.73 trillion on Bush's January 20, 2001, inauguration day. By the start of Obama's presidency on January 20, 2009, it stood at $10.63 trillion. Bush's tax cuts and the unfunded wars in Iraq and Afghanistan nearly doubled the federal debt in 8 years. Specifically, it was an increase of 85.6%.

The current U.S. government debt on October 23, 2010, stands at $13.67 trillion. That's an increase of 28.6% -- largely because the Bush tax cuts do not expire until January 1, 2011, and the wars remain unfunded.

The tea party's claim seems to be based on CBO estimates from March 2009 of future deficit spending forecast through 2019. The latest projections are not as bleak and are quite volatile, depending upon assumptions about economic growth, tax revenues (will those Bush cuts expire or not? -- it's a $700 billion question over a decade), etc.

In a nutshell, Republicans are poised to retake the House and perhaps the Senate because their noisiest loyalists have convinced too many members of the media and electorate that the Obama administration is somehow to blame for what they label unprecedented government spending, borrowing, and intervention into the economy.

** New presidents assume office on January 20, so it makes sense to average the monthly data for January/February as I've done here.

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