Tim Graham has already addressed this comment today in his post on comparisons of Bush and Herbert Hoover. I would like to address the point Tom Shales made in his Washington Post column today, A Speech Both Stately And Stolid, and provide a bit more historical basis for the use of this comparison - to Hoover. Shales stated in his opening line:
Whether George W. Bush is, at best, the worst president since Herbert Hoover -- as a seemingly sizable number of Americans appear to believe -- he acquitted himself fairly well and came off as basically competent when he delivered his fifth State of the Union speech last night.
Hoover? Any fleeting comparison of the Bush administration to the Hoover administration that would be sensed by the American Public, is only because of an ignorant (and I'll suggest that is by choice) and exceedingly biased media.
The media has planted this seed in the minds of Americans. The public knows little of Hoover on their own. The media misreported the entire shift in fortunes in the economy, and the budget situation for well over 2 solid years (and still revisit it), until the American public had zero understanding of what had happened, long before anything that Bush did began showing up on the books. Whether or not Bush's efforts lessened the impact of the disaster, or made it worse. Whether or not Al Gore or later on, John Kerry, would have had a substantially different outcome (rather, how it would have played out - obviously it would have been much different - Personally, I think the deficit would be larger now - maybe), is indeed a great question - and it should be debated.
Here is my case - the media needs to understand it, and report it. And then, and only then, can the media have a clear conscious to go on with the Bush/Hoover thing. Bush and/or his policies did not cause the shift in economic fortunes. He did not cause the return to deficit spending. He did not cause millions of Americans to loose their jobs, their health insurance or their life savings - this was well set in motion before President Bush had even received his party's nomination as their candidate.
Here then would be my argument - If the American public understood this, then we would be in a position, and a mood, in which we could demand that the congress and the leadership actually address the issues, instead of the rhetoric, which the media plants in the public's mind.
Why depend on conservative or right wing views in the effort to attack what the mainstream media has successfully indoctrinated in the minds of American citizens (think voters). I think that I'll lean to the view made public (which the media ignored) by a well known leading "progressive" economist, Dean Baker, Center for Economic and Policy Research. Baker was probably the first nationally recognized person to use the comparison to Hoover in regards to economic events over the past several years, however, he was talking about the leadership in the Clinton White House, not the Bush WH. Following his published view, the media went on a frenzy invoking the "Hoover" comparison to the Bush Admin. for a number of economic calamities. Oh, did the media not understand the facts, in their rush to blame all on Bush.
On March 16, 2000, Mr Baker noted:
"The main feature of the 'new economy' is a stock market bubble of unprecedented magnitude. When the bubble bursts, the new economy will just be a bad memory. The inflated stock market has created enormous distortions in the economy, the ramifications of which will only be apparent when stock prices return to more normal levels. If the market falls 50 percent and loses $10 trillion of wealth in a correction, it's going to be very hard to avoid a recession. A lot of these dot.coms are worth a corner lemonade stand and are putting real companies out of business. What are you going to tell people who lose much of their retirement savings in their 401K when there's a downturn?" Today, Baker said: "The decline in the stock market was an entirely predictable event for anyone familiar with basic arithmetic, even if the exact timing could not be known in advance. The nation's political leaders chose to ignore the stock market bubble and instead focused their attention on distant and relatively minor problems like potential shortfalls in the Social Security trust fund in 30 or 40 years or the reappearance of budget deficits in a decade or two. As a result, millions of families have seen their dreams of a secure retirement or their children's college education vanish with the stock market bubble. The level of negligence of the nation's political leaders in ignoring the stock bubble exceeds anything since the days of Herbert Hoover."
Folks, Bush was not President yet, in fact he had not even captured hs party's nomination.
A year and a half later, Baker is still clear about what had happenned to the economy, and to individuals, whose lives had been financially destroyed.
From: THE NEW ECONOMY GOES BUST: WHAT THE RECORD SHOWS By Dean Baker October 29, 2001
"The first step in dealing with the current recession is to recognize clearly its cause. On this point, there can be little ambiguity. The cause of the recession was the collapse of the stock market bubble."
"The decision by the Federal Reserve Board and the Clinton Administration not to take any actions to try to limit the run-up of the stock bubble was a mistake that the nation will suffer from for many years to come."
"Even the most cursory review of the data shows that the "new economy" was mostly hype. For the business cycle as a whole, the average GDP growth rate of 3.1 percent was much lower than in the fifties and sixties, and even slightly below the pace of the seventies. Real wage growth averaged less than half a percentage point annually for a typical worker. "
"Furthermore, it was an enormous failure of public policy, not to warn people about the stock market bubble that created this situation. At a macro level, it will be difficult to again pump up the economy in the wake of the collapsing bubble. At the individual level, millions of households now find themselves with insufficient savings to pay for their retirement or their children's education."
"The stock market bubble created a huge amount of unpredicted wealth, which has quickly dissipated. Millions of families have been hurt as a result."
And in March of 2003, Baker is maintaining what should be obvious to anyone with math 101 skills. In These Times | Bursting Bubbles
In 2000, President Clinton could legitimately boast of the “best economy in 30 years.” Unemployment was low, wages were rising at all income levels, and the poverty rate was headed downward at a rapid pace. But after President Bush took office in 2001, the economy fell into recession, shedding jobs and causing real wage growth to slow and eventually stop altogether.
A convenient story explains this sharp economic reversal. According to the script, Clinton eliminated the deficit through progressive tax increases and spending restraint. This deficit reduction lowered interest rates and spurred an investment boom, which was the basis for the extraordinary growth of the late ’90s. Then Bush came into office and quickly squandered the surplus with his tax cuts to the rich and military build-up. As a result, the deficit skyrocketed and the economy tanked.
It’s a good story, but the reality is quite different. The Clinton boom was built on three unsustainable bubbles. One of them, the stock bubble, has already burst. The other two bubbles—the dollar bubble and the housing bubble—are still with us. The dollar bubble is starting to deflate, and the housing bubble is perhaps just now reaching its peak. These bubbles created the basis for the 2001 recession and the economy’s continuing period of stagnation.
While we all should understand that there are many factors involved in the US budget's return to deficits, Mr. Baker, no fan of President Bush's economic leadership, still has the fairness to call a duck a duck as to what actually caused the return to deficits. The point that Bush has done little to reduce the size of the budget (hence the size of the deficit), after it's historic crash, is a separate and fair topic. In a personal note to me he made a few obvious observations - too bad the media did not have the investigative skills required to ask the easy questions.
Dear Gary,
At its peak in February of 2000, the value of all corporate equities, including privately traded shares was a bit over $17 trillion (this data comes from the Federal Reserve Board). Assuming that that market fell by 50 percent at its July lows, this implies a loss of $8.5 trillion. I believe the lower numbers that are often cited refer to either a shorter time stretch or a more narrow measure of stocks.
As far as the second question, the budget projections for 2002 assumed about $120 billion in capital gains tax revenue. We don't have the final numbers yet, but my guess is we probably will see something closer to $20-30 billion. There were also substantial revenue losses at the state level, especially California.
This, along with the fallout from the recession, has been a far bigger cause of the return of deficits than the Bush tax cuts. These cuts raised the deficit by about $30-$40 billion in both 2001 and 2002. You're right that this part of the tax cut was put in at the insistence of the Democrats.
Regards,
Dean
