Barack Obama and the Financial Aftermath of George W. Bush – Some Perspective Needed

Over the past few years I have come to learn the meaning of the word perspective. Without a doubt, the lens through which one views events is certainly colored by one’s opinions.

Such is the case with the current situation in Washington. Each passing month criticism is heaped upon President Barack Obama and the ever-growing national debt.

The debt accruing is troublesome, but when it comes to the issue of finances, President Obama is but eight months into a tenure that is attempting to turn around one of the greatest fiscal downturns in our nation’s history.

The Bush Years

As he was leaving office amidst a growing fiscal crisis, George W. Bush offered his own perspective of his financial leadership during the eight years he served in the White House. On one hand, he touted that his administration oversaw 52 straight months of job growth in the middle of the decade. On the other, he sought to reinforce the notion that the economy grew at a steady clip from 2003 to 2007.

We did mention at the outset the key word: perspective.

The Bush view contrasted significantly with a Washington Post evaluation of the eight-year period Bush held office. Back in January, the Post deemed that Bush “presided over the weakest eight-year span for the U.S. economy in decades” and noted that “economists across the ideological spectrum increasingly view his two terms as a time of little progress on the nation’s thorniest fiscal challenges.”

One of the most telling stats was in the area of job growth. During Bush’s time in office, the number of jobs nationally increased by about 2 percent. According to the Post, that represented “the most tepid growth over any eight-year span since data collection began seven decades ago.”

And as for even more stark news, the Post offered:

“Gross domestic product, a broad measure of economic output, grew at the slowest pace for a period of that length since the Truman administration. And Americans’ incomes grew more slowly than in any presidency since the 1960s, other than that of Bush’s father.”

Not too surprisingly, most people seem to see the eight-year period as two distinct eras, the first seven years followed by the severe recession in 2008. The data indicates otherwise as over the first seven years of the Bush administration, the gross domestic product grew at a 2.1 percent annual rate.

In the Post article, Mark Zandi, chief economist of Moody’s Economy.com and an informal adviser to McCain’s campaign, referred to the Bush years as a period representing “almost a lost economic decade.”

That notion of a lost decade comes in great part due to yet another negative, the inability of the administration to address the four most pressing fundamental financial issues facing America: Medicare, Social Security, tax code simplification and affordable health care. According to the post, “Resolution of those issues might have left the government more flexibility to respond to the current crisis by lowering the nation’s future budget deficits.”

A Tale of Two Americas

Now, we see a great deal more is emerging regarding the Bush policies. Peter Cohan insists that the real Bush legacy, “W’s greatest leave-behind, is a level of income inequality that outpaces even that of the Roaring ’20s that led to the Great Depression.”

As but one more example that trickle down economics does not work, by 2007 “the top .001 percent of American earners took home 6 percent of total U.S. wages.” That was twice the figure for 2000, the year before Bush took office.

On the wealth side, Cohan reports that “the top 10 percent of American earners pulled in 49.7 percent of total wages: a level ‘higher than any other year since 1917.” It  “even surpasses 1928.”

That growth in wealth no doubt came in great part due to the Bush tax code changes. Of the $1.3 trillion in tax cuts, essentially one third of those dollars went to the top 1 percent of earners.

Two Wars and Economy Mired in Muck

It is troublesome to read about the soaring national deficit. And we are definitely concerned with our current president’s propensity to spend.

But Obama is to be applauded for beginning the much-needed debate on healthcare. He is also to be applauded for his stance regarding increased access to college for all Americans and his focus on new energy policies and initiatives.

At the same time, Obama is attempting to put an end to a disastrous war of choice while focusing on what many deem to have been the proper battle, the War in Afghanistan. He is tackling all these issues against the remnants of a Bush economy, one that was built on a housing bubble and now provides us with unemployment rates approaching ten percent.

That backdrop is one powerful landscape – it must be kept in mind if we are to have any perspective on the current situation.

Because as challenging as the healthcare debate has been, Obama has yet to address what is perceived as the other three thorniest financial issues: medicare, social security and yes, that elephant in the room:

The tax code.

Ultimately, they all intersect – all are incredibly complex – and all must be solved.

As challenging as they are, one fact is becoming more evident with each passing day. These complex issues have been made all the more difficult by eight years under the leadership of George W. Bush.

 

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