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Tuesday, August 17, 2004 - Page updated at 12:33 A.M.
By Walter Williams
Studies of the Bush presidency pop up like shooting-gallery targets and drop down without fanfare in this year so filled with such reports.
That happened with "Tax Returns," a highly significant April 2004 report by Isaac Shapiro and Joel Friedman, senior fellows at the Center on Budget and Policy Priorities in Washington, D.C.
The report's great strength comes from the comprehensive presentation of hard facts showing the overall impact of President Bush's three tax cuts that became his primary economic policy weapon. "Tax Returns" should be one of the key documents informing the upcoming election.
The results are crystal clear. Bush's performance is the worst for job creation in the first two years of an economic recovery and second from last in gross domestic product (GDP) growth, as compared with the eight earlier postwar recoveries from recession.
No president in the past 60 years, save George Herbert Walker Bush, has failed so miserably in his economic performance. But to see how bad President Bush's economic policies have been, we must work through the numbers. It's worth the effort.
Consider the percentage change in jobs from the bottom of each of the postwar recessions to 28 months into the recovery. Before the early 1990s, job increases averaged over 7 percent; the elder Bush gained only 2 percent; and the current recovery, as of March 2004 (the report's cutoff date), had produced no job growth.
Later information shows an increase of 1.5 million jobs in the past 10 months. It is still a tepid performance after an unprecedented postwar record of no job gains for the first two years into the recovery.
The Bush record also pales compared with Bill Clinton's average of 236,000 additional jobs per month, or 2.3 million in 10 months. Clinton's average gain per month is 50 percent greater than the average of Bush's gains in the past 10 months.
Finally, Stephen Roach, chief economist for Morgan Stanley, has pointed out that over four-fifths of total job growth in the past year has been in low-end occupations. "The Great American Job Machine is not even close to generating the surge of high-powered jobs that is typically the driving force behind greater incomes and consumer demand," he wrote in a New York Times column last month.
After the economy reached its low point in the last quarter of 2001, the inflation-adjusted annual rate of economic growth in the first two years of the Bush recovery was 3.6 percent. Only the average real growth rate of 2.9 percent during the early 1990s in the first Bush presidency was lower.
The authors of "Tax Returns" observed: "Two years into the eight previous recoveries since World War II, the economy has grown at 5.7 percent." That's more than one-and-a-half times greater than President Bush's rate of growth in real GDP in the current relatively weak recovery.
In assessing Bush's performance, deleterious consequences clearly resulting from the three tax cuts also need to be taken into account. Most important was the swing from a budget surplus in 2000 of $236 billion, or 2.4 percent of GDP, to a Congressional Budget Office-projected deficit of $477 billion, or 4.2 percent of GDP, in 2004.
As Shapiro and Friedman underscored: "The swing of 6.6 percentage points of GDP is the sharpest deterioration in the nation's fiscal balance since World War II."
Despite Bush's efforts to blame the size of the deficit on the economic downturn and increased defense and homeland security spending, the authors wrote that his three tax cuts "account for more than half of the 2004 deficit."
Without the three tax cuts, the deficit in 2014 is projected to be under $100 billion. In contrast, the projection 10 years out is a whopping $675 billion with the Bush tax reductions, they said.
"Tax Returns" provides a great amount of sound evidence that overwhelmingly supports my performance assessment: Bush's three tax cuts add up to the worst major income-tax legislation in American history and are the major policy factor in the least successful economic performance of the postwar years.
Nor is the poor performance a mystery. The Bush administration has refused to abandon an economic theory that did not pan out. The largest three-year tax cut in the nation's history produced record yearly budget deficits, but failed to generate lots of good jobs or high economic growth.
The bottom line is that Bush refuses to accept the hard facts showing the failed policy performance and instead relies with blind stubbornness on a bankrupt economic theory that threatens to bankrupt the nation.
Walter Williams, professor emeritus at the University of Washington's Evans School of Public Affairs, is the author of "Reaganism and the Death of Representative Democracy."
E-mail him at firstname.lastname@example.org
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