A Record of Recovery

ver the course of last week, we heard a lot from the Democrats about their record of economic achievement. So let's take the advice of a Democrat of yesteryear, Al Smith, the former governor of New York. His trademark phrase was, "Let's look at the record."

These charts show the rate of change in real gross domestic product and in employment from 1990 to last June. The shaded areas show recessions. The vertical lines show when President Bill Clinton took office and when he left. Because the economy has momentum, it's useful to look carefully at the trends in evidence at the time of presidential transitions. When you look at the record, a quick summary is this: President Clinton inherited prosperity; President Clinton bequeathed recession.

The 2001 recession was short and shallow, with employment - always a lagging indicator - the last part of the economy to rebound. The employment picture has been a little puzzling since the two main surveys - one asks existing establishments how many people are on their payrolls, and the other asks people in a large sample of households whether they have jobs - show slightly different patterns. In any case, by now a third piece of the record appears clear: the recession President Clinton left behind has turned into prosperity under George W. Bush.

George P. Shultz, secretary of the Treasury from 1972 to 1974 and secretary of state from 1982 to 1989, is a distinguished fellow at the Hoover Institution at Stanford University.

This is interesting and it points out a few things (to me anyway).

Clinton enjoyed a 5 year economic run who's roots stemmed from some good policy making that took place in the earlier part of the 90's. And, his administration did do some good things around monetary issues. (Maybe it had something to do with a fiscally sane republican congress but not solely)

People enjoyed enough of a run that they expected it to go on forever. That's foolish thinking.

One could make the same case that Bush I inherited prosperity and created poverty but they actually got things going in a positive direction even with the gulf war happening in the middle of his watch,

The 2000 economic decline was a major crash. 4% GDP going to negative territory in a year is pretty sharp.

Sept. 11th did not have the material impact on the economy as people have stated when you consider the sharp growth rate of GDP that followed.

This economy has grown rapidly since the end of 2001.

What this proves is that Bush's economic policies have been pretty spot on and that his administration has done a good job of keeping us moving forward in spite of 9/11 and a recessionary spiral that he inherited. I'm not pleased with deficit spending but in part it is war time related and a factor of declining tax receipts in a recessionary period.

Lastly, did total government spending go down during Clinton's reign?

The chart leaves so much out, but that might be good because it's simple and uncluttered. If I were doing the chart, I'd mention that real earnings are higher than ever, that Clinton's taxes were the highest ever and GW cut taxes to a 50 year low, and more people have jobs now than ever before. OTOH, almost all voters have already made up their minds. The democrats just want power and they don't care about anything else, and the rest of us already know the facts.

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