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Bush Lead During Weakest Economy in Decades
The federal government had a modest budget surplus when Bush took office in 2001, but ran a deficit -- funding itself to a significant degree with borrowed money -- of 4.9 percent of gross domestic product in 2004 and 4 percent in 2005, even as the economy was growing at a healthy pace.
Bush did not steer the country toward a more sound long-term fiscal position. After winning reelection, he made a failed push both to tweak Social Security to stabilize its long-term finances and create private accounts for Americans to invest in the stock market. Democrats aggressively fought the plan, but indicated they were willing to work on a compromise to ensure the program's long-term financial stability if Bush would take private accounts off the table, which he declined to do.
Keith B. Hennessey, Bush's chief economic adviser, said the administration "tried everything" it could to broker a deal on Social Security, including sending subtle signals to Democrats that it would negotiate on private accounts.
Changes to Medicare were also elusive for the administration. When Bush entered the White House, the program faced a long-term funding deficit. It still does, and its cost is expected to balloon in the years ahead. In fact, the administration's addition of a prescription drug benefit enlarges Medicare's long-term funding imbalance.
The administration had planned to try to deal with the problem after a successful overhaul of Social Security. That day never came, though, and officials figured that if they couldn't reach a deal on the relatively simple problem of fixing Social Security, they would have no shot at fixing the vastly larger and more complex problems facing Medicare.
Bush made a more concerted effort in 2007 to overhaul the health-care system, with a plan that many independent experts thought could make care more affordable for poor and middle-income families. But by the time the president made the push, he was already highly unpopular. The proposal went nowhere.
"The retirement of the baby boom is not a distant thing, and the rapid rise in medical care costs goes on year after year," said Alice Rivlin, a scholar at the Brookings Institution and senior economic official in the Clinton administration. "It's easiest to fix those things when the economy is doing well, and we didn't fix them when we had the chance."
A Bush-created commission proposed a detailed overhaul of the tax code in 2005 that aimed to make taxes more fair and less complex, also winning plaudits from tax experts. But passing such a plan wasn't a high priority for the White House, and the effort stalled.
"On tax reform, I think they themselves were not very interested in it," said Kevin A. Hassett, a senior fellow at the American Enterprise Institute and an adviser on Bush's reelection campaign.
As achievements, Bush and his advisers point to the tax cuts of 2001 and 2003, which many analysts credit for keeping the last recession mild, even as the cuts contributed to the large deficits that followed. Bush and other administration officials play down the role of the tax cuts in feeding the deficits, arguing instead that increased spending on counterterrorism, national security and the military after the Sept. 11 attacks was the primary, and unavoidable, cause.
Bush also boasts about his record on trade, including the signing of 11 free-trade agreements with countries in Asia, Africa and Central and South America. But he also failed in bids to land several other prominent trade pacts and saw the collapse of negotiations to curb global agricultural subsidies, known as the Doha Round.
One constant for Bush has been an optimistic, even rosy, economic outlook. Throughout much of past year, even as the Treasury Department and Federal Reserve began preparing for the worst behind closed doors, Bush and his aides trumpeted the fundamental strength of the U.S. economy and dismissed Democratic proposals for a second stimulus package. A White House fact sheet released on Sept. 5 was titled: "American Economy Is Resilient in the Face of Challenges."
Two days later, the administration announced the federal takeover of Fannie and Freddie, setting in motion the most sweeping government intervention in the economy since the Great Depression.
That takeover, experts widely agree, was necessary. But even those sympathetic to the president's ideas are skeptical of his overall legacy.
The highest praise Hassett offers for Bush's economic legacy is that "the economy was caught up in a storm while he was president, but it wasn't his fault."
"In the end, to the extent there ends up being a defense of the Bush presidency" on economic issues, "that's about the best you can get."