One of the biggest myths about our current economic situation is that it was caused by the failed policies of George W. Bush. President Obama described it as “a final verdict on the failed economic policies of the last eight years…” I guess he drinks his own kool-ade. The Wicked Speaker from the West blames “the Bush administration’s eight long years of failed deregulation policies.” Captain Peanut, a.k.a. President Carter, blames the “atrocious economic policies of the Bush administration,” particularly “deregulation and . . . a withdrawal of supervision of Wall Street.”
But what is the truth?
We first need to define how to measure deregulation. I suggest three categories:
- Paperwork: Pages of legislation
- Money: Budget spending
- People: Staffing levels
Paperwork
Under the Bush Administration the Federal Register – the government’s annual compendium of proposed and finalized regulations – was more than 74,000 pages every year but one. During the Clinton years, by contrast, the Federal Register reached that length just once. Overall, the final outcome of this Republican regulation has been a significant increase in regulatory activity and cost since 2001. The number of pages added to the Federal Register, which lists all new regulations, reached an all-time high of 78,090 in 2007, up from 64,438 in 2001.
In addition, President Bush signed hundreds of laws commanding federal agencies to produce new regulations. One is the Sarbanes-Oxley Act of 2002, which established new or enhanced standards for all publicly held companies and accounting firms in the United States. Another is the McCain-Feingold campaign finance reform law, which imposed new restrictions on campaign spending and prohibited unregulated contributions (“soft money”) to national political parties.
Money
Adjusting for inflation, the regulatory budget grew from $25 billion in fiscal year 2000 to an estimated $43 billion in FY 2009 – a 70 percent increase. “In constant dollars,” writes James Freeman in the Wall Street Journal, “the Bush regulatory budget increases vastly exceed those of predecessors Clinton, Bush, Reagan, Carter, Nixon, and, yes, Lyndon Johnson.” Freeman also write “Looking at regulatory spending in percentage terms, Mr. Bush’s staggering 2003 increase of more than 24% was the largest in the last 50 years.”
Ten Largest Annual Percentage Increases
in Total Regulatory Budget Spending (last 50 years)
| GW Bush 2003 Nixon 1973 Nixon 1971 GW Bush 2002 Nixon 1972 Kennedy 1963 Ford 1976 Nixon 1970 Johnson 1968 Nixon 1975 |
24.3% 20.0 19.6 16.4 14.6 13.6 10.9 10.6 09.5 09.4 |
The Bush team spent more taxpayer money on issuing and enforcing regulations than any previous administration in U.S. history. Between fiscal year 2001 and fiscal year 2009, outlays on regulatory activities, adjusted for inflation, increased from $26.4 billion to an estimated $42.7 billion, or 62 percent. By contrast, President Clinton increased real spending on regulatory activities by 31 percent, from $20.1 billion in 1993 to $26.4 billion in 2001.
With specific regard for the category of finance and banking, expenditures were cut by 3 percent during the Clinton years and increased 29 percent from 2001 to 2009, making it very hard to argue that Bush deregulated the financial sector.
People
Let’s look at staffing levels. Regulatory agencies employed 175,000 people in 2000. They employ nearly 264,000 today. In eight years, Bush increased the federal government’s regulatory staff by 91,196 employees. In his eight years Clinton cut it by 969.
So there you have it. The Bush Adminstration spent more, wrote more, and employed more. Tell me Mr. President and Madam Speaker, how with a clear conscience can George W. Bush be called a failed de-regulator?
Team Obama still enjoys referring to and reminding anyone that will listen about the “past eight years” under President Bush. Many Americans repeat it ad nauseum as their defense for voting President Obama into office. Sadly, this lie is alive and well, and if Republicans don’t get really loud in an obnoxious public manner to correct this fallacy we can look forward to another loss in 2012.
Liberals tend to ignore facts, but I think they can handle pictures. I created the chart below to show US stock market performance over the past twenty years. In the chart below, red (top line) is the NASDAQ, blue (middle line) is the Dow Jones Industrial Average, and green (bottom line) is the S&P 500.
20 Years of Market Performance
Let’s look at what happened during various stages of this chart:
- February 2000: The peak of the “dot-com” boom. Crazy stock valuations, lots of paper millionaires. Cats and dogs living together.
- July 2000: The beginning of the “dot-com” bust. Investors realize they were punch drunk and millions of little people (the hard working ones that enabled companies to grow) get shafted out of stock bonuses and options while executives cash out big time.
- October 2001: The bottom of the market thanks to the effect of the 9-11 attacks. Over the next six years our economy would recovery, some would even say “thrive.” Something not noted above is the decrease in unemployment, which dipped toward 4% (“We have basically full employment in this country” said Geraldo Rivera on June 14, 2007).
- October 2007: Our most recent market peak, the beginning of the housing bubble burst (FannieMae, CountryWide, et al).
- May 2008: Washington offers $168B “stimulus” in effort to revive economy. Wall Street could not care less.
- September 2008: The US Government takes control of mortgage companies Fannie Mae and Freddie Mac (a $200B promise).
A rational thinker could glean from the image above that the George Bush economy did quite well, even when considering 9-11. The early years of the Clinton administration saw relatively modest growth (prior to the boom); after the bust correction the market under Bush grew at a more significant rate. You could even say the market thrived under Bush. Did you hear that in the press? Did you hear that during the campaign? ::crickets::
So lets look at a related Liberal talking point: “Clinton presided over the best economy, evah.” Here’s a nice comparison of media treatment of economic conditions under both Clinton and Bush. Bill Clinton can’t take credit for the dot-com boom (even though Al Gore’s verbal blunder makes people think that he takes credit for it). Clinton did work diligently to eliminate debt, so much so that the Office of Management and Budget projected a surplus of $5Trillion over the next 10 years, enough to pay off the entire Federal debt and fund Social Security, the state pension scheme, for several more decades. (How about a do-over on that?). Clinton also let office with the US more exposed than ever before to the international economy.
While the dot-com boom during the Clinton years made many people rich, many people also lost money during this highly irrational and volatile market. The following Bush presidency brought a level of stability back to the markets. Unfortunately, seeds planted during the Carter administration and watered during the Clinton administration came to bear fruit about 18 months ago and we are now in the throes of a horrible market with stability nowhere in sight. To me it seems that every action President Obama takes toward improving market conditions is met with a not-so-equal and opposite reaction by Wall Street. As Joe Biden said, the presidency is no time for on-the-job training, and I’m tired of my portfolio and kids college fund being used as part of a financial experiment.
