Wednesday, December 07, 2005

The Bush Boom

This is a response to anyone who still holds the absurd notion that the past two years have been "dreadful" for the American economy. With the freshly revised numbers from the third quarter, a stellar 4.3%, the last 10 quarters have averaged 4.1% GDP growth. What significant event happened at the beginning of the 10 quarter benchmark? If you answered the Bush supply-side tax cut of May 2003, please move to the front of the class (in the words of Walt Williams).

Jerry Bowyer, author of The Bush Boom, explains:
Why do we begin counting 10 quarters ago? Because while Bush’s overall GDP average remains tempered by the anemic economy he inherited, it has grown by leaps and bounds since he signed his full tax cut (the so-called “tax cut for the rich”) into law.
Anyone who pays attention to the Bureau of Economic Analysis's quarterly reports on GDP and its growth rate knows that this economy has seen no less than a 3.3% quarterly growth rate since the first quarter of 2003. That's a span of nearly three years! The best streak Clinton can take credit for is a meager six quarters (from 1998q3 to 1999q4). After that last period of prolonged prosperity, Clinton saw one quarter over 2.1% economic growth (6.4% in 2000q2) and one quarter of negative growth before Bush took office.

The truth is that President Clinton handed President Bush an anemic economy that dragged its feet for three years until the latter signed his tax cut into law. Over the three year period between 2000q1 and 2003q1, the economy averaged a 1.6% growth rate and never exceeded a 2.7% quarterly rate.

Indeed, we are seeing record deficits pile up. Who cares?

Is it slowing down the economy? No, growth is exceeding the Clinton years. Is it hurting employment? No, the economy continues to add an average of nearly 200,000 jobs monthly while the wage rate is increasing with inflation (disproving the "McJobs" theory). Is it causing inflation? No, apart from Katrina-bloated energy prices, inflation is still at a yearly rate of 2%. Is it hurting the value of the dollar in the world market? No, in fact the current value is reminiscent of the January 1997 value when 1 USD bought .82 Euros.

The "Bush Boom" is very real, and it doesn't seem to be slowing any time soon. Bush's pro-growth policies have helped this economy rise from the doldrums that Clinton left it in. If Congress fails to make the Bush tax cuts permanent, and fails to pass the suggested reforms from Bush's bi-partisan tax panel, the growth rate will definitely hit the proverbial glass ceiling and carry the momentum downward. But have no fear, the MSM will clear Congress of any malfeasance and simply take the "Blame Bush" approach.

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