George W. Bush on Budget & Economy
President of the United States, Former Republican Governor (TX)
For a statist like President Obama, a door cracked for the federal government to solve a national crisis is an open door for pursuing his agenda, behind which is creeping socialism. He sees this as a crisis that must not go to waste.
But he did not fight for fiscal conservatism with the same fervor with which he pursues the freedom agenda in his foreign policy. He was dubbed by the Republican-friendly columnist Fred Barnes in the "Weekly Standard", "a big government conservative." I am not sure that's fair to the President or to the term conservative. There is no such thing as a "big government conservative." It is an oxymoron. I do think George is basically a conservative man who believes in God, in the greatness of America, in the protection of life, and in protecting our nation from our enemies. That's a pretty good record if you ask me. But he also seemed unwilling to fight spendthrift congressional Republicans for the sake of his larger goals.
I worked closely with Congress to meet my spending targets--or, as I called it, the overall size of the pie. I didn't always agree with how Congress divvied up the pieces.
It is fair to debate those policy choices, but here are the facts : The combination of tight budgets and the rising tax revenues resulting from economic growth helped drive down the deficit from 3.5% of the GDP in 2004 to 2.6% in 2005, to 1.9% in 2006, to 1.2% in 2007.
The second President Bush had some good ideas, but he turned out to be a weak negotiator with the Democrats. Wasteful spending and earmarks expanded dramatically under Bush II and the Republican majority. The Bush tax cuts pulled the economy out of recession, but government spending and debt increased to historic levels. The number of Americans who were dependent on some government service reached the highest level in history. I began to question if President Bush and the Republican leadership shared my sense of urgency to stop America's slide toward socialism.
Overall federal spending is up 42% under Bush, and CBO projects further upward pressure on spending, including rising interest rates pushing up the cost of servicing the swelling national debt, and rising medical costs and Bush’s new prescription drug benefit pushing up the cost of Medicare. (Neither item is counted in the “discretionary” category).
KERRY: I’ll tell you exactly how I can do it: by reinstating what Pres. Bush took away, which is called “pay as you go.” During the 1990s, we had pay-as-you-go rules. If you were going to pass something in the Congress, you had to show where you are going to pay for it and how. Pres. Bush is the only president in history to [rescind pay-as-you-go]. I’m going to reverse that. We’re going to restore the fiscal discipline we had in the 1990s.
BUSH: I’ll tell you what PAYGO means, when you’re a senator from Massachusetts, PAYGO means: You pay, and he goes ahead and spends. He’s proposed $2.2 trillion of new spending, and yet the so-called tax on the rich raises $800 billion by his account. There is a tax gap. And guess who usually ends up filling the tax gap? The middle class.
We can also help by having a world of free trade. One of the concerns is if the economy were to slow down like ours, the protectionist sentiments around America might start bubbling to the surface. Ours is an administration dedicated to free trade. Free trade is good for America. And, finally, we need to have lower taxes, instead of bigger government.
GORE: I think that the American people deserve credit for the great economy that we have. And it’s their ingenuity. I agree with that. But they were working pretty hard eight years ago, and they had ingenuity eight years ago. The difference is, we’ve got a new policy. Look, we have gone from the biggest deficits to the biggest surpluses; we’ve gone from a triple dip recession during the previous 12 years to a tripling of the stock market. Instead of high unemployment, we’ve got the lowest African-American and lowest Latino unemployment rates ever in history, and 22 million new jobs.
Bush also said he would target wasteful spending by restoring a version of the line-item veto and installing a commission to recommend pork-barrel projects for elimination. [Bush proposes] devoting the off-year in the biennial budget process to examining which government programs should be eliminated.
House and Senate members said Bush’s ideas would get a respectful hearing on Capitol Hill, although proposals requiring Congress to relinquish power over the nation’s purse strings likely would encounter resistance.
Insofar as the program was successful, as a stopgap, it was because it was secret--a fundamental violation of long-standing principles of corporate accounting, where the source of each dollar is supposed to be clear. As to any structural solutions, both the Fed and the Treasury ducked, as did the Bush administration, because acknowledging the need for dramatic action and then forcing architectural changes in the system would have undermined "confidence in the markets."
They probably did the same with the funds Obama gave away at the start of his term. According to one study , "most Americans saved their 2008 stimulus checks and only about a third of consumers spent them." mortgage payments. They are saving the money, not spending it. That's the smart thing to do--but it doesn't help the economy.
Americans took the stimulus checks Bush sent out in 2008 and put them in their bank accounts.
A: We have a deficit because this country went into a recession. You might remember the stock market started to climb dramatically six months before I came to office, and then the bubble of the 1990s popped. That cost us revenue. Secondly, we’re at war. And I’m going to spend what it takes to win the war, more than just $120 billion for Iraq and Afghanistan. We’ve got to pay our troops more. We’ve increased money for ammunition and weapons and pay. And homeland security. We went from 10 billion to $30 billion to protect the homeland. And plus we cut taxes for everybody. Everybody got tax relief, so as to get out of the recession. If you raise taxes during a recession, you had the depression. I proposed a plan, detailed budget that shows us cutting the deficit in half by five years. And you’re right, I haven’t vetoed any spending bills because we work together.
BUSH: We can cut the deficit in half over the next five years.
FACTCHECK: Not mentioned: The projected federal surplus at the end of Bill Clinton’s term have now turned to a projected federal deficit of $1.4 trillion over the next 10 years, due to Bush’s two large tax cuts, large increases in federal spending, and an economic downturn. Also not mentioned: A 12.3% rise in discretionary federal spending last fiscal year followed by a 9% rise this fiscal year, as estimated by the Congressional Budget Office.
Bush’s budget plan will conclude that the national debt held by the public. White House officials said their position is not the result of a political or a policy decision, but a reflection of the fact that a portion of the debt in the form of a variety of bonds is not easily redeemable, either because it would be too expensive to do so or because its holders would be unwilling to part with it.
The NY Fed lent AIG $85 billion in return for 79% of AIG's shares.
I wished there were some way to hold individual firms to account while sparing the rest of the country. But every economist I trusted told me that was impossible. The well-being of Main Street was directly linked to the fate of Wall Street.
If credit markets remained frozen, the heaviest burdens would fall on American families: steep drops in the value of retirement accounts, massive job losses, and further falling home values. " I understand the frustration of responsible Americans who pay their mortgages on time, and are reluctant to pay the cost of excesses on Wall Street," I said. "But not passing a bill now would cost these Americans much more later."
At the same time, we must be careful not to overcorrect. Overregulation slows investment, stifles innovation, and discourages entrepreneurships. The government should unwind its involvement in the banking, auto, and insurance sectors. And the financial crisis should not become an excuse to raise taxes, which would only undermine the economic growth required to regai our strength.
Above all, our country must maintain our faith in free markets, free enterprise, and free trade. Democratic capitalism, while imperfect and in need of rational oversight, is by far the most successful economic model ever devised.
Free-market fundamentalism didn't fail because our leaders didn't execute it well enough. In fact, during his time in office (until the economic house of cards finally collapsed at the end of his presidency) Pres. Bush and his team did a bang-up job executing a defective theory. The problem isn't just the bathwater; the baby itself is rotten.
Even Alan Greenspan finally saw the light, saying in Oct. 2008 that he "made a mistake in presuming that the self-interests of banks were such that they were best capable of protecting their own shareholders."
Many, including Bush, lay the blame on a few rotten apples: "Wall Street got drunk." He said. Maybe so, but who made the Bush years a nonstop happy hour and kept serving up the drinks?
Let's start with the bursting of the housing bubble and the foreclosure crisis that followed. That bubble was no accident. Fueling the boom was the development of securitized mortgages--including collateralized debt obligations (CDOs)--in which mortgages of varying degrees of risk were bundled together. The Fed did its part, too, contributing extremely low-interest rates and lax oversight.
George W. Bush and the GOP also helped inflate the bubble by pushing to dismantle some of the barriers to homeownership-- part of Bush's vision of "an ownership society" that sought to, as he put it in his second inaugural address, "give every American a stake in the promise and future of our country." The road to hell continues to be paved with good intentions.
Who would have thought that a Republican president (claiming that he had "abandoned free market principles to save the free market system") would push for an unprecedented $700 billion bailout of Wall Street and later, Detroit? Who could have guessed that this wholesale abandonment of constitutional restrictions on the power of unelected bureaucrats would receive such a tepid response from a Beltway policy community that ostensibly existed to boldly challenge such bad ideas? In the process guaranteeing future bailouts and bolstering the political culture of "too big to fail"?
This story has all the markings of a classic Greek tragedy, doomed to be repeated again and again.
Our bill would have subjected Fannie Mae and Freddie Mac to the kinds of federal regulation that banks, credit unions, and savings loans have to comply with. No Democrat supported it. The economic danger didn't faze Fannie or Freddie's congressional allies, who ranted at Bush officials who testified on the need for reform.
When Freddie Mac and Fannie Mae collapsed at the end of 2008, after housing values had dropped 12.8% since 2006, they were the accelerant that turned a minor economic downturn into a worldwide calamity.
The leadership agreed to move rapidly on a bailout bill. Two days later, Paulson presented his proposal to Congress: a three-page request for $700 billion with essentially no strings attached. Both partied recoiled from the plan, but their respective leaders began trying to build a workable bill around it.
[After discussion by Obama and McCain and others], Bush had heard enough. He stressed how important it was that some kind of deal happen quickly. "We can't let this sucker fail," Bush said, and, with that, the meeting was over.
Bush was dumbfounded by McCain's behavior. He'd forced Bush to hold a meeting that the president saw as pointless--and then sat there like a bump on a log. "Unconstructive," thought Bush. "Unclear. Ineffectual."
McCain told his aides the reason he was silent was that, from the moment the Democrats deferred to Obama, he knew that the meeting would accomplish nothing.
Bush may never have brought our country this far down the road of Obamanomics--he may not have taken over the most important manufacturers, tied a tight harness around our energy companies, and turned the health sector into a managed economy--but with his flood of bailouts in 2008, especially the Great Wall Street Bailout, Bush got the tank of state rolling over the country's tradition of free enterprise--and Obamanomics is just the next gear.
Had Bush governed in 2008 according to the free-market principles he espoused for eight years, Obama wouldn't, politically, have been able to do what he has done.
When that doesn't work, the stock markets continue to fall, and Goldman Sachs pleads for more help.
A $700 billion bailout of Wall Street, borrowing the money from future taxpayers in order to buy bad assets from banks is an unprecedented, open-ended intervention into the US economy: a slush fund for the president to give private businesses billions of dollars that don't really exist.
The result was a bloodbath for Republicans in the 2008 election and the installation of a powerful majority of Democrats who believed they were elected with a mandate to expand government regulation and control of the financial market. Democrats believed the financial and economic crisis was caused by deregulation and a failure of capitalism. They are now working to further centralize government power over the financial markets in the US and internationally.
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George W. Bush(R,2001-2009)
George Bush Sr.(R,1989-1993)
John F. Kennedy(D,1961-1963)
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