Now I’m well aware George W Bush’s presidency ended over a month ago. However, given this is my blog’s kickoff, I would feel remiss if I were completely left out of the Bush bashing parade. There just seems to be a vacuum now that he’s gone, which leaves me in an awful nostalgic mood. As a matter of fact, the extraordinary decline in consumer demand for anti-Bush merchandise since he gracelessly left office is one fascinating theory of how the financial crisis got so bad in the first place. So hey, I’m just doing my part to prime the proverbial pump.
I’m going to take a little different approach than most have and call Bush out for his distinctly free market hating policies. I think the idea that Bush was somehow fond of unregulated, dog eat dog, laizzez-faire capitalism in all of its creatively destructive glory is an extremely important myth to bust. Why? Well since our economy is crumbling all around us, people are desperate to run away from whatever we were just doing as fast as Keith Olbermann can decline a debate. Therefore, it’s critical to know just exactly what it is we were doing before we start running.
Unfortunately, the “Bush was a free marketer” myth is more or less ubiquitous these days. Barack Obama has repeatedly said in one form or another, the financial crisis “…is a verdict on the failed policies of the last eight years that said that we should strip away consumer protections, let the market run wild, and prosperity would rain down.” And many others have taken the baton and regurgitated that sentiment en masse (see here and here). But what were those horrible policies? Was the Bush administration really letting “the market run wild?” If they were, then maybe we should try big government again. However, if they were big government policies to begin with, maybe the free market deserves a first chance.
It is true that Bush has said some nice things about the free market, but since when do we believe what politicians say. If you really believe everything Bush says than you must think there are some WMD in Iraq and on another note I have some beach front property in the Mojave Desert you may be interested in. Oh but didn’t Bush cut taxes like three times? Well yes he totally did. He “slashed” the top income tax bracket from 39.6% to 35%. He also added a sixth bracket to our ridiculously complicated tax code. However that’s about where his free wheeling free marketing ends.
The media rarely blames the tax cuts for our financial mess though, instead it repeats ad nauseam that deregulation was the key to our current crisis. I’ll leave refuting this claim to another article, but the key here is Bush has not been a deregulator. The main piece of legislation proponents of the “deregulation theory of financial collapse” point to is the Gramm-Leach-Bliley Act that repealed much of the Glass-Steagall Act, effectively breaking down the barriers between commercial and investment banks. The problem is that this piece of partial deregulation was passed during Clinton’s presidency in 1998 (and voted for by Joe Biden by the way).
In reality, Bush’s presidency has been an eight year long string of red tape. The Bush administration added a staggering average of 76,526 pages to the federal registry each year. In 2002, he signed off on Sarbanes-Oxley, one of the most overbearing regulations since the New Deal. The SEC alone saw it’s budget triple over eight years, which of course wasn’t quite enough to catch a 50 billion dollar, decades long ponzi scheme. The Bush administration increased federal spending on regulatory agencies by 6.5% per year (adjusted for inflation) and staffing by 6.3%. That’s more than any president since Richard Nixon (another president bestowed with the “free market” myth).
Even more damning is the federal budget. Bush was the first president to ever push the federal budget over 2 trillion (yes trillion with a t) and then just to shatter the record Michael Phelps style, he was the first to push it over 3 trillion as well. In his first term Bush increased total budget expenditures by 25.3% and non-defense discretionary spending by 19.7%. Both were the largest increases since the Nixon/Ford presidency from 1972-76. Bush’s second term was no better.
In eight years, Bill Clinton only increased the budget from 1.41 trillion to 1.86 trillion, a 32.2% increase which is notably not adjusted for inflation. As a percentage of GDP the budget fell from 21.4% to 18.5%. Under eight years of Bush the budget increased from 1.86 trillion to 3.11 trillion, an uncanny 66.8% increase. However, that figure does not include either war or the 700 billion dollar bailout. If we include the wars and the multitude of bailouts, Bush’s budgetary madness parallels the eight years of New Frontierin’ in the Great Society under Kennedy and Johnson, which saw the budget increase 87.9%. As a percent of GDP, by 2009 the budget had jumped back up to 20.7%. In contrast, the highest percentage of GDP spending reached during either the Kennedy or Johnson administrations was 20.6% in 1968.
Fiscal conservatives should also hate budget deficits, but Bush sure doesn’t. The deficit may exceed a trillion dollars this year and the total debt has ballooned from 5.6 trillion dollars to 10.7 trillion dollars! Even more startling are the unfunded liabilities (what we would need to have invested in treasury bills to meet future entitlement obligations) which now stands at an incomprehensible 65.5 trillion dollars!
So how did he do get the budget so bent out of shape? Well with conservative things such as the biggest entitlement package since the Great Society in Medicare Part D. A piece of legislation David Walker, the former comptroller general of the GAO, called “a poster child for what not to do when considering new legislation.” Or perhaps it was doubling the size of the Department of Education, a department Reagan campaigned on abolishing. Or maybe it was two wars that the Congressional Budget Office estimates will cost the United States an absurd 2.4 trillion dollars (along with many lives) in economic output by the time they both end. Or just possibly it was his massive wealth redistributing, failure rewarding bailout of bankrupt financial firms. Or could it have been his end around Congress to bail out the auto industry. Hey, maybe it was his own 150 billion dollar stimulus package in 2007.
All this brings us to an obvious conclusion: Bush was not a free market president. This reality is confirmed by the The Fraser Institute, which releases country-by-country rankings for economic freedom every year with a 10 being completely free and a 0 being completely unfree. In 1990, the United States had a 7.8 ranking. After Clinton (albeit with a Republican congress most the time) the United States’ ranking went up to 8.6 in 2000. By 2006, Bush had let it fall back to an 8.0 and it will likely sink further after all this bailout mania. Canada, with all its universal health care, has an 8.1 ranking.
So how on Earth is Bush a fiscal conservative? How is he even conservative? Aren’t conservatives in favor of the free market and federalism while being weary of big government? Well empty suit, talking head, political hack Fred Barnes took up the issue in 2003. As he wrote in The Weekly Standard, Bush is “a big government conservative.” George Bush and his administration “simply believe in using what would normally be seen as liberal means–activist government–for conservative ends.”
Ahh, big government conservatism: a delightful oxymoron akin to centralized federalism, Darwinian Creationism and environmentally friendly nuclear explosions. One simply can’t be conservative in any simultaneously American and non-Orwellian sense with out being pro-free market and one simply can not be pro-free market while massively increasing the size of federal government. There are many, especially on the left, who accuse Bush of increasing the size of government to simply ally with big business and rip off the taxpayers, but that is aside the point. Corporatism is not capitalism! So if you want to blame corporatism for the mess we’re in, that’s fine. But perhaps, just perhaps, capitalism, real capitalism is a better way out of this mess than big government. Big government is after all what we were just doing.