Bush and the Republicans Are Not to Blame for the Recession, Part I: The Bush Prosperity

           In my last post, I explained that presidents in particular, the federal government as a whole, or even government in general receive too much credit or blame for the economy, which is not even the responsibility of government.  Government is charged with the primary duty of protecting liberty, which itself necessitates some harm to the economy in the form of taxation, in exchange for the benefit of allowing commerce.  Nevertheless, it is possible to analyze the economic affects of specific government policies. 

As I noted in my May of 2009 post, The Economy, Deficit and Debt at George W. Bush’s Inauguration, http://williamcinfici.blogspot.com/2009/05/economy-deficit-and-debt-at-george-w.html the economy had been experiencing a downturn since 2000, during the Clinton Administration.  Bush took office in 2001. 

The tax cuts Bush signed into law began to stimulate economic growth, but before they could fully take effect for that tax year, the September 11 Terrorist Attacks occurred, which represented a trillion-dollar blow to the economy.  As expected, the economy went into a recession, although it was mild and brief.  By 2002 the economy was in recovery, on its way to five or six years of prosperity.  The 2002-2007/8 period of relatively robust economic growth was characterized by low unemployment (and the creation of 8 million jobs), low inflation (despite sharply higher oil prices since 2005) and low interest rates, which combined to increase personal income and decrease poverty. 

Then the current recession began in 2007 or 2008, which seems to have made people forget about the lengthy period of prosperity that immediately preceded it.  It is difficult to understand how Bush’s policies were responsible for several years of prosperity, and then suddenly could have been supposedly responsible for an economic downturn, if the apparently contradictory belief that presidents are chiefly responsible for the condition of the economy is true.

It should be noted that perhaps the most significant contribution Bush and the Republican Congress made for the economy were their policies that prevented any further terrorist attacks after September 11, in addition to fulfilling the primary government responsibility of protecting liberty.

In the next post in this series, I shall identify the real causes of the current recession and the factors that exacerbated it.