The president spoke to the Economic Club of New York on Friday, delivering a speech that was apparently intended to help reassure the markets and investors that the Bush administration is aware of the economic downturn, and is prepared to take steps to address the problem.
I think it’s safe to say that Bush came up short. When more people appear exasperated by a speech than reassured by it, it’s not a good sign. By the time the president told his audience, “You’ve helped make our country really in many ways the economic envy of the world,” most of the people listening were probably thinking to themselves, “Really?”
The NYT’s Gail Collins noted that it was hard not to “wonder what the international financial community makes of a country whose president could show up to talk economics in the middle of a liquidity crisis and kind of flop around the stage as if he was emcee at the Iowa Republican Pig Roast.”
We’re really past expecting anything much, but in times of crisis you would like to at least believe your leader has the capacity to pretend he’s in control. Suddenly, I recalled a day long ago when my husband worked for a struggling paper full of worried employees and the publisher walked into the newsroom wearing a gorilla suit.
The country that elected George Bush — sort of — because he seemed like he’d be more fun to have a beer with than Al Gore or John Kerry is really getting its comeuppance. Our credit markets are foundering, and all we’ve got is a guy who looks like he’s ready to kick back and start the weekend.
If you haven’t seen it, the speech is worth reading, if for no other reason because it’s amazing how odd Bush’s priorities seem. In the midst of a mortgage crisis, credit crunch, plunging dollar, weak growth, and stagnant employment market, the president emphasized urging Congress to “cut the number of, cost of earmarks in half,” and make his fiscally ridiculous tax cuts permanent.
As the NYT editorial board noted today, “This was too far afield of reality to be dismissed as simple cheerleading.”
Mr. Bush said he was optimistic because the economy’s “foundation is solid” as measured by employment, wages, productivity, exports and the federal deficit. He was wrong on every count. On some, he has been wrong for quite a while.
Mr. Bush boasted about 52 consecutive months of job growth during his presidency. What matters is the magnitude of growth, not ticks on a calendar. The economic expansion under Mr. Bush — which it is safe to assume is now over — produced job growth of 4.2 percent. That is the worst performance over a business cycle since the government started keeping track in 1945.
Mr. Bush also talked approvingly of the recent unemployment rate of 4.8 percent. A low rate is good news when it indicates a robust job market. The unemployment rate ticked down last month because hundreds of thousands of people dropped out of the work force altogether. Worse, long-term unemployment, of six months or more, hit 17.5 percent. We’d expect that in the depths of a recession. It is unprecedented at the onset of one.
Mr. Bush was wrong to say wages are rising. On Friday morning, the day he spoke, the government reported that wages failed to outpace inflation in February, for the fifth straight month. Productivity growth has also weakened markedly in the past two years, a harbinger of a lower overall standard of living for Americans.
Exports have surged of late, but largely on the back of a falling dollar. The weaker dollar makes American exports cheaper, but it also pushes up oil prices. Potentially far more serious, a weakening dollar also reduces the Federal Reserve’s flexibility to steady the economy.
Finally, Mr. Bush’s focus on the size of the federal budget deficit ignores that annual government borrowing comes on top of existing debt. Publicly held federal debt will be up by a stunning 76 percent by the end of his presidency. Paying back the money means less to spend on everything else for a very long time.
Given all of this, is it any wonder we’re starting to hear more comparisons between Bush and Herbert Hoover?