Center for Social Theory and Comparative History

Edward Leamer evaluates President George W. Bush’s economic record by considering what were the policy targets, governmental instruments, and background within which actions were taken. He suggests that the targets should have been material well-being, lower economic volatility, greater income equity, and especially a consideration of how policies will affect the future. Instruments for economic manipulation included taxes, state spending and borrowing, regulation, immigration and trade rules. Leamer turns to the environment that takes up most of the rest of the presentation. In particular, he outlines the structural shift to a post-industrial economy, greater globalization and wage repression, the aging of the US population, and higher levels of household and government debt. He concludes his analysis by noting that the Bush administration has failed to use fiscal policy effectively and borrowed too much from abroad undermining a solid foundation for future sustainable economic growth.

Dean Baker begins his talk by rebutting and qualifying some of the points made by Edward Leamer. He notes that Bush did not cause the recession of 2001 rather he inherited a stock market collapse and a trade deficit from the Clinton years. Bush attempted to promote growth with tax cuts. The real return to growth came from the action and inaction of the Alan Greenspan’s Federal Reserve. It lowered interest rates and refused to clamp down on subprime lending. Chairman Greenspan actually encouraged the writing of adjustable rate mortgages. Baker predicts that the bursting of the real estate bubble will cause a severe downturn in the economy because so much of GDP is consumption. He speculates that the dollar will lose its role as the world’s reserve currency but this will be a positive in the long-term because it will make the US economy more competitive. He concludes with some of the economic legacies of the Bush administration.

The accompanying audio files provide the complete recording of the two talks.