This business cycle could get vicious(Bush screws US for 04 election)

[papau]

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2004/01/07/this_business_cycle_could_get_vicious/

This business cycle could get vicious
By Robert Kuttner, 1/7/2004

IN 1975, POLITICAL scientist Edward Tufte and economist William Nordhaus put forth a theory of the political business cycle. Usually, "business cycle" refers to the normal ups and downs of the economy. Their insight was that the business cycle is influenced by politics.<snip>

But the political business cycle is back with a vengeance, and this time the morning after will be a corker. The only question is whether the damage will be visible before or after Election Day.
President Bush has unleashed the most massive fiscal stimulus program since World War II, with immense deficits that only grow after 2004 as the biggest tax cuts for the wealthiest kick in. He has timed the relatively meager breaks for the middle class for this (election) year.

Meanwhile, Fed chairman Alan Greenspan (up for reappointment in June) is doing his part to fuel the election-year boom. Despite his own misgivings about immense deficits -- he was far from shy about this during the 1990s -- Greenspan has loyally kept mostly silent when it comes to Bush's deficits. More important, Greenspan is pumping up the recovery with low interest rates notwithstanding his earlier concerns about the danger of economic bubbles.

Thanks to this short-term hyperstimulation, Bush might well have his election year recovery. For now, corporate profits are up, the stock market is booming, and there is even a trickle of job growth.

But there is not a reputable economist -- left, right, or center -- who thinks this act can continue beyond a year or two. Bush's own treasury secretary, John Snow, and his chief economist, Greg Mankiw, both warned about this danger in their previous lives.

As the deficits spin out of control, interest rates will rise. If Bush is reelected, the deficits would also be used as justification for a round of cuts in social outlays that would make Bush's program cuts to date look like mere tinkering.<snip>