Democratic Underground

Depression Watch: #2 When Life Handed Bush a Bowl of Cherries, He Made Lemons
December 10, 2001
Jerald Cumbus (JCMach1)

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It is no mistake my column this week begins with a mixed metaphor:  a mixed message of clichés.  It was almost exactly one year ago that the mixed messages began.  Clinton administration officials argued the relative health of the economy despite the debacle.  It was at this time the recession emerged fully developed from the creative engineers of Bush, Inc. as a way to sell their huge tax giveaway to the American people.   On Thursday, December 21, 2000 the Bush Recession began with the Dick Cheney statement that the United States was at "front edge of a recession."  Combined with the month and a half of the election challenge 'the real' economy began its downturn.

Because of the excellent health (with the possible exception of factory orders) this alone would probably have not been enough to tip the scales to negative.  However, events quickly overtook the Bush administration that continued the erosion of the nation's economic health.  Bush's go it alone 'Cowboy' foreign policy left many foreign investors cold.  The China crisis and our arguments with Russia over the ABM Treaty served to reinforce this view.  Add in the California energy crisis and Bush's 'do nothing' policy and you have a recipe for disaster.

Additionally, the effect of Bush pushing his tax cuts cannot be overstated.  Part of the success of the markets over the Clinton years had been the result of taking control of runaway Republican spending and the accumulation of record budget surpluses.  Economists and the market clearly recognized that the Bush tax cuts would lead to new deficits.  All of these factors served to first destroy confidence in a relatively healthy economy and later directly led to the unemployment dive that began in March 2001 which marked the beginning of the Recession proper.

The economic blow dealt by September 11th was like kicking an old lady after she had already fallen down.  It hastened the decline, but did not cause the Recession.  In fact there was some evidence this week that the economic affect of the attack on America may be less than previously thought.  For example, there was a record jump in consumer spending in October.  While unemployment claims dropped by "18,000" last week.  I firmly believe that most of this decrease can be accounted for by people returning to work after employers miscalculated the affect of 9/11 on their businesses.   The unreported news in the Unemployment Insurance Weekly Claims Report was that "The advance number of actual initial claims under state programs, unadjusted, totaled 599,975 in the week ending Dec.1, an increase of  160,533 from the previous week. There were 477,503 initial claims in the comparable week in 2000."  The media completed ignored these important figures.

When you combine an unemployment rise of of 5.7% (the highest in 6 years) and poor retail sales this holiday season, on its one year anniversary, the Bush recession is going strong.  And, because it was directly caused by his administration's policies Bush is more responsible for the economy than almost any other President in recent memory.  Welcome to the Bush recession.

Depression Watch is a continuing series that will explore the numbers, politics, and realities of the US Economy.  Why a Depression Watch?  We are in a Recession -- there is only one thing worse than that.  We here at Depression Watch will keep you informed on this important issue that affects your pocketbook.