The Myths and Harsh Effects of Bush's Economic Class War

By Larry Beinhart, AlterNet. Posted April 28, 2008.

George Bush came into office. There was a recession almost immediately. Officially it began in March of 2001 and, officially, it ended eight months later.

The causes of that recession are vague and amorphous, generally credited to the "business cycle."

There is, in addition, a minor Republican industry dedicated to backdating the onset by five months, to November 2000, in order to make it a Clinton recession. Or, to inadvertently say that the very election of George Bush screwed up the economy; he didn't even have to come to power.

Bush came in with a plan for tax cuts. Originally, that was based on the government having a surplus, and it was packaged as giving people their own money back. When the surplus disappeared, due to the recession and the tax cuts, he kept pushing the tax cuts as a jobs and stimulus package. The economy went into "recovery" by 2003.

The administration claimed that the recovery was due to the tax cuts. It was an odd and rather limp recovery. Indeed, it was a mysterious one and the mystery was that the United States was still losing jobs. This was considered inexplicable.

The administration claimed that the weakness in the economy was due to 9/11 and being in a war. The very same people who used that story would have been the first to say that Roosevelt and the New Deal did not bring the United States out of the Depression, it was World War II that did it. Historically, wars have produced booms. But their war was somehow different.

Nonetheless, the five years from 2003 to 2007 are now routinely described as having been a "boom," a time of "robust" growth, low inflation, and low unemployment. Now we are in, or facing, a recession.

This recession was brought about by a specific overexpansion, the "subprime lending bubble."

This has caused turmoil in the credit markets.

The cure is a "stimulus package." It consists of two parts. Low interest rates and giving cash out to every American, in the hopes that we will "consume" our way out of trouble. It's hard to tell how much anyone believes this will work, but Republicans and Democrats have all signed on, no one is saying it's nonsense or pointing out the obvious -- that's the horse that brought us here. Here's the reality.

The recession of 2001 never ended.

At least not for ordinary Americans.

Ordinary Americans found that their income was declining. From 2001 to 2007, median family income declined -- depending on where you get your figures from -- by somewhere between $500 and $1,000. Median individual income went down by at least $1,000.

The yearly average number of new private sector jobs created from 2001-2008 was just 369,000, not even keeping up with the growth in population. It should be compared to the average number of new private sector jobs created from '92 to 2,000: 1,760,000 per year.

The number of people in manufacturing jobs decreased by over 3 million.

The number who got healthcare at work went down, from 64.2 million to 59.7 million. The number of people without healthcare went up from 38.4 to 46.9 million.

The number of people in poverty increased from 31.6 million to 36.5 million.

The value of America's businesses, at least as measured by the stock market, did not go up. An astonishing thing in what was called a boom. Meantime, the cost of living went up.

Home heating oil went up about 150 percent. Gas at the pump at least doubled. The cost of health insurance went up about 50 percent. The cost of college went up about 30 percent. Now food is going up. How can the myth and the reality be so different?

Part of it is the standard theology and story telling about free markets and America always being No. 1 and the envy of the world. Add to that the great grasp of media manipulation on the part of the administration, the herd mentality in politics, the media even, and especially among economists.

The key fact is this: During the Bush administration the U.S. economy "grew" by 37 percent. Give or take, plus or minus, but something around there

What has been ignored is what that growth consists of. And even more, what it cost.

The middle class has shrunk and is less well off. So the growth isn't there.

The stock market is flat, so it's not in business. Manufacturing jobs have been dramatically reduced, so it's not there.

See more stories tagged with: economy, bush, spin, recession, debt

Larry Beinhart is the author of "Wag the Dog," "The Librarian," and "Fog Facts: Searching for Truth in the Land of Spin." All available at nationbooks.org.

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