Bush is a 'laissez-faire' master…or he's just lazy

During the last few years there have been many instances where Republicans seemed to be disconnected from reality; obviously the biggest one is their disconnection from the realities in Iraq and Afghanistan. However, as a business student I can’t help but notice Republicans’ detachment from the bleak realities surrounding our current economy, since they continue to fawn over George Bush’s mastering of “laissez-faire” economics. Just last month, Fred Thompson stated Bush’s handling of the economy was the “greatest story never told.” Certainly, the two main headline numbers (GDP, unemployment) might suggest this opinion, however, a deeper look reveals Republicans are again disconnected from reality.

So far “Bush’s economy” has had the lowest rate of job creation in the last 40 years. According to data from the National Bureau of Economic Research, the annual compound rate of job growth under his presidency has been a paltry 1.26 percent. What this 1 percent basically means is that the United States workforce is several million workers smaller than it should be, and you don’t need to take economics to know that’s a bad thing. However, not only is America not living up to its economic potential during Bush’s presidency, but American workers are also not receiving fair compensation as wages have stayed stagnant for the duration of this “expansion.”

According to the Census Bureau, from 2001 to 2006 the median income rose from $42,228 to $48,201. However, these numbers aren’t adjusted for inflation; once they are, it’s clear the real wages of average working Americans have not increased during the Bush presidency. Not helping Americans’ wallets either is that our dollars don’t go as far as they used to now under Bush’s economic leadership, or lack thereof. Since 2001, the dollar has lost more than a third of its value and is now the lowest it’s been in over 20 years. This is important because it raises the cost of our imports, including oil and food products, which are hitting all-time highs and will continue to do so as our dollar weakens.

However, while the wages of average Americans are under duress, “shockingly,” the salaries of the richest Americans continue to skyrocket during Bush’s presidency. In October, Internal Revenue Service (IRS) data revealed that the richest one percent of Americans earned 21.2 percent of all the income in 2005 (IRS’s most recent date of data), which is up from 19 percent a year earlier. The IRS claims the last time wealthy Americans had such a high percentage of the national income pie was during the 1920s, also known as the “Gilded Age.” By the way, when asked about this report highlighting the growing gap between rich and poor, the President said, “Our society has had income inequality for a long time.” How insightful.

However, poor job and wage growth in America tells only part of Bush’s economic legacy. More importantly, the foundation of Bush’s economy is terrible and is starting to crumble right before our eyes. This leaves the American economy with a very uncertain future.

The most serious problem facing the current American economy is crippling debt. Sure, debt has always been around as a result of our cultural proclivity to spend, but our nation’s debt problems have substantially worsened under this president’s watch. The Federal Reserve reports that at the beginning of the Bush presidency, total household debt outstanding totaled $7.680 trillion dollars (75 percent of GDP). In July 2007, total household debt outstanding increased to $13.331 trillion (97 percent of GDP). That’s a 73.56 percent increase in debt in just six years. Clearly this massive debt burden is a direct reflection of our president’s own “fiscally responsible” behaviors in office, as Bush has single-handedly increased the national debt by more than $3 trillion, from $5.6 trillion to $9 trillion.

Granted, all this debt doesn’t necessarily mean the U.S. will stop growing; it’s not like there’s some magic economic line that says “debt above this level is bad.” However, when you look at recent financial headlines it’s starting to look like we have reached our debt limits as countless credit defaults have emerged in the real estate market and could spread to other parts of the economy. In the past few weeks Citigroup, Merrill Lynch, Morgan Stanley and other big banks have reported nearly $40 billion worth of mortgage defaults on their books. Furthermore, just this week Bloomberg reported that mortgage defaults from millions of American homeowners could total over $400 billion.

As a result of this sharp rise in defaults from credit-strapped Americans, many experts are now anticipating banks to dramatically cut the amount they lend to businesses and consumers. This reduction in credit will severely stunt future economic growth for several months, likely leading to a recession in 2008. Certainly sounds like what you’d expect from the “greatest story never told.”

Patrick Molnar is a business junior and a Mustang Daily liberal columnist.