Bush v. Kerry: Economic Teams
Brad DeLong argues that Kerry has assembled a fine economic policy team–actually, several of them, as evidenced by a piece in today’s WaPo. Dan Drezner is impressed but is still tentatively on the fence, “sitting and learning.”
I would argue that the near-invisibility of Bush’s economic team goes a long way towards proving a point I’ve been making for years: Presidents don’t much matter in domestic economic matters. The Fed has taken total control of monetary policy for years and fiscal policy operates within a very narrow range. The days of 70% marginal tax rates are beyond us for good and we’ve pretty much cut taxes as far as is likely. Presidents matter more in international trade, since they can encourage open markets or swing toward protectionism but, again, only within pretty narrow bands. Our national instinct is toward free trade with annoying but relatively minor protectionism to protect interest groups favored by the party in power.
By all accounts, Bill Clinton had a superb economic team, especially in the second half. It had guys like Brad DeLong behind the scenes, for example. I’ve always given the team–and Clinton personally–a lot of credit for their strong advocacy of free trade, pushing NAFTA and the WTO. But the boom that dominated Clinton’s tenure in office was already underway when he took over, fueled almost entirely by the full-blown emergence of the World Wide Web, and then burst toward the end of his second term. Bob Rubin and company had little to do with the dot.com boom and virtually nothing to do with the dot.com bust.
Similarly, Bush inherited an economy going into recession. He pushed through some rather niggling tax cuts that had a marginal effect. The 9/11 attack certainly caused a major blow to the economy and the war on terror–as well as some undisciplined spending elsewhere–helped push us back into a large budget deficit. Nonetheless, the economy has recovered nicely. All with an economic team that most news junkies wouldn’t recognize if they were all seated together at the restaurant table next to them with a “Reserved for Bush Economic Team” placard.
I agree for the most part Presidents do not have a control over the economy. Though you are right trade plays a huge role in long term growth and it also plays a role in inflation, the more open trade is the easier it is for the monetary policy price control , which is it’s major objective. The other big thing that a president has that can do good or major damage to the economy is regulation. This again for the most part Clinton stayed away from most of the really bad heavy regulation on us until he was impeached. It was after that impeachment and the Far Left stood by his side that he started imposing more onerous regulation on the country. It also has much to do with deflating the bubble and the slow down at the end of his watch. The Ecomony was not into recession until early 2001 though it had been decelerating for close to a year before that. Clinton also put in many last minute regulatory polices that were very bad and Bush still has not stopped enough of them.
I’ve long held a position that agrees with half of your premise: Presidents can’t help the economy a whole lot, but they can damn sure screw it up. And in a right hurry too, I might add.
the economy has recovered nicely = the economy has not managed to collapse and stock prices have risen
How nice it is depends on whether you have a job, whether you are looking for a job, whether you have ceased trying to look for a job because you have so consistently failed to find one, whether the job you managed to get gives you much less money and no health coverage, whether the job you lost was outsourced to India where it is now being done mariginally worse for much less money, and whether your job was filled out from under you while you serve in the National Guard in Iraq with no health coverage for your stateside family.
If none of these things has happened to you, it’s ok. Not wonderful, but ok. And whether it’s ok or not it is objectively the case that the current president has done virtually nothing to make it even ok, with the possible exception of rehiring Alan Greenspan. He has not even pretended to be doing anything.