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.