The Bush Economy by Karl Rove

While Mark Thoma has a few words about the partisan garbage Karl Rove delivered to the American Enterprise Institute, let me start here:

The economy itself began slowing in the third quarter of 2000 as GDP declined by an annual rate of 0.5 percent. And all of this took place before George W. Bush set foot in the Oval Office.

Rove fails to admit that during the fourth quarter of 2000, real GDP increased by an annual rate of 2.1% and that for the entire year, real GDP rose by 3.7% – which just happens to be the average rate of increase for the Clinton tenure in office. Compare that to the meager performance of real GDP during the 2001 to 2005 period. Employment growth – as measured by the payroll survey – was very strong during the Clinton years with employment continuing until March 2001. Employment growth since Bush took office has been pathetic. And before any of the household survey freaks jump in, let me remind them that the employment-population ratio (from the household survey) stood at 64.4% when Bush took office but was only 63% as of April 2006.

Rove describes Bush’s economic policies thusly:

And he believes that economic growth is created largely on the economy’s supply side. The best tax cuts create incentives for people to work and businesses to produce and companies to invest. President Bush doesn’t believe government creates wealth. He understands that’s done by American workers, farmers and entrepreneurs. His economic policies, then, are tied to a view of human beings that understands the role of incentives in shaping behavior. There are three important elements of these policies that I’d like to talk about today: the tax system, trade liberalization and budget discipline. The president believes when the economy falters, tax cuts will lead to economic prosperity. This reflects a deep faith in individual citizens; in their energy and common sense and capacity to make wise decisions. His view of free trade is grounded in the knowledge that American producers and workers can compete and win internationally as long as the rules are fair. And an emphasis on a responsible federal budget reflects the president’s belief that, while government should actively perform its core functions, it should not impede the efforts of individual citizens and enterprises to create jobs, wealth and economic opportunity. Let me deal briefly with each one of these three: taxes, trade and spending.

The premise that Bush has promoted a free trade agenda is a JOKE. So let’s turn to fiscal policy where Bush has pretended to give us our money back – but rather than cut government spending, he has allowed it to increase as a share of GDP. Of course, the Bush cheerleaders wish to tell you that despite the fact that national savings has declined since 2000, Bush’s economic policies have somehow led to more long-term growth. Of course, the facts don’t support this spin.

But Karl wants the Bush Administration to get credit for a wonderful labor market:

The American economy has created more jobs than all the countries in the Euro zone and Japan combined, and our economy is growing today faster than that of any major industrialized nation in the world. It grew at an annual rate of 4.8 percent in the first quarter. It added more than 5.2 million jobs in the last two and a half years. Employment is at near all-time high. Claims for unemployment insurance are at a five-year low. The unemployment rate is 4.7 percent; well below the average for each of the last three decades.

So I guess Karl’s fuzzy math says 63% is greater than 64.4%?!

Let’s face it – George W. Bush sent Karl Rove to the AEI to flat out lie. But then what’s new?

Update: David Altig does his best to defend Karl Rove’s speech.