Monday, February 07, 2005

Rolling Along: The U.S. economy produced another 146,000 jobs in January. That's not as high as some people would have liked, but it's still more good news about the economy. Oh, and that January number gives President Bush a small net gain of jobs during his first term. That's right, despite opponents' claims to the contrary, Bush is not the first president since Herbert Hoover to have a net loss of jobs created.

And that just makes me wonder why has there has been all this talk of doom and gloom about the economy. Did Democrats really expect us to buy the argument that times now are comparable to the Great Depression?

The fact that jobs increased under Bush, however small, is pretty remarkable. The economy will always have its ups and downs. Rarely, though, will a change in direction coincide exactly with the change of presidents. The economy began to go downhill just as President Clinton was leaving office, letting Bush inherit a recession.

Now I don't blame Clinton for the recession any more than I give him credit for the record economic expansion during the 1990s. As I've said repeatedly, the president has no direct control over the economy. He has some indirect influence, namely with taxing, spending, and controlling some regulations. And any action a president takes will not cause immediate change. It takes at least a year or two for the economy to respond.

The phenomenal economic growth during the 1990s was mostly due to the tech-boom, growth of the Internet in commerce, and the dot-com bubble. That's how we were able to erase budget deficits and produce surpluses without significantly raising taxes or cutting spending. Clinton and the Republican Congress deserve credit for not screwing up the economy, which is something we should not take for granted. But neither of them created it. The American workforce did that.

But the irrational exuberance had to come to an end. And the downturn in the economy happened under Clinton's watch. There's nothing he could have done to have prevented it. Then Bush came to office only to see a massive terrorist attack a nerve center of our economic and financial might. 9/11 hurt our economy. There was little for Bush to do about the inevitable recession except to cut taxes, maintain government spending, and encourage people to buy things. Then all there was to do was wait.

Instead, as we know, Bush decided to spend like a teenager with a stolen credit card. Small deficits are necessary to ward off recessions. But what Bush did was inexcusable.

So while there is plenty to criticize about Bush concerning the deficits, there's not much that can be said about his handling of the economy. Nobody can point to anything that he's done wrong. All critics do is exaggerate how bad things are now and say things were better under Clinton. But the economy of the 1990s was an anomaly. We can't realistically expect that to continue. The slow growth that we're seeing now is more in line with a typical healthy economy.

Right now the unemployment rate is 5.2 percent. When Clinton was re-elected with a fantastic economy, unemployment was 5.4 percent. And, just so you know, Germany currently has a 12.1 percent unemployment rate.