Credit Where Due

George W. Bush's advisors, whining to The Washington Post:

For years, President Bush and his advisers expressed frustration that the White House received little credit for the nation's strong economic performance because of public discontent about the Iraq war. Today, the president is getting little credit for improved security in Iraq, as the public increasingly focuses on a struggling U.S. economy.

It's worth saying that these things are doubly-asymmetric. For one thing, the president obviously doesn't control the economy which limits the amount of credit he can get. But for another thing, the economy is usually growing. We're not stuck in some pre-industrial malthusian trap here in the United States. GDP and employment grow in most of the time. So when the economy is growing but we're also mired in a military fiasco, the fiasco tends to occupy the mind. But when the rare event occurs -- financial system shocks, asset price declines, lots of talk of recessions -- people's attention shifts to that.

Meanwhile, though, there's something puzzling about their inability to grasp why their Iraq policy isn't more popular. But in case anyone at the White House is reading, people don't like to see American troops killed in pointless wars. The war in Iraq became pointless some years ago. That the rate of casualties has declined is nice, and should soften public opposition to the war somewhat, but people are still getting killed and the way to get the casualty rate down even further is to end the war.

Comments

"The war in Iraq became pointless some years ago."

I'd actually say that it either was poinless from the getgo or it remains pointful, depending on your perspective. If the point was to protect the United States from existing foreign enemies, terrorist and otherwise, it was doomed to fail from the start. If the objective was to establish more military basing in the Middle East for the sake of projecting power and creating Pax Americana, it's still pointful. it was just a grossly immoral exercise from its conception among the PNAC types in the late 90s.

Posted by Galen | January 28, 2008 3:18 PM

Re "GDP and employment grow in most of the time"
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Yes, but a philosopher of all people should ask WHY that is, what are the forces driving it, and will it continue?

1) What's been BAD about the Bush regime -- and something for which it has NOT been criticized -- is how most of the growth has come from unsustainable sources.

2)Pissing away $4 TRILLION by borrowing some of the money from the CHinese and stealing the rest from the Social Security/Medicare Trust Funds. What happens when you have to shift from running $500 Billion deficits --in the baby boomers prime earning years -- to running $300 Billion SURPLUSED year after year, to cut retirement checks to those baby boomers?

3) We know we're hitting peak oil and yet we've done nothing in the past 7 years to develop alternative energy supplies needed to keep the US economy running.

4) Plus US GDP growth has come not from some technological advancement but simply has matched the growth in US population -- 1 million immigrants per year plus the 12 million illegals not accounted for. So even if the overall pie has grown slightly, the piece of the pie per citizen has not grown much.

5) In a real democracy, the news media would have given us frequent updates on the economic metrics and would have warned us that George W was acting irresponsibly. Instead, I seem to remember hearing most stories about Janet Jackson's tits
and Saddam's nukes.

Posted by Don Williams | January 28, 2008 3:27 PM

I'm counting all the purple fingers in the audience this year, and taking a shot for each one.

I'll be cold sober at bedtime.

Posted by Davis X. Machina | January 28, 2008 3:31 PM

Today, the president is getting little credit for improved security in Iraq

Probably because the same people who are repeating the "The Surge™ Worked!" talking point are the same people who are telling us we're going to stay in Iraq for years and years. For non-political junkies, this is a "victory" without any meaning or value, especially to those sacrificing in Iraq.

"No end in sight." Yippee.

Kinda hard to start a party when you're pissing in your own punchbowl, but such are the idiots who style themselves hawks.
.

Posted by Grand Moff Texan | January 28, 2008 3:31 PM

I'm counting all the purple fingers in the audience this year, and taking a shot for each one.

I'll be cold sober at bedtime.

Posted by Davis X. Machina | January 28, 2008 3:32 PM

the economy is usually growing

Yeah, I remember that when Bill Clinton was praising his record of economic growth, all the Democrats retorted that "the economy is usually growing".

Not.

Posted by Al | January 28, 2008 3:33 PM

"What happens when you have to shift from running $500 Billion deficits --in the baby boomers prime earning years -- to running $300 Billion SURPLUSED year after year, to cut retirement checks to those baby boomers?"

We'll have to cut benefits and raise taxes. There doesn't seem to be much more to it than that. Putting current funds into a rhetorical "lock box" or investing it in the stock market, whatever- those are gimmicks from an electorate unwilling to face the prospects of fiscal reality.

Posted by Helter | January 28, 2008 3:34 PM

Sorry for the dupe. Weirdness re script-blocker here at work.

Posted by Davis X. Machina | January 28, 2008 3:34 PM

Yeah, why don't the media report all the good news which comes out of the White House!

Posted by El Cid | January 28, 2008 3:35 PM

David Leonhardt has a recent column suggesting that Matthew's view of constant GDP growth might have been a ..uh.. mirage.

See http://www.nytimes.com/2008/01/23/business/23leonhardt.html?_r=1&scp=1&sq=Worries+that+the+Good+Times&st=nyt&oref=slogin

Some excerpts:

"The recent financial turmoil has many causes, but they are tied to a basic fear that some of the economic successes of the last generation may yet turn out to be a mirage. "
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"The great moderation now seems to have depended — in part — on a huge speculative bubble, first in stocks and then real estate, that hid the economy’s rough edges. Everyone from first-time home buyers to Wall Street chief executives made bets they did not fully understand, and then spent money as if those bets couldn’t go bad. For the past 16 years, American consumers have increased their overall spending every single quarter, which is almost twice as long as any previous streak.

Now, some worry, comes the payback. Martin Feldstein, the éminence grise of Republican economists, says he is concerned that the economy “could slip into a recession and that the recession could be a long, deep, severe one.” In Monday’s Democratic presidential debate, Barack Obama made the same argument: “We could be sliding into an extraordinary recession,” he said. "
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"The bigger question is how severe the recession will be if it does come to pass. The last two, in 1990-1 and 2001, have been rather mild, which is a crucial part of the great moderation mystique. There are three reasons, though, to think the next recession may not be.

First, Wall Street hasn’t yet come clean. Even after last week, when JPMorgan Chase and Wells Fargo announced big losses in their consumer credit businesses, financial service firms have still probably gone public with less than half of their mortgage-related losses, according to Moody’s Economy.com. They’re not being dishonest; they just haven’t untangled all of their complex investments.

“Part of the big uncertainty,” Raghuram G. Rajan, former chief economist at the International Monetary Fund, said, “is where the bodies are buried.”
--------------
Anyone remember Texas Senator Phil Gramm --the "free market" proponent whose wife Wendy was
on Enron's Board of Directors -- waving to 10,000 of his bankrupt constituents/Enron employees as he skipped gaily off into a lavish Senatorial retirement and highly paid sinecure at a financial services firm??

Posted by Don Williams | January 28, 2008 3:35 PM

For most people, wages + benefits = economy. I think the fact that most Americans hate this President shows he is getting credit for the "economy".

Posted by flounder | January 28, 2008 3:35 PM

Today, the president is getting little credit for improved security in Iraq, as the public increasingly focuses on a struggling U.S. economy.

Someone really needs to tell these morons that the two issues aren't completely decoupled. It almost makes you wonder if Bush thinks the war is being paid for with Monopoly money.

Posted by Jake | January 28, 2008 3:37 PM

Democrats retorted that "the economy is usually growing".

Not.

Probably because that growth was large enough to actually, you know, be observed without the use of a time-lapse camera ... located inside a gated community.

And I haven't heard "... Not!" since before Bill was elected. Thanks for taking me back to the last Republican recession.
.

Posted by Grand Moff Texan | January 28, 2008 3:47 PM

If Bush wants so badly to take credit for the housing boom of 2005, let him. Should he then be blamed for the housing bust of 2007? How many presidents have presided over 2 recessions? And yet they want to be applauded for the country's economy? Sure boys, you guys are the primary movers of the economy (not the free market) and you are truly doing the job. It is all on you. And since things are shitty, you must be doing a shitty job.

In other news, there is a war in the Congo...

Posted by freddiemac | January 28, 2008 3:48 PM

although don williams has implied it, let's simply say it directly: bush didn't get "credit" for a "strong" economy because it wasn't a "strong" economy.

It was a decent economy by GDP growth, a mediocre economy by job growth and median household income, a scary economy by its zero-savings rate, MEW-fueled consumption support, an outstanding economy by profitability, and the most superest most awesome time every to be in the top one-tenth of one percent of households by income.

the weighted average of that isn't "strong."

Posted by howard | January 28, 2008 3:52 PM

back in 2000 when the price of gas was going over $1.00, Bush the candidate talked about how he would "jawbone" OPEC members to keep the price of oil low. Now oil is close to $100/bbl and gas is over $3.00 - and he's bitchin' because he doesn't get credit for the economy? If anything, he hasn't been given enough blame.

Posted by Ethel-to-Tilly | January 28, 2008 4:11 PM

That the rate of casualties has declined is nice, and should soften public opposition to the war somewhat

Hoping that by 'should' you mean 'can be expected to,' without implying that a reduction in opposition would be justified.

Posted by live | January 28, 2008 4:12 PM

"Yeah, I remember that when Bill Clinton was praising his record of economic growth, all the Democrats retorted that "the economy is usually growing".

Not." - Posted by Al

Well Al, it could be because Clinton presided over the highest average annual increase in inflation adjusted per capita GDP of our last 5 presidents, while George W. Bush was only worsted by George H.W. Bush.

All running backs average positive yardage, but some of them have numbers worth bragging, others do not. Whether they deserve credit, or their lines or bad defenses are the reason is harder to decipher.

President, average growth in per capita GDP adjusted for inflation
Clinton 2.47%
Reagan 2.45%
Carter 2.14%
(50 year average 2.08%)
(100 year average 1.93%)
Bush II 1.40% (first 6 years)
Bush I 0.91%

Posted by Njorl | January 28, 2008 4:14 PM

Re Don Williams comments:

1) DON, I've noticed you like enumerated lists.

2) An EXCEPTION to that rule is when you are quoting from another source.

3) While your STYLE is, um, somewhat distinctive, I seldom have any qualms with your content. Here's one though -- do you have a link that might support your claim that "we're now hitting peak oil"?

4) At least Janet Jackson has TITS (artificially enhanced or not) unlike Saddam and his fantasy nukes.

5) Speaking of things MISSING, amen to Davis X Machina's unrelated point about the now you see them now you don't purple fingers.

Posted by Bragan | January 28, 2008 4:18 PM

A point you missed, but that people like Paul Krugman and Dean Baker keep mentioning, is that the growth in the Bush economy has been extremely uneven, and hasn't benefited the majority of Americans. I'd say that's the major reason the administration doesn't get credit for the economy, not the Iraq war; for most people, there's been nothing about this economy for them to credit anyone for.

Posted by beckya57 | January 28, 2008 4:45 PM

Re Bragan's comment "do you have a link that might support your claim that "we're now hitting peak oil"?"
-----------
See Table 1 and Figure 1 of this summary of DOE's Hirsch Report at http://www.acus.org/docs/051007-Hirsch_World_Oil_Production.pdf

See also the numerous citations and links here:
http://en.wikipedia.org/wiki/Peak_oil

Note that the huge growth in demand from China and India will drive rapid depletion in the next 10 years.

Re one outlier --Shell's forecast for a later date for peak oil -- note that Shell had to restate its projected reserves in 2004 and the new figure was 20 percent LOWER than the prior value they had given out.
See http://www.timesonline.co.uk/article/0,,2-960901,00.html

Energy companies stock prices depend greatly upon their stated reserves --since that directly affects their future revenues. Hence, there is pressure for them to overstate those reserves.

Posted by Don Williams | January 28, 2008 5:01 PM

"...but people are still getting killed and the way to get the casualty rate down even further is to end the war."

Dream on. Now that AIPAC has what it's wanted all along (a long term U.S. ground force in the M.E.) it will do everything it can to see that things stay the way they are.

Posted by kafka | January 28, 2008 5:14 PM

Well, I'm looking forward to the improvements the Democrats will surely make in the economy. Maybe they can get the oil price back down to 2001 levels; if they can't nothing else will help much.

Posted by SamChevre | January 28, 2008 5:28 PM

Well, I'm looking forward to the improvements the Democrats will surely make in the economy. Maybe they can get the oil price back down to 2001 levels; if they can't nothing else will help much.

Why do people not understand that borrowing money to pay for a useless war is bad for the economy? You can hide behind cheap Chinese credit for a few years and the specific mechanisms may be hard to identify even once reality hits, but the underlying principle is pretty simple: if you waste hundreds of billions of dollars you will suffer economically.

Posted by mpowell | January 28, 2008 6:20 PM

The economy has been tremendous - in the face of a terrist aggression that stopped civil aviation for weeks and financing wars in Iraq and Afghanistan (wars we are undoubtedly winning)the economy has grown sharply

Norjl is siply full of shit, look at
http://www.bea.gov/national/xls/gdpchg.xls

for real numbers on real (inflation adjusted) GDP
It will show him to be the prevaricator that he is

There is a tremendous hype, fear and resentment industry in this country and the media is pumping it now more than every

Even after the so-called "mortgage" crisis, which is a small slice of neer-do-wells given mortgages that they never should have gotten (and never would have had the clintonists and sharptonists not spent 10 years browbeating banks to give loans to any slob) yet the wealth creation in the past 6 years has been astonishingly high and broadly based

Anyone who will deny this is simply as dishonest (or uninformed) as Norjl. Look at the Federal Reserve statistics on wealth. Sorry, the media scare stories about "savings" say nothing - wealth creation among homeowners and those with pensions (most of us) is unprecendented and does not show up in most "savings" calculations. You should try being honest about the country and world you live in!

Posted by jozef | January 28, 2008 8:16 PM

sheesh, i didn't know they still made 'em like jozef anymore, but i guess i need to get out more.

for some reason, i can't open his link, but i'm betting it will show he neglected to notice the words "per capita" in njorl's comments.

putting that aside, let's see: he mis-states the nature of the "mortgage" crisis as well as its source; he has no understanding of what has passed for "wealth creation" over the past 6 years; he doesn't understand the difference between aggregate statistics and median performance and what it tells us; he doesn't really even understand "savings."

so please tell me he's just a performance artist?

Posted by howard | January 28, 2008 8:55 PM

My guess is he's a Republican - and we all know they're "performance artists".

When they aren't just trolls.

Posted by Richard Steven Hack | January 29, 2008 1:46 AM

Savings, Howard?

Since I am an economist, I know that the mortgage checks most families write every month are largely NOT counted as consumption spending. When people -some of whom write checks equal to 40% of their income - buy houses they are investing a portion of every check and this "savings" component is captured in some national income statistics but not others, particularly not the "personal savings rate".

Similarly, if someone has, say 15%, of their paycheck diverted into a 401K account, this never shows up as "savings". Odd, no?

It is queer that the 2 main savings avenues for middle class americans are not reflected in the national savings rate. the personal income/personal savings rate measure was invented before 401ks and before people (rightly or wrongly) paid such huge portions of their income to buy such ridiculously large, well-appointed houses.

I damn sure understand savings and understand why the tremendous -BROADLY BASED- wealth creation we have had in the Bush years is not reflected in savings. You and the appropriately named Hack can be as intellectually dishonest as you'd like but don't accuse me of not understanding what is happening in this country.

Posted by Jozef | January 29, 2008 6:59 AM

Jozef, i guess i have to give up my hope that you are a performance artist and instead conclude that you are simply very poorly informed and lack understanding.

"savings" means exactly what it says: it is what you "save," not what you "invest." we have plenty of ways of tracking investments (i'll return to that in a moment), but an "investment" is not "savings." these are simply matters of definition and you need to know the definitions to proceed.

as for housing, while you can make money owning a house, the long-term real return on housing historically has been...zero. housing prices go up and down in real terms and it is simply not the case that because you write a big mortgage check every month you are "saving." indeed, when you debit out people who own 100% of their house, the remaining current housing equity is on the order of 32%, and that number is, of course, falling as house values fall. (you can learn more here:http://calculatedrisk.blogspot.com/2007/12/homeowners-with-negative-equity.html)

now let us turn to retirement savings. here's a bls study that i have bookmarked (it's from 2005, so it's a touch out-of-date, but good enough): http://www.bls.gov/opub/cwc/cm20050114ar01p1.htm

what does it tell us? first, that only 57% of households have a retirement account; second, that the median size of a household's retirement account is a massive $2,000; third, that the average size of a retirement account is $49,944. that's sure a lot of wealth!

indeed, most households do not have enough resources to sustain their lifestyle in retirement because they haven't set aside enough money.

so let's see what you've got: you've got the greatest housing bubble in history, now burst, which you believe is a source of wealth creation despite the increasing amount of households with negative equity in their home; you've got a bare majority of households with retirement accounts and not all that much money in them.

from this, you conclude a massive surge of wealth creation, which shows that you are either an idiot or you take your ideas from idiots. i'd suggest you stop posting and try and learn a few things before you repeat your fantasies again.

Posted by howard | January 29, 2008 10:43 AM