The Legacy of George “Herbert Hoover” Bush

I was an early subscriber to Vanity Fair magazine when it was relaunched (after more than four decades out of print) in the 1980s. However, I soon fell out of love with its concentration on Hollywood celebs and the rich and famous, and ceased subscribing. It is only in the last few years, as editor Graydon Carter (formerly of the wonderful Spy magazine) has taken VF in a decidedly more political direction, even devoting his monthly editor’s note to detailed criticisms of the Bush administration, that I’ve started to pay attention to the magazine again. I guess I can forgive VF its movie-star profiles and continued willingness to publish Christopher Hitchens and Dominick Dunne, along with a monthly horoscope, so long as it turns out powerful stories such as this one, and produces outstanding covers (examples A and B).

Renowned American economist Joseph E. Stiglitz’s analysis, in the December issue, of why George W. Bush has been such a disastrous force on the U.S. economy only reinforces my conviction that Vanity Fair is a must-read these days. Coming on the heels of McClatchy Newspapers’ characterization of Dubya as “the biggest-spending president since Lyndon B. Johnson,” an ABC News/Washington Post poll showing that a phenomenal 74 percent of Americans think “the country is headed in the wrong direction” (“the most since the government shut down in a contentious budget battle in early 1996”), and historic voter dissatisfaction with Bush’s performance as president (“Fifty percent of Americans now say they strongly disapprove,” according to the latest Gallup poll); and released amid front-page stories about stock market declines, a slowdown in housing sales, the plummeting value of the U.S. dollar, and Bush’s wasteful spending on a war in Iraq that he isn’t mature enough to end, or at least rethink, Stiglitz’s devastating assessment should serve as a wake-up call to any Americans who haven’t yet connected the dots on how destructive Republican’t Bush’s economic policies have been.

You really need to read the whole essay. However, a few choice excerpts should get you started. In this first one, Stiglitz pre-emptively responds to likely GOP attacks on the credibility of his arguments:

I can hear an irritated counterthrust already. The president has not driven the United States into a recession during his almost seven years in office. Unemployment stands at a respectable 4.6 percent. Well, fine. But the other side of the ledger groans with distress: a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris--or even the Yukon--becomes a venture in high finance.

And it gets worse. After almost seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands--or so he says--that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both.

Up to now, the conventional wisdom has been that Herbert Hoover, whose policies aggravated the Great Depression, is the odds-on claimant for the mantle “worst president” when it comes to stewardship of the American economy. Once Franklin Roosevelt assumed office and reversed Hoover’s policies, the country began to recover. The economic effects of Bush’s presidency are more insidious than those of Hoover, harder to reverse, and likely to be longer-lasting. There is no threat of America’s being displaced from its position as the world’s richest economy. But our grandchildren will still be living with, and struggling with, the economic consequences of Mr. Bush.

Later in the piece, Stiglitz writes:

You’ll still hear some--and, loudly, the president himself--argue that the administration’s tax cuts were meant to stimulate the economy, but this was never true. The bang for the buck--the amount of stimulus per dollar of deficit--was astonishingly low. Therefore, the job of economic stimulation fell to the Federal Reserve Board, which stepped on the accelerator in a historically unprecedented way, driving interest rates down to 1 percent. In real terms, taking inflation into account, interest rates actually dropped to negative 2 percent. The predictable result was a consumer spending spree. Looked at another way, Bush’s own fiscal irresponsibility fostered irresponsibility in everyone else. Credit was shoveled out the door, and subprime mortgages were made available to anyone this side of life support. Credit-card debt mounted to a whopping $900 billion by the summer of 2007. “Qualified at birth” became the drunken slogan of the Bush era. American households took advantage of the low interest rates, signed up for new mortgages with “teaser” initial rates, and went to town on the proceeds.

All of this spending made the economy look better for a while; the president could (and did) boast about the economic statistics. But the consequences for many families would become apparent within a few years, when interest rates rose and mortgages proved impossible to repay. The president undoubtedly hoped the reckoning would come sometime after 2008. It arrived 18 months early. As many as 1.7 million Americans are expected to lose their homes in the months ahead. For many, this will mean the beginning of a downward spiral into poverty.

Looking ahead to the challenges facing whoever takes up the White House reins from Bush in 2009, Stiglitz opines:

The most immediate challenge will be simply to get the economy’s metabolism back into the normal range. That will mean moving from a savings rate of zero (or less) to a more typical savings rate of, say, 4 percent. While such an increase would be good for the long-term health of America’s economy, the short-term consequences would be painful. Money saved is money not spent. If people don’t spend money, the economic engine stalls. If households curtail their spending quickly--as they may be forced to do as a result of the meltdown in the mortgage market--this could mean a recession; if done in a more measured way, it would still mean a protracted slowdown. The problems of foreclosure and bankruptcy posed by excessive household debt are likely to get worse before they get better. And the federal government is in a bind: any quick restoration of fiscal sanity will only aggravate both problems. ...

Some portion of the damage done by the Bush administration could be rectified quickly. A large portion will take decades to fix--and that’s assuming the political will to do so exists both in the White House and in Congress. Think of the interest we are paying, year after year, on the almost $4 trillion of increased debt burden--even at 5 percent, that’s an annual payment of $200 billion, two Iraq wars a year forever. Think of the taxes that future governments will have to levy to repay even a fraction of the debt we have accumulated. And think of the widening divide between rich and poor in America, a phenomenon that goes beyond economics and speaks to the very future of the American Dream.

As I said before, though, you ought to read all of Stiglitz’s analysis. It is a cautionary tale of what can happen when an arrogant ideologue, more determined to reward his deep-pocketed friends than to the help the majority of Americans live a better life, and unconcerned with public opinion, is rewarded with election to the highest office in the land. I hope our grandchildren can forgive us the economic carnage Bush leaves behind.

READ MORE: “The Worst Economy of Our Lifetime, Parts I, II, and III,” by Hale “Bonddad” Stewart (The Huffington Post).