http://www.j-bradford-delong.net/movable_type/2003_archives/002949.html

This really sums up the problem. The economy in terms of job creation is the worst since Hoover and the Great Depression. We can quibble I suppose if that makes it the second worst, and that Bush achieved something wonderful by not eclipsing that record.

This is a serious problem. When something like this happens economists have to look at the whole picture and see what went wrong and how to avoid it happening again. They can't just paper over the cracks, policy has to be scientifically analysed, papers written and peer reviewed, economic models run on computers and so on.

It's not a matter of blind partisan loyalty but of science. When the shuttle blew up no one asked Bush what caused it, and how he would fix it, the job was presumed to be a scientific question. Such a disastrous employment record is also a scientific question. Just because you yourself are doing very well has no bearing on the issue except for you.

In fact the economy is showing signs of softening yet again, there is no clear indication yet the worst is over. There are also some issues with the trade deficit whether a recovery simply creates jobs in China.

Many of these identical problems happened after the last recession at the end of the 80's. This was also a time of supply side economics that failed to work, and the job outlook was also slow to respond. So this jobless recovery may be yet another side effect of failed supply side economics. If it is (and no one knows yet) then it has to be investigated. As the graph shows something has delayed the jobs recovery extensively.

It may also be for example the high oil prices in relation to the invasion. That took a lot of money out of people's pockets each week, which is like a tax hike in effect. So raising oil prices in a recession may be very dangerous like it was in the 70's with the embargo. It may have been better to delay the Iraq invasion until after the recession.

Al Qaeda and 9/11 may have something to do with it as well, how much isn't known yet. It's easy to make these into excuses for Bush but fixing the problem isn't accomplished by blind loyalty but by science.

Another aspect is the tax cuts were almost universally condemned by mainstream economists as the wrong way to stimulate the economy. So they tend to say "I told you so" now. They are entitled to as they predicted it would be a poor way to stimulate the economy.

In fact the tax cut for the most part worked like a tax increase which is the worst thing you can do in a recession. Orthodox economics states the thing to do is give tax relief to lower incomes as they spend it more. You can argue about that, but that's what the science of economics said long before Bush.

Since the tax cuts overwhelmingly went to people who didn't spend it (like you as you pointed out) there was very little stimulus to the economy, perhaps the major part was the $500 rebate. As the recession deepened states started running deficits and so had to raise taxes on lower incomes to balance their budgets. So the effect of the tax cut was to distribute about 90% to the upper class, and then the recession caused the lower classes to get tax increases from the states.

Add to that the increased oil prices at the pump and the lower incomes from unemployment the people that spend money more (who live from paycheck to paycheck) had an enormous drop in disposable income. Since this kind of spending has the highest multiplier effect this amounted to be very contractionary policy at a very bad time. The result as economists all seem to be saying now is an extended economic downturn.

So the textbooks will likely say Bush caused much of the recession by economic mismanagement. He went against all the mainstream advice and the economy did much worse than it normally would in simulations.

That doesn't mean a deficit and tax cuts weren't necessary, but they should have been targeted according to how the science of economics said they should be. They weren't and now the blame points at Bush.

One can argue the rich get taxed too much etc but that is a separate issue. The issue is how you stimulate an economy in a downturn and Bush picked about the worst possible way.