Economy Made Few Gains in Bush Years

Eight-year period of Bush presidency is weakest for U.S. economy in decades

Tim Sloan / The Associated Press

By Neil Irwin and Dan Eggen

January 12, 2009

Excerpts

President Bush has presided over the weakest eight-year span for the U.S. economy in decades, according to an analysis of key data, and economists across the ideological spectrum increasingly view his two terms as a time of little progress on the nation’s thorniest fiscal challenges.

The number of jobs in the nation increased by about 2 percent during Bush’s tenure, the most tepid growth over any eight-year span since data collection began seven decades ago. Gross domestic product, a broad measure of economic output, grew at the slowest pace for a period of that length since the Truman administration. And Americans’ incomes grew more slowly than in any presidency since the 1960s, other than that of Bush’s father. …

“It’s sad to say, but we really went nowhere for almost ten years, after you extract the boost provided by the housing and mortgage boom,” said Mark Zandi, chief economist of Moody’s Economy.com, and an informal adviser to McCain’s campaign. “It’s almost a lost economic decade.” …

Even excluding the 2008 recession … Bush presided over a weak period for the U.S. economy. For example, for the first seven years of the Bush administration, gross domestic product grew at a paltry 2.1 percent annual rate.

The administration also failed to gain traction on some of the fundamental economic and fiscal issues facing the nation — including solidifying the finances of Medicare and Social Security, simplifying the tax code, or making health care more affordable. Resolution of those issues might have left the government more flexibility to respond to the current crisis by lowering the nation’s future budget deficits.

The federal government had a modest budget surplus when Bush took office in 2001, but ran a deficit — funding itself to a significant degree with borrowed money — of 4.9 percent of gross domestic product in 2004 and 4 percent in 2005, even as the economy was growing at a healthy pace. …

One constant for Bush has been an optimistic, even rosy, economic outlook. Throughout much of past year, even as the Treasury Department and Federal Reserve began preparing for the worst behind closed doors, Bush and his aides trumpeted the fundamental strength of the U.S. economy and dismissed Democratic proposals for a second stimulus package.

A White House fact sheet released on Sept. 5 was titled: “American Economy Is Resilient in the Face of Challenges.” …

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Related analysis

The Bush-Cheney legacy

The legacy of America’s most unpopular president

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1/20/2009 Update

On the day George W. Bush was inaugurated as president, January 20, 2001, the Dow Jones Industrial Average closed at 10,588. On January 20, 2009, the day he left office, the Dow closed at 7,949 — back to its levels of 11 years earlier, when the DJIA hovered around the 8,000 mark.

Speaking at the Pentagon on September 17, 2001, President Bush called Osama bin Laden a prime suspect in the terrorist attacks of 9/11, saying: “I want justice. And there’s an old poster out West, I recall, that said, ‘Wanted, dead or alive.’ ”

When Mr. Bush left office, on January 20, 2009, Osama bin Laden remained a fugitive from justice, along with his chief strategist, Ayman al-Zawahiri.

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ECONOMIC UPDATE

Signs of Credit Market Thaw Begin to Emerge

January 13, 2009

NEW YORK — Credit markets are beginning to thaw after months of a deep freeze.

In a promising turn that could bolster the economy, companies are selling bonds at a pace not seen since last spring. At the same time, companies are finding it easier to issue commercial paper, the short-term loans necessary for quick access to cash. …

If the trend continues, it would be the outcome that government officials have been seeking for months, as they pumped hundreds of billions of dollars into the financial system. More could be on the way.

Federal Reserve Chairman Ben Bernanke, in a speech Tuesday at the London School of Economics, indicated additional steps will be taken to stabilize the financial system beyond the $800 billion stimulus package being crafted by President-elect Barack Obama.

“History demonstrates conclusively that a modern economy cannot grow if its financial system is not operating effectively,” Bernanke said. …

To be sure, danger still looms in the credit markets. Bank lending remains at a trickle and it will likely stay that way so long as financial companies contend with massive losses tied to their mortgage-related assets and other bad debt.

Despite a taxpayer-funded bailout and moves by the Federal Reserve to loan more money to financial institutions, banks are still reluctant to lend. …

The Fed has also ratcheted down its key interest to hover between zero and 0.25 percent, a record low. In that move last month, the central bank signaled it would hold rates at such levels for some time to help cushion the blows of a recession that has just entered its second year. …

It’s not just businesses that are benefiting from improving credit conditions. Mortgage rates have also tumbled since the Fed in November announced plans to spend up to $500 million to buy mortgage-backed securities in an effort to bolster the ailing U.S. housing market.

The average rates on the 30-year mortgage fell to 5.01 percent last week, the lowest since Freddie Mac started tracking the data in 1971.

Full story

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NATIONAL SECURITY UPDATE

Young Men Vanish into Somalia, Stirring Fears of Terrorist Recruitment

By Bob Drogin

January 18, 2009

Anguished Minnesota families say a group of seven youths who vanished on Nov. 4 may have gone to join an Islamist militia. They aren’t the first to leave.

Full story

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IRAQ UPDATE

Suicide Bomber Kills Deputy Head of Iraq Sunni Party

January 18, 2009

MOSUL, Iraq — A suicide bomber on Sunday killed a deputy leader of an influential Iraqi Sunni Arab political party as he and other politicians met to discuss an upcoming provincial election, the party’s leader said.

Hassan Zaidan al-Lihebi, deputy leader of the Iraqi National Dialogue Front, was killed by a suicide bomber who stormed his house, shot at guards and blew himself up in a crowded reception room, Saleh al-Mutlaq, the party’s leader, told Reuters. …

Police sources said between one and four other people were also killed, including a policeman, in the attack in the town of Qaiyara, south of the northern city of Mosul. …

A former general under Saddam Hussein, al-Lihebi was not himself running as a candidate, Mutlaq said. But he led the party’s campaign in the still violent city of Mosul and many of the others in the room when the blast occurred were candidates.

Full story

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Iraqi Lawmakers Deadlock Over Speaker Choice

January 18, 2009

BAGHDAD — Iraqi lawmakers moved to break the deadlock over the choice of a new speaker Sunday by agreeing to form a committee to choose a candidate after Sunnis failed to reach consensus on a nominee, the deputy speaker said. …

The bid to resolve the dispute comes just two weeks before key provincial elections aimed in large part at empowering minority Sunnis, who spearheaded the insurgency that erupted after the collapse of Saddam Hussein’s regime in the 2003 U.S.-led invasion. …

The disagreement threatens to block the 275-seat parliament from making key decisions on legislation. The Shiite deputy speaker can preside over sessions, but the Sunnis object to participating until a speaker from their bloc is elected. …

U.S. commanders have warned the uncertainty over Iraq’s political stability could lead to new violence at a time when the more than 140,000 U.S. troops are facing cutbacks under the incoming Obama administration.

U.S. and Iraqi officials are hoping the Jan. 31 provincial elections will help unify the country’s fractured sectarian and ethnic groups. …

Full story

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Security Developments in Iraq

Following are security developments in Iraq on Jan. 19, 2009, as reported by Reuters.

MOSUL – A roadside bomb targeting an Iraqi army patrol wounded one soldier in east Mosul, 240 miles north of Baghdad, police said.

MOSUL – Gunmen stormed a bakery in west Mosul and killed a man inside, police said.

MOSUL – Police killed a gunman in a firefight in west Mosul, police said.

BAGHDAD – A roadside bomb targeting a police patrol in the Zaafaraniya district of southeast Baghdad killed an off-duty police captain and wounded eight people, including a policeman, police said.

MOSUL – A roadside bomb wounded four civilians when it targeted an army patrol in eastern Mosul, police said.

Following are security developments in Iraq on Jan. 18, 2009, as reported by Reuters.

BAGHDAD – A roadside bomb wounded three policemen in the Mashtal district of east Baghdad, police said.

BAGHDAD – A roadside bomb targeting a truck carrying pre-cast blast walls wounded two civilians in the Yarmouk district of west Baghdad, police said.

BAGHDAD – A roadside bomb near a restaurant wounded eight civilians in Palestine Street in northeastern Baghdad.

MOSUL – Gunmen in a car killed two guards protecting a communications tower on Saturday in northeastern Mosul, 240 miles north of Baghdad, police said.

MOSUL – Gunmen in a car shot dead an off-duty policeman on Saturday in northern Mosul, police said.

BAGHDAD – The deputy head of the U.S.-backed neighborhood patrols program was wounded when a bomb exploded near his house on Saturday in the al-Furat district of southwestern Baghdad, police said. Five of his neighbors were wounded in the blast.

BAGHDAD – A roadside bomb wounded three policemen on Saturday when it targeted their patrol near central Baghdad’s Al-Shaab stadium, police said.

BAGHDAD – A mortar round wounded two Iraqi soldiers on Saturday in the Jamiaa district of western Baghdad, police said.

BAGHDAD – A bomb attached to a vehicle belonging to a municipal official killed his driver and wounded a bystander in the Yarmouk district of western Baghdad, police said.

BAGHDAD – A U.S. soldier died from wounds sustained when roadside bomb struck a patrol on Friday, the U.S. military statement said.