March 26, 2004,
President Bush’s critics accuse him of presiding over a weak economy. They claim that job creation has been anemic and that growth has been uneven. Sure, partisan politics color these charges, but that doesn’t necessarily mean they’re untrue. What do the numbers actually say?
So who’s right? Has President Bush done a poor job? Fortunately, there’s a way to answer this question without having to pick sides in the partisan fight. The Joint Economic Committee (JEC) of Congress has just published a comprehensive report analyzing economic performance among the world’s major economies (available here). Entitled “International Economic Performance Since the Stock Market Bubble,” the report compares growth rates and job creation in the United States, Japan, the European Union, and Canada.
The report finds that the United States economy has significantly out-performed other developed economies. This does not necessarily mean that President Bush has done a great job, but it unambiguously means that his economic policies have performed better than those of our major foreign competitors. In a global economy, it’s an unbiased and important way of measuring who has done the best job.
The JEC report notes that all developed nations suffered an economic downturn earlier this decade. Financial markets declined and unemployment rose in every major country. The key question is how various leaders responded. President Bush aggressively moved to lower tax rates. He saw how lower tax rates during the 1980s helped trigger a record economic boom and wanted to repeat Ronald Reagan’s successful formula. According to the JEC study, President Bush made the right decision:
The U.S. economy has expanded by 7.8 percent since the recession, the best performance in the developed world. Indeed, it has grown more than three-times faster than European economies.
The U.S. unemployment rate has fallen by 0.8 percentage points again, the best performance in the developed world. The U.S. unemployment rate of 5.6 percent is far lower than the 8 percent unemployment rate in Europe.
On the two main indicators of economic prosperity, the United States is head and shoulders above the world’s other developed nations. Many of these other nations are governed by politicians who think government should be bigger and taxes should be higher. But this approach inevitably fails, condemning citizens to economic decline and higher unemployment.
While the White House can take comfort in the relative strength of the American economy, this doesn’t mean that the administration should be satisfied. Economic growth could be much higher, especially if there are improvements in economic policy. Putting a lid on federal spending would be a big step in the right direction. The Bush administration has not done a good job in this area, allowing spending to climb much faster than it did when the Democrats last controlled the White House.
But since people in glass houses usually don’t throw stones, it’s unlikely that John Kerry will accuse President Bush of being a big spender. Sen. Kerry has compiled a voting record to the left of Ted Kennedy. During the campaign, he has endorsed programs that would add hundreds of billions of dollars in new spending.
America has the world’s most powerful economy, but our advantage won’t last if Republicans and Democrats waste money on ineffective government programs. We don’t want France’s stagnant economy and high unemployment, so our lawmakers shouldn’t behave like French politicians. That means they should compete to make government smaller, not bigger. They can be sure the numbers will vindicate them if they do.
Daniel J. Mitchell is the McKenna fellow in political economy at the Heritage Foundation.