Bush on the Economy: Too Bitter, Too Late

05/25/2011 12:30 pm ET
  • Jeff Madrick Author, 'Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World'

Bush conceded the economy was in bad shape on Tuesday. The man who doesn't look at the public opinion surveys may have noticed how little regard Americans have for his economic management according to the latest polls.

More to the point, people know how bad the economy is even as economists tinker cautiously around the technical edges. As I've said several times before, wages and family income haven't gone up in the 2000s, despite a growing economy, and now people will be hit by lost jobs and declining wages and salaries. And food and fuel prices keep rising with frightening speed. People are worried and scared.

The real problem, Bush tells us, is that America doesn't drill for enough oil -- all just to appease those environmentalists. It is the oil company mantra, of course, and Bush is an oil company guy. That's the extent of the Bush analysis, apparently. A minor tantrum bitterly thrown at the Democrats to dodge responsibility and for what he hopes is political advantage. Too bitter, too late.

There is no magic wand, he also told us. That is the mantra of the privileged, who don't suffer much in recessions, and the conventionally conservatives, who think government is bad most of the time. As the people know, Bush has been consistent: he has done little to solve the problems and he had done much to create them, not least by ignoring financial excess.

As some of the people may also know, or at least remember, the government can be constructive. All that Bush has done constructively so far, in fact, is to endorse the Democratic stimulus plan. Now that took some doing, because it was early. But Bush favored it because it was about giving taxes back.

Other than that, Bush, the ex-cheerleader, took to jawboning that all was ok, or at least not too bad. But it is better to call a good play than a good cheer.

What we have to be thankful for, besides the stimulus now having its early effects, is the lower dollar, which is spurring manufacturing, and a lot of Federal Reserve activity. The Fed moved quickly to supply liquidity and lower rates. Inflation hawks are screaming. The Fed knows the bigger risk than inflation is recession and a downward spiral in house prices. (I am writing this before we know what the Fed will do with rates this week.)

We also may need another stimulus package. I'd love to see infrastructure investment in it.

What else? Something to stem the severity of the housing crisis. The Democrats have a reasonable plan, not a perfect one. Bush is opposing it. Well, offer a better one. And move quickly.

That is the last piece. If something constructive about mortgage defaults is adopted, there is a good chance we will avoid the worst. So far, the government deserves kudos, and it was done all with a mostly absent president. The government deserve kudos? Yes. How 'bout that! Can't stop now.