Ever pious, the Wall Street Journal is sure to praise Bush on how splendidly he has run the economy. Well, I want to know the truth of the matter and therefore, with that in mind, I want to take each claim that the WSJ made in its recent article, Bush Has a Good Economic Record, and compare it apples to apples with past US economic performance. As a quick note before I start, please also note that they have an article about the weak dollar that Bush has created and why the GOP should get back to all-around sound policies and not just the cut and spend policies of Bush. Here are a couple quotes from that article:

As for the political challenge that Mr. McCain faces, look no further than the “misery” spike of 2008. At 5.7% in July, the U.S. jobless rate isn’t much worse than it was (5.4%) when Mr. Clinton ran for re-election in 1996. The difference is the rolling 12-month inflation rate, which at 5.6% puts the misery mark at 11.3 — back to heights not seen since the early 1990s…

As a political matter, President Bush appointed Mr. Bernanke and thus shares responsibility for this policy outcome. He also appointed Fed Governors Donald Kohn and Frederic Mishkin, the other intellectual architects of the Fed’s dollar neglect. More broadly, the Bush Administration has tolerated — even encouraged — a policy of dollar decline throughout its tenure…

The good news is that the dollar has rallied in recent weeks, while commodity prices have fallen from their peaks. Markets had overshot on the upside as they often do and have since had to cover themselves. Slower growth outside the U.S. may also play a role. The widely advertised dissents from further easing inside the Fed have helped, as perhaps did Barack Obama’s recent remarks that he favors a stronger dollar. When the liberal candidate for President comes out in favor of sound money, the world notices.

Here is the chart that they referred to.

And now onto the main topic of this post, the WSJ claims about how wonderful the economy is under Bush.

Claim One: Economic Growth

- Economic growth. U.S. output has expanded faster than in most advanced economies since 2000. The IMF reports that real U.S. gross domestic product (GDP) grew at an average annual rate of 2.2% over the period 2001-2008 (including its forecast for the current year). President Bush will leave to his successor an economy 19% larger than the one he inherited from President Clinton. This U.S. expansion compares with 14% by France, 13% by Japan and just 8% by Italy and Germany over the same period.

The latest ICP findings, published by the World Bank in its World Development Indicators 2008, also show that GDP per capita in the U.S. reached $41,813 (in purchasing power parity dollars) in 2005. This was a third higher than the United Kingdom’s, 37% above Germany’s and 38% more than Japan’s.

Let’s just break this down to the numbers.

Part one: Since 2000 the US economy grew at a rate of 2.2% and is 19% larger than it was when he came in.  France was 14%, Japan 13% and 8% for Italy and Germany.

The Comparison: The WSJ seems to have drawn their stats from similar numbers as these IMF numbers.  It also seems that they rounded up.  An appropriate comparison is of course the same length of time but for the previous eight years.  Looking at that we discover that the economy grew at a rate of 3.7%, which is 60% better than the Bush years.

As for the 19% growth and the comparisons, I have no idea where the WSJ came up with those numbers.  They say they are from IMF.  They say he will leave the economy 19% larger.  IMF GDP constant prices puts the US at 17.6 between 2001 and 2008 and that is the closest I could find.  [Same time: France = 12.1, Japan = 13, Italy = 6.2 and Germany = 8.7.]  Again, I have no idea how the WSJ came up with their numbers, but I’ll use these number to compare since they are close to the WSJ and they too come from the IMF.  So what do we compare these to?  I would have to say 1993 to 2000 with the same countries.  This is what follows according to IMF for those years:

US grew by 30.3%.  France by 19.9%.  Japan by 8.2%.  Italy by 15.4%.  Germany by 15%.

That means that in the same period of time the economy grew two-third more under Clinton than under Bush.  Again, I am just reporting the numbers without the WSJ spin.  I have no vested interest in what the numbers tell us.  [It should also be noted that I voted for Dole in 1996 and Bush in 2000, just so you know my possible biases.]

Part two: US GDP purchasing power in 2005 was $41,813.  higher than UK, Germany and Japan by 33%, 37% and 38% respectively.

The Comparison: Again, the similar IMF numbers are here, though I could find no exact number that matched theirs.  The WSJ is correct on our comparison to the countries it mention and most countries on the list, though we are half the spending power of Luxembourg and we are less than Norway and Singapore as well.  The same can be said of Clinton’s last year in office, 2000, except that only Luxembourg and Norway had higher purchasing power.

[Also of note, when Bush entered office we were 23.603 of the world's economy.  This year (2008) we are only 20.882.  In fact we have gone down on that stat ever since Bush came into office.  Compared to the 1993 through 2000 time-frame we discover that the lowest was when Clinton entered office and we had a 20.01% share.  It fluctuated when he was in office, but when he left it was 23.603 and it reached a height of 23.826 in 1999.]

Claim Two: Household consumption

The ICP study found that the average per-capita consumption of the U.S. population (citizens and illegal immigrants combined) was second only to Luxembourg’s, out of 146 countries covered in 2005. The U.S. average was $32,045. This was well above the levels in the UK ($25,155), Canada ($23,526), France ($23,027) and Germany ($21,742). China stood at $1,751.

To really address this one I needed to seek out the ICP report, which is here.  Just one problem.  It is only for the year 2005, which is not all that helpful when you want to compare years.  I needed to look elsewhere.  But where?  How the heck do we know what to compare it to?  Normally at a time like this I would turn to the Bureau of Economic Analysis, which is run by the US government.  Unfortunately, their personal consumption data only goes back to 2002.  If you are reading this and you know how to find some comparable data to compare apples to apples, please let me know and send me the link!

Claim Three: Health services

The U.S. spends easily the highest amount per capita ($6,657 in 2005) on health, more than double that in Britain. But because of private funding (55% of the total) the burden on the U.S. taxpayer (9.1% of GDP) is kept to similar levels as France and Germany. The U.S. Census Bureau reports that 84.7% of the U.S. population was covered by health insurance in 2007, an increase of 3.6 million people over 2006. The uninsured can receive treatment in hospitals at the expense of private insurance holders.

I never know how the heck we are suppose to take this information.  Is it good that we spend the most on health care?  I don’t know.  The fact that a significant amount of that spending is profit for a few insurance companies would suggest to me that it is not necessarily all that wonderful.  Britain, for instance, spends half what we spend, but has universal health care, so you don’t have the profit factor.  And of course it is difficult to measure the health care comparison when the WSJ switches measurements from per capita in overall costs to GDP percentage in tax cost.  So in the end the only way to show a historic comparison is to measure the percentage of uninsured under Clinton versus Bush and of course to compare per capita tax cost here versus elsewhere and/or GDP % overall.  And what do we find?

In 1999, according to Nation Master, the US spent 5.9% on Health Care.  Is 9.1% an improvement?  Again,  guess that would depend on how to measure it.  That’s public dollars.  Private was 7.1% in 1998.  In 1998 we also spent the most per capita at $4,271.  I don’t have much to make out of any of this other than the fact that in those years we were in the same general area as Switzerland and Norway per capita, Estonia, Italy, Slovakia and others in public GDP % and Cambodia and Uruguay in private GDP %.  But those are the old Clinton numbers.  What are they like now?  We know that public funds, according to the WSJ, is up to 9.1%.  Again, I don’t know what this all means for our health or the economy.  In fact, I have no idea why the WSJ would lump it in a article on Bush’s economic policy.  And I am not alone on questioning the importance of spending in Health Care.  For instance, the Century Foundation questions what we get for our money too (this is from 2006).

The United States spends more of its income on health care than any nation on earth, nearly $6,000 per person per year, more than 15 percent of our total income. In contrast, the countries of the European Monetary Union spend about $2,500 per person per year, less than 10 percent of their income.

What do we get for our money? One simple test is to see where the United States stands in a comparison of the most basic health statistic of all: life expectancy at birth.

The answer is that the United States appears to be doing badly, not just compared to Britain but compared to every advanced country in the world. Taking into account the overall standard of living and spending on health care, we should expect a newborn in the United States to live 81 years. In fact, life expectancy at birth is 77 years. Of 25 high-income industrialized countries, the United States is in last place, both in life expectancy at birth and in the gap between actual life expectancy and predicted life expectancy given the standard of living and spending on health care. The next worst outcome, behind U.S. life-expectancy deficit of four years, is a deficit of 2.7 years in Denmark. In contrast, a Japanese newborn is predicted to live about 79 years but actual life expectancy in Japan is nearly 82 years. A Japanese newborn can be expected to live two and a half years more than Japanese living standards and medical spending would lead one to expect, while an American lives four years fewer.

The four year deficit in life expectancy in the United States is one of the worst outcomes anywhere outside Sub-Saharan Africa. All the other countries with life expectancy outcomes substantially worse than predicted are developing countries or part of the former Soviet Union.

Countries with the Biggest Life Expectancy Deficits (years)
1	Haiti	-13.3
2	Papua New Guinea	-10.1
3	Lao PDR	-8.8
4	Russian Federation	-6.8
5	Guyana	-5.2
6	United States	-4.1
7	Kazakhstan	-4.1
8	Trinidad and Tobago	-3.7
9	Dominican Republic	-3.6
10	Turkey	-3.5

No other G7 country has such a large gap between actual life expectancy and that predicted on the basis of its standard of living and medical expenditures.

The United States is very rich and we spend the most in the world on health care. We have a right to expect more for our money than a life expectancy outcome that places us thirtieth in the world, behind Singapore, Chile, and Costa Rica as well as Australia, New Zealand, Japan, and every Western European nation.

We can’t compare our Health Insurance to other industrialized nations because they mostly have public health coverage.  So again it is a pre-Bush to post-Bush comparison on this number.  Let’s go to the source that the WSJ claims, the U.S. Census Bureau.  Again, the Wall Street Journal lavishes its praise on Bush for the economics of his administration and uses a health insurance stat of 84.7% coverage in 2007.  Actually, let’s go ahead and quote them directly again:

The U.S. Census Bureau reports that 84.7% of the U.S. population was covered by health insurance in 2007, an increase of 3.6 million people over 2006.

The blatant problem is the switch from percentage to an actual number.  The Wall Street Journal clearly wanted to play the game of large numbers, but to keep it in perspective, the number of uninsured decreased by just .5% according to the same source they used.  That is still an improvement over 2006, no doubt, but there’s more.  What percentage was covered by insurance in 2000?  According, once again, to the U.S. Census Bureau, the percentage of insured in 2000 was 86.3%– it is now lower by more than 1.5% after it improved this year.  Pardon me if I no longer understand how this is an achievement by the Bush administration.

When talking about health the WSJ goes on to say:

While life expectancy is influenced by lifestyles and not just access to health services, the World Bank nevertheless reports that average life expectancy in the U.S. rose to 78 years in 2006 (the same as Germany’s), from 77 in 2000.

Well that’s wonderful.  Who else has a 77 life expectancy?  Well, this chart will show you a selection I made in a somewhat random way.  You can decide for yourself how wonderful of an achievement it is.  By the way, did you notice in that chart that it only goes up to 2005 and the US was at 77.9 then?  Guess 80 wasn’t a huge leap.

And, sadly, we’re barely above Cuba.

Claim Four: Income and wealth distribution

Part one:

The latest World Bank estimates show that the richest 20% of U.S. households had a 45.8% share of total income in 2000, similar to the levels in the U.K. (44.0%) and Israel (44.9%). In 65 other countries the richest quintile had a larger share than in the U.S.

Comparison: This would be an interesting fact to back Bush’s policies if he were president in 2000, but since he was not, I find it a bit misleading.  So let’s take that claim that 20% owned 45.8% in 2000 and compare it to more recent numbers.  The problem is that there don’t seem to be any to go on.  The U.S. Census Bureau hasn’t had a stat on this since 2002 (as of today 9/5/08) though they have several for the 1990s.  World Bank?  Same problem.  So the best we can do is look at other numbers and less “official” numbers.  Here is a report about the inequitable distribution of wealth between 1995 and 2004.

While aggregate household net wealth grew from $25.9 trillion in 1995 to $50.1 trillion in 2004 (both in 2004 dollars), nearly 90 percent of the net gains occurred only among the top quartile of households in the wealth distribution.

But that is by someone from Harvard and we all know that Harvard is less reliable on these things than the WSJ (who cites irrelevant stats to create a smokescreen).  We won’t allow those evil academics to rain on our economic parade.  How about we take a gander at what the people over at the Federal Reserve of Chicago have to say?

In the United States wealth is highly concentrated and very un-
equally distributed: the richest 1% hold one third of the total wealth in
the economy.

Have I WOWED you the same way the Wall Street Journal did?  I’ll let you in on a little gambit…  This is drawn from the exact same information that the WSJ spun to fit its agenda, but, once again, it tells us nothing about Bush’s policies because it precedes Bush’s inauguration. So, while this would be a legitimate stat to look at if it were about Bush, it is not legitimate to take old info to explain the effect of new policies.

Part two:

Investment has been buoyant under President Bush. According to the ICP, outlays on additions to the fixed assets (machinery and buildings, etc.) of the U.S. economy amounted to $8,018 per capita in 2005 compared to $4,963 in Germany and $4,937 in the U.K. Higher taxes on the upper-income Americans, as proposed by Mr. Obama, are likely to result in lower saving and investment, less entrepreneurial activity and reduced availability of bank credit. Lower-income Americans would be among the losers.

There isn’t really anything to compare that leap to, except the per capita fix investments of prior years.  However, that isn’t really much of anything either.  The assertion that this is a stat about “income and wealth distribution” is one of the greatest stretches imaginable.  After all, this is a per capita stat and therefore is by nature not dealing with wealth distribution, since it just lumps all the wealth together.   At this point I am starting to think that the WSJ is just throwing around numbers in an attempt to dazzle and confuse us.  Here is where they drew the stats from, but once again the report does not have anything to compare it to.  What were the investments in prior years?  … … … … do you hear that awkward silence?  That’s the sound of the stats they provided.

As for this gem– “reduced availability of bank credit”– has the WSJ had its eyes closed for the last year and half?  Reduced bank credit is not a bad thing right now.  The Bush policies are what led to this collapse in the housing market.  Wait.  Wait.  I can hear the engines roaring as some conservatives wind themselves in a knot ready to decry my assertion.  They aren’t responsible!  It’s not their fault!  They only get to TAKE CREDIT!!!  But let’s see what President Bush had to say about housing when it was going in his favor (State of the Union 2005):

First, we must be good stewards of this economy, and renew the great institutions on which millions of our fellow citizens rely. America’s economy is the fastest growing of any major industrialized nation. In the past four years, we provided tax relief to every person who pays income taxes, overcome a recession, opened up new markets abroad, prosecuted corporate criminals, raised homeownership to its highest level in history, and in the last year alone, the United States has added 2.3 million new jobs.

If he gets credit when it goes up, he better get blame when it goes down.  A quick look at the housing stats reveals that the homeownership levels have now dropped back down to what they were in 2000.  Perhaps those aren’t the stats that the Wall Street Journal wants us to look at as we assess the job Bush is doing.

Part three:

When considering the distribution of income and wealth in the U.S., another factor that should be taken into account is the sharp rise in the number of immigrants. The stock of international migrants (those born in other countries) in the U.S. grew by nearly 10 million from 1995 to 2005, reaching a total of 38.5 million according to the World Bank.

Again, I don’t know why the WSJ wants to avoid the real numbers on wealthy distribution, but I’ll bite.  How many immigrants came to the US between 1985 and 1995?  And how many came between 1995 and 2000 versus 2000 and 2005?  The Wall Street Journal used the World Bank to tell us how much immigration had increased between 1995 and 2005, but after searching around at the World Bank website without finding this info I decided that I would look elsewhere.  The first place that made sense to look was the U.S. Census Bureau.

The U.S. Census Bureau’s Foreign-Born population page is a bit cumbersome to navigate when dealing with this topic, but this is what I was able to discover.  The number of immigrants to enter the country between 2000 and 2004 was three-quarters that of 1990 to 1999.  So the Wall Street Journal is correct about the trend.  However, one may also note that more immigrant came between 1980-89 than ‘90-99 and same with ‘70-79.  However, that has not been used as an excuse for the economy in those years.  Carter should have thought of that excuse!  Further, it should be noted that the longer someone is in the States, the more money they make.  For those who have recently entered (since 2000) the median income is $31,930.  For those who entered between 1970 and 1979, their median income is now $54,569 (’90-99 = $38,395 and ‘80-89 = $44,002).  And why would immigration be a matter to consider when discussing Bush’s economic policies?

The inflow of migrants may have restrained the growth of average income levels in the bottom quintiles. Nevertheless, their earnings still allowed immigrants to remit $42 billion to their families abroad in 2006, double the level in 1995. So the benefits are widely spread among the families of immigrants remaining abroad — an important U.S. contribution to the reduction of poverty in these countries.

The operative word being “may.“  They may as well have said, “It ‘may have restrained’ but we don’t know.  But we’ll mention this because we don’t have any stats on this that support our agenda.”  The numbers I cited above, however, would suggest that the number of immigrants in the country from prior decades would then be bringing average incomes up by the same logic that the WSJ suggests that recent immigrants bring the number down.  Furthermore, the unemployment rate is higher among immigrants than among people born here, so the WSJ can claim that is the cause of the unemployment hike too if they want, but that would be nothing more than smokescreens and spin, just like the rest of this WSJ article.  [BTW, where this $42 billion number came from is anybody's guess.]

Call me crazy, but now might be the time to look at other numbers concerning wealth distribution, such as poverty.  The WSJ would rather talk about how businesses bought tractors than about the populations in poverty (relative poverty).  In 2000, before Bush came to office, 11.3% of the population lived below the poverty line.  In 2007 it was 12.5%.  The Wall Street Journal and Conservatives may not like the stats.  They may not like the definition the government uses for “poverty.”  They may not like that these stats paint a dim picture of the Bush years, but they can’t blame “the Left,” since the government (Bush’s government) is who calculated these stats.

Claim Five: Employment

The U.S. employment rate, measured by the percentage of people of working age (16-65 years) in jobs, has remained high by international standards. The latest OECD figures show a rate of 71.7% in 2006. This was more than five percentage points above the average for the euro area.

The U.S. unemployment rate averaged 4.7% from 2001-2007. This compares with a 5.2% average rate during President Clinton’s term of office, and is well below the euro zone average of 8.3% since 2000.

Well, if they hadn’t spun the stats to make a comparison to Clinton, I would just leave this section alone.  The WSJ is correct that unemployment is not a huge issue in the US, though it certainly is an issue.  Here’s the problem: “The U.S. unemployment rate averaged 4.7% from 2001-2007. This compares with a 5.2% average rate during President Clinton’s term of office…”  That sounds amazing until you look at the numbers.  The claim they make is true.  Unemployment was higher on average under Clinton than under Bush.  However, Clinton inherited a high unemployment rate from H.W. Bush and the unemployment rate dropped every single year under Clinton.  Bush can make no such claim, especially since the rate has now jumped to 6.1%.  Conservatives can’t blame Clinton for this one.

Claim Six: Debt interest payments

The IMF reports that the interest cost of servicing general government debt in the U.S. has averaged 2.0% of GDP annually from 2001-2008, compared with 2.7% in the euro zone. It averaged 3.2% annually when President Clinton was in office.

The cost of the wars in Iraq and Afghanistan has been largely absorbed in a relatively small increase in the defense budget (to 4.1% of GDP in 2006 from 3.8% in 1995).

I have no idea what the point of the claim about the cost of interest is.  I also am not compelled to try and figure it out.  My student loan interest costs are down this year because of the lower rate that the Fed put in place.  That is not a sign that the economy is strong under Bush.  And the cost of war as reflected by the Defense budget’s percentage of the GDP is not just utterly misleading, it is an out and out lie.  The costs are not simply absorbed by the defense department.  You also have to look at the money that goes to the State Department for dealing with Iraq, the special war-spending bills that Bush has pushed through the Congress and the cost of paying contractors to do the work the US military is stretched too thin to do.   But in the end there is only one way to answer this absurd claim about the cost of debt under Bush and that is to look at what the US debt is now.  So here is the number and a pretty chart to make it nice and clear.

Our current debt is:

And here’s the pretty chart I promised.

Here's my guess. If the economy goes up, Obama's rating will too. If the economy goes down, so will Obama's rating. Now let's watch it right here. It may not happen immediately, but it will usually follow.

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