Arrested Pulse

In November 2002, one month before he was fired for not being a team player, Treasury Secretary Paul O’Neill approached Vice President Dick Cheney with the warning that the country was moving toward "fiscal crisis.” Specifically, O’Neill opposed a second-round of massive tax cuts ($674 billion) for America's wealthiest citizens on the grounds that they would swell the ballooning federal deficit. Cheney’s swift and now infamous remark: “Reagan proved deficits don’t matter. We won the midterms. This is our due.”

Cheney got what he wanted. What did Americans get? Deficits, debt, denial, and deceit. In fact, these words will be used by historians when describing the calamitous role played by the administration of George W. Bush in the abrupt decline of American prosperity. Because he didn’t, or couldn’t, stand up to Cheney and other self-serving hawks in his administration, he is doomed forever to be compared with his fiscally talented predecessor, Democratic President Bill Clinton, whose administration oversaw one of largest expansions in the U.S. economy.

Clinton had for long been attacked by Republicans for being an economic softy. The economic slowdown that began in March, 2001, was for some time called “the Clinton recession,” thanks in large part to date-changing tactics by the private, pro-Bush National Bureau of Economic Research. But in fact, unlike Bush’s, Clinton’s legacy on the economy will be a positive one.

Unlike Bush, who inherited a robust economy from the Democrats, Clinton inherited an economy on the rocks. Under the fiscally reckless administrations of Ronald Reagan and George H.W. Bush, the national debt increased by a mind-boggling 40.9% . Even though the Republicans left Clinton with one of the worst federal deficits in U.S. history, his administration managed to push the government back to solvency and actually achieved a $236 billion surplus during his second term. In addition, the national debt actually decreased by 8.8% during Clinton's two terms in office.

Enter George W. Bush. Within a year, the impressive surplus was wiped out and unbelievably huge deficits were brought back. The On-Budget surplus left behind by Clinton was $86 billion in 2000; in 2006, the Bush administration had an On-Budget deficit of $434 billion. In addition, according to the nonpartisan Congressional Budget Office, the combination of tax cuts and expenditures in that time period increased the national debt by $2.6 trillion (ref. 41, CBO report). As a percentage of GDP, the national debt shot up 6.9% during Bush's first term alone.

Deceptively running as a "compassionate conservative" against Al Gore in 1999, Bush frequently promised voters that "help was on the way"--the implication being, of course, that the country was foundering under Clinton. In fact, according to the Economic Policy Institute, the median U.S. family’s household income was up 11.3% under Clinton; in Bush's first term household incomes slid by 2.9%. Job growth under Clinton spiked at 12%; during the Bush years, jobs grew by a meager 1.3%--and few offered health care or pension benefits. And for all his rants against "big government," federal spending was five times larger under Bush than it was under Clinton, outraging fiscal conservatives.

One of the costliest expenditures—one that grows with each passing second—remains the aftermath of the invasion of Iraq, which the neoconservative hawks who control the Bush administration deceived the American media, and hence much of the American public, into supporting. What was supposed to be a “slam dunk” victory costing no more than between $50 and $80 billion dollars has turned into a financial disaster. As of this writing, the war in Iraq costs $1.2 million dollars every five minutes, and is approaching $12 billion per month. Nobel Prize winning economist Joseph E. Stiglitz estimates that U.S. engagement in both Iraq and Afghanistan will result in a total cost to taxpayers of between $1.7 and $2.7 trillion within the next ten years. Over the next decades, American taxpayers will be required to cough up hundreds of billions of dollars just to pay interest on the debt created to fund the war!

The greatest deception of all--again, garbed in the cloak of compassionate conservativism--was the Republican-sponsored Prescription Drug Bill, which Bush signed into law on December 8, 2003. This bill was the "most fiscally irresponsible piece of legislation since the 1960s," U.S. Comptroller David Walker said in July, 2007. This legislation, sponsored by former House Speaker Dennis Hastert and zealously pushed through the GOP-controlled House by former Majority Leader Tom DeLay, was largely written by lobbyists for the pharmaceutical industry and contained a provision prohibiting the government from negotiating with drug companies for lower prices. With a stroke of a pen, Walker said, "eight trillion dollars [was] added to what was already a $15 to $20 trillion under-funding. We're not being realistic. We can't afford the promises we've already made."

The Denial Factor

Monstrous debts and deficits aside, perhaps the most outlandish thing of all is Bush’s own denial of the economic problems facing the United States. Now in the last year of his second term, Americans are witnessing the devastating results of this "bubble presidency.” As the stock market lurches, investment banks go belly-up, the dollar depreciates, oil prices skyrocket, inflation increases, and the mortgage meltdown has resulted in the most dramatic increase in homelessness since the Great Depression, Bush has—again, as of this writing—stated repeatedly that the United States is not in, or even headed toward, a recession.

This claim is at odds with the experts, who have been warning of a recession—a very bad one, in fact--for some time now. On August 23, 2006, Nouriel Roubini, president of Roubini Global Economics, warned that the United States was heading into a recession that would be “much nastier, deeper, and more protracted” than the 2001 recession. The online magazine Marketwatch.com reported Roubini’s prediction. It noted, however, that “while many economists share Roubini's concerns about imbalances in the global economy and in the U.S. housing sector, he stands nearly alone in predicting a recession next year.”

Roubini did not have to stand alone for long. Fourteen months later, Wells Fargo CEO John Stumpf told a Merrill Lynch banking conference in New York: "We have not seen a nationwide decline in housing like this since the Great Depression." Around the same time, Jim Melcher, who heads up Balestra Capital Partners, said he was “worried about a recession. Not a normal one, but a very bad one. The worst since the 1930s. I expect we’ll see clear sings of it in six months with a dramatic slowdown in the gross domestic product.” Four months later, on March 27, 2008, the Bureau of Economic Analysis reported that in the last quarter of 2007 the GNP had gained only 0.6%, a dramatic drop from the third quarter gains of 4.9%. Get ready for the "Panic of 2008" warned Trends Research Director Gerald Celente on November 11, 2007: “We are going to see economic times the like of which no living person has seen.” Celente, who correctly forecast the U.S. dollar’s dramatic depreciation over the past couple years, warned that the subprime mortgage meltdown and massive corporate losses will result in a drastic reduction in Americans' standards of living.

As these trend-making, highly visible industry insiders were clanging all the warning bells—their predictions were published widely in the media and across the Web—just what was the Leader of the Free World saying? On February 26, 2008, the same day economic reports showed the housing market had slumped 8.9% the previous year, Bush said in an interview on American Urban Radio Networks: “I don't think we will go in a recession. We're in a slowdown, and there's a difference.”

Bush didn’t explain what this “difference” is. The fact remains that the state of the economy worsens with each day, and that the situation is dire. Mass layoffs in February alone were the worst since Hurricane Katrina in 2005, with 177,374 people losing their jobs, according to the Department of Labor. In March, the Congressional Budget Office reported that the United States will soon have the greatest number of food stamp recipients—more than 28 million—since the federal program began in the 1960s, costing the Federal Treasury approximately $36 billion for the fiscal year and prompting the U.K.'s The Independent to report the event under the headline: USA 2008: The Great Depression.

Slowdown. Eh? Recession. What? Depression. Huh?!? As our president hop-scotches from script to script and the media plays up the worst of all worst-case scenarios, Americans are left feeling rather blank, wondering what will happen next. Well, I offer something that can't be denied: This country will pay a price—an astronomically enormous one—because of the denials, deceit, and overall gross fiscal mismanagement of the George W. Bush administration.