As someone who works for a liberal political magazine I’ve often caught grief for my support of the Clinton administration’s approach to monetary and fiscal policy. Today, though, those positive feelings about Bob Rubin et. al. only make me all the more worried about the wackiness that seems to be taking shape down in Austin, Texas.
For starters, Bush signaled on several fronts today that he plans to abandon Bill Clinton’s policy of not commenting on Fed policy and return to Bush, Sr.’s fairly disastrous policy of trying to jawbone the Fed into doing the administration’s bidding.
This is about more than sound bites. There’s an ethic about politics and fiscal and monetary policy which is implicit in this policy of silence.
It’s really not an exaggeration to say that everyone with a serious interest in economic matters thought Clinton’s move was a move in the right direction. Not only did Bush today himself “break” this rule. But his Press Secretary said it’s not a rule he intends to follow.
That’s for starters.
Then you have the increasingly reckless talk from the president-elect. The nation is in need of an “economic recovery.” The rate cut is good because it is a “strong statement that measures must be taken to make sure our economy does not go into a tailspin.”
A recovery? For the moment at least the economy is still growing. When asked about this, Bush responded: “I say ‘recovery’ because a lot of folks in this room [i.e., his mini-economic conference] have brought some pretty bad news.”
And, a tailspin? If one were inclined to be cheeky one might remind Bush, Jr. that this isn’t Reagan’s 1982 recession or his father’s 1990 recession. But cheekiness aside, is anyone talking about a “tailspin”?
It’s not too much to say that Presidents never use this kind of language. Never. It just doesn’t happen.
Bush said he believes the Fed’s rate cut is a signal to congress that they should pass his tax cut to further stimulate the economy. Actually, every analyst says that if there’s any signal it’s the opposite.
The Clintonites have complained volubly of late that the Bushies are trying to talk down the economy. And, admittedly, up until now there’s been a lot of spinning going on on both sides of this little rhetorical battle. But there’s something more going on in Bush’s comments. Something more than kicking the economy a bit for political advantage – which would be bad enough. There’s a recklessness at work here that transcends political calculation. An unseriousness about what the economy. Something juvenile.
Is it possible that the Bushies’ intuitive understanding of supply-side tax policy and fiscal stimulus doesn’t really compute outside the context of an economic downturn? Do they need a downturn? Are they stuck in a time-warp from the mid-seventies – when most of Bush’s economic hands cut their teeth?
I’m not sure whether this is the case or not. What I am increasingly sure of, however, is that these reckless statements are not simply rooted in political calculation.
In recent years Democrats have indulged the conceit that they were now the party of fiscal responsibility, in contrast to the Republicans, who had abandoned that mantle. Honestly, though, I didn’t know it had gotten this bad.
Next up, Bush’s wacky economic summit.
