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Bush's Recession?

Democrats are trying to blame the recession on George W. Bush. It's worse than partisanship--it's not true.

11:01 PM, Dec 4, 2001 • By FRED BARNES
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TOM DASCHLE, the Senate majority leader, says President Bush is handling the economy poorly. His evidence? The White House now projects budget deficits for the next several years. Representative Nita Lowey of New York, who runs the Democratic Congressional Campaign Committee, labels the economic downturn "George Bush's recession." Richard Gephardt, the House Democratic leader, insists Bush is "mismanaging the economy."

The press has played this Democratic assault as a return to sharp partisan conduct after several months of bipartisanship following the terrorist attacks on September 11. But Democrats are indulging in something more than that: extremely muddleheaded economic thinking. And this is what the media ought to be examining but aren't.

For starters, let's look at the economic facts. The economy began to grow more slowly last year, and a real downturn began in March 2001. By the third quarter, the economy had fallen into negative territory--in other words, contracting rather than growing. And last week, the National Bureau of Economic Research declared we're now experiencing a recession.

So the question is, what caused it? Democrats don't have a clue. They don't understand the difference between the economy and the federal budget. The two are not the same. Yet Daschle suggests that budget deficits, which are projected for the next several years but haven't happened yet, caused the recession. That, of course, is economically impossible. The economy, we now know--and Daschle knows--began to shrink before the deficits were projected. But even if they had been projected months ago, that wouldn't matter.

Budget projections of shortfalls don't cause recessions or downturns and never have. Actual deficits don't either. Remember the period of 1982 to 2000, the period of spectacular economic growth. For most of those years, there were budget deficits, often whopping deficits, far larger than the ones projected for 2003 and 2004. Democrats and liberal economists used to regard deficits as good because they supposedly spurred demand and thus made the economy grow. Now, without acknowledging the flip-flop, they claim deficits or just predictions of deficits have the opposite effect. Crazy, huh? Or maybe it's just mindless partisanship.

What about tax cuts? It would be one thing for Daschle to blame Bush's tax cuts for prompting projections of deficits in future budgets. They play a smaller role in this than the slowed economy or the burst of new spending since September 11. Still, in terms of static analysis, they might play some role in creating deficits. But Daschle is suggesting something different, namely that potential deficits in the future are hurting the economy now. That's impossible.

As for Lowey and Gephardt, it's hard to know what they're really talking about. When Lowey blamed Bush for the recession, she didn't explain how he caused it--and for good reason. He simply couldn't have caused it in so short a time as president. Besides, both Bush and the Federal Reserve were taking anti-recessionary steps--tax cuts and interest rate reductions, respectively. Absent these, the economy would probably be deeper in recession.

Finally, there's a job for the press in all this. Just to write it all off as partisan squabbling and political rhetoric isn't sufficient. There's a question that Democrats should be asked: Exactly what economic steps did Bush take or not take that caused the economy to sink into recession? I can't imagine a cogent answer, but at least they should be asked. If Republicans were making absurd economic claims, no doubt they'd be called on to justify them. The same should be true for Democrats.

Fred Barnes is executive editor of The Weekly Standard.