Today, the notion of a federal budget surplus is almost unfathomable, but as a result of President Clinton’s economic policies America’s finances were actually in the black at the beginning of George W. Bush’s presidency. The current deficits are largely attributable to Bush’s signature policy “achievements” — the enactment of huge tax cuts that overwhelmingly favored the wealthy and wars that were not paid for — and the dramatic loss of revenue caused by the economic collapse under his watch.

Not surprisingly, the Bush Presidential Library and Museum presents the 43rd president’s economic record in a much more positive light. Although deficits go unmentioned, a display touting the Bush tax cuts boasts that they “led to a sustained period of economic growth.” In reality, Bush presided over a historically weak economy that featured sluggish growth, falling incomes, and increased poverty – and that was before the meltdown that pushed the nation to the brink of a depression.

The library’s presentation of the financial crisis is similarly rosy, as it denies the failure of Bush’s anti-regulation, “free-market” philosophy and gives the impression that Bush solved the problem before leaving office. However, while Bush did sign a bailout of the nation’s largest financial institutions, he left behind the most devastating recession in recent memory. As a result, much of President Obama’s first term was spent addressing the miserable conditions he inherited, and the long-term consequences of Bush’s economic legacy are still being felt today by many Americans.


Bush Tax Cuts signing

Bush’s Story: Tax Cuts “Led to a Sustained Period of Economic Growth”

“Empower Growth” Display at George W. Bush Presidential Library and Museum, photo taken May 3-4, 2013.

Bush Library Claims President Bush’s Tax Cuts “Led To A Sustained Period Of Economic Growth.” According to a display (pictured above) labeled “Empower Growth” at the Bush Library, “To help American workers, businesses, and entrepreneurs thrive, President Bush worked with Congress to enact the largest tax relief in two decades. His tax reforms allowed individuals and businesses to keep more of their hard-earned dollars, which they could use to expand the economy and create jobs. These reforms reduced tax rates for all taxpaying Americans and led to a sustained period of economic growth.”

The Whole Story: Bush Tax Cuts were Followed by Historically Poor Economic Performance

Bush Tax Cuts Were Followed By “The Decade With The Slowest Average Annual Growth Since World War II.” According to the New York Times, “Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7. The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 — the dreaded 1970s — but it still had 3.21 percent average growth.” [New York Times, 11/18/10]

  • GDP Grew Half As Much From 2001 To 2010 As From 1991 To 2000.” According to Slate, “Unfortunately, the tax cuts never translated into robust economic growth, either. Indeed, the aughts saw the worst growth since World War II. From 2001 to 2007, annual GDP growth averaged just 2.4 percent per year, lower than in any other postwar business cycle. The contrast is starker still when judging against the previous decade. In real terms, GDP grew half as much from 2001 to 2010 as from 1991 to 2000.” [Slate, 6/8/11]
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Under Bush, Household Income Fell For The First Time On Record. According to Slate, “Put simply, the aughts were a decade of income stagnation: The tax cuts failed to bolster most taxpayers’ earnings, even before the recession hit. Median real wages actually dropped from 2003 to 2007. Household income from business-cycle peak to business-cycle peak declined for the first time since tracking started in 1967.” [Slate, 6/8/11]

Under Bush, African-American Job Growth Was Historically Weak. According to the Center for American Progress, “Over the course of the Bush economic cycle, African-American employment increased by only 900,000 jobs, or 11,000 jobs per month. In both absolute and percentage terms growth terms, this is the worst employment growth for African Americans over an economic cycle since the Labor Department began reporting black employment patterns in 1972. The 0.9 percent average monthly increase in African-American employment during the Bush cycle is roughly one-quarter of the 2.9 percent average monthly increase in the 1980s, and barely one-third of the average monthly increase of the 1990s.” [Center for American Progress, February 2009]

Under Bush, “Women’s Employment Growth Declined, For The First Time Since 1948.” According to the Center for American Progress, “The Bush tax cuts did nothing to promote expanded employment opportunities for women. Looking at the average monthly growth in the ratio of employed women to the female population—a measure that better accounts for the variation in women’s labor force participation since 1948—women’s employment growth declined, for the first time since 1948, during the Bush economic cycle. Over the course of the economic cycle from March 2001 to December 2007, the employment-to-population ratio for women declined at an average annualized monthly rate of -0.3 percent. In all previous post-World War II economic cycles, the employment-to-population ratio for women grew, ranging from 0.6 percent in the 1990s cycle to 1.9 percent per month in the 1970s.” [Center for American Progress, February 2009]

Under Bush, “Overall Poverty, African-American Poverty, And Child Poverty All Increased.” According to the Center for American Progress, “The Census Bureau began to track poverty statistics in 1959. Since then, the U.S. economy has experienced six business cycles, not counting the brief recovery in the double-dip recession of the early 1980s. In four of those six cycles, the number and percentage of Americans in poverty declined significantly. In contrast, during the Bush economic cycle from 2000 to 2007, overall poverty, African-American poverty, and child poverty all increased—giving the Bush cycle the worst record on poverty of any economic cycle.” [Center for American Progress, February 2009]

  • “Only One Other Economic Cycle Saw An Increase In Poverty Since The Census Bureau Began Tracking Poverty Data.” During the Bush economic cycle, the U.S. economy saw a greater percentage of its population fall into poverty than during any previous cycle on record. In 2007, 12.5 percent of the U.S. population was in poverty, up 1.2 percentage points from 11.3 percent in 2000, the previous peak of economic activity when looking at annual data. That means that an additional 5.7 million Americans were in poverty over that period. Only one other economic cycle saw an increase in poverty since the Census Bureau began tracking poverty data. That period, from 1974 to 1979, had a 2.7 million (0.5 percentage point) increase in poverty, less than half the Bush increase. Every other major cycle saw a decrease in poverty of at least 1.5 percentage points and as much as 10.3 percentage points. In contrast, during the 1990s cycle, the number of people in poverty dropped by over 2 million.” [Center for American Progress, February 2009]

Nearly 40 Percent Of Bush Tax Cuts Went To The Top 1 Percent Of Earners. According to Slate, “But the benefits mostly accrued to the rich, according to the nonpartisan Tax Policy Center. The think tank reports that between 2001 and 2008, the bottom 80 percent of filers received about 35 percent of the cuts. The top 20 percent received about 65 percent—and the top 1 percent alone claimed 38 percent.” [Slate, 6/8/11]

Bush Tax Cuts Added $2.6 Trillion To Public Debt From 2001-10. According to the Economic Policy Institute, “From 2001 through 2010, the cuts added $2.6 trillion to the public debt, nearly 50% of the total debt accrued during this period.” [, 6/1/11]

CBPP: In 2019, “Almost Half” Of Public Debt Will Be Attributable To Bush-Era Tax Cuts And Wars. According to the Center on Budget and Policy Priorities, “Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for nearly $6 trillion in deficits in 2009 through 2019 (including associated debt-service costs of $1.4 trillion). By 2019, we estimate that these two policies will account for almost half — over $8 trillion — of the $17 trillion in debt that will be owed under current policies. These impacts easily dwarf the stimulus and financial rescues, which will account for less than $2 trillion (just over 10 percent) of the debt at that time. Furthermore, unlike those temporary costs, these inherited policies do not fade away as the economy recovers.” [, 2/28/13]


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Financial Crisis and Great Recession tradingfloor

Bush’s Story: The Financial Crisis Was Solved Before Bush Left Office

Bush Library Erases Administration’s Role In The Financial Crisis And Suggests Problems Were Solved Before He Left Office. The following photographs are from the George W. Bush Library and Museum display on the financial crisis:

Display at George W. Bush Presidential Library and Museum, photos taken May 3-4, 2013.

The Whole Story: Bush Administration’s Anti-Regulation Philosophy Contributed to Failure to Prevent Financial Meltdown

Experts Say Bush “Bears Part Of The Blame” For The Financial Crisis Due To “Personnel Choices” And “Overarching Antipathy Toward Regulation.” According to the New York Times, “And while economists and other experts say there are plenty of culprits — Democrats and Republicans in Congress, the Federal Reserve, an overzealous home-lending industry, banks and also Mr. Bush’s predecessor, Bill Clinton — they do agree that the Bush administration bears part of the blame. These experts, from both political parties, say Mr. Bush’s early personnel choices and overarching antipathy toward regulation created a climate, that, if it did not set off the turmoil, almost certainly aggravated it. [New York Times, 9/19/08]

Bush Administration “Backed Off Proposed Crackdowns” On Risky Lending And “Ignored Remarkably Prescient Warnings That Foretold The Financial Meltdown.” According to the Associated Press, “The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents. […] Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.” [Associated Press, 12/1/08]

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Bush’s First Two Treasury Secretaries Lacked “Wall Street Expertise” And Were Considered “Less Comfortable With The Mysteries Of Markets.” According to the New York Times, “The president’s first two Treasury secretaries, for instance, lacked the kind of Wall Street expertise that might have helped them raise red flags about the use of complex financial instruments that are at the heart of the crisis. […] Mr. Bush’s first two Treasury secretaries, Paul H. O’Neill and John W. Snow, came from top jobs in industry, not Wall Street. They were viewed in Washington as advocating the interests of business, and being less comfortable with the mysteries of markets.” [New York Times, 9/19/08]

Former Reagan Adviser Bartlett: “The President Erred… By Appointing Two Secretaries Who Had No Background In Finance.” According to the New York Times, ““The primary agency responsible for keeping an eye on these things is, and should be, the Treasury Department, and I think the president erred in the first place by appointing two secretaries who had no background in finance,” said Bruce R. Bartlett, a Republican economist who worked for President Ronald Reagan and President George H. W. Bush.” [New York Times, 9/19/08]

Bush Treasury Secretary Henry Paulson Was “Wary” Of Additional Regulation Of Derivatives. According to ProPublica, “In June, Treasury Secretary Paulson told the Washington Post that in one of his first meetings with President Bush, he warned that the growing use of derivatives posed a fundamental risk to the market. If that is the case, he didn’t say so publicly. In response to a written question by Sen. Mike Crapo (R-ID) submitted at the Treasury Secretary’s Senate confirmation hearing in June 2006, Paulson said he was ‘wary’ of proposals to strengthen regulation of derivatives because of their importance in managing risk.” [ProPublica, 10/6/08]

Paulson Warned That Derivatives Regulation “Could Have Significant Unintended Consequences.” According to ProPublica, at his Senate confirmation hearing, Henry Paulson responded to a question about derivatives regulation by saying, “I believe these proposals could have significant unintended consequences for the risk-management functions that the markets – whether over-the –counter or exchange-based – perform in our economy. It is my view that absent a clearly demonstrated need, we should be wary of major changes to the manner in which we regulate our derivatives markets. The importance of derivatives markets in the U.S. economy should not be taken lightly, as businesses, financial institutions, and investors throughout the economy rely on these markets to manage their risks and to protect themselves from market volatility. These markets have contributed significantly to our economy’s ability to withstand and respond to various market stresses and imbalances.” [ProPublica, 10/6/08]

Federal Reserve Chairman Bernanke Dismissed Concerns About Derivatives By Saying “Very Sophisticated Financial Institutions” Had Incentives “To Use Them Properly.” According to ProPublica, at his Senate confirmation hearing, Federal Reserve Chairman Ben Bernanke responded to a question characterizing derivatives as “time bombs” by saying, “I am more sanguine about derivatives than the position you have just suggested. I think, generally speaking, they are very valuable. They provide methods by which risks can be shared, sliced, and diced, and given to those most willing to bear them. They add, I believe, to the flexibility of the financial system in many different ways. With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well managed and do not create excessive risk in their institutions.” [ProPublica, 10/6/08]

Former Bush Fed Chairman Greenspan “Admitted That He Had Put Too Much Faith In The Self-Correcting Power Of Free Markets.” According to the New York Times, “But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. ‘Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,’ he told the House Committee on Oversight and Government Reform. […] He noted that the immense and largely unregulated business of spreading financial risk widely, through the use of exotic financial instruments called derivatives, had gotten out of control and had added to the havoc of today’s crisis. As far back as 1994, Mr. Greenspan staunchly and successfully opposed tougher regulation on derivatives.” [New York Times, 10/23/08]

Bush SEC Chief Christopher Cox Opposed Derivatives Regulation While In Congress. According to ProPublica, “Securities and Exchange Commission Chairman Cox now leads the call for increased regulation of derivatives. In testimony before the Senate Banking Committee on September 23, he singled out credit derivatives in particular, pointing out that the market in credit default swaps is ‘regulated by absolutely no one’ making it ‘ripe for fraud and manipulation.’ Cox has long known about the pitfalls of poorly understood hedging instruments; as a Congressman, he represented Orange County, California, when it declared bankruptcy in 1994 after its investments in derivatives went badly awry. But at the time, he did not join calls to regulate them: ‘I’m concerned that now anything called a derivative will be considered inherent evil in Congress,’ Cox said, according to the Orange County Register. ‘It is sort of like a fire hose: In the wrong hands, it is dangerous.’ Did his opinion evolve by the time he was confirmed as SEC Chairman? You won’t find any clues by looking at his Senate confirmation hearing of July 2005. That is because no senator asked him a question about the topic.” [ProPublica, 10/6/08]

Former SEC Chief In 2008: “The Commission In Recent Years Has Handcuffed The Inspection And Enforcement Division.” According to the Washington Post, “Although Cox speaks of staying calm in the face of financial turmoil, lawmakers across the political spectrum counter that this is actually another way of saying that his agency remained passive during the worst global financial crisis in decades. And they say that Cox’s stewardship before this year — focusing on deregulation as the agency’s staff shrank — laid the groundwork for the meltdown. ‘The commission in recent years has handcuffed the inspection and enforcement division,’ said Arthur Levitt, SEC chairman during the Clinton administration. ‘The environment was not conducive to proactive enforcement activity.’” [Washington Post, 12/24/08]

SEC Inspector General Review Found Agency “Did Not Take Actions” To Address “Numerous Potential Red Flags” At Bear Stearns Before Its Collapse. According to the Washington Post, “Under [Christopher] Cox, the SEC has taken particular heat for its oversight of the five major investment banks — all finance titans synonymous with Wall Street. […] The March collapse of Bear Stearns illustrated an array of agency shortcomings, according to a review by the SEC’s inspector general. He concluded that agency officials had been aware of ‘numerous potential red flags’ at Bear Stearns ‘but did not take actions to limit these risk factors.’ ‘It is undisputable,’ the inspector general concluded, that the “program failed to carry out its mission in its oversight of Bear Stearns.’” [Washington Post, 12/24/08]

Washington Post: “The Agency Also Knew About But Failed To Adequately Address Various Weaknesses In Bear Stearns’s Management Of Mortgage Risk.” According to the Washington Post, “The SEC was aware that the firm’s exposure to mortgage securities exceeded its internal limits and represented a significant risk, but the agency made no effort to reduce that exposure, the report found. The agency also knew about but failed to adequately address various weaknesses in Bear Stearns’s management of mortgage risk, such as a lack of expertise, persistent understaffing and an apparent lack of independence between risk managers and traders. In violation of an SEC rule, agency officials also allowed Bear Stearns and other investment banks to entrust critical checks and balances to internal, rather than outside auditors, the report found.” [Washington Post, 12/24/08]

Bush SEC Chairman Christopher Cox Acknowledged Failure Of “Voluntary Supervision Program” Enacted Under His Predecessor In 2004. According to the New York Times, “The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down. […] Because it is a relatively small agency, the S.E.C. tries to extend its reach over the vast financial services industry by relying heavily on self-regulation by stock exchanges, mutual funds, brokerage firms and publicly traded corporations. The program Mr. Cox abolished was unanimously approved in 2004 by the commission under his predecessor, William H. Donaldson.” [New York Times, 9/27/08]

Failed Program Was Created “After Heavy Lobbying” From Major Investment Banks, Including Goldman Sachs, Which Was Led By Future Treasury Secretary Henry Paulson. According to the New York Times, “Known by the clumsy title of ‘consolidated supervised entities,’ the program allowed the S.E.C. to monitor the parent companies of major Wall Street firms, even though technically the agency had authority over only the firms’ brokerage firm components. The commission created the program after heavy lobbying for the plan from all five big investment banks. At the time, Mr. Paulson was the head of Goldman Sachs. He left two years later to become the Treasury secretary and has been the architect of the administration’s bailout plan. The investment banks favored the S.E.C. as their umbrella regulator because that let them avoid regulation of their fast-growing European operations by the European Union.” [New York Times, 9/27/08]

The Whole Story: Bush Left Behind a Devastating Recession that Produced Massive Job Losses, Increasing Poverty, and Soaring Deficits

Bush Left Office Amid The Longest Recession Since World War II. According to the National Bureau of Economic Research, “The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months. In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.” [, 9/20/10]

The Economy Was Losing Hundreds Of Thousands Of Jobs Per Month At The Start Of President Obama’s First Term. According to the Bureau of Labor Statistics, the economy shed 794,000 jobs in January 2009, 695,000 in February 2009, 830,000 in March 2009, and 704,000 in April 2009 – a four-month average of 755,750 lost jobs per month.

monthly jobs lost

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Recession-Fueled Unemployment Spiked At 10 Percent, Double The Rate Before The Downturn. According to the Bureau of Labor Statistics, “One of the most widely recognized indicators of a recession is higher unemployment rates. In December 2007, the national unemployment rate was 5.0 percent, and it had been at or below that rate for the previous 30 months. At the end of the recession, in June 2009, it was 9.5 percent. In the months after the recession, the unemployment rate peaked at 10.0 percent (in October 2009). Before this, the most recent months with unemployment rates over 10.0 percent were September 1982 through June 1983, during which time the unemployment rate peaked at 10.8 percent.

Recession Pushed The Poverty Rate Over 15 Percent, Up From 11.3 Percent In 2000. According to the Center on Budget and Policy Priorities, “By 2010, the number of people in poverty had risen by 8.9 million since 2007, the last year before the economy turned down. These numbers largely reflect the struggling labor market. […] Adding to this gloomy picture is the fact that the poverty rate has increased significantly in seven of the last ten years, including most of the years from 2001 to 2007, a time when the overall economy was growing (see Figure 1). For the poverty rate to be higher at the peak year of an economic recovery (2007) than in the last year of the previous recession (2001) is unprecedented (and adds to the evidence that the economic growth of that period was not widely shared). Thus, even before the recession began, a growing number of Americans were already being left behind by the economy.”

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Recession “Battered The Budget” By Driving Up Spending On Safety Net Programs And Causing Tax Revenues To Fall. According to the Center on Budget and Policy Priorities (CBPP), “When unemployment rises and incomes stagnate in a recession, the federal budget responds automatically: tax collections shrink, and spending goes up for programs like unemployment insurance, Social Security, and Food Stamps.” In addition, according to CBPP, “The recession battered the budget, driving down tax revenues and swelling outlays for unemployment insurance, food stamps, and other safety net programs.  We calculate that changes in the economic outlook since the summer of 2008 account for over $400 billion of the deficit in both 2009 and 2010 and smaller amounts in later years.  We estimate that the downturn has pushed up deficits by $2.5 trillion (including the associated interest costs) over the 2009-2018 period.” [, 11/18/10;, 5/10/11, citations removed]

Bush Left Behind A Projected Deficit Of $1.2 Trillion For 2009. According to the Washington Times: “The Congressional Budget Office announced a projected fiscal 2009 deficit of $1.2 trillion even if Congress doesn’t enact any new programs. […] About the only person who was silent on the deficit projection was Mr. Bush, who took office facing a surplus but who saw spending balloon and the country notch the highest deficits on record.” [Washington Times, 1/8/09]

CBPP: “Without The Economic Downturn And The Fiscal Policies Of The Previous Administration, The Budget Would Be Roughly In Balance This Decade.” According to the Center on Budget and Policy Priorities, “The deficit for fiscal year 2009 — which began almost four months before President Obama took office — was $1.4 trillion and, at 10 percent of Gross Domestic Product (GDP), marked the largest deficit relative to the economy since the end of World War II.  Annual deficits in 2010 through 2012, while slightly lower, each topped $1 trillion.  If current policies remain in place, deficits are expected to range between $600 billion and $900 billion for the rest of this decade, reaching a low around 2015 before climbing again. […] Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance in this decade.  Even if we regard the economic downturn as unavoidable, we would have entered it with a much smaller debt — allowing us to absorb the recession’s damage to the budget and the cost of economic recovery measures, while keeping debt comfortably below 50 percent of GDP.”

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