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.” [NBER.org, 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

[BLS.gov, accessed 6/4/13]

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.”

cbpp poverty rate

[CBPP.org, 9/14/11, citations removed]

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.” [CBPP.org, 11/18/10; CBPP.org, 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.”

deficit cbpp

[CBPP.org, 2/28/13; internal citations removed]