Economy turnaround - war or tax cuts?

[BigBigBear]

Does anyone find it interesting that Bush pushed tax cuts through in 2001, and the economy did nothing...and went to war (in quite a hurry) and pushed more tax cuts through in 2003 and the economy responded?

Didn't his father go to war, only to see the economy start to respond 6-9 months later (too late to win the election?)

My theory: war is better for the economy than paltry (for middle class Americans) tax cuts, but if you do both at the same time, people will THINK it's the tax cuts that improved the economy. And no one would ever believe that it's actually the war spending that stimulates the economy. Even though it worked for FDR, and Nixon.

Thoughts? Anyone seen columns on this? Too tinfoil hat?

[T Roosevelt]

1. Turnaround?

What turnaround. There are still so many problems with this economy we'll be lucky if we're not witness to another depression...

[stereophonic]

5. In all fairness

To be fair, we have seen larger growths in the economy in the past two quarters than in the previous two years, with a reduction in jobless claims by over 3%. It's obvious that something is stimulating the economy, but if it hadn't responded to such massive tax cuts it could have been deemed as completely dead.

[Kathy in Cambridge]

8. In reality, it will take 8 additional quarters of 20% or more growth

to get to the same levels we were at in Jan. 2001

[alcuno]

12. Welcome to DU, stereophonic.

I am absolutely amazed that with all the juice poured into the economy, the jobs are still not there. I really thought that late last summer we would be steaming. The US economy needs about 120,000 new jobs created each month JUST to keep up with population growth and new workers entering the job market.

I remember watching CNBC last month and that idiot Lawrence Kudlow was making fun of an analyst predicting 97,000 new jobs in November. He was predicting 375,000 and the number came out at an abysmal 57,000. Unbelievable.

The jobless claims number is terribly misleading since many people simply give up looking for work. The lowest number that I have seen is 8.5 million Americans are unemployed and that does not even count the people who are considered under-employed.

I think that the real problem with the tax cuts is that they let their greed completely take them over; they put too little into the areas that really needed it and took too much for themselves. I am just stunned that so little has been accomplished with so much.

[thinkingwoman]

19. as a business owner

I'm not buying this economic growth bs. Everybody is still waaayyyy sllooooooooooooowwwwwwwww paying my accounts receivable. There was a 2-3 week period back at the end of Sept/first of Oct where money seemed to flow more easily than it had in a couple of years. But a screeching halt occured shortly after that and it's been like slogging through waist-high mud ever since.

Maybe Walmart is experiencing an upturn. Maybe Haliburton is seeing profits increase.

But midwestern small business is in serious pain. Don't believe the statistics being thrown about. They lie.

[Bronco69]

2. I don't see how war is stimulating the economy

and the tax cuts aren't either IMO. What makes you think war is better for the economy?

[ComerPerro]

3. The stock market doesn't mean shit

Look:

If you have a shit economy where the stock market is just struggling and prices are low, and then spend three years giving the richest Americans tons of money for doing nothing, why wouldn't you expect them to buy up the market for pennies on the dollar?

[Fixated]

7. .....

The market is often a little ahead of the economy though. It's hard to tell at this point.

[silverlib]

4. I don't think there's a turnaround in the economy...

I think the temporary upsurge in the stock market could be related to government contracts in Iraq.

I also think the temporary upbeat numbers for unemployment are screwed in many areas, but are also affected by the amount of soldiers serving overseas. When/if they come home and want to go back to work, will we count them?

[rfranklin]

9. Biggest bear rally in history....

folowing the biggest bubble in history. The pattern on the charts looks very much like what happened after 1929. Following that bear rally, the market cascaded down 80% from its high in 1929.

There is no such thing as a "jobless recovery," especially in an economy which is primarily based on consumer spending. The war effect will last for a while and then fizzle out.

[lcordero]

6. War did nothing but make the economy worse

Tourism is down and with that it has killed a huge part of every major cities economy.

[DrBB]

10. How's your job security? Even at the present rate

... Bush will have the worst job growth record since Hoover and yet it's a "turnaround"???

Let me ask everyone a question, or rather two questions. Assuming you're presently employed:

2. Sure you're not gonna get laid off this year?

3. If you did get laid off, sure you'd find a new job before your benefits ran out? With a Republican president and congress?

[Kathy in Cambridge]

11. That's Right-Greatest Job Losses Since Herbert Hoover

and more jobs lost that the previous eleven presidents combined.

[leftofthedial]

13. neither. there is no turnaround

the tax cuts definitely helped the stock market, as has the sharp rise in unemployment.

Both are temporary, since there soon will be no one able to buy any products. Consumers represent 2/3 of the American economy and the middle class has already shrunk by over 20%.

[Hell Hath No Fury]

14. There is no turnaround...

Not a real one. Read it and weep:


The massive tax cuts put forth by the Bush Administration as urgent economic and job stimulus have resulted in a record deficit, a "jobless" recovery, and contributed to in the most severe fiscal decline in over 20 years. OMB Watch, August 22, 2003 http://www.ombwatch.org/article/articleview/1747/1/18/

The American dollar continues to fall against the Euro, sterling and the Swiss franc due to fears about US trade and budget deficits.
Reuters courtesy of the Washington Post, December 29, 2003
http://www.washingtonpost.com/wp-dyn/articles/A38085-2003Dec29.html

The United States is experiencing its worst budget deficit in its history -- $374.2 billion -- under George W. Bush. Australian Financial Times, October 21, 2003
http://www.financialreview.com.au/articles/%202003/10/21/1066631380718.html

The national debt is scheduled to hit a record $7.4 trillion in 2004.
Associated Press courtesy of Truthout, June 16, 2003
http://www.truthout.org/docs_03/061703H.shtml

The United States has lost over 3 million jobs since George W. Bush took office. Bloomberg News courtesy of Rocky Mountain News, October 18, 2003
http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_2357182,0%200.html

[web63]

15. More Tax Cuts?????

I say give us more tax cuts.
Government is like a fire.
A fire needs fuel.
If you take away the fuel for the fire, it goes away.
Our money is fuel for the Politician fire.
We give less money, we get less Government.
Yeaaaaaaaaaaaaaa Meeeeeeeeeeee!!!!!!!!
Let's do it.

[BigBigBear]

16. Agreed

on all points of skepticism about the substance of the recovery - but growth rate did seem to move upward in the first two full quarters after Congress approved the initial $87 billion.

I am not oblivious to the deficits, nor under any illusions about how far these idiots have let the economy slide, nor how far till it returns to the point at which they inherited it, nor how paltry the tax cuts were in reality.

My simple question was, can we plausibly cite a sagging economy as a possible motive for this war and occupation? I believe we can.

[Hell Hath No Fury]

17. Nope...

that was and has always been about the oil in the region, going back to Dickie Cheney's leaked policy paper back when he was with the Bush I administration. This has been in the works for a VERY long time. Even when Clinton was in office Richard Perle and his buds were sending papers to Clinton telling him just what our actions/policies on the ME should be. Low and behold, it is EXACTLY what we are seeing right now.

This would have happened irregardless of how the ecomomy was doing.

The PNACers would have seen to it. 9/11 just gave them the best excuse.

[jpgray]

18. War spending and an investor's bacchanal? (nt)

[priller]

20. CHEAP & EASY DEBT

That's what is keeping the economy kicking. That keeps consumer spending going, which is by far the biggest engine in the economy. Yes, military spending has helped the economy, but it's a small part.