PrintFebruary 2, 2010
The Lost Decade
President Obama called the "oughts" (2000-2009) the "lost decade." That was his way, yet again, of blaming Bush. More precisely, it was Obama heeding the advice of Homer Simpson.
The three little sentences that will get you through life. Number 1: Cover for me. Number 2: Oh, good idea, Boss! Number 3: It was like that when I got here.
It was like that when Obama got there. The whole decade was lost when he got there.
Or perhaps President Obama was not channeling Homer Simpson, but was channeling James Carville channeling Homer Simpson.
Democrats would not be playing the blame game with one another for the [Massachusetts] loss or for the health care debacle if they had only pointed fingers at those (or in this case, the one) who put Americans (and most of the world) in the predicament we're in: George W. Bush.
Not only did Bush do it, but he did it all by himself: "the one." The world was one of peace and prosperity, birds singing, and children playing, and then, whammo, Bush got selected. All of a sudden, endless war, exploding debt, Great Recession, and torture in Dick Cheney's personal dungeon.
Barack Obama, being more nuanced than James Carville, put it this way in his State of the Union address, also known as his 137th Blame Bush Address.
We can't afford another so-called economic "expansion" like the one from the last decade -- what some call the ‘lost decade' -- where jobs grew more slowly than during any prior expansion; where the income of the average American household declined while the cost of health care and tuition reached record highs; where prosperity was built on a housing bubble and financial speculation.
Compared to other recent decades, he was right. See the table below.
Real GDP Annual Growth Rate (%) | Annual Employment Growth Rate (%) | Real Disposable Personal Income Annual Growth Rate (%) | |
50s | 4.2 | 2.2 | N/A |
60s | 4.3 | 2.8 | 4.5 |
70s | 3.3 | 2.4 | 3.5 |
80s | 3.0 | 1.8 | 3.1 |
90s | 3.3 | 1.8 | 3.1 |
00s | 1.8 | 0.0 | 2.5 |
But before we go blaming all that on Bush, let's take a closer look. The oughts were a bit uneven. As it happens, Barack Obama was an Illinois state senator in the first half of the oughts and only came on the national scene, first as U.S. Senator and then as president, in the second half. How do those two halves compare?
Real GDP Annual Growth Rate (%) | Annual Employment Growth Rate (%) | Real Disposable Personal Income Annual Growth Rate (%) | |
Obama in Illinois | 2.4 | 0.36 | 2.7 |
Senator & President Obama | 1.2 | -0.21 | 1.9 |
The U.S. economy got significantly worse when Barack Obama entered national politics. Call the Obama era the "lost half of the lost decade."
Before that, Obama was an Illinois state senator. When he started serving in 1997, the Illinois unemployment rate was slightly below the national average: 4.8% versus 4.9%. By his last four years in the Illinois senate, 2001-2004, the Illinois unemployment rate was over 6%, and 0.7% higher than the national average. His tenure as state senator saw his state's unemployment rate rise from 0.1% below the national average to 0.7% above it. Those were "the last eight years" before he entered national office.
Congress changed hands a few times in the last several years. After the 1994 elections, Republicans controlled both houses of Congress through 2000. They had them both again from 2003 through 2006. But in 2001 and 2002, the Senate, with the party-switch of Jim Jeffords, was under Democrat control. And since 2006, both houses were under Democrat control. How did the economy do in these various phases? See the table below.
Real GDP Annual Growth Rate (%) | Annual Employment Growth Rate (%) | Real Disposable Personal Income Annual Growth Rate (%) | |
All GOP (95-00) | 3.9 | 2.2 | 3.8 |
Split (01-02) | 1.2 | -0.87 | 2.6 |
All GOP (03-06) | 3.0 | 1.3 | 3.2 |
All Dem (07-09) | 0.24 | -1.5 | 0.94 |
So that "lost decade" was really just five lost years: the years when Republicans did not control Congress. When Republicans did control Congress, all of ten years in the last eighty, the economy did just fine -- better than most recent decade averages.
Let me be clear. We got "lost" only when Democrats took over Congress. That is a fact.
What Obama, Carville, and I are employing is the post hoc ergo propter hoc logical fallacy (after this, therefore because of this). Except I'm admitting it, and they aren't.
I say that since the Illinois unemployment rate went down farther (relative to the national rate) the longer Obama was in the Illinois senate, it was Obama's fault. Since the U.S. economy got worse the longer he was in national office, that was his fault, too.
That fallacious logic is exactly what Obama, Carville, and the Democrats have been doing nonstop since 2008 at least, from "the last eight years" to "the lost decade." Since Bush was president when things turned sour in 2008, it was all his fault. And even more magically, they turn one lousy year under Bush -- 2008 -- into an entire decade.
Tell me, how did George Bush cause a global housing crisis? In fact, the house price decline in the U.S. in 2008 matched the median decline for 52 countries analyzed by the IMF over that same period. Housing prices declined more in Spain, Ireland, Norway, Australia, France, Finland, Denmark, the U.K., the United Arab Emirates, and eleven other countries than in the U.S.
How did Bush cause a housing bubble from Australia to Iceland, Latvia, and the UAE?
Tell me also, how did Bush cause recessions all over the world, especially when most were simultaneous with ours, or even preceded ours, and most were also deeper?
How was the "lost decade" Bush's fault when for at least the first eight years of that decade, the U.S. fared better than Europe and much of the developed world? According to OECD statistics, real GDP in the US grew 22% over the eight years of 2000 through 2007 (last year of available data). In that same period, the European Union grew 21%, and our friends France and Germany grew 18% and 12% respectively (all Purchasing Power Parity comparisons). Japan grew 15%. If it was a lost decade for the U.S., then it was beyond lost for Europe and Japan.
Just to remind everyone, George Bush was not president of Europe or Japan.
How is it that George Bush, who had a Republican Congress for only four of his eight years, and never with a filibuster-proof majority in the Senate, could cause housing bubbles and recessions around the globe?
How are Democrats, who controlled both houses of Congress since 2006 and now have a filibuster-proof majority in the Senate and Obama in the White House, totally blameless? Especially since the really bad stuff of this last decade (see above table) happened in those very years?
If we are all to play by the post hoc ergo propter hoc rules, then Barack Obama increased unemployment in Illinois and made GDP, jobs, and personal income growth worse off. In fact, a Democrat Congress causes economic stagnation, and a Republican Congress causes economic growth.
It may be a logical fallacy, but I consider those conclusions much more plausible than "Bush did it."
By the way, by writing this article, I saved or created one million jobs. (It's a tad liberating to just make up stuff. That must be why Joe "we kicked Hezbollah out of Lebanon" Biden always seems so at ease.)
Randall Hoven can be contacted at randall.hoven@gmail.com or via his web site, randallhoven.com.
