NYT's Krugman: Slumping U.S. economy not entirely Bush's fault

Posted Jul 8th 2008 3:30PM by Joseph Lazzaro
Filed under: Other Issues, Economic Data, Recession

New York Times (NYSE: NYT) columnist and economist Paul Krugman, author of The Conscience of a Liberal, would never be confused with a loyal backer of the economic policies of President Bush.

Still, Krugman, in the academic tradition that argues that a scholar's most important word is "valid," gives President Bush credit where credit is due -- or at least a lack of blame. Krugman says it's true that the U.S. economy is a mess, but it's not true that the bad economy is entirely President Bush's fault.

Krugman outlines the unfortunate reality regarding the U.S. economy's 2001-2008 performance: recession, followed by one of the weakest recoveries since World War II, followed by another slump that technically isn't a recession yet. When President Bush leaves office, Krugman says, the U.S. economy will have created five million jobs, not nearly enough to keep up with population growth. By contrast, 22 million jobs were created during the Clinton Administration.

Still, Krugman argues that to say President Bush is 100% responsible for the U.S. economy's dismal performance would be inaccurate, and not rigorous. The causes of the poor economic performance, in Krugman's view: the housing bubble and its end, rising health care costs, and skyrocketing raw material prices.

The latter two have substantially increased U.S. employers' costs, Krugman and many other economists agree, and Krugman argues this played a large role in this decade's weak job creation.

Economic Analysis: Kudos to Krugman for accurately assessing the source of low job creation: galloping heath care costs and raw material prices, factors beyond the U.S. president's control. We know from survey research in political science that presidents are blamed for the nation's economic woes, although they are rarely 100% responsible.

One caveat: Krugman says the Bush Administration's tax cut didn't work, but did not create the jobs dearth; the view from here is that a more-broad-based tax cut would have stimulated the economy more than the tax cut passed, which awarded large tax cuts to upper-income citizens.

Tags: gasoline prices, gdp, health care, inflation, inthenews, job creation, jobs, oil prices, Paul Krugman, The Conscience of a Liberal, The New York Times, TheNewYorkTimes, U.S. economy, unemployment