Saturday, May 30, 2015

Jeb Bush’s four percent fraud

There's an old Monty Python sketch in which a "Face the Press" interviewer grills the Minister for Home Affairs:
"You claimed that you would build 88,000 million, billion houses a year in the Greater London area alone. In fact, you've built only three in the last fifteen years. Are you a bit disappointed with this result?"
Given some of the recent pronouncements of his campaign, it's easy to imagine President Jeb Bush being subjected to similar shaming. After all, Jeb has been promising for months that if elected he will deliver four percent annual economic growth for the American people. As it turns out, since Ike was in the White House only two presidents—Democrats John F. Kennedy and Lyndon Johnson—averaged at least 4 percent GDP growth over their tenures. And no President named Bush ever reached that mark even once in 12 years.

Nevertheless, Reuters last week offered a fawning story ("How an off-the-cuff remark shaped Jeb Bush's economic vision for U.S.") about how Jeb came up with that magical target, if not any details on how he might hit it:

There were no fancy economic models or forecasts when former Florida Governor Jeb Bush first tossed out the idea that 4 percent annual growth should be the overarching goal for the U.S. economy.

But what started as a casual suggestion during a 2010 conference call with advisers to the George W. Bush Institute, a public policy center in Dallas, has now become the central economic idea of Bush's developing run for the White House.

Last Thursday, Jeb explained to a New Hampshire audience the birth of his sound bite:
"It's a nice round number. It's double the growth that we are growing at. It's not just an aspiration. It's doable."
Four is a nice round number. (It's also an even number and the square of two.) But so far, Bush has offered neither a plan for how he'll achieve it nor a reason why Americans should trust anyone named Bush to run the economy at all.

Head below the fold for more Bush strategy.

After all, four percent GDP growth isn't just higher than the post-World War II U.S. average; it is a figure that has been reached only 27 times in that period. And in that span, two of the worst performers in the White House were Jeb's father and brother.

As the historical record shows, the economy almost always does better with a Democrat in the Oval Office. (As the Washington Post noted in 2012, it does better still when Democrats control Congress, too.) In general, the economy has grown faster, job creation increased more quickly, incomes expanded more rapidly, and stock market returns accelerated when the country voted blue. In their 2014 paper, economists Alan Blinder and Mark Watson chalked up the Democrats' success to "mostly 'good luck,' with perhaps a touch of 'good policy.'"

But for would-be President Jeb Bush to ring the bell at four percent growth annually, he'll have to be better lucky than good. It's possible that he could inherit a booming economy from President Obama, who despite unending Republican obstructionism, rescued the American economy from the brink where George W. Bush left it. But history is working against Jeb in more ways than one. His economic team includes such right-wing luminaries as Glenn Hubbard, Arthur Laffer, Stephen Moore and Larry Kudlow, the men who helped Dubya deliver the worst eight-year economic performance since VJ Day. And James Glassman, the man credited as the inspiration for Jeb's "Four Percent Solution" was the author of a 2000 book that sounds like the punchline of another Monty Python joke: Dow 36,000.


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