Political philosophy riding the economic merry-go-round – columns – wallowa county chieftain electricity and magnetism connect to form


The philosopher George Santayana famously said, “Those who cannot remember the past are condemned to repeat it.” Keeping this maxim in mind, I would like to review a few broad facts about the tax policies and economic records of our last three two-term presidents, with a skeptical eye toward measuring the self-proclaimed “success” of our current commander in chief.

When President Bill Clinton took office 25 years ago, he inherited a 1993 budget deficit of $255 billion and an unemployment rate of 7.3 percent. He raised taxes in upper income brackets, and although Republicans predicted disaster, eight years later he handed George W. Bush a 2001 budget surplus of $128 billion, an unemployment rate of 4.2 percent and a stock market that had tripled in value during Clinton’s two terms in office.

But Bush declared that several consecutive budget surpluses meant that the federal government was overtaxing us, so he lowered rates, especially on wealthy taxpayers. And like President Clinton, he relaxed restrictions in the banking and housing industries, making credit easier to get.

George W. Bush’s last year in office saw the collapse of long-term investment firms such as Merrill Lynch, and the bailout of AIG and the entire banking system. His final act as president was to sign legislation to help salvage a failing U.S. auto industry.

President Obama inherited a 2009 budget deficit of $1.43 trillion and an economy that was hemorrhaging jobs at a rate of about half a million per month. The stock market bottomed out six weeks after Obama took office with the Dow below 7000, which was down about 40 percent from when Bush was inaugurated in 2001.

The recovery from the deepest recession since the Great Depression was far from immediate, and the lagging indicator of unemployment reached its worst rate of 10 percent in October 2009. But the slow, consistent upward movement of the economy was underway, and by January 2017, President Obama was able to hand over a 2017 budget deficit of $666 billion, an unemployment rate of 4.8 percent, and a Dow Jones average at 20,000 points.

With the economy trending positively, it was not surprising that President Trump’s numbers continued to move in the right direction throughout 2017. By December of last year, the Dow had reached 25,000, which was an increase of about 25 percent in Trump’s first year.

The initial reaction of investors in the first few weeks after the law was passed was euphoric. The market climbed in January, and some companies handed out $1,000 bonuses to employees. But that response has been tempered since then, and the stock market dropped in February, and has now been relatively stagnant for about four months.

And now that President Trump has decided to wage a trade war with other countries, there are different elements of uncertainty added. One day he announces sweeping new tariffs, and a week later, he declares that some countries will be exempt.

Bringing the matter closer to home, our tax preparer has estimated that my wife Pepper and I will pay about $500 less in federal taxes next year under the new law. But we are not celebrating, because $40 a month will not go far if recent tax credits that we have enjoyed under the Affordable Care Act are undermined.

Rising health insurance premiums are anticipated because of the elimination of the individual mandate, and the 2018 budget deficit is now projected by some analysts to once again exceed $1 trillion. That is poor fiscal management during a year where the economy is generally humming. We have seen this movie before. We had better sober up before it is too late to avoid repeating our previous failed national economic experiments.