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Wednesday, October 7, 2009

Comparing & Contrasting Obama's Jobless Recovery with Bush's Bubble Economy

"Partisanship meets reality"

By: Ryan Jaroncyk
, THL Contributor

In a quick strike blog at The National Review, highly esteemed historian and columnist, Victor Davis Hanson, taunts critics while comparing the "jobless recovery" of 2004-2006 to the current "jobless recovery."

Hanson's thesis, buried in sarcasm, can be paraphrased as follows: The Republican economic recovery of 2004-2006 is superior to the Democratic economic recovery of today. It's no secret that Hanson was a staunch supporter of the Bush administration and is often a harsh critic of the Obama administration and Democratic-led Congress. However, in this blog, he appears to allow partisanship to cloud his sense of objectivity.

Following the 2000-2001 recession, the so-called "jobless recovery" produced low unemployment, low inflation, high GDP growth, and a booming stock market. Today's "jobless recovery," according to the consensus, is producing high unemployment, low GDP growth, and an improving, but still battered stock market.

From Hanson's perspective, the recovery of the Bush years is quite attractive compared to the present "recovery." Superficially, the hard data would appear to support Hanson's claim, but upon closer examination, he seems to completely misunderstand the cause of the 2008-2009 collapse.

With the benefit of recent history, we have now learned that the numbers of the 2004-2006 economy were a mirage. These were not boom years. They were bubble years. The rosy statistics were hiding a rotten foundation. On the government side of things, Bush and a Republican Congress were driving us deeper into debt.

Those in power continued to stretch the U.S. Dollar. The American consumer was borrowing and spending its way into unsustainable debt to fuel the stock market rise. China, Japan, and other foreign nations were enabling our debt-driven boom by lending us trillions.

In 2007, however, the bubble began to burst. By the end of the Bush years, the house of cards collapsed. Unemployment began to spike, GDP plummeted, the housing market was falling off a cliff, and the stock market took a nose dive.

In reality, we should not long for the economy of the mid 2000s, nor should we accept the "jobless recovery" of the present time. Both are based on massive deficit spending, skyrocketing debt, excessive borrowing, undisciplined money printing, artificially low interest rates, and Dollar devaluation.

Both "jobless recovery" economies are built on foundations of sand. In fact, the "jobless recovery" of 2009 is a direct result of the "jobless recovery" bubble economy of 2004-2006. The two are inextricably linked.

Sadly, the current Democratic administration and Democrat-led Congress seem hell-bent on returning us to the bubble economy of past years. Haven't we learned our lesson?

As Winston Churchill once said, "Those who fail to learn from history are doomed to repeat it."