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The Consequences of Conservative Economic Policy: A Tried and Failed Approach that Should Not Be Repeated
From the Center for American Progress, this report details why conservative economic policy has failed our nation time and time again.
Click here to download the full report as a PDF.
The Great Recession dealt a crushing blow to the well-being of the American people, but our economy had actually been in a tough spot for many years. Before President George W. Bush left a deep financial crisis and economic collapse on President Barack Obama’s doorstep, he presided over two terms of laissez-faire supply-side policies that yielded the weakest expansion in recent U.S. economic history, marked by tepid job growth, weak private investment, stagnant family incomes, and a host of other ills that mounting housing and financial bubbles helped partially obscure. That President Bush took no action to address the fundamental weakness of the American economy and protect it from financial collapse was a tragic failure—but it was a tragic failure to be expected by a conservative president practicing conservative economics.
This approach sowed the seeds for today’s federal budget deficit, financial crisis, and the Great Recession. And it is no less tragic that those who share that president’s philosophy—and who still retain power through their positions in Congress—are compounding their ideological brother’s mistakes by standing in the way of economic progress and growth.
After the Obama administration took office in January 2009, conservatives in Congress worked hard to weaken the American Recovery and Reinvestment Act, fought efforts to reform our financial system, and demanded tax breaks for the richest of the rich in exchange for extending unemployment benefits for those who lost their jobs through no fault of their own. Now, “Pledge to America” promises more of the same for the American people in the second decade of the 21st century. Theirs is a tried-and-failed economic strategy that continues to hold the nation back from growing prosperity. In this memo we will lay out the crippling consequences of conservative economic ideology over the past decade, today, and into the future.
Listening to conservatives, it would be easy to think that America’s economic woes began with the inauguration of President Barack Obama on January 20, 2009. In fact, upon taking office the Obama administration and a new Congress inherited from the previous administration an economy plunging into what threatened to be a second Great Depression. For the prior eight years, President George W. Bush and his administration pursued a one-trick economic policy of supply-side tax cutting that did nothing to address deep-seated structural problems but successfully produced federal budget deficits that left the country fiscally weak going into the Great Recession. At the same time, the Bush administration’s regulators stood by as the financial industry engaged in some of the most catastrophic and irresponsible practices seen in the history of financial markets.
In retrospect, some leading conservative economists admitted to these failings, but conservatives in Congress did not change their tune. The passage of the Temporary Asset Relief Program, or TARP, late in Bush’s presidency to bring stability to global financial markets on the edge of meltdown was necessary, but its design was hardly reflective of a new way of doing business. And since the changing of the guard in Washington in January 2009, conservatives in Congress have done every thing they can to obstruct efforts to fix the economic mess left at the end of the Bush era. With foot-dragging in committees, threats of filibuster, and other parliamentary tricks in the Senate—where governance rules allow even one lone senator to derail the entire legislative process—they have seriously weakened the national response to our nation’s economic woes.
It started with the American Recovery and Reinvestment Act, which conservative senators fought in general and then worked to weaken by stripping out more effective job-creating provisions in favor of less effective conservative priorities. These changes, some of which were disdained by even conservative economists, ensured that taxpayers got less economic bang for their buck than they should have. The Recovery Act saved or created millions of jobs, but it could have done more.
For the full brief, click here.
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