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Saturday, October 18, 2008

Bush: Economic Liberal

A few weeks ago, I examined President Bush's legacy. As it turns out, my analysis is likely to be obselete. That's because the analysis was done prior to the financial meltdown and the manner in which this bailout will play out will most certainly affect his legacy. If this financial meltdown leads to a bad recession, then I believe his legacy will continue to remain mixed as I wrote. If, on the other hand, it leads to a long and painful depression, then that will tarnish President Bush's legacy in a manner that will make his Presidency among the worst of all time.

One thing I don't have to wait to analyze though is President Bush's legacy as an economic conservative. On this issue he has failed miserably. In fact, his record is so economically liberal that in my opinion it challenges the economic liberalism of Franklin Delano Roosevelt.

Now, President Bush endeared the hearts of economic and fiscal conservatives everywhere right away when he passed sweeping and across the board tax cuts to combat the weakening economy in 2001. Ironically enough, the most economically conservative idea that President Bush offered never became law when he pushed for privatizing social security accounts. Bush has also shown great conservative economic credentials on the issue of trade. We have seen very few more pro free trade Presidents than George W. Bush. As a result, we have had a landmark agreement with the Latin American sphere as well as smaller agreements with the Far East and Middle East. Still, this is where his conservative economic record ends and his liberal economic record is much longer.

The biggest affront that President Bush has perpetrated to economic conservatism has of course been spending. Rather than curbing spending when he implemented these tax cuts, he allowed the Congress that his own party controlled to go on unlimited spending sprees without ever once vetoing one budget due to the pork in it.

Spending is just one way to look at President Bush's economic liberalism. Another way to look at his economic liberalism is the massive increase in government bureaucracy under his administration. Both of No Child Left Behind and the creation of the Department of Homeland Security added tens of thousands of new bureaucrats into the Federal government. Nationalizing education may have been a hallmark of Compassionate Conservatism but it was certainly not economic conservatism.

Besides this, President Bush was also the architect of the massive new prescription drug benefit program. Putting to the side the merits of providing government subsidies for seniors struggling to pay for prescription drugs, this new roughly $70 billion program (in its inception and it will likely grow) is the furthest thing from economic conservatism. President Bush also signed into law the massive new highway bill in 2005. This nearly $300 billion bill was nothing more than a series of giveaways by the Federal government for local and state projects. It also appears that the highway bill was a major boon personally for its main Congressional architect Dennis Hastert. In July of this year, President Bush signed into law a massive bailout of distressed borrowers, a bill co authored by the dubious Chris Dodd. This bill, worth in excess of $300 billion, would have the FHA back loans for troubled borrowers in which they would get rates and even loan balances that they neither deserve and nor would they get in the open market. This bill was not only an affront to free markets but to economic conservatism.

That brings us to the present. In response to a financial crisis, President Bush threw all appearance of the belief in free markets and economic conservatism out the window in announcing his bailout proposal. Now, the President has backed a $700 billion bailout of financial institutions by buying up their distressed Mortgage Backed Securities. Meanwhile, he has authorized government intervention to bailout both Fannie Mae and Freddie Mac and to guarantee loans to the automakers. Beyond this, his Treasury Secretary has been authorized to begin buying up preferred stock in major U.S. financial institutions. In fact, the President is now coordinating a world wide and massive socialization of the world wide financial system. The President in the last few months has gone from economic liberal to economic socialist.

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