Today's Article
Knowing how and
why the current GOP
economic plan has
not worked for most
Americans is
immensely
important.
why the current GOP
economic plan has
not worked for most
Americans is
immensely
important.
The American Spark
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How GOP Economic 'Expansion' Failed Us
By Cliff Montgomery - Nov. 3rd, 2008
An April report from the Center on Budget and Policy Priorities, a major economic think-tank, perhaps is even
more timely now, just before most Americans cast their ballot tomorrow on Election Day.
It describes--in clear, easy-to-understand English--how the Bush economic 'expansion' from 2001-2007 was
nowhere near the high-performer its proponents have claimed.
Whomever you vote for tomorrow, knowing how and why the current GOP economic plan has not worked for
most Americans is immensely important. Below The American Spark has provided some of the report's key
points. You also may pull down the full study, for your own perusal.
HOW ROBUST WAS THE 2001-2007 ECONOMIC EXPANSION?
"Proponents of the 2001 and 2003 tax cuts often argue that the economic and employment growth of the past
several years establishes that these tax cuts 'worked' and had strong beneficial effects.
"More recently, some have also argued that, with growth slowing, new tax cuts are needed and would
reinvigorate the economy.
"It now appears that the economic expansion that began in 2001 is drawing to a close. The economy may be
entering a recession; if not, it is certainly entering a slow-down. Now is therefore a good time to take stock of
the recent economic expansion as a whole.
"We examine the expansion from 2001, when it began, through the third quarter of 2007, before the
slow-down in economic growth in the last part of 2007.
"The evidence on the 2001-2007 expansion provides no support for the claim that the tax cuts generated
exceptional economic growth. Rather, examination of a broad range of key economic indicators indicates that
the economic expansion that began in 2001 was, on balance, weaker than average.
"In fact, with respect to GDP [Gross Domestic Product], consumption, investment, wage and salary, and
employment growth, the 2001-2007 expansion was either the weakest or among the weakest since World War
II.
"Moreover, the economy’s performance between 2001 and 2007 was weaker, overall, than its performance in
the equivalent years of the 1990s, years following significant tax increases [for the wealthy]. GDP growth was
somewhat weaker than in the 1990s, and job creation, investment, and wage and salary growth all were
substantially weaker.
What the Data Show: The Key Findings
"We examine Commerce Department, Labor Department, and Federal Reserve Board data on seven
economic indicators: the Gross Domestic Product, personal consumption expenditures, private domestic fixed
non-residential investment, net worth, income from wages and salaries, payroll employment, and corporate
profits. For each indicator, we look at average growth both since the economy hit bottom in November 2001
and since the last business-cycle peak in March 2001.
"We compare average growth over these periods with the average growth that occurred over comparable
periods in the other business cycles since the end of World War II. (Growth is measured after adjusting for
inflation, except for employment levels, where such an adjustment is inapplicable.)
"These conclusions hold whether one focuses on comparisons that examine the period since the expansion
began or comparisons that examine the period since the last business-cycle peak (i.e., since the 1990s
expansion ended).
The 2001-2007 Expansion
"As noted above, we have examined the performance of these economic indicators in two ways: from the start
of the expansion in November 2001 (that is, since the fourth quarter of 2001) through the third quarter of 2007;
and from the previous economic peak (the first quarter of 2001) through the third quarter of 2007. This section
focuses on the expansion period.
"The Gross Domestic Product, consumption, net worth, non-residential investment, wages and salaries, and
employment all grew less rapidly than during other comparable expansionary periods.
"Labor market progress was especially weak, with employment and wage and salary growth far below average
and, in fact, lower than in any previous post-World War II expansion. Employment grew at an average annual
rate of only 0.9 percent since November 2001, as compared with an average of 2.5 percent for the comparable
periods of other post-World War II expansions.
"In addition, real wages and salaries grew at a 1.9 percent average annual rate in the 2001-2007
expansion, as compared with a 3.8 percent average annual rate for the comparable periods of other post-
World War II expansions.
"Corporate profits fared exceptionally well. The sole exception to the 2001-2007 period’s lackluster
performance was the growth of corporate profits. They experienced average annual growth of 10.3 percent, as
compared with average growth of 7.4 percent for other comparable postwar periods."
Like what you're reading so far? Then why not order a full year (52 issues) of the The American Spark e-
newsletter for only $15? A major article covering an story not being told in the Corporate Press will be
delivered to your email every Monday morning for a full year, for less than 30 cents an issue. Order Now!
By Cliff Montgomery - Nov. 3rd, 2008
An April report from the Center on Budget and Policy Priorities, a major economic think-tank, perhaps is even
more timely now, just before most Americans cast their ballot tomorrow on Election Day.
It describes--in clear, easy-to-understand English--how the Bush economic 'expansion' from 2001-2007 was
nowhere near the high-performer its proponents have claimed.
Whomever you vote for tomorrow, knowing how and why the current GOP economic plan has not worked for
most Americans is immensely important. Below The American Spark has provided some of the report's key
points. You also may pull down the full study, for your own perusal.
HOW ROBUST WAS THE 2001-2007 ECONOMIC EXPANSION?
"Proponents of the 2001 and 2003 tax cuts often argue that the economic and employment growth of the past
several years establishes that these tax cuts 'worked' and had strong beneficial effects.
"More recently, some have also argued that, with growth slowing, new tax cuts are needed and would
reinvigorate the economy.
"It now appears that the economic expansion that began in 2001 is drawing to a close. The economy may be
entering a recession; if not, it is certainly entering a slow-down. Now is therefore a good time to take stock of
the recent economic expansion as a whole.
"We examine the expansion from 2001, when it began, through the third quarter of 2007, before the
slow-down in economic growth in the last part of 2007.
"The evidence on the 2001-2007 expansion provides no support for the claim that the tax cuts generated
exceptional economic growth. Rather, examination of a broad range of key economic indicators indicates that
the economic expansion that began in 2001 was, on balance, weaker than average.
"In fact, with respect to GDP [Gross Domestic Product], consumption, investment, wage and salary, and
employment growth, the 2001-2007 expansion was either the weakest or among the weakest since World War
II.
"Moreover, the economy’s performance between 2001 and 2007 was weaker, overall, than its performance in
the equivalent years of the 1990s, years following significant tax increases [for the wealthy]. GDP growth was
somewhat weaker than in the 1990s, and job creation, investment, and wage and salary growth all were
substantially weaker.
What the Data Show: The Key Findings
"We examine Commerce Department, Labor Department, and Federal Reserve Board data on seven
economic indicators: the Gross Domestic Product, personal consumption expenditures, private domestic fixed
non-residential investment, net worth, income from wages and salaries, payroll employment, and corporate
profits. For each indicator, we look at average growth both since the economy hit bottom in November 2001
and since the last business-cycle peak in March 2001.
"We compare average growth over these periods with the average growth that occurred over comparable
periods in the other business cycles since the end of World War II. (Growth is measured after adjusting for
inflation, except for employment levels, where such an adjustment is inapplicable.)
- • For six of the seven indicators, the average annual growth rate between 2001 and 2007 was below the
average growth rate for the comparable periods of other post-World War II economic expansions.
Notably, this expansion was among the weakest since World War II with respect to both overall economic
growth and growth in fixed non-residential investment. These two indicators should have captured any
positive “growth effects” of the tax cuts.
• The labor market also was weaker during the 2001-2007 expansion. Both employment growth and
wage and salary growth were weaker during this expansion as a whole than in any prior expansion since
the end of World War II.
• The 2001-2007 expansion outperformed the average post-World War II expansion in only one area:
corporate profits, which grew much more rapidly than average.
"These conclusions hold whether one focuses on comparisons that examine the period since the expansion
began or comparisons that examine the period since the last business-cycle peak (i.e., since the 1990s
expansion ended).
The 2001-2007 Expansion
"As noted above, we have examined the performance of these economic indicators in two ways: from the start
of the expansion in November 2001 (that is, since the fourth quarter of 2001) through the third quarter of 2007;
and from the previous economic peak (the first quarter of 2001) through the third quarter of 2007. This section
focuses on the expansion period.
"The Gross Domestic Product, consumption, net worth, non-residential investment, wages and salaries, and
employment all grew less rapidly than during other comparable expansionary periods.
"Labor market progress was especially weak, with employment and wage and salary growth far below average
and, in fact, lower than in any previous post-World War II expansion. Employment grew at an average annual
rate of only 0.9 percent since November 2001, as compared with an average of 2.5 percent for the comparable
periods of other post-World War II expansions.
"In addition, real wages and salaries grew at a 1.9 percent average annual rate in the 2001-2007
expansion, as compared with a 3.8 percent average annual rate for the comparable periods of other post-
World War II expansions.
"Corporate profits fared exceptionally well. The sole exception to the 2001-2007 period’s lackluster
performance was the growth of corporate profits. They experienced average annual growth of 10.3 percent, as
compared with average growth of 7.4 percent for other comparable postwar periods."
Like what you're reading so far? Then why not order a full year (52 issues) of the The American Spark e-
newsletter for only $15? A major article covering an story not being told in the Corporate Press will be
delivered to your email every Monday morning for a full year, for less than 30 cents an issue. Order Now!
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