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Fiscal Policy Comparisons: Obama v. Bush, Where are we now?

Garrett Clinton and Jimmie Johnson

As we have been studying fiscal policy in class, we wanted to examine the different fiscal policies of former presidents George W. Bush and Barack Obama. Bush’s tenure (2000-2008) featured many tax cuts for the wealthy as his idea was they would invest and the wealth would trickle down. In addition, he was very loose on regulations for business. In contrast Obama (2008-2016) repealed many of the Bush era tax cuts and implemented the American Recovery and Reinvestment Act, which featured tax cuts and federal spending to social welfare programs in an effort to kick start the economy and recover from the great recession. Obama was also had much stricter regulations on business.

Looking at the civil unemployment rate, it shows that during the Bush era the unemployment rate was rather consistent besides the small recession in 2001 and the beginning of the great recession in 2008. For the bulk of his years, Bush’s unemployment rate remained around five percent with the lowest being 4.4% in late 2006. In the Obama era, the unemployment rate skyrocketed in 2008, so Obama came into the presidency with an unemployment rate of about nine percent. However, since the peak of unemployment at ten percent in October 2009, the rate has been mostly decreasing. During the end of his presidency the unemployment rate was similar to the Bush era at five percent.

Looking at this data is very interesting. It shows that Bush’s trickle down method was having an effect because for the bulk of his presidency the rate was consistent. It must be noted that he was in office during the housing market crash of 2008. I have not done any research on that topic, but it would be interesting to see if any of Bush’s fiscal policies aided or tried to prevent the housing bubble from growing too large. With Obama, it is even more interesting. One can say his stimulus package was a success as the unemployment rate slowly decreased to a manageable level. However, it took seven years for the employment rate to get to those low levels. Could there have been a quicker way to stabilize the unemployment rate?

Ultimately looking at the data, whose fiscal policy do you all believed better helped the American people? What major events played roles into each presidency which shifted economic standards?

Although both presidents have had signigicant roles in their impacts of economics, it is extremely interesting to note of the specific changes each president made to get us to the point we are at today. Despite of vast political welfare, when does government action subside from economic action? The free hand that drives all financial markets is not simply directed by fiscal policy but by many other factors so it is important to not focus entirely on government interaction when dealing with this subject.

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15 thoughts on “Fiscal Policy Comparisons: Obama v. Bush, Where are we now?

  1. alisonw20

    Garrett and Jimmie,
    I enjoyed reading this blog because it reinforced the idea that there are many different fiscal policies that can achieve the same goals. President Bush's fiscal policies clearly decreased the unemployment rate from 2003 to 2008 and President Obama's policies also returned the high unemployment rates back to their normal levels. Because of this, I believe that both policies worked like they were supposed to and served the American people well. Because I do not know the rate at which each of the presidents were able to decrease the unemployment rate, I cannot determine which policy would have decreased the unemployment rate faster. However, all I can say is that they both accomplished their intended goals, which is what ultimately matters.

  2. spencerc20

    This post is extremely relevant, not only to what we've been talking about in class, but also to the recent tax bill signed by President Trump. It's very similar to what President Bush passed with increased tax cuts for the wealthy and businesses in the hopes that they will invest and that money will trickle down. Though it did look successful under President Bush, I'm not sure it's sustainable in the long term. The housing market crash was separate from the fiscal policy of President Bush, but it would be interesting to see if it had any affect on the Great Recession of 2008.

  3. Cade Hornak

    I recently finished a paper in which I delved deeply into supply- vs demand-side economics during the era of Reagan and Thatcher vs their democratic counterparts. In short, the supply-side economics under Reagan had virtually effect on the overall economy in terms of productivity. Looking at unemployment rate, it skyrocketed in the UK during Thatcher's reign.

    I see the same thing occurring between Bush and Obama. Rates stayed consistent for Bush but increased for Obama, but once can attribute that to the Great Recession of 2008 rather than Obama's policy since he inherited that crisis, and he promptly lowered rates during his eight years. Leaders preach that they can manipulate the economy using different policies, but in fact they have little control over what takes place, as seen in your data too. Just an interesting thought.

  4. myerse20

    While this post is extremely interesting, I don't think that one can determine which of the Presidents' fiscal policies best helped the American people just by looking at unemployment rates. While it does give a broad sense for how the general economy was doing at the time, unemployment rates definitely don't tell the whole story. Looking at unemployment rates between the two administrations alone, it would look like Bush's policies made the American people better off. As you noted, the Great Recession played a huge role on unemployment rates at the end of Bush's era and throughout most of the Obama administration.

  5. moraifa19

    In general, increasing federal spending on welfare programs has both benefits and burdens. On one had, unemployed people are receiving economic aide in times of need, as well as disabled and other marginalized groups. The danger, however, is that during times of recession there are more people who need government aid, so the government will tax more heavily. Increasing taxes decreases the amount of disposable income consumers can use to spend their money and put it back into the economy. Often times these welfare programs can have the adverse effect of limiting the aggregate output demanded and slowing an already slumped economy.

  6. bearupk20

    This is a really interesting topic you chose to write on. I agree with the comments above that unemployment rate isn't the only thing which indicates the effects of a Fiscal Policy, but it is interesting to see how the unemployment rates compared at different points in times and the approaches in which the different presidents had to get them to that point. If further research would be conducted, I think it would be interesting to see the logic of the Fiscal Policies and the state of the economy at the time the policy was put into place.

  7. Lauren Fredericks

    I liked the political aspect of your article, and it was a very interesting read! I'm more of the opinion that the president has little to no impact on the economic trajectory as a whole; if anything, we should be looking at Congress. Usually it takes a year or two but Congress will eventually win a majority of the opposing political group to the president. Thus, maybe in the future we could examine how a Republican Congress affected the economy during the Obama era. The fact that both Bush and Obama largely dealt with a Republican Congress may reveal why the rate remained largely the same.

  8. legarthb20

    This is very well written. It is very interesting to see the comparisons to what he said in class today about monetary policy not working as well as it should. With fiscal policy being the best way to go and it being difficult to fully implement a fiscal policy, it's very interesting to see the data that shows that it truly works!

  9. laytonr20

    To add on to what several people have said, I think that it would be interesting to compare the trends that you guys found in the unemployment rates with data on other aspects of the American economy to see if there was any correlation in the data. For example, looking at inflation or interest rates might be interesting, to see if those imply a different result of the two presidents respective policies, since only looking at one doesn't seem to imply enough to make a conclusion on their entire policies. Additionally, Obama entered office on the heels of one of the greatest recessions in history, so there was likely some residual effects from that in the public psyche that effected the economies response to his policies.

  10. warej20

    I thoroughly enjoyed reading this post. It provided a great mix of economics and politics. It was interesting to observe the differing economic tactics used by a republican and a democrat. Because no two situations are exactly the same, it is difficult to tell whether Bush's tax cuts were the best for the time and whether Obama's stimulus package was the method method for his time. Overall it is good to observe the decreasing unemployment rates within both presidencies.

  11. Chris Surran

    I really enjoyed your post. I think that it would be hard to argue that Bush's fiscal policy had a serious impact on the housing market crash. I do think that it is interesting that both president's ultimately accomplished their desired goals of keeping unemployment down, even if they ultimately employed different tactics.

  12. trammellc20

    I found this very informative and a good way to compare the effects of fiscal policy of different political ideologies. I do, however, think that the comparison of Bush and Obama might not be the best because of the different conditions that were taking place when both took office. Obama dealt well with the high unemployment rate, but he had to deal with a much higher one than Bush did.

  13. longa20

    This is very interesting to read as I did not understand economic policies when both Bush and Obama were presidents. For the Republican Bush, it is interesting how the unemployment rate was consistently low for most of his tenure, except for at the end when it rose. Then when Obama took over his package returned us to normal. During those times it would be interesting to look at which plans congress enacted as that is not in the president's control.

  14. wickhamj20

    This post is great because it gives data points to help us decipher which of two drastically different fiscal policies were more effective. I think we can nullify the unemployment rate since they both had the desired effect in that regard. I think it would be interesting to see the real GDP growth rates of the and the strength of the dollar(which would in turn tell us about imports and exports) of each president's tenure. This would shed light on which policy was better for the United States as I know there is contention about whether Bush's or Obama's fiscal policy was more successful.

  15. Katie Paton

    It is interesting how different parties create such different policies that they believe will stimulate the economy, proving that the economy is much for complex than it seems. I wonder how long the lag is between policies enacted and results on things such as unemployment. It will be interesting to see if unemployment will increase with the steel tariff if car manufacturers outsource production.

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