In case you didn't hear the economy grew 7.2% this past quarter. This is obviously very good news. Of course, the Republicans and Bush are taking all the credit for this growth, and many have even dubbed this single quarter's rise the "Bush Boom." It seems a tad premature to be calling a single quarter's growth, impressive as it may be, a boom. Especially when the job numbers still dropped in the past quarter. Still, there is no doubt that Bush does deserve some credit for this growth. He, after all, did give out billions in a giant tax cut. Among the cuts he gave were to people who actually could use it. The cut that I am talking about is the cut that gave people a higher child tax credit. To me, this is the most significant of the cuts, as far as consumer spending is concerned, and these cuts, I think, are a sizeable factor in the growth we saw this quarter.
Paul Krugman notes that "housing grew at a 20 percent rate, while spending on consumer durables (that's stuff like cars and TV sets) — which last year grew three times as fast as the economy — rose at an incredible 27 percent rate last quarter." Do you think all the wealthy people were out buying new televisions? No. Middle-class people who got a few hundred extra bucks on a child tax credit bought televisions, and help grow the economy. I know that my analysis sounds incredibly simplistic, and in a way it is. Obviously televisions didn't account for a 7.2% growth, but I am sure that the child tax credit was a major factor in the jump in consumer spending.
As for the rest fo the jump, Paul Krugman writes that "last quarter's consumer splurge was 'borrowed' from the future: consumers took advantage of low-interest financing, cash from home refinancing and tax rebate checks to accelerate purchases they would otherwise have made later."
So, does Bush deserve some credit for the growth we saw this past quarter? Yes, he does. If you give people money who will actually spend it, like the middle-class, then they will spend. However, if Bush is so eager to take credit for this growth then he also has to take responsibility for his record deficit and for not adding a single net job to our economy since he was elected. Also, once this supposed Boom proves to be nothing more than a burp then Bush will have to take responsibiltiy for the subsequent job loss, and his cronies will also have to stop blaming the bad economy on the Clinton presidency. After all the smoke and dust from this burp settles, we will realize that it is like many other burps: abrupt, loud, and stinky.