Kudlow’s Money Politics

“White House: Bush economy stronger than Clinton’s…”

(Drudge has been featuring this story by Bill Sammon over at The Examiner all day.)

WASHINGTON – The White House says the economic surge that began five and a half years ago on President Bush’s watch is more robust than the much-touted expansion during the Clinton administration.

“This is a much stronger expansion in a lot of ways,” White House spokesman Tony Fratto told The Examiner. “It’s much deeper and more measured.”

Fratto’s assertion was disputed by Gene Sperling, economic adviser to presidential candidate Hillary Rodham Clinton, who spoke to The Examiner in his capacity as former National Economic Adviser to President Bill Clinton.

“That’s a rather absurd claim,” said Sperling, a senior fellow at the liberal Center for American Progress. “In terms of job creation, in terms of wage growth, in terms of business investment, in terms of poverty, there’s absolutely no comparison.”

“The expansion during the 90s was exceptionally strong,” he said. “And this has been a historically weak expansion in virtually all of those measures.”

Fratto cited last Friday’s stronger-than-expected jobs report as evidence of the strength of the economy under Bush. The Labor Department reported that 180,000 new jobs were created in March and the unemployment rate fell to 4.4 percent, matching a five-year low.

“If you go back to this point in the Clinton expansion,” Fratto said, “they would have loved to have seen the numbers that we have right now.”

“On the unemployment rate, we’re a full percentage point below where they were at the same point in the expansion – 60 or 61 months in,” he said. “They would have loved to have been at 4.4 percent. They were still up in the mid-5s, which is huge, when you think about it.”

Sperling conceded that “the headline on the employment rate is certainly sound.”

“But if you look beneath that, at the number of people who have dropped out of the labor force, the length of unemployment period, even that is not as strong as it appears,” he said.

Economist Larry Kudlow said the Clinton and Bush expansions “each have their minuses and pluses.”

“Every expansion has a little different coloration,” he said. “The Clinton years were colored by the technology boom and the dot-com boom, which ultimately produced a bubble that burst. The Bush years were colored by the tremendous housing boom from the Greenspan interest rates, and we’re undergoing some kind of a bubble bursting right now.”

Kudlow said neither Bush nor Clinton have fundamentally transformed the U.S. economy in the way that former President Reagan did a quarter century ago. He credited Reagan’s economic reforms for growth in the Gross Domestic Product in 93 of the last 98 quarters.

“Since the early Reagan years, we have had 25 years of virtually uninterrupted prosperity,” Kudlow said. “Because of the Reagan reforms – the deregulation, the lower taxes, the disinflation – we have transformed the economy from a top-down, government-run operation into a free market, capitalist economy with durability and resilience.”

(Note: Something else I told Bill Sammon that didn’t make the story was the positive benefit from President Bush’s 2003 reduction in marginal tax rates’”especially on capital. Obviously this has given the Bush recovery a big push in the past four years. And it’s also worth noting however, that while President Clinton raised taxes in his first term, he lowered tax rates in his second term. That included a cap gains tax cut for investments and housing.)