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The Sandy Spring Way

May Observations

May 1st, 2013 | By Fred Burke

FredericBurkeYou gave your vote to pass the law; do you want to take it back? All the bad news we read about today; is it because our system’s on the rack? Can you make your dreams straight reality? Do you think you’d meet hospitality; if you went to the White House by mistake?”

Freedom of Choice Earth Wind and Fire

Today, May 1, 2013, the George W. Bush Presidential Library and Museum opens. The library contains dozens of documents related to September 11, 2001, and the future of terrorism in the United States. The library also contains a ‘what would you do’ section which enables the visitor to make a presidential decision as to what he or she would do if faced with the same set of facts. For example the exhibit asks what actions should have been taken after the New York terrorist attack. The visitor is given the opportunity to review the policies instituted by President Bush which enhanced the overall safety but at the expense of constitutionally established freedoms.

Recently Congress deployed the ‘what would you do’ process when it amended Bush era tax provisions. The revisions focused upon sun downed marginal tax rates, dividend income taxation, and corporate credits. The legislation made permanent certain sections of the tax code demonized by the Democrats as being only for the rich but recognized quietly as critical to the middle class. Using the library tool, would you have proposed tax legislation that enabled the growth of capital but at the expense of prospective class warfare? While serving, President Bush addressed present realities and languishing expectations when he initiated legislation on immigration and social security. In both instances, the media belittled the efforts as ill conceived and short sighted. President Bush also increased the deficit by fighting two wars on the credit card. Would you have supported immigration reform, social security revisions, and the unpopular and unrealistic Iraq and Afghanistan wars?

In 2008, President Bush signed legislation targeted to stave off a recession that promised to cause severe economic dislocation and unemployment. The $152 billion bill primarily consisted of $600 tax rebates to low and middle income Americans. The legislation accomplished little and failed to address the realities and sources of the crisis. To this day fiscal stimulus efforts continue to address unemployment and slow economic growth. In September 2001 President Bush rallied the nation in the time of crisis and yet later had little ‘juice’ to respond to the financial crisis which nearly overwhelmed the country. What and when should he have done as the economy started to collapse?

When President Bush took office on January 20, 2001, the S&P 500 stood at 1342 and the ten year bond yielded 5.13%. The day he left office the S&P was at 805. Today the S&P is at 1591 and the ten year bond yields 1.63%. The unemployment rate was 3.8 % in 2001 and is currently 7.9%. As the markets and the Boston Marathon bombings illustrate, the world has changed a great deal since President Bush took office in 2001. Thinking now about how you would have responded to the many issues addressed by President Bush is an exercise that only can be seen in a very creative crystal ball.  Remember Yogi Berra’s observation: “In theory there is no difference between theory and practice.”