With six weeks to go before his exit and a longer period after that needed for reflection, it is too early to settle the big academic question of our time: Was George W. Bush as bad as Herbert Hoover?
Let’s take a shot at it anyway because there are immediate lessons that we can learn from the comparison. We can stipulate that Bush was worse overall because Hoover, except for enactment of the Smoot-Hawley Tariff, which wrecked foreign trade, was not a bad steward of international relations. Hoover was known as a brilliant manager and humanitarian and in some quarters an intellectual, qualities that no one ever attributed to the 43rd president.
Let’s make this about just their stewardship of the economy and the well being of their people.
The country will not be in a depression when Bush leaves office and the unemployment rate will not be 24.9 percent, Hoover’s peak, nor is it apt to approach that number even after all the foreclosures and defaults shake out of the financial system in 2010 or thereabouts. The nation’s economic output actually fell in Hoover’s four years and in Bush’s eight it will average an anemic 2 percent growth a year. That is in Bush’s favor at this point, but he still does not shine in comparison with Hoover.
While Bush will leave office with an unemployment rate still in the single digits (if you don’t count those no longer actively seeking work and the temporarily and partially employed, which runs it up to 12 percent), his job creation record, except for Hoover’s, is the worst for any president since the government began counting. Presidents in the 20th century created jobs at the rate of 2 to 4 percent of the workforce a year. Bush’s average will be about 0.25 percent a year.
The rate of mortgage foreclosures rose under Hoover by 84 percent between his election in 1928 and his departure in 1933. In Bush’s last two years, they are increasing at an even faster clip.
If you look at the inequality of incomes, Bush took us to higher levels than the earlier peak under Hoover. In 2006, the last year for which figures are available, the top 10 percent of individuals enjoyed an average income eight times the average of the bottom 90 percent. It fell from Hoover’s 7 percent to 4 percent under President Roosevelt and stayed in the 4 to 5 percent range until President Reagan, when the government returned to the incomes policy of the ’20s. It’s been on a steady incline since then, except for a blip downward in Bill Clinton’s second term. It rocketed back up under Bush.
The differential in incomes is great, but the differential in wealth — assets held by individuals — is staggering. The Federal Reserve’s Survey of Consumer Finances this year shows that roughly a third of all the household wealth in America is held by the richest 1 percent. A big difference between Bush and Hoover is that the incomes of richest Americans as well as everyone else eroded under Hoover but under Bush the lowest 90 percent of American households suffered a decline in average incomes while the richest 10 percent sharply increased their average incomes.
Hoover’s and Bush’s parallel handling of their responsibilities, particularly when the economy signaled bad times, offer the lessons.
Both pushed Republican Congresses to slash taxes on higher incomes when they took office, Bush not once but three times in his first three years. Believing Treasury Secretary Andrew Mellon’s theory that cutting marginal tax rates would stimulate investment and increase government revenues, Hoover cut the top tax rate from 73 to 24 percent, which reduced revenue and plunged the government into deep deficits. The debt climbed from 20 to 40 percent of the nation’s economic output. He saw the light and at the end of his term, with a fourth of the people out of work and the government unable to help, he raised the top rate close to its pre-Depression level, doubled the estate tax and levied new taxes on corporations. Franklin Roosevelt called him a taxer and spender, and his vice presidential running mate, John Nance Garner, said Hoover and the Republicans were leading the country down the path of socialism.
Oblivious to the Hoover and Reagan examples of how tax assistance for the rich produces huge deficits, Bush never saw the light. He will wind up doubling the nation’s debt.
When calamity struck, Hoover and Bush followed the same strategy: shield business from destruction but not individuals. Hoover cut government spending as the depression worsened and resisted public works to create jobs while, like Bush, supplying at-risk financial institutions with capital. Bush twice went along with small stimulus rebates to taxpayers but opposed public works and relief for distressed homeowners or the chronically unemployed. Hoover thought government aid would weaken people’s character, but at the end of his term agreed to modest public works and relief programs.
Hoover found error a good teacher, Bush didn’t. Rexford Tugwell, Roosevelt’s brainy adviser, would say much later that the New Deal simply took Hoover’s final strategies and made them work. Whatever happens, that will never be said of George W. Bush.