GregsOpinion.com

Respectfully disagree with "factually incorrect", courtesy of the below:

"More, attaching this recession to Bush ? another Daschle maneuver ? is the height of silliness. Let's review the timeline: The recession officially began in March, less than two months after Bush took office. Blame Clinton. Blame the Fed. Blame OPEC. But don't blame Bush. In terms of the stock market, business production, and profits, it actually began near the middle of 2000, seven months before Bush took office.

But Daschle stumbles on. He is even arguing that the U.S. has moved into the worst fiscal condition in its history. Oh yeah? Even if we run recession deficits of $50 billion in 2002 and 2003 (and the House and Senate budget committees don't think the budget gap will be that wide) it will still be less than half of one percent of GDP. In other words, this recession will result in a relatively puny hit to federal cash flow. Most recent recession cycles have produced deficits that run between 3% and 5% of GDP; the recession deficits projected today will probably be the lowest since World War II.

More, according to Senate figures, even with the recession, surpluses over the next ten years are likely to run just south of $2 trillion in total. That's not a bad haul of tax overpayments, even for Mr. Daschle.

Then there's the Robert Rubin argument that we should run surpluses all the time, even in recessions, in order to get long-term bond rates down. This is a tax-raising Herbert Hoover strategy; or in current parlance it is a Japanese strategy. Recession-prone Japan has a 1.5% long-bond rate, and they also have the most massive build up of yearly deficits and cumulative debt in the history of man.

An honest Keynesian, much less a supply-sider, would today argue for an additional $150 billion for spending or tax-cut measures to stimulate recovery."
Larry Kudlow, 1/09/02

"During the late '80s, Papa Bush raised taxes and the economy went into a recession. Also during that time, the Fed moved temporarily away form the price rule and the inflation rate nearly doubled, to 4% from 2%. Bush lost the election and Clinton moved in. The new president also raised taxes.

But help was on the way. The Fed returned to the price rule and the inflation rate declined to the 2% range. The effective tax rate declined, and with the Republicans capturing the House in 1994, the prospect of future tax increases were greatly diminished. The economy responded and so did the markets. Earnings grew at a fairly fast pace and the valuations grew even faster.

The market kept reaching new highs and a debate as to whether the market was overvalued and irrationally exuberant ensued. That?s when the Fed began tinkering with monetary policy to reign in the market ? and there's a direct connection between that tinkering and the depressed market we are seeing today.

In 1999, Alan Greenspan, a.k.a. the Maestro, was greatly concerned with the ?century date change.? He flooded the market with high-powered money while simultaneously leaning on the banks not to lend money (i.e., not to expand the credit system). Once the century date change occurred ? and nothing happened ? the Maestro began to withdraw the high-powered money, but he did not ease up on the banks. The lending standard continued to increase, the bubble burst, and the market went into a tailspin.

During that time some other unfortunate events began to come into play. Energy prices began to climb, with an effect analogous to a tax increase. The combination of a slight increase in the inflation rate, higher regulations, and the energy tax proved too much for the economy. So, the economy rolled over.

The Maestro, by then, had departed from the price rule and began "fine tuning" the economy. Without the aid of complete foresight, this micromanagement did more damage than good, and we have paid the price for it."
Victor Canto, 9/11/01

Respectfully disagree ... in order to "inherit" something, it must already have started.

From: Mort Zuckerman: How the bottom fell out

Downward spiral. Why did the economy hit the wall? The Internet bubble burst; energy prices soared, siphoning off close to 1 percent of GDP; earlier Fed rate increases began to squeeze; liquidity virtually disappeared from the highest-risk credit markets; bankers grew cautious, cutting back on syndicated loans; inventories began to pile up; the newly elected Republican leadership unwisely began to badmouth the economy; unrestrained optimism gave way to widespread pessimism; the decline of the stock market since March subtracted about $3 trillion in wealth, depressing consumer spending on Main Street by about $80 billion. Projections of profit growth nose-dived: One study predicted a drop from 16 percent to 5 percent in the fourth quarter and 14 percent to zero in the first quarter of 2001. Manufacturing is down to the lowest levels since the 1991 recession, while job growth has slowed dramatically as layoffs have increased. Most disturbing, technology firms that were thought to be most resistant to a cyclical downturn are tumbling fast. Technology profits, up in the third quarter by about 40 percent over the same period in 1999, are expected to rise at best 15 percent in the fourth quarter and are declining. The fall in tech-share prices may not yet be over because their price-earnings ratios are still well above market averages.

And not that I anticipate you giving Krugman the time of day, but there's this too. No argument that monetary policy will always have the greatest impact on any economy, but the free market does feed of psychological factors as well. In most recent Presidential party changes, you see the same effect kick an economy down: Reagan working against Fed policy in 1981, Clinton pushing for an ill-advised stimulus package in 1993, and Bush telling anyone and everyone how bad the economy is(before it really was).

Yeah, there were several indicators looking gloomy, but its not uncommon that several indicators will contradict the direction of the economy ... that's why an official recession, as defined by the NEBR, looks at a variety of factors and even then, makes an official pronouncement much later. What was inherited was not what Bush saw in March, though.