The back-to-back Bush and Obama administrations allow us to easily compare the effectiveness of liberal and conservative economic policies. President George W. Bush’s record is highlighted by tax cuts largely aimed at giving the wealthiest Americans more money with which to invest, and a looser regulatory regime on businesses. President Obama implemented the Keynesian-style American Recovery and Reinvestment Act (also known as “the stimulus”), repealed the heart of the Bush tax cuts, greatly expanded the federal government’s role in health care with the Affordable Care Act, and tightened regulations on several industry sectors including finance and energy.
How do their economic records compare?
Let’s start with the big one: jobs. And let’s make it fair to Republicans and only look at private sector job creation – no Democratic cheating by putting all the unemployed on the government payroll!
Bush vs. Obama: Private Sector Job Creation
Bush lost private sector jobs over the course of his eight years (the Wall Street Journal declared it the “Worst Track Record On Record” on jobs), while Obama has created a net of 9.5 million private sector jobs during his presidency, and nearly 13 million if you start counting after the Great Recession Bush handed Obama technically ended in mid-2009.
Bush vs. Obama: Unemployment Rate
Similarly, while Bush’s policies drove up the unemployment rate, Obama’s has pushed it down.
The above, like the other line chart below, is a simplified graph that removes all month-to-month fluctuations during their presidencies, to clarify the bottom line.
Now sometimes reductions in the unemployment rate are dismissed, because the lower percentage comes from unemployed people giving up and leaving the workforce instead of getting a job. In turn, analysts often look at the “employment-population ratio” to see what percent of our population is actually working. But the steady increase in job creation over the last year has begun to lift the employment-population ratio as well.
Under Bush, the employment-population ratio dropped 3.8 percentage points, from 64.4 percent to 60.6 percent. Under Obama, it fell another 2.4 percentage points by October 2013, but since has regained half of that loss and now sits at 59.3 percent. With continued steady job gains, Obama could leave office with a net positive increase.
Again, Obama’s overall record bests Bush’s … lest you thought Bush’s near-doubling of the unemployment rate was due to millions of people rushing to get back into the job hunt.
Bush vs. Obama: Corporate Profits
It may seem off-base to look at corporate profits when the middle class is still struggling.
However, in the first year of Obama’s second term, median household income ticked up 0.3 percent (see Table H-5 on this Census Bureau page of household income data), the first year with an increase since 2007. Also, average hourly earnings of private sector employees have risen, though slowly, up 14 percent during the course of Obama’s presidency.
This could mean income declines hit bottom in 2012, and the other economic successes of the Obama administration are beginning to translate into improvements felt by the middle class. The other silver lining for the middle class is that inflation has been lower under Obama than Bush (with essentially no movement in 2015) so at least flat wages aren’t losing purchasing power.
Still, stagnant wages have been a persistent problem both before and after the crash. According to a 2013 report from the Economic Policy Institute, by one measure wages only grew 2.4 percent between 2000 and 2007, under Bush yet before the crash, then have basically stayed flat since. Presuming that wages can rise enough to rescue the middle class without any new policies would be a big risk.
A big debate awaits us on how we solve the problem of stagnant wages holding back middle-class prosperity. Considering that under Bush, corporations did worse than under Obama, household income still fell and private sector jobs were lost, perhaps conservative economic policies should not be our North Star.
Note: This post was originally published on August 18, 2014, then updated on December 8, 2014. This version was rewritten December 4, 2015 using updated statistics.