A friend of mine called me today wanting to talk about my politics. He said that one of the few things he can count on every day is that my Facebook status will include some sarcastic comment about the Obama administration, which is pretty close to the truth. His problem was that in our previous conversations about politics, I had always described myself as neither Democrat nor Republican. He thought perhaps I wasn’t being honest about that, and am now really just a closet Republican.

We disagree on a lot of things politically, but he’s still one of my best friends. You don’t have to agree with someone’s political beliefs to still think they’re a great person that you want in your life – far too many people dismiss people right off the bat because of their political differences, and that’s just sad. At some point, you may simply have to understand that you may both have different priorities, at which point you agree to disagree and talk about something else. We both understand that, so we don’t take political arguments personally and it doesn’t affect our friendship in the slightest. Anyway, back to the topic at hand. I explained my lack of Bush-bashing on Facebook on two things. The first is that I didn’t use Facebook anywhere near as much a year or two ago, so the forum for my discontent with government has changed. I didn’t have this blog until January of this year, or I would have called Bush out on a bunch of things here too. The second and more important thing is that while I care about both economics and social issues, as an economist, I tend to care about economic policies (and most importantly about not intervening in markets) a whole lot more than I care about whether terrorists should be entitled to Geneva convention protections or whether abortion should be left up to the states or guaranteed by the federal government. Sure, those things are important, but they’re smaller blips on my radar. I’m an economist who is strongly in favor of free markets. (They’re not perfect, but in my opinion they tend to work a whole lot better than some unelected czar in D.C. making decisions that affect every American.) If I were a doctor, I would likely care much more about the effect of a new health care bill on patient care than I would about the effect it might have on the unemployment rate or the national debt. I think about economics and our system overwhelmingly more than I think about the consequences of other important issues, like global warming climate change and gay marriage. When I see someone doing something I think is bad for free market capitalism and the growth that often comes with it, I obviously have no problem calling attention to it.

But I do understand his point, and there’s some validity to it. I can see how one might come to the conclusion that I hate Democrats from some of the things I have on Facebook and on this blog. (I think my posts are just a reaction to the unprecedented size and scope of government intervention under the Obama administration and the last year of Bush’s term, and the fact that Congress passes these massive bills without reading them. Everything is rushed through before anybody can even begin to think through the unintended consequences of their actions, and to me that’s sheer madness. I don’t hate Democrats – I hate big government that is unaccountable to the people. Right now, that just happens to be something in which most Democrat politicians appear to believe.) So in the sense of equal time for both sides, I thought I’d use this post to discuss some of the things I didn’t like about the Bush administration. Consistent with what I criticize the Obama administration for, they’re mostly things that were done to the detriment of free markets.

When he ran for president in 2000, Bush made a big deal about how he was in favor of free trade. Then one of the first things he did when in office was to sign an executive order imposing tariffs on foreign steel. Every principles class I teach knows this because I use it as an example of what happens when you put a tax on a product whose demand is elastic. There is a great substitute for foreign steel (domestic steel) so consumers of foreign steel can be very price-sensitive. Tariffs on foreign steel raise the price of both kinds of steel, with steel consumers purchasing more domestic steel than foreign steel. They hurt foreign steel manufacturers and hurt domestic manufacturers who use steel, like the automobile industry. Years later, several European countries said that if Bush didn’t eliminate the tariffs, they were going to impose retaliatory tariffs on a lot of American-made products. Their threats worked and eventually Bush caved and let go of the steel tariffs. But he won Ohio in 2004, with a lot of support from the steel industry. Coincidence?

When he ran for president in 2000, he promised Americans a tax cut. With budget surpluses under the last few years of the Clinton administration, Bush said he was going to give us a refund because it was our money and we had basically overpaid. (Nevermind that we still had a pretty sizeable national debt, so we could have used those budget surpluses to pay down the debt.) Leading up to 2000, the economy had been growing for 6 straight years but with incredibly low inflation and low growth in wages, which surprised many economists. At the beginning of 2000, wages were starting to rise. While that might sound like a good thing for workers, it’s bad for firms and it’s a sign of impending inflation: eventually firms are going to have to start increasing prices to offset the increase in wages, and then you get inflation. Very low unemployment and the signs of rising wages are two signs that the economy is operating at or above potential output, the level of output we expect to be producing at in the long run. The last thing you want to do in that situation is stimulate demand in the economy by giving people tax refunds, as their increased consumption is just going to lead to even faster-accelerating inflation. Many economists, including myself, thought this was an irresponsible policy. I was in grad school at the time and was teaching courses at a nearby community college and I used this as a way of talking about when certain economic policies may or may not be appropriate. I said at the time that while I would certainly love a $600 check in the mail, I thought it was not the right policy for the economy at that time. As it turns out, the economy slowed in the summer of 2000 as California got hit with an electricity crisis, and later as the NASDAQ stock market lost 70% of its value when the tech bubble popped. Coming into 2001, what was previously thought of as an irresponsible policy ended up being something the economy needed. So I blame Bush for supporting an unnecessary and irresponsible tax cut. That it later turned out to be a more appropriate thing is his good fortune.

When Bush ran for office, he did so on a policy against nation-building in other countries. Then he proceeded to do just that in Iraq. I would like to cut him some slack since he presided over the country when almost 4,000 of its citizens were attacked by terrorists. That kind of responsibility can make one over-react, as I think he did by going into Iraq when he did. It might have been necessary eventually, but I don’t think it was at the time. It has cost us countless billions and, more importantly, the lives of thousands of American men and women far braver than myself.

I think TARP was a disaster. It was partially Congress’s fault for giving the Treasury a blank check and not specifying what how the money was to be used. It was also partially Bush’s and Paulson’s fault for totally changing how the money would be used. It’s called the “Troubled Asset Relief Program” and was designed to take the troubled mortgage assets out of the financial system, and nine months later we still haven’t done that. TARP has turned into a slush-fund for whatever random idea the Treasury comes up with this week. That kind of uncertainty has done damage to investor confidence and is part of why the economy is not recovering as fast as we all would want. Nobody knows who is going to be bailed out next week or who is going to get a new tax break or government subsidy, so a lot of people are just waiting until the future is more certain. Bush said he had to abandon the principles of the free market to save the free market. I’m still struggling to understand that one. That’s as stupid as Obama spending trillions and then saying he is fiscally responsible and deeply concerned about deficits. Logically inconsistent.

Have I been beating up on the economic policies of the Obama administration in the last few months? Of course I have. Here’s one more. Joe Biden says that “everybody guessed wrong” about the economy. That is a flat-out lie, but Joe Biden lying or saying something stupid and/or slightly racist is apparently just “Joe being Joe,” so the media doesn’t call him out on it. At the time the stimulus bill was being proposed, the Obama administration came out with their estimates of future unemployment rates and future output growth rates. Go back and compare those estimates to those of economic think-tanks and private research firms at the time and the administration’s view of the future was significantly rosier than everyone else’s. They had to use the most favorable numbers they could so that tax revenues would be higher and their deficit projections would be lower. The administration took the most optimistic estimates they could find so they could sell the stimulus bill, and now it’s starting to come back to haunt them. It makes it look like they don’t know what they’re doing, and it becomes harder to trust all of their estimates of the likely impact of their health care, environment, and energy proposals on our economy. So no, I have absolutely no problem calling attention to what I believe are the wrong economic policies for the country, given my staunch belief in free markets. But I hated McCain’s idea of using TARP money to bail out homeowners who were upside-down on their homes, and I’ll state that for the record — even though I might be upside-down on my home right now. And if McCain or any other Republican were in office doing the same stuff Obama is doing right now (destroying free markets, expanding government ownership of private businesses, regulating wages, scaring investors out of the stock market, and decreasing the incentives for businesses to hire labor at the time when we need them to hire people more than ever), rest assured I’d be making sarcastic Facebook status updates about him too.