The Pie Got Bigger

Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=304643903414901

By INVESTOR'S BUSINESS DAILY | Posted Tuesday, August 26, 2008 4:20 PM PT

Economy: Average U.S. income fell when George Bush took office in 2001. Naturally, Democrats and the media unfairly blamed him for it. But now Americans are better off than when Bill Clinton was president.

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According to the latest data from the Internal Revenue Service, average adjusted gross income in 2006 hit $58,029 in 2006 dollars. It was the first time that average income had exceeded the peak year of 2000, the year before incomes began to decline. The average income in 2006 was 1.2%, or $739, higher than in 2000, when incomes were swollen by capital gains from a roaring market, and $1,369 over the 2005 average.

We've heard a lot about how Bush has mismanaged the economy, but there's no evidence of this. In fact, incomes began growing in 2003 after falling in 2001 and 2002 and have trended upward every year since. The small bump in 2003 was followed by gains of $2,291 in 2004 and $2,210 in 2005.

Meanwhile, there's been only one quarter of negative GDP growth, the fourth quarter of last year, which was preceded by two quarters of 4.8% gains.

It can hardly be argued that Bush is responsible for falling incomes in 2001 and 2002, or that he's been a poor steward of the economy.

He inherited a decline that began on Clinton's watch with negative growth in the third quarter of 2000 and again in the first quarter of 2001. A stock market crash and the 9/11 attacks hit incomes hard, as did a series of Fed rate hikes. The effects of the resulting slowdown continued until Bush's economic policies, especially his tax cuts, kicked in.

Thanks to a growing economy, Americans' real disposable income has increased every quarter but two from the beginning of 2003, when Bush's policies started going into full effect, to the first quarter of 2007. Some of the growth was remarkable, including a 7.5% jump in the fourth quarter of 2004 and a 6.3% increase in the third quarter of 2003.

In November, voters will pick a candidate to replace a president who did an exceptional job of steering the economy through tough circumstances, but hasn't gotten a shred of credit for it. The best choice is the man who's more interested in increasing income than redistributing — and ultimately shrinking — it.