Robert Sobel, Moderator. Professor Turgeon hasn’t spoken yet, so we’ll give him a chance.
E. Lynn Turgeon: I think I can add a few things that might be interesting. One is, I went to the last session on budgets and deficits, and there’s a lot of continuity between these two sessions. One thing that was mentioned in the last session was the possibility that Bush could have not vetoed the bill that came out of Congress in early 1992. Let me set the framework here, because the last quarter of ‘91 was a period of no growth, as Boskin mentioned in the Council of Economic Advisers report. Bush, in his address to Congress, admitted this, and the great fear was this would be another double-dip recession. The first double-dip recession occurred in the early ‘80s, and it looked as if the economy was going downhill again on the basis of lack of growth in the fourth quarter of ‘91. And Bush gave Congress ninety days to come up with a tax-cut package, restore the investment tax credit, lower capital gains, and also middle-income tax cuts. Now, if Bush had been willing to play the political business cycle the way previous presidents had done, he could have been reelected. The tax cut would have gotten him elected, but he didn’t even wait till the bill got to him. He was so upset by the fact that a few wealthy people (those making more than $1 million yearly) would have their taxes increased as a result of this tax cut coming out of Congress. That was his big mistake.
Now, let me add something else I think is very important. In both of these sessions, we’re getting the idea that, if you have sluggish growth, the positive growth since then is due to the sluggish growth. And we had this before in the Kennedy administration. You may remember—some of you that are old enough—that Arthur Burns had urged Eisenhower to cut taxes in early 1959 to get Nixon elected in 1960. He refused to do it, and poor Nixon, of course, had to wait eight more years until he got elected. As soon as the Democrats got in, they recognized the need to get the economy growing again. You had a sluggish period of eight years with three recessions under Eisenhower. People think the ‘50s was a great decade, but it was only great during the Korean War. The sluggishness after the war had to be rectified, and that’s what Walter Heller was in charge of. This is a major change in economic policy, just as the Reagan change in the ‘80s represented a similar policy. It’s very important to realize that Kennedy and Reagan had an awful lot in common. The supply-side economics is the same as what we called commercial Keynesianism in the age of Keynes. Robert Lekachman’s book, The Age of Keynes, in 1966 recognized that what Kennedy was practicing was commercial Keynesianism. That’s one of the reasons that John Kenneth Galbraith had to be sent to India, because he didn’t approve of commercial Keynesianism or military Keynesianism.
Anyway, this recent attempt to picture the Bush stagnation—I don’t use the term “recession” because it was stagnation, four years of stagnation—as responsi