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Healthcare costs destroyed the Bush economy


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Apr 4, 2009
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David Frum: A former economic speechwriter for President George W. Bush

Posted: September 15, 2009, 4:30 PM by NP Editor

Ron Brownstein ably sums up the Census Bureau’s final report on the Bush economy.

Bottom line: not good.

On every major measurement, the Census Bureau report shows that the country lost ground during Bush’s two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked.

What went wrong?

In a word: healthcare.

Over the years from 2000 to 2007, the price that employers paid for labor rose by an average of 25% per hour. But the wages received by workers were worth less in 2007 than seven years before. All that extra money paid by employers disappeared into the healthcare system: between 2000 and 2007, the cost of the average insurance policy for a family of four doubled.

Exploding health costs vacuumed up worker incomes. Frustrated workers began telling pollsters the country was on the “wrong track” as early as 2004 – the year that George W. Bush won re-election by the narrowest margin of any re-elected president in U.S. history.

Slowing the growth of health costs is essential to raising wages – and by the way restoring Americans’ faith in the fairness of a free-market economy.

Explaining the impact of health costs on wages is essential to protecting the economic reputation of the last Republican administration and Congress.

If Republicans stick to the line that the US healthcare system works well as is – that it has no important problems that cannot be solved by tort reform – then George W. Bush and the Congresses of 2001-2007 will join Jimmy Carter and Herbert Hoover in the American memory’s hall of economic failures. Recovery from that stigma will demand more than a tea party.

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