Guest post by Joe Hoft
The Fed has done all they can to derail Republican Presidents for the past half century. President George H. W. Bush blamed the Fed for his loss in 1992.
George H. W. Bush believed balancing the budget was his top priority, but his efforts to do so were constantly hindered by his “no new taxes” pledge. He held conservative views on government spending and believed that issues like homelessness and crime were important, but that the government should not use more tax money to fix such issues.
Bush agreed to a budget agreement in 1990 which looked to the long-run for balancing the budget with the deficit reduction beginning some two years after the agreement was put into effect. The initial actions of the Fed and the President’s views on Fed involvement at the beginning of his administration were unclear, but Bush eventually favored the idea of the Fed supporting the economy by reducing rates. However, the Fed’s actions were too late for him as he lost the election.
As National Review even noted, President George H. W. Bush handed the Clinton administration a very strong economy –
During the last quarter of his predecessor’s [George H. W. Bush] presidency, real GDP growth was 4.33 percent; during the last quarter of Clinton’s presidency, it was down to 2.89 percent and plunging.
Bush later in life reminisced about why he lost the election to Bill Clinton in 1992 as reported in 1998 in the Wall Street Journal –
Former President Bush said in a television interview that he blames Federal Reserve Chairman Alan Greenspan for his 1992 defeat.
“I think that if the interest rates had been lowered more dramatically that I would have been re-elected president because the [economic] recovery that we were in would have been more visible,” Mr. Bush told interviewer David Frost. “I reappointed him, and he disappointed me.”
The Fed Reserve is still hurting Republicans today. As we previously reported, the Fed’s actions to increase interest rates stalled the stock market and are costing US tax payers trillions in current and future debt payments.
The Fed provided former President Obama the most generous interest rate package ever. Rates under Obama remained at 0% most of his seven years in office. In late 2015, the Fed raised rates 0.25% but this was for only one year and the only time the rates were raised up to the 2016 election.
After President Trump won the election in 2016, the Fed started a steady program of raising interest rates. Rates were increased seven times by the Fed since the 2016 election to their current 2%.
The last rate increase in September and the Fed’s consistent pledge to raise rates effectively killed the market bull run two months ago. This resulted in billions removed from the market in gains year-to-date costing US taxpayers billions in their 401k’s.
In addition, the Fed Funds interest rate increases result in raising interest payments on the massive debt that President Trump incurred from President Obama. A 1% increase in rates results in an additional $200 billion annual interest rate payment for the US government and US taxpayers. A 2% increase results in an additional $400 billion in annual interest payments for the US tax payer to cough up.