7 June 2001, Bush signed legislation that cut taxes by $1.35 trillion.
Fifteen months later, NASDAQ had lost $1.25 trillion in value.
Is this just a coincidence? It could be. Financial markets are difficult to understand, much less predict. But it may be that the two numbers are related.
Bush's legislation clearly helped to shift the government's surplus into a deficit. There is only so much money that goes into investment markets each year and it has a variety of options: among them bonds and stocks. When the government is running a deficit, it is bidding for those investment funds, competing with business start-ups and expansion. When the government is running surplus, it is actually freeing up money to find investment options other than government bonds.
During the Clinton administration, the American economy created jobs at a rate of nearly 250,000 per month. Under the Bush administration job creation has averaged about 150,000 per month, in spite of a big increase in government spending. With less money to move into private investment markets, into NASDAQ stocks for instance, there is less money available for job creation.
Could it be that Bush's big deficits have helped to squeeze out private investment and, subsequently, dampened the creation of jobs? It's really not such a radical notion. In fact, it could very well be an idea that Republicans themselves, before their party was hijacked by neoconservatives, might have put forth: private investment markets do a better job of job creation than government agencies.