Bush's Legacy May End Up Better Than You Think: Kevin Hassett

Commentary by Kevin Hassett

Dec. 22 (Bloomberg) -- The George W. Bush farewell tour took off in earnest last week, with the president granting interviews left and right. The image that emerged was surprisingly upbeat. His party is in tatters, the economy is the bleakest in a generation, and yet Bush played the part of a man confident that history will side with him.

He recognizes that times are tough. "It turns out this isn't one of the presidencies where you ride off into the sunset, you know, kind of waving goodbye," Bush told a Washington audience. That's the understatement of the century.

Bush's popularity is about the lowest on record for postwar presidents. A recent Gallup Poll ranked his 29.4 percent approval rating as the 10th-worst quarterly ranking since 1945. Only Harry Truman and Richard M. Nixon saw lower ratings.

With those numbers, one might forgive Bush if he snuck out of town and entered the witness-protection program. Instead, we get a concerted effort at legacy management. Is this campaign hopeless, or might history judge him favorably?

The argument for his eventual vindication is stronger than many might expect.

On foreign policy, Bush emphasizes that he pursued a "freedom agenda" and spread freedom to Iraq. While the Iraqi future is far from clear, it is possible that the country becomes a democracy and a reliable ally of the U.S. If that transformation is completed, then it could well be viewed as a turning point in the war on terror.

On the home front, to virtually everyone's surprise, we've avoided a terrorist attack since Sept. 11.

Hard to Argue

So it is hard to argue that Bush's policies were a failure. The unpopular war may have trashed his party, but it didn't have the same effect on the country.

Turning to the economy, the pro-Bush argument becomes more of a stretch. First, his accomplishments were few. He passed a relatively small tax cut and was unable to hold the line on government spending. As a result, the deficit skyrocketed and set the stage for his tax cuts to be reversed. The prescription- drug benefit wasn't paid for, and the jury is out on his No Child Left Behind education policy.

The insignificance of Bush's economic policy, though, might work to his advantage. We are in the midst of the worst recession of our generation, yet it is hard to attribute this crisis to anything that Bush actively did. If his large deficits produced skyrocketing interest rates that crushed the economy, then the argument that Bush caused the mess we're in might hold water. If he was the one who deregulated the financial sector, then we could justifiably blame him for our predicament.

Before Bush

Instead, the forces that allowed the financial sector to blow up -- deregulation, for example -- were in place when he took office. Former Federal Reserve Chairman Alan Greenspan, who failed to stem the crisis, was inherited from the previous president. Bush even tried to avert the crisis early and often in his presidency, as he sought strict limits on the actions of Fannie Mae and Freddie Mac, the mortgage-finance companies that were at ground zero of the crisis.

Bush was unable to stop the housing crisis and its fallout, but he tried. In that failure, he is hardly alone. The crisis has touched just about everyone, wiping out wealth in countries run by both liberals and conservatives.

All told, it seems unlikely that history will blame Bush for the financial crisis. He may even receive credit for helping to minimize its impact.

Diminishing Importance

Capital markets, after all, have been anticipating a recession for most of this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have defended their extraordinary actions as necessary insurance against a depression. If a disaster is avoided, if the recession begins to ease in the coming months and the bailout frenzy ends, then the terrible economy we see before us will diminish in historical importance.

This is the 11th recession of the postwar period, and 33rd in the National Bureau of Economic Research's business cycle chronology, starting in 1854. Most presidents have a recession or two during their term, but it is hard to think of one that historians blame on a president. Bush's tenure would have been unusual if it hadn't had a recession. It is hard to see why he would bear more blame than has been the historical norm.

It may well be that Paulson and Bernanke have made things worse, and we are going to enter a depression. If we do, then historians will view Bush as someone who at the very least failed to act as needed. Regardless of how foreign policy turns out, Bush would take his place next to Hoover in the rogues' gallery of history.

But if we look back and see only a worse-than-normal recession, then the Bush legacy will depend on the future of Iraq, and its role in smoothing out the Middle East. In the best-case scenario, Bush will have been a good -- maybe even a great -- president.