Obama's Economic PoliciesObama outlined his economic policies in the 2008 Presidential election campaign. Once elected, he named former Federal Reserve Chairman Paul Volcker, who advocated tougher financial restrictions, to head his Economic Advisory Panel. He then launched the $787 billion Economic Stimulus Package, which returned the economy to positive GDP growth by the third quarter 2009. The next year, Obama pushed through the Health Care Reform Act, with the goal of lowering health care costs. He also supported passage of the Dodd-Frank Bank Reform Act, which was designed to make another financial crisis less likely. It regulated non-bank financial companies, like hedge funds, and the most complicated derivatives, like credit default swaps. It included the Consumer Financial Protection Agency, which consolidated protection for consumers with credit and debit cards, consumer and payday loans, and credit reporting agencies, and regulates credit and mortgage fees.
He hasn't yet fulfilled his campaign promise to review all trade agreements to make sure they didn't cause job losses. However, he did support passage of these agreements as part of the American Jobs Act. More important, this Act sought to stimulate economic growth to create jobs. This Act was in response to unemployment that remained stuck at 9.1%.
For more detail, see Obama Economic Policies.
Bush Economic PoliciesTo address the 2001 recession, President Bush launched tax cuts. The first tax rebate, EGTRRA, was designed to jumpstart consumer spending. Checks were mailed to households in August 2001. After the 9/11 attacks, Bush focused on the War on Terror.
In 2004, Bush proposed the JGTRRA tax cuts to help businesses recover from the lingering effects of the 2001 recession, which the 9/11 attacks aggravated. In 2005, he missed an opportunity to quickly react to Hurricane Katrina, which some estimates said cost $200 billion in damage. As a result, GDP fell to 1.5% in Q4 2005. He then added $33 billion in the FY 2006 budget to help with cleanup.
President Bush did not respond to the Subprime Mortgage Crisis with any fiscal policy or regulations. He left it up to the Federal Reserve to address the resultant banking crisis with monetary policy only.
Obama and Bush Both Created Huge Budget DeficitsBoth Presidents ran up record-setting budget deficits. Obama's FY 2012 Budget proposed a $1.07 trillion deficit, even though the recession was over. The FY 2011 Budget deficit was $1.3 trillion, but was delayed by the Republican House until a mere $38 billion was trimmed in March 2011. Obama's first budget in FY 2010 ran the highest deficit ever -- $1.6 trillion.
President Bush's last budget, for FY 2009, started out with a $500 billion deficit. However, Treasury Secretary Hank Paulson's TARP plan was added to it. After Obama was elected, he also added part of the Economic Stimulus Plan. Although it was to be spent over ten years, the bulk was budgeted for the first three fiscal years: $185 billion in FY 2009, $400 billion in FY 2010 and $135 billion in FY 2011.
The Bush FY 2008 Budget was the last budget untouched by recession fighting. Even so, it ran a (then shockingly high) $500 billion deficit to fund the War on Terror. This was after borrowing $678 billion from the Social Security Trust Fund. That type of raiding is standard operating procedure, since the Federal government can borrow from itself at will.
How Deficit Spending Hurts the EconomyBy increasing the Federal debt, deficit spending will reduce demand for U.S. Treasuries as investors become concerned that the government will not honor the debt. This could increase interest rates, thus slowing the economy. Lowered demand for Treasuries will also put downward pressure on the dollar. That's because dollars, and dollar denominated Treasury Securities, become less desirable, so their value declines. As the dollar declines, foreign holders get paid back in currency that's worth less, which further decreases demand.
Despite its long-term ill effects on the economy, deficit spending seems to work for Presidential popularity. Obama has had a higher approval rating (40-60%) than Bush (started at 60%, spiked to 80% after 9/11, but ended at 30%). To compare approval ratings for all the Presidents, see this Wall Street Journal article.