First, both Bush and Obama used expansionary fiscal policy to combat recessions by stimulating economic growth. As a result, they were the biggest contributors to the Federal debt. Bush added $5.8 trillion, while Obama added $5 trillion by the end of FY 2013. For more, see Debt by President.
First, Bush created the two unsuccessful wars in Iraq and Afghanistan. Obama successfully found Osama bin Laden, allowing him to end the war in Afghanistan. He also ended the Iraq War.
The second biggest difference is that Bush did not regulate banks' use of derivatives, thus creating the 2008 financial crisis. Obama pushed through the Dodd-Frank Wall Street Reform Act, which does regulate banks. In addition, it regulates credit, debit and prepaid cards and ended payday loans with the Consumer Financial Protection Agency.
Although both President's used expansionary fiscal policy, Obama passed the Economic Stimulus Act. This powerfully created jobs through education and infrastructure, ending the recession in 2009. Bush used tax cuts, which aren't as effective in creating jobs. For more, see Unemployment Solutions.
Bush also spent $350 billion to save the banks with TARP, but did nothing for homeowners. Obama used TARP funds to subsidize homeowners stuck with upside-down mortgages.
As for health care, Bush passed the 2005 Bankruptcy Prevention Act. This made it difficult for people to declare bankruptcy, so they took money out of their home equity instead. After the Act was passed, mortgage defaults rose 14% per year. The number #1 cause of bankruptcy is medical costs(Source, NBER, Did Bankruptcy Reform Act Cause Mortgage Delinquency to Rise?, March 2010)
In addition, he created the Medicare Part D prescription drug program, which left a "donut hole" in costs to seniors. It also added $550 billion to the debt. (Source: Health and Human Services, Report of the Trustees, 2009)
Obama passed the Affordable Care Act, which funds the so-called "donut hole" left by Bush's program. It also provides health insurance for everyone, allowing many people to get preventative health care and ultimately cut health costs over time.
In Depth: Obama Economic Policies
Obama 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 Act, which returned the economy to positive GDP growth by the third quarter 2009.
In 2010, Obama pushed through the Affordable Care Act, with the goal of lowering health care costs. The benefits it provided were phased in over several years. It was self-funding through a variety of taxes.
The Dodd-Frank Act makes 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 CFPC which consolidated protection for consumers with credit and debit cards, consumer and payday loans, and credit reporting agencies, and regulates credit and mortgage fees.
Obama supported passage of free trade agreements as part of the American Jobs Act. He hasn't yet fulfilled his campaign promise to review all trade agreements to make sure they didn't cause job losses. For more detail, see Obama Economic Policies.
In Depth: Bush Economic Policies
To 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, which cost at least $1.5 trillion.
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. Only after Lehman Brothers collapse did he agree to Treasury Secretary Hank Paulson's recommendation to stop financial panic with the $700 billion bailout bill.
Obama and Bush Both Created Huge Budget Deficits
Both 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, it grew after the TARP plan was added to it. After Obama was elected, he also added part of the Economic Stimulus Plan to it. 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 Economy
By 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 the Wall Street Journal. Article updated November 20, 2013