Decision Points

account to a big New York bank. I was not going to gamble on First National’s solvency.
    Tom and I hustled over to the bank. From the second-floor balcony, we watched people line up in the lobby to approach the tellers’ windows. Some carried paper sacks. Amid the crowd was a prominent old rancher, Frank Cowden . Like other West Texas ranchers, Mr. Cowden was fortunate that his land overlay a lot of oil. He was a large shareholder of First National. He was working the line, telling people that the federal government insured every deposit up to $100,000. The people just stared back at him. They wanted their money.
    On October 14, 1983, the FDIC seized First National and sold it to First Republic in Dallas. The depositors were protected, but the shareholders were wiped out and a Midland institution was gone. Mayor Thane Atkins spoke for a lot of folks when he said, “I feel like hanging a black wreath on my door.”
    I had read about the financial panics of 1893 and 1929. Now I had witnessed firsthand the bursting of a speculative bubble. First National, like all financial institutions, depended on the confidence of its customers. Once that confidence was lost, the bank had no chance to survive.

    Sixteen years later, I was running for president. By nearly all measures, the economy was booming. America’s GDP had increased by more than $2.5 trillion since the recession that had cost Dad the election but endedbefore he left office. Fueled by new Internet stocks, the NASDAQ index had shot up from under 500 to over 4,000. Some economists argued that the Internet era had redefined the business cycle.
    I wasn’t so sure. “Sometimes economists are wrong,” I said in a speech outlining my economic policy in December 1999. “I can remember recoveries that were supposed to end, but didn’t, and recessions that weren’t supposed to happen, but did. I hope for continued growth—but it is not guaranteed. A president must work for the best case, and prepare for the worst.”
    The centerpiece of my plan was an across-the-board tax cut. I believed government was taking too much of the people’s money. By the end of 1999, taxes accounted for a higher percentage of GDP than they had at any point since World War II. The government was supposedly running a large surplus. I knew where that money would go: Government would find a way to spend it. After all, Congress and President Clinton had agreed to increase nonsecurity discretionary spending by more than 16 percent in fiscal year 2001.
    I had another reason for supporting tax cuts . I worried that we could be witnessing another bubble, this one in the technology sector. Larry Lindsey , my top economic adviser, believed the country was headed for a recession. If he was right, the tax cuts would act as a vital stimulus.
    Sure enough, a recession officially began in March 2001. The
New York Times
considered the downturn a positive development for me. One article ran under the headline “For the President, a Perfect Time for a Recession.” It sure didn’t feel that way to me. I couldn’t help but note a strange irony of history. In 1993, Dad had left behind an economy much better than the public realized. Now I had inherited one much worse.
    With the economy tanking, the tax cuts took on a new urgency. I pressed Congress to move quickly. In June 2001, I signed a $1.35 trillion tax cut, the largest since the one Ronald Reagan signed during his first term. The bill reduced marginal tax rates for every income taxpayer, including millions of small business owners; * doubled the child tax credit from $500 to $1,000; reduced the marriage penalty; and eliminated thelowest tax bracket, which removed five million low-income families from the tax rolls. The bill also phased out the death tax, a burden that was unfair to small business owners, farmers, and ranchers. I figured Americans had paid enough taxes while they were living; they shouldn’t be taxed again when they died.

    Signing the 2001 tax relief bill.
White House/Paul Morse
    I was optimistic that consumers and small businesses would spend their tax relief to help pull the economy out of the recession. But we were in for another massive economic hit that no one expected.

    The toll of 9/11 will always be measured by the 2,973 lives stolen and many others devastated. But the economic cost was shattering as well. The New York Stock Exchange shut down for four days, the longest suspension of trading since the Great