Op-ed: Bye-Bye, Bush Boom

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Registered: 03-18-2000
Op-ed: Bye-Bye, Bush Boom
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Tue, 07-06-2004 - 5:11pm

http://www.nytimes.com/2004/07/06/opinion/06KRUG.html?hp


When does optimism — the Bush campaign's favorite word these days — become an inability to face facts? On Friday, President Bush insisted that a seriously disappointing jobs report, which fell far short of the pre-announcement hype, was good news: "We're witnessing steady growth, steady growth. And that's important. We don't need boom-or-bust-type growth."


But Mr. Bush has already presided over a bust. For the first time since 1932, employment is lower in the summer of a presidential election year than it was on the previous Inauguration Day. Americans badly need a boom to make up the lost ground. And we're not getting it.


When March's numbers came in much better than expected, I cautioned readers not to make too much of one good month. Similarly, we shouldn't make too much of June's disappointment. The question is whether, taking a longer perspective, the economy is performing well. And the answer is no.


If you want a single number that tells the story, it's the percentage of adults who have jobs. When Mr. Bush took office, that number stood at 64.4. By last August it had fallen to 62.2 percent. In June, the number was 62.3. That is, during Mr. Bush's first 30 months, the job situation deteriorated drastically. Last summer it stabilized, and since then it may have improved slightly. But jobs are still very scarce, with little relief in sight.


Bush campaign ads boast that 1.5 million jobs were added in the last 10 months, as if that were a remarkable achievement. It isn't. During the Clinton years, the economy added 236,000 jobs in an average month. Those 1.5 million jobs were barely enough to keep up with a growing working-age population.


In the spring, it seemed as if the pace of job growth was accelerating: in March and April, the economy added almost 700,000 jobs. But that now looks like a blip — a one-time thing, not a break in the trend. May growth was slightly below the Clinton-era average, and June's numbers — only 112,000 new jobs, and a decline in working hours — were pretty poor.


What about overall growth? After two and a half years of slow growth, real G.D.P. surged in the third quarter of 2003, growing at an annual rate of more than 8 percent. But that surge appears to have been another blip. In the first quarter of 2004, growth was down to 3.9 percent, only slightly above the Clinton-era average. Scattered signs of weakness — rising new claims for unemployment insurance, sales warnings at Target and Wal-Mart, falling numbers for new durable goods orders — have led many analysts to suspect that growth slowed further in the second quarter.


And economic growth is passing working Americans by. The average weekly earnings of nonsupervisory workers rose only 1.7 percent over the past year, lagging behind inflation. The president of Aetna, one of the biggest health insurers, recently told investors, "It's fair to say that a lot of the jobs being created may not be the jobs that come with benefits." Where is the growth going? No mystery: after-tax corporate profits as a share of G.D.P. have reached a level not seen since 1929.   


What should we be doing differently? For three years many economists have argued that the most effective job-creating policies would be increased aid to state and local governments, extended unemployment insurance and tax rebates for lower- and middle-income families. The Bush administration paid no attention — it never even gave New York all the aid Mr. Bush promised after 9/11, and it allowed extended unemployment insurance to lapse. Instead, it focused on tax cuts for the affluent, ignoring warnings that these would do little to create jobs.


After good job growth in March and April, the administration declared its approach vindicated. That was premature, to say the least. Whatever boost the economy got from the tax cuts is now behind us, and given the size of the budget deficit, another big tax cut is out of the question. It's time to change the policy mix — to rescind some of those upper-income cuts and pursue the policies we should have been following all along.


One last point: government policies could do a lot about the failure of new jobs to come with health benefits, a huge source of anxiety for many American families. John Kerry is right to make health care a central plank of his platform. I'll analyze his proposals in a future column. 

cl-Libraone~

 


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iVillage Member
Registered: 03-24-2003
Tue, 07-06-2004 - 9:44pm
Is there anything else to say? I'm sure the campaign types will do their war is peace stuff with these numbers, but... it won't work.
iVillage Member
Registered: 09-05-2003
Wed, 07-07-2004 - 8:17am

What should we be doing differently? For three years many economists have argued that the most effective job-creating policies would be increased aid to state and local governments, extended unemployment insurance and tax rebates for lower- and middle-income families.


I always laugh at the idea of "Trickle Down Economics" any economist would tell you that it was never based in economics.

iVillage Member
Registered: 03-18-2000
Wed, 07-07-2004 - 9:00am

"Trickle Down Economics"


Yes we all know how 'well' that works. I always get a nasty visual when I hear trickle down economics. :)


people fall for it just because they get a couple hundred dollars in their tax refund.


When the $400 child tax rebate cheques were sent out in

 


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iVillage Member
Registered: 03-26-2003
Wed, 07-07-2004 - 9:50am
"Trickle down economics" could work if all CEO's and employers were mindful of the needs of their employees. It requires a certain fairness--pricing products and services within reason, and reimbursing employees for hard work. My husband is a small business owner and he knows that it's good business sense to balance company profits with employee well-being. He also makes the point that he's in business to make money, not to run a benevolent organization.

But rapacity and greed seem to be the first order of business for some firms and they look at the bottom line solely in dollars and cents rather than considering profits as being a contribution to societal harmony.

It's tricky to find the balance between over-regulation and laissez-faire economics. Consumer Reports had a brief blurb in its most recent edition about the profit being made by the oil companies. "Double, double oil and trouble" is the title and I quote in part below:

"U.S. oil companies have been swimming in after-tax profits that exceed by $50 billion to $80 billion the profits they enjoyed from 1995 to 1999. They're on track now for another banner year"

--A wave of mergers from the 1990's whittled 34 major oil and gas companies down to 13; 15 refining companies were whittled to 7. This consolidation reduced competition and with it, the impetus to lower prices.

--Tight markets and high prices in the U.S. would ease fastest if we used less oil by developing more energy-efficient products. But the energy bill that Congress is considering doesn't do enough to boost efficiency requirements for the most energy hungry products such as automobiles."

The piece goes on to make recommendations on how to remedy the situation. I'm going off on a tangent now, but it's interesting to note that not one of them involves reducing the speed limits on interstate highways. Am I the only one who is curious about the lack of emphasis, by both consumer advocates like CR and the administration, on conservation measures?

Goodness me, I wish we had some other viable source of energy rather than fossil fuels. Domestic politics, economics, foreign policy and possibly social structure are so entangled with our dependence.

Gettingahandle

Ignorance is Nature's most abundant fuel for decision making.

iVillage Member
Registered: 03-18-2000
Wed, 07-07-2004 - 10:15am

Small business owners, for the most part, have to work with their employees. Unlike these large corporations where the CEO's live in the stratosphere & are only concerned with the shareholder profits.


Almost all of the present admin. have their roots in the oil industy. It's no wonder profits are up, up away.... They need to secure their new positions after the Nov. elections. ;)


"Goodness me, I wish we had some other viable source of energy rather than fossil fuels."


Agreed!

cl-Libraone~

 


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iVillage Member
Registered: 04-16-2003
Wed, 07-07-2004 - 10:59am
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I too am amazed. Perhaps we should teach economics in high scool. We certainly can't rely upon our elected representatives to be wise stewards. They are more concerned with their salary and benefits, and what is even more surprising is they think that's OK. While the average American is struggling to repay the debt they will be enjoying their largess.

iVillage Member
Registered: 09-05-2003
Wed, 07-07-2004 - 11:04am

"Trickle down economics" could work if all CEO's and employers were mindful of the needs of their employees. It requires a certain fairness--pricing products and services within reason, and reimbursing employees for hard work. My husband is a small business owner and he knows that it's good business sense to balance company profits with employee well-being. He also makes the point that he's in business to make money, not to run a benevolent organization.


Actually it doesn't work because it really truely has no basis in economic theory.

iVillage Member
Registered: 04-16-2003
Wed, 07-07-2004 - 11:43am
<<"Trickle down economics" could work if all CEO's and employers were mindful of the needs of their employees.>>

Theoretically, this should be true, but just like communism "from each according to his ability and to each according to his needs" didn't work because this isn't heaven. Business men are focusing on the bottom line as they should. Employees are to help emoloyers make money, and the way to do that is to work employees harder for the least amount of pay. This is common sense, it may not be right or fair, but it is reality.

<>

I say it's not a humanitarian organization. From my point of view, I see a contradiction in your ideas. How can we possibly expect employers "to mindful of the needs of their employees"; such an expectation splits their attention. Salaries are set by the market, granted some employers are more fair with their employees than others, but this is not the point. Believing employers will treat employees fair, if it ever were true, is part of the American fantasy spread by the employers to aide in their exploitation.

I don't think I'm cynical I think I'm realistic. Further, until workers stop expecting employers to share the wealth and demanding it they will receive less and less benefits. Bring back the unions to protect workers benefits. Americans workers didn't spend the first half of the 20th century fighting for fair working conditions to have workers in the 21st century give in to false paternalism.

It is not oil companies that are earning huge profits. Profits are unusually high for most corporations. Who exactly is getting the benefit?

iVillage Member
Registered: 03-18-2000
Wed, 07-07-2004 - 1:12pm

What

 


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iVillage Member
Registered: 09-29-2003
Wed, 07-07-2004 - 1:36pm
Yes, I remember those checks!


 


Mich

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