Economy is Bush's downfall.
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| Wed, 08-11-2004 - 11:20am |
Sometimes I sympathize with President Bush. Really.
Last week's dismal report on job creation -- a scant 32,000 jobs created versus 240,000 expected -- left our re-election-seeking president little wiggle room on the economic front.
"Economic growth is strong and getting stronger," Bush told a gathering of minority journalists after the jobs number was released.
It can't be easy to have to defend your economic policies when all evidence suggests that average Americans are worse off today than they were four years ago.
Here are just a few of the numbers:
-- When Bush took office on Jan. 20, 2001, the Dow Jones industrial average was at 10,587.59. It closed Tuesday at 9,944.67.
-- When Bush took office, the unemployment rate was 4.2 percent. It's now 5.5 percent, according to the Labor Department.
-- When Bush took office, U.S. consumer debt totaled almost $1.7 trillion. It's now $2.038 trillion, according to the Federal Reserve.
-- When Bush took office, bankruptcy filings during the previous year totaled almost 1.3 million, down 5 percent from a year before. By Dec. 31, 2003, bankruptcies had hit a record of nearly 1.7 million, up 5.2 percent from 2002, according to the American Bankruptcy Institute.
-- When Bush took office, the federal budget had been balanced for three straight years and was, in the 2000 fiscal year, running a surplus of $236 billion -- the largest in U.S. history. The White House is projecting a record budget deficit this year of $445 billion.
All this must be placed in context, though. When Bush came to power, the U.S. economy was at the tail end of a dot-com-fueled bubble that couldn't have been sustained under any circumstances. A recession, most economists believe, was all but inevitable.
Then there was Sept. 11.
A tough hand
"Every president is dealt a hand of cards," said John Shoven, a Stanford University economist and senior fellow at the conservative Hoover Institution. "Bush inherited a pretty tough hand."
The average American is indeed worse off now than four years ago, he said. But Shoven gives Bush "a passing grade, maybe a B-plus," for his handling of the economy.
"Overall, the economy has performed pretty well given the shocks it has faced," he said, adding that credit for this "has to be significantly shared with Alan Greenspan," the Fed chief, who boosted a key interest rate Tuesday by a quarter-point.
Jared Bernstein, senior economist at the liberal Economic Policy Institute in Washington, agreed that Bush was dealt a tough hand when he took office.
"What he failed to do, though, was take decisive action to ameliorate the problems he inherited," Bernstein said.
The president's key economic error, he said, was to attempt to stimulate the economy by skewing the benefits of three tax cuts toward wealthy Americans.
According to Citizens for Tax Justice, a liberal-leaning Washington think tank, nearly 40 percent of the benefits from Bush's tax cuts will go to the richest 1 percent of Americans, those earning on average $1 million a year.
By contrast, only about 17 percent of the benefits will go to the 60 percent of the population earning $45,000 or less.
"The tax cuts made no sense as a stimulus measure," said Bob McIntyre, director of Citizens for Tax Justice. "If you want to stimulate the economy, you have to give money to people who don't already have it."
Bernstein said a crucial problem for many Americans today is that wages are significantly lagging behind inflation.
Prices up 3%
During the past 12 months, average hourly earnings increased by 1.9 percent, according to the Labor Department. Consumer prices, meanwhile, have risen by about 3 percent.
"The middle-income family is definitely worse off than four years ago," Bernstein said.
He noted that it would take extraordinary growth -- about 400,000 new jobs a month between now and November -- for Bush to avoid the dubious distinction of being the first president since Herbert Hoover to see a net decline in jobs during a term of office.
"We are more than a million jobs below where we were at the employment peak in March 2001," Bernstein observed.
Even Shoven at the Hoover Institution had to acknowledge the seriousness of the job-loss situation. "It's bad," he said.
People I spoke with in random encounters this week conveyed a clear perception that things are tougher for them economically than when Bush first took power.
"Real estate's through the roof, gas prices, tolls, food, movies, cigarettes -- everything's gone up," observed Ron Cairns, 40, a Redwood City electrician. "But wages have stayed the same."
Cairns, a Democrat, blamed Bush for most of the current difficulties.
"Everyone's in a state of fear," he said, "worrying about the war and worrying about their next paycheck."
Niles Helmboldt, 37, a San Francisco banker and a Republican, offered an almost identical perspective.
"I'm not as well off as I was," he acknowledged. "My cost of living has gone up, but wages have not kept pace."
Not helping
Is this Bush's fault?
"I don't see his economic policies helping," Helmboldt replied. "It's not a pretty picture."
After it was reported last week that just 32,000 jobs were created in July and that 61,000 fewer jobs were created in May and June than previously estimated, the president did his best to put all the grim news in a positive light.
"Today's employment report shows our economy is continuing to move forward," he said. "And it reminds us that we're in a changing economy and we've got more to do.
"I'm not going to be satisfied until everybody who wants to work can find a job," Bush added. "I'm running (for re-election) because I understand how to take a strong economy and make it stronger."
All evidence to the contrary notwithstanding.


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Oh, I see what you are saying. If you want to avoid reading quoted links, just go to the statement of opinion first, then you can decide for yourself if the links are worth reading or not. I am not seeing it as being bizarre as there are often times links that support the reasons why the poster may think kerry or bush are sooo stupid. that doesn't mean I agree with them but I can see why the quoted information could support that view. In my mind that is a useful tool for examining why posters draw some conclusions. If a links information can be refuted or challenged with alternate date, then it furthers the debate beyond just offering a statement of opinion.
I didn’t blame the bankruptcies on Bush. We were using Bush’s term of office as an indication of the failing economy and it’s results. In this respect, my reference to bankruptcies was at a macroeconomic level not a microeconomic level. If people don’t have money they can’t contribute to the economy by consuming goods. When people don’t consume goods, businesses suffer, when businesses suffer their employees suffer, which means they can’t consume and the cycle continues.
<< I daresay that a great majority of these bankruptcies are from people who are living beyond their means.>>
I am sure that some people are “buying things that they can’t afford”. However, I do not believe that this is the vast majority. Many many people live paycheck to paycheck, so when any emergency (medical bills or loss of job) happens they fall into a hole and with a sluggish economy can’t get out. Perhaps, these people aren’t as prudent as they should have been, but neither can you blame their circumstances solely on their own actions.
There is a tone in your message that disturbs me. It is your accusatory finger pointing toward people whose circumstances you don’t understand. It is easier to assume they are responsible for their downfall than to consider the health of the economy. In other words, it is easier to find the fault in the micro economy than to consider the role played by the macro economy. Let’s face it, Bush’s economic policies haven’t worked, mainly because they consist almost solely of giving money to the rich at the expense of a national debt. There are economic consequences to such folly. See article below.
>>The responsible thing to do would be to make it harder for people to get credit cards<<
On a personal level, I agree it would be better, I am an advocate for zero credit card balances. However, from a national economic perspective this would be a disaster. The US consumer has been keeping the world economy going through their purchases. If the banks cut off credit, the world economy would become depressed.
Here's the article:
http://www.nytimes.com/2004/08/12/opinion/12thu1.html
Painting the Economy Into a Corner
President Bush reacted decisively to this month's shockingly bad employment report - by quickly changing the topic to terror. The Federal Reserve chairman, Alan Greenspan, also focused elsewhere, namely on rising oil prices. Mr. Greenspan used inflationary energy costs as the rationale for raising interest rates a quarter point, despite the drastic slump in hiring and a recent slowdown in productivity growth.
What neither man seems ready to acknowledge outright is that policy makers have run out of tools for stewarding an economy that - nearly three years into a recovery - has yet to flourish and may even be downshifting to neutral. The president's fiscal policies, mainly high-end tax cuts, have resulted in a record federal budget deficit without spurring hiring or income growth. If Mr. Bush continues on the tax-cut path, continuing high deficits will further threaten job creation and living standards.
Mr. Greenspan passed up opportunities to discourage Mr. Bush's disastrous tax-cut strategy back when it might have done some good. Instead, the Fed pursued its own stimulative policy, pushing interest rates to the lowest level in a generation. One result has been a debt load that is a big factor in the overall decline in households' net worth, despite the rise in housing values. That alone argues for tightening the money spigot. Another reason for raising rates is that the continuation of a cheap-money policy would probably precipitate inflation, as a glut of dollars would eventually feed rising prices.
Mr. Bush and Mr. Greenspan have now exhausted almost all of their stimulus options. The economy is on its own, and it is not clear whether it is on track for a stronger recovery in the second half of the year.
No wonder, then, that Mr. Bush won't acknowledge the bad news on jobs. Doing so would imply a need to re-examine the policies that have led to this point, something he is not willing to do. Given the facts, his intransigence is appalling: according to a new research report by Economy.com, an independent provider of economic data and analysis, the $700 billion swing from surplus to deficit under President Bush accounted for nearly two percentage points of economic growth a year. But it has generated economic gains of just over one percentage point.
The main reason for the crippling discrepancy is that the tax cuts were mostly handed out where they did the least good - that is, lavished on the people least likely to spend the largess. The reduction in the tax rates, the largest of Mr. Bush's tax boons, provided only 59 cents of economic stimulus for every dollar of lost tax revenue. The tax cut for dividends and capital gains produced 9 cents of stimulus for every forgone dollar. (Did someone say, "Deficits as far as the eye can see"?) In contrast, the economic bang for a dollar of aid to state governments is $1.24. Yet such assistance accounted for only 3 percent of the total cost of Mr. Bush's fiscal policies.
The president was right to use a fiscal stimulus to counter a recession - it's just that his favorite tactics were wrong, and they failed to create an environment that fosters growth in jobs and income. Now, along with outside factors like oil prices, Mr. Bush's priorities are actually contributing to the weak picture for jobs. And in a perverse feedback loop, a continuation of these policies will further swell the deficit, impeding job growth even more.
While the economy is still expanding and jobs are being created, the pace pales in comparison with the pace of other recoveries at this same stage. For real prosperity to take hold, a much broader swath of the labor force must be able to find jobs and earn decent wages. That isn't likely to happen under Mr. Bush's policies.
Why didn't you post the link. I find it disconserting when people don't provide the link for the statements. I still find your logic confusing; I went back and re-read the post.
<>
The key word here is "median" which means that the number below $90K and the number above it are the same. So??
As I have stated previously on this board I consider the middle class to earn between $45K and $150K; so no I don't consider $90K "rich".
Gettingahandle
Ignorance is Nature's most abundant fuel for decision making.
'Experience' has been my brutal teacher, in this lesson-in-economics, as well ...
my prayers for you, and for all the millions of Americans (and planet Earth citizens) suffering still, over this Conservative Republican Economic Experiment ...
prayers for all.
ForeverHugs,
--Genie
The definition of credit is getting something that you do not have the funds to pay for at that time. So, yes, when people get into credit trouble it IS their fault. They make the choice to buy something that they do not have the funds to purchase. Whatever happens to their job or salary after the fact is a risk that they chose to take when they purchased that item with credit.
< There is a tone in your message that disturbs me. It is your accusatory finger pointing toward people whose circumstances you don’t understand. It is easier to assume they are responsible for their downfall than to consider the health of the economy. In other words, it is easier to find the fault in the micro economy than to consider the role played by the macro economy. >
There is a tone in your message that disturbs me. It is your oh so easy way to blame someone else, and not expect people to take ownership of their own mistakes and make them accountable to them. You say we must first consider how the macroeconomy effects the microeconomy. The bankruptcies of the microeconomy negatively affect the macroeconomy and therefore the poor economy is partly the fault of those filing for bankruptcy and using credit poorly.
< Let’s face it, Bush’s economic policies haven’t worked, mainly because they consist almost solely of giving money to the rich at the expense of a national debt. There are economic consequences to such folly. >
I don't see how allowing the rich the keep some of their money just as we have allowed the middle class taxpayers too is bad business. Of course, we should penalize them for having the audacity to make more money than we do and make them foot the bill for more low income handouts. I agree in the share-the-wealth theory, but I also think it is irresponsible to expect the upper class to pay for all that Kerry wants to spend. If he wants to spend so much, raise taxes across the board and let everyone help carry the load, but it just sounds so much better to take from the rich and give to the poor. Kerry's theory of taking more money from the rich to hand out to the middle and lower class rings of the Robin Hood theory, but the only problem with Robin Hood was that he was a thief...
< On a personal level, I agree it would be better, I am an advocate for zero credit card balances. However, from a national economic perspective this would be a disaster. The US consumer has been keeping the world economy going through their purchases. If the banks cut off credit, the world economy would become depressed. >\
So you are for personal debt but against national debt? The US government has been keeping the world economy going with its purchases. I would hate for the world economy to become depressed.
my prayers for you, and for all the millions of Americans (and planet Earth citizens) suffering still, over this Conservative Republican Economic Experiment ...
prayers for all. "
Very dramatic, blame the conservatives for all the poor and down trodden. I'm just amazed at how powerful we are what with us being responsible for the planet Earth's citizens’ unemployment. Wow. I figured Bush would at least get credit for employing all these Earth citizens what with him being single handily responsible for the exportation of jobs to other countries.
Wonder how Kerry plans on employing a man in South America without exporting jobs. Oh wait I got it…a new government job!! I say do away with private enterprise and lets all go work for the government. No need to pay us, we couldn’t afford the taxes. Just give us each day our daily bread, protect us from our transgressors and deliver us from evil. Wait is that God or the US government….well it must be the government….cause we have outlawed God.
http://seattlepi.nwsource.com/national/186210_camp13.html
Campaign 2004: Bush tax cuts favor the very rich, report finds
Friday, August 13, 2004
By EDMUND L. ANDREW
THE NEW YORK TIMES
WASHINGTON -- Fully one-third of President Bush's tax cuts in the last three years have gone to people with the top 1 percent of income, who have earned an average of $1.2 million annually, according to a report by the non-partisan Congressional Budget Office to be published today.
The report calculated that households with incomes in that top 1 percent were receiving an average tax cut of $78,460 this year, while households in the middle 20 percent of earnings -- about $57,000 a year -- were getting an average cut of only $1,090.
The new estimates confirm what independent tax analysts have long said: that Bush's tax cuts have been heavily skewed to the very wealthiest taxpayers, although those are also the people who pay a disproportionate share of federal income taxes.
The calculations, which were requested by congressional Democrats, are all but certain to intensify a central debate between Bush and Sen. John Kerry, the Democratic presidential nominee.
Bush has argued that the tax cuts provided crucial support to the economy at a time when it was mired in a recession and reeling from the effects of a stock market collapse, terrorist attacks and corporate scandals.
Kerry has argued that the cuts were tilted so much in favor of the wealthy that they provided relatively little stimulus to the economy and set the stage for record budget deficits.
Since 2001, the federal budget has deteriorated from a surplus of more than $100 billion to a deficit expected to exceed $400 billion in 2004.
Bush's top economic priority has been to make his tax cuts permanent, rather than letting them expire at the end of this decade as they would under current law.
Kerry would seek to roll back the tax cuts for households with incomes above $200,000 a year, a move his campaign estimates would save $860 billion over 10 years, and use that money in large part to pay for a vast new national health care plan.
According to the new report from the Congressional Budget Office, about two-thirds of the benefits from the tax cuts, enacted in 2001 and 2003, went to households in the top fifth of earnings, with an average income of $203,740.
But the report also gave Republicans support for their contention that tax reduction had brought some benefit to people in almost all income categories.
People within the bottom fifth of income, for example, averaging earnings of only $16,620, saw their effective tax rate drop to 5.2 percent from 6.7.
But because lower-income and many middle-income families were paying very little federal income tax in the first place, people in the bottom fifth of earnings received an average tax cut of only $250.
"It doesn't matter who you are, the report shows that you are better off now than you were before the tax cuts," said a House Republican aide. "It's showing that everybody's tax burden has gone down as a result of the tax cuts."
The tax cuts of 2001 and 2003 reduced tax rates for people in all income brackets, but they had a disproportionate effect on people at the very highest income levels because they had already been paying a disproportionate share of total federal taxes.
William Gale, a long-time tax analyst at the Brookings Institution, said the new congressional report was consistent with his own calculations on the distribution of benefits from Bush's tax cuts.
"It's not just that lower-income people are getting smaller benefits. It's also that these tax cuts will eventually have to be paid for with either spending cuts or tax increases, and those are likely to be less progressive than the taxes they are paying now."
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