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Greetings, all It is true that the US economy is ailing, and it is true
that the Bush team, naturally, avoided the topic and distorted the record by
carefully ‘selecting’ what it would talk about. But the real
culprit lies beyond the reach of the Bush administration: poor education for
too many kids, obsolete labor/corporate structures and relations (past CEO’s
irresponsibly burdened future ones with unrealistic pension and other worker
obligations), and, off-shoring (a better term for this phenomenon that
out-sourcing). Until we Americans develop an effective national industrial
policy we will not be able to address these issues successfully. Who then is really to ‘blame’? Past economists
and political leaders, who combined for reasons of ideology and interest group
convenience to deride the idea of a national industrial policy. Cheers, Lawry From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On
Behalf Of Karen Watters Cole More economic analysis of Bushonomics. The consensus
seems to be that he is out of gas, running on empty. Others say, finished. Once again, it’s imperative to correct the
misinformation and grandstanding that flows incessantly from this
administration, that “the rate of job growth over the period to which the
president referred was 3.6%; the historical average for comparable periods in
the past is 8.4%.” We must repeat these corrections as often as the
incorrect and false is repeated, in order to break the cycle of
“misinformation”. KwC Short
Changed
The times call for good economic stewardship, and last
night we didn’t get it. By Jared Bernstein, The American Prospect, Web Exclusive: 02.01.06 When the economy is doing well, presidents tend
to spout growth rates and historical comparisons in their State of the Union
speeches, while leaders of the other party suffer through the speech. If a
president is presiding over a downturn, he feels their (and everybody’s) pain,
tortures a few numbers to suggest things are not that bad, and describes a way
forward. But -- despite the serious economic challenges
the country faces -- we heard little about it last night. The economy and
economic policy got short shrift, with one or two statistics (4.6 million jobs
and four-plus years of uninterrupted growth), a few sentences on health care, a
few lines on tax cuts, and a smattering of education. Sometimes what presidents
don’t say speaks volumes. It’s worth pondering why the economics
section of the speech was light. First, many things are not going Bush’s
way right now. A few days ago, we learned the real GDP rose 1.1 percent in the
last quarter of 2005, the worst growth rate in three years. Before that, the
Bush team could brag of at least moderate growth rates, but their
Achilles’ heel was that the growth wasn’t trickling down -- it was
gushing up. In fact, the morning of the speech, we at the
Economic Policy Institute released a note showing that, according to Bureau of
Labor Statistics data, one of the broadest measures of wage growth in the
economy fell about 1 percent in real terms last year. The administration’s rap had been,
“Pay no attention to the wage squeeze. With rising health costs,
employers are just taking dollars from the wage side and plowing them into
health benefits.” Except real compensation was essentially unchanged
(down 0.2 percent) in 2005. And this was yet another year with strong
productivity growth. The fact is that profits, which soared over the last few years, are squeezing both
wages and compensation. The president is right
about the economy growing for four years. But the distribution of that growth has been highly skewed. It’s possible the administration truncated the usual
“ain’t we great” rap here because of the dissonance it might
cause with so many Americans working harder yet still falling behind. Oh, and that 4.6 million jobs. It sounds like a
big number, but that’s half the rate at which
jobs were growing at this point in the last recovery. The rate of job growth
over the period to which the president referred was 3.6 percent; the historical
average for comparable periods in the past is 8.4 percent. In fact, that remaining slack in the job market is one reason
real wages are doing so badly (faster energy-induced price growth is another). It also seemed, to me at least, that another
reason for the shabby treatment of domestic policy was that the president
isn’t that engaged in this stuff anymore. Sure, he’d like to cut
more taxes, but, especially given the flop of his 60-city Social Security tour,
the fire in his belly is all about 9-11, the Iraq war, domestic spying, and
intimidating the wimps who refuse to see it his way on foreign policy. But
enough psychoanalysis. Here is a look at some of the president’s
recommendations. Don’t
Let the Sun Go Down: The president touted his $880 billion in “tax relief”
and tried to connect those dots to the ongoing economic recovery. To see the
stretch in this argument, check out this analysis by my EPI colleague
Lee Price, but it’s a
typical State of the Union move to make such connections. There were, however, two pretty egregious parts
that followed. First, there was this crazy argument that if we stick to the law
and let the tax cuts sunset (they’re set to expire over the next few
years), “American families will face a massive tax increase they do not
expect.” Do not expect? The cuts were sold on the basis
that they’d expire by the end of this decade. That’s the only way
the president and Congress could at least create the illusion that they could control the deficit that the
cuts helped to create. Their expiration is on
the books; that’s hardly unexpected. We all understand that powerful
forces would like to extend them, but there can be no doubt that making the tax
cuts permanent involves new tax cuts, and there are many in Congress, including
Republican moderates, who may not be so quick to sign off on these new cuts. The other objectionable part here was the president’s equating good stewardship with cuts in
“non-security discretionary spending.” What’s really being said here is that given these
massive tax cuts, they’ve got to make a show of cutting spending. But
they can’t go after entitlements or defense, or any of those programs
with big lobbyists behind them, which leaves Medicaid, food stamps, student
aid, child support enforcement -- these are what our benighted fiscal stewards
are going after, and they’re actually making “progress.” Attention
Health Care Shoppers: The president was
expected to say more here, but again, his heart wasn’t in it. The
administration will soon be offering expansions of Health Savings Accounts,
their major health care initiative. These are personal accounts (sound familiar?)
where you can save and withdraw money tax free for medical expenses. To join
the program, you have to purchase an insurance policy with a high deductible.
These policies cover the really expensive stuff, but for the rest of your care,
you pay out-of-pocket. The idea is that by shifting the costs for the
small stuff from their insurers to their wallets, consumers will become better
health-care shoppers. This is not the place for detailed analysis but many
economists don’t believe these plans will save money or lower health
costs, and most people -- surprise -- are not interested in bearing more costs,
even with the tax incentive. Which isn’t to say there’s not a big
problem in need of a solution here. To his
credit, the president acknowledged last night that it isn’t really Social
Security that’s going to gobble up the economy; it’s health care.
HSAs won’t change that one whit, nor will it do much to address the
plight of the 46 million uninsured Americans. And by the way, the president did admit his team
has no idea what to do about the health-care challenge, i.e., he announced a
bipartisan commission to study the coming pressures on Medicare, Medicaid, and
Social Security. Speaking of admissions, the impressive part of
the speech was the president’s acknowledgement that “America is
addicted to oil,” words that don’t come easy to an old oil guy (I
imagined a big sneer from Cheney when he heard that). But here again, as the The New York Times put it this morning,
“… the goal was grand, the means
were minuscule.” According to one analyst, the proposed new
expenditures would just get renewable-energy funding back to its pre-Bush level. After a nod to his guest-worker program, this
part of the speech ended with some Clintonesque
ideas about enhancing research and development
and encouraging children to learn math and science. But by then it was pretty clear that beyond
cutting taxes, inveighing against “protectionists” (anyone
who’s concerned about the downsides of globalization), and incentivizing risk-taking as a
health-care plan, the Bush administration’s economic agenda has run out
of gas. I suppose one could applaud that development but I find that too
cynical. We face a set of economic challenges calling for true stewardship. We
haven’t had it for years, and we didn’t get it last night. Jared Bernstein is a senior
economist at the Economic Policy Institute, a nonprofit, nonpartisan think tank
in Washington, D.C. and author of the forthcoming book, All Together Now:
Common Sense for a Fair Economy, published by Berrett-Koehler. http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=11066 |
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