Top Gun Fires Blanks on the Economy
by Mark Weisbrot
November 1, 2003
"Mission accomplished," declared the Top Gun as he staged the most elaborate photo- opportunity of his presidency, landing an S-3B Viking aboard the Abraham Lincoln aircraft carrier. That was six months ago, and little did he know that the war in Iraq was just beginning. The occupation is a disaster, Americans are getting killed nearly every day, and President Bush will be lucky if this war doesn't run him out of office like Vietnam did to President Lyndon B. Johnson.
Welcome to the spin zone. The war is starting to spin out of control, but there's another issue that could make or break Bush's re-election bid depending on how it is perceived by American voters: the economy.
The U.S. economy has lost 2.8 million jobs since February of 2001. Unemployment stands at 6.1 percent of the labor force, not including the millions who are working part-time because they cannot find full-time jobs, or those who have given up looking for work.
Despite fast-growing productivity, real wages have barely grown over the last year. Soaring health care costs -- including an increasing share shifted to employees -- have taken a big bite out of most people's income. Millions of older workers are now slogging past their planned retirement to make up for the savings they lost in the stock market crash and corporate crime wave.
But President Bush has made a political career out of setting the bar low enough -- remember the Presidential debates of 2000? -- that anything less than Great-Depression-style failure could possibly be spun by the Bush team as success.
And they are trying, with Treasury Secretary John Snow boasting that the economy would create 200,000 jobs a month over the next year.
But the economy needs to create more than 150,000 jobs each month just to employ new entrants to the labor force and keep the unemployment rate from rising. Even if Snow's prediction were to come true, the 200,000 jobs per month would still not make up for the 2.8 million jobs lost since President Bush took office.
Mr. Bush is well on his way to being the first president since Herbert Hoover, more than 70 years ago, to preside over a net loss of jobs.
Some have argued that the economy is recovering fast enough, but that productivity -- the amount of output produced per hour of labor -- is growing too much. According to this argument, since businesses can produce more and more with fewer labor hours, they're not hiring more employees.
But this is not true. Productivity always grows more rapidly after a recession, and this recovery is not much different from the last five -- going back to the 1960s -- in terms of productivity growth. The problem is simply that the economy has not grown fast enough -- as it did in previous recoveries -- to create new jobs.
To be fair, the Bush team is not responsible for the recession that officially began in March of 2001. That was caused by the collapse of the stock market bubble, an entirely foreseeable event that all of our political leaders -- and the press -- should have warned us about. But the Bush team can be blamed for not doing anything to counteract the downturn.
For example, they could have provided federal funds to the state governments, which are reducing employment and economic growth as they try to close an $80 billion shortfall. But instead they chose to rewrite the tax code in favor of their very richest contributors, creating chronic fiscal deficits far into the future -- while providing relatively little economic stimulus at present. And they embarked on a costly war, based on false pretenses, with no end in sight.
The economy generally looms large in any Presidential election. Al Gore would most likely be president today if he had chosen to campaign on the economy, as most political observers expected he would. After all, his administration had presided over the longest economic expansion in American history. But for reasons that remain unexplained, he chose not to make a major issue out of it.
The Democratic candidate this time is unlikely to make the same mistake. He might take a page from Ronald Reagan, who in 1980 famously asked voters, "Are you better off than you were four years ago?" For most Americans, even those fortunate enough to be employed, the answer next year will probably be no.
Mark Weisbrot is Co-Director of the Center for Economic and Policy Research, a nonpartisan think-tank in the nation's capital (www.cepr.net). Readers may write him at CEPR, 1621 Connecticut Ave NW, Suite 500, Washington, DC 20009-1052 and e-mail him at Weisbrot@cepr.net
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