Bush's imagined economic recovery

• Declaring the Job Loss Recovery Over Doesn't Make it So
  by_Christian Weller
  January 9, 2004
  
  Politicians would like to end their term on a high note. Hence, administration representatives and Congressional leaders would like to see the persistently weak labor market disappear. Absent real strong job growth, they have opted for the second best thing: defining away the problem. By simply declaring that any employment growth, regardless of how measly in historical comparison, equals victory over the "job loss" recovery, policymakers no longer have to worry about low employment, wage, and income growth.
  
  In February 2003, President Bush's Council of Economic Advisors estimated that the economy would create about 306,000 new jobs per month between June 2003 and the end of 2004. Treasury Secretary John Snow changed this forecast in October to about 200,000 jobs per month. And the White House declared in December that President Bush's tax cuts are working because the economy added an average of 82,000 in the past four months. In line with this view, House Majority Leader Tom DeLay (R-TX) was quoted in December saying that he saw "no reason" to extend unemployment benefits further. By moving the goal posts closer, victory is achieved much more easily.
  
  The labor market is growing again, albeit at an anemic rate. For the past five months, a total of less than 300,000 new jobs were created, including 1,000 for December as the Bureau of Labor Statistics reported today. This is obviously very slow growth – it does not even keep pace with population growth – and it began late in the recovery – almost two years after the recession ended.
  
  The danger in turning a blind eye to the struggling labor market lies in inaction to help those, who have not yet gotten a job. By historical standards, the labor market is effectively 8.4 million jobs short. Wage growth has been about half of what it has traditionally been in a recovery, as has been the growth of weekly earnings. With the labor market struggling, the average length of unemployment – 19.6 weeks – and the share of the long-term unemployment are still close to their highest level in 20 years.
  
  Given typical employment growth rates in the first 25 months of a recovery, about 300,000 jobs per month should be created and the share of the long-term unemployed should be 13.5% of the unemployed, instead of its actual 22.3%. Thus, typically the need for extended unemployment benefits at this stage in a recovery is significantly less. However, as we have learned, this recovery is not typical, and as today's numbers show, the need for extended unemployment benefits is still high.
  
  By defining the problem out of existence, policymakers do not have to address it. In this world of glossed over problems, Tom Delay's comment that he sees "no reason" to extend unemployment benefits and the White House's silence on this issue make sense. In the real world, where people are on average unemployed for more than four months and where job growth has come to a halt, they don't. Workers and the economy deserve and need the honesty to admit that the labor market is still weak. Then, policy can be designed to address the problem, thus also stabilizing the recovery.
  
  Congress did not extend benefits before its recess in December, thus, as of December 21, 2003, the extended unemployment benefits program is gradually phased out as the long-term unemployed are exhausting their benefits. The Center on Budget and Policy Priorities estimates that 80,000 to 90,000 unemployed become ineligible for unemployment benefits every week. However, just because politicians would like to see it go away, the problem of long-term unemployment has not disappeared yet. In December, 22.3% of the unemployed were out of a job for more than 26 weeks.
  
  And this is not counting the large number of people who have given up looking, many of whom probably never qualified for unemployment benefits in the first place. If those who left the weak labor market were included in counts of the labor force, the unemployment rate would have been 7.1% instead of 5.9% in November, the Economic Policy Institute estimates. Consequently, the number of the long-term unemployed, if not their share of the unemployed, would be higher, too.
  
  Policymakers who favor extending unemployment benefits to the long-term unemployed not only face economic realities, they are also implicitly proposing to stabilize the economy. Unemployment benefits constitute what economists consider an "automatic stabilizer" for the economy. The government pays out more in benefits when the economy is weak, thereby increasing demand, when it is needed, and vice versa. Thus, extending unemployment benefits would help to raise consumer demand at a time when it shows signs of slowing down. In September and October, consumer spending declined after showing solid gains since early in 2003.
  
  The politics of denial and redefinition are harmful to the unemployed and they do not serve the economy well. Extending unemployment benefits for the long-term unemployed is the least policymakers can do to mitigate the continued fallout from the "job loss" recovery. This will also have the beneficial side effect to support a labor market and strengthen an economy that are still trying to find their footholds.
  
  Share of Long-Term Unemployed relative to All Unemployed, 1948 to 2003
  Long-term unemployment is typically measured as the share of people unemployed for more than 26 weeks out of all unemployed. Long-term unemployment spiked in the early 1980s, and it reached similarly high levels in 2003. By December 2003, 22.3% of the unemployed had been unemployed for more than half a year.
  Source: Bureau of Labor Statistics, Employment Situation.

Dr. Christian Weller is a senior economist at the Center for American Progress.

January 18, 2004

• Poll Bolsters Bush on Terrorism but Finds Doubts on Economy
  By ROBIN TONER and JANET ELDER
  
  President Bush begins his campaign year with Americans voicing strong support for his handling of the war against terrorism, but many doubting his economic and domestic policies, according to the latest New York Times/CBS News poll.
  
  Fewer than one in five people said their tax burden had been eased by Mr. Bush, who has made tax cuts the centerpiece of his economic program. His latest domestic initiatives, unveiled in the run-up to the State of the Union message on Tuesday, got only a lukewarm response, with 58 percent saying that building a permanent space station on the Moon was not worth the risks and costs.
  
  Moreover, the support Mr. Bush gained after the capture of Saddam Hussein last month has largely dissipated. His overall approval rating now stands at 50 percent, comparable to President Bill Clinton's 47 percent in January 1996. Mr. Bush remains a polarizing figure in a sharply divided country, with 9 in 10 Republicans approving of his performance, and only 1 in 4 of the Democrats.
  
  Despite those vulnerabilities, which the Democratic presidential candidates are busily trying to exploit, Mr. Bush retains a powerful advantage on national security. Sixty-eight percent, including majorities of both Democrats and independents, gave him high marks for the campaign against terrorism, and 68 percent said the Bush administration's policies have made the United States safer from terrorist attacks. Sixty-four percent said they considered him a strong leader.
  
  "He demonstrated a maturity after 9/11, responding in a positive and determined way to bring the country onto a steady keel," said George House, a 72-year-old Democrat in Sigourney, Iowa. Mr. House, who was reinterviewed after the poll, added that he still had doubts about the war with Iraq.
  
  Such assessments could set a high bar for Mr. Bush's Democratic challengers, who are still largely unknown, even among Democratic primary voters, many strategists say. "People wonder whether the Democrats will be as aggressive as Bush in keeping the country safe," said Bill McInturff, a Republican pollster.
  
  Already, credibility as commander in chief has emerged as a major issue in the battle for the Democratic nomination. Many Democrats in rival campaigns have argued that Howard Dean, who has led in the polls for most of the primary season, is unlikely to pass that test on national security, because of his opposition to the war in Iraq and his lack of foreign policy experience.
  
  The Times/CBS News poll was conducted Monday through Thursday by telephone with 1,022 adults nationwide, and has a margin of sampling error of plus or minus three percentage points.
  
  Other polls released last week and conducted earlier than the Times/CBS News poll found Mr. Bush's job approval rating to be higher. For instance, a Gallup Poll taken Jan. 9 to 11 had a 59 percent job approval rating for Mr. Bush, while an NBC News/Wall Street Journal poll taken Jan. 10 to 12 had a 54 percent approval rating.
  
  While the Times poll was a road map for an intensely divided electorate, it also highlighted Mr. Bush's strengths. His approval rating is highest among those ages 30 to 44; those younger and older are more divided. Whites approve of his performance by 56 to 41 percent; in contrast, 70 percent of blacks disapprove of the job he is doing, while just 17 percent approve, the poll found.
  
  He also has a big edge among those who say religion is extremely or very important to them; 56 percent of that group say they approve of Mr. Bush and 39 percent say they disapprove.
  
  His approval rating among men and women is about the same, suggesting he is addressing the historic Republican vulnerability of a gender gap. And he has a substantial edge among married women.
  
  One of the president's signature accomplishments on the domestic front — the passage of a Medicare overhaul with new coverage for prescription drugs — has yet to register much with the voters, the poll suggests. Twenty-nine percent said they thought the administration had made "a lot" or "some" progress on prescription drug relief. Fifty-four percent said the administration had made little or no progress.
  
  For all of Mr. Bush's strengths, the poll shows the potential for a competitive election. When asked whether Mr. Bush had done more to unite the country or divide it, the public was split — 43 percent said he had brought Americans together, 44 percent said he had divided them.
  
  When given a choice between an unnamed Democrat and Mr. Bush, 43 percent of the registered voters polled said they would vote for Mr. Bush, while 45 percent said they would vote for the Democrat.
  
  The survey found the nation still in an anxious state economically, despite the recent rebound in economic growth and the improvement in the stock market. The economy, jobs and unemployment led the list of most important issues for voters, with health care and education not far behind.
  
  Administration officials argue that by almost every major measure — save jobs — the economy is in a strong recovery, and that employment will soon catch up. In fact, more people now rate the state of the economy as "very" or "fairly" good — 54 percent, compared with 41 percent who gave it that rating a year ago. Similarly, people are more optimistic about where the economy is headed — 34 percent said they believed it was getting better and 26 percent worse, another sharp turnaround from last year.
  
  But many in the poll still worried. "They say unemployment is down, but that's because a lot of people's unemployment ran out, so they're not listed anymore," said Ellen Diliello, a Republican retiree in Preble, N.Y. Thirty-nine percent said they remained worried that they or someone in their household would lose a job in the coming year.
  
  Moreover, many Americans say their own economic circumstances have not improved much. A majority said they were having a hard time keeping up with their bills. Only 19 percent said their tax burden had been eased by the administration's policies, while 32 percent said their taxes had gone up and 44 percent said the policies had not affected them one way or the other.
  
  Mr. Bush argues that the tax cuts are spurring economic growth and must be made permanent. But only 27 percent in the poll said they believed the tax cuts were good for the economy, while 17 percent said the tax cuts were bad and 51 percent said the cuts had not made much of a difference.
  
  The perception that Mr. Bush's economic policies favor the affluent and big business remains; 64 percent said they thought "big business" had too much influence on the Bush administration, while 57 percent said the administration's policies favored the rich, as opposed to the middle class and the poor.
  
  "It's a Republican theory that if you help large corporations, it should filter down to everyone else, but it takes too long, and sometimes it just doesn't," said Patricia Domingo, a 58-year-old Democrat in Byron, Calif.
  
  In contrast, Ardis Barton, a Republican businessman in Earth, Texas, argued, "The tax cuts were needed and he got them through. The economy is improving, and that proves he made the right choice on the tax cuts."
  
  Mr. Bush's proposal to overhaul immigration policies, announced this month, is getting a skeptical response. Two thirds of those polled said immigrants who entered the country illegally should not be allowed to stay and work in the United States for three years, as Mr. Bush proposes. There was little enthusiasm for increasing levels of immigration at all, with a plurality saying immigration should be decreased.
  
  The survey also found divisions over Mr. Bush's proposal for returning to the Moon by 2020, and eventually using a lunar base as a launching pad to Mars. Forty percent said the nation was spending too much on space exploration programs, while 17 percent said the nation was spending too little. Forty-eight percent said they would favor the United States' sending astronauts to explore Mars, while 47 percent said they would oppose it.
  
  And 58 percent said building a space station on the Moon was not worth the risks and costs, while 35 percent said it was.
  
  Despite the widespread support for Mr. Bush's handling of terrorism, there are also doubts about his handling of foreign affairs in general. Forty-seven percent in the survey said they approved of the way he was handling foreign affairs, while 45 percent disapproved.
  
  Moreover, half the public said the result of the war in Iraq was not worth the loss of life and other costs. Forty-nine percent said Mr. Bush was too quick to get the United States involved in a war there, while 35 percent said the timing had been about right and 13 percent said the administration was too slow to act.
  
  The public is also divided over Mr. Bush's current handling of the situation in Iraq, with 48 percent approving and 46 percent disapproving. In addition, 6 in 10 of those polled said the Bush administration had been hiding information about the existence of weapons of mass destruction; only 27 percent said the administration had told the public most of what it knows.

[stonemonkts]

I hate to write this, but, that poll is actually good news for Bush.

1. The economy IS improving, so this poll result has nowhere to go but up, and

2. The area where he should be most vulnerable, foreign affairs, is where he polls favorably?


What a dumb fucking country.