Is Bush economic "recovery" wishful thinking?

• George Bush's big-government conservatism
  Can't last
  
  Jan 8th 2004 | WASHINGTON, DC
  From The Economist.com
  
  
  
  Between 1998 and 2001, America's federal government ran a surplus on its accounts. The prospect now is of years, even decades, of deficits. Is that scary?
  
  IN HIS first three years as president, George Bush has cut taxes three times and yet orchestrated a sharp rise in public spending—not just, or indeed mainly, on foreign wars and “homeland security”, but also on domestic matters. For instance, spending on education has jumped by three-fifths since 2000, and spending on transport has risen by nearly half. Lower taxes, higher spending: the outcome is that the federal government, despite a steep fall in the interest it pays on its debt, has swung sharply into deficit—$450 billion this fiscal year, by most accounts.
  
  That is not, yet, as big a deficit as that presided over by Ronald Reagan in 1983 (6% of GDP then, compared with about 4% of GDP for this year). Yet the deterioration of the government's finances today—from a surplus of 2.4% of GDP in the 2000 fiscal year—is certainly steeper.
  
  What is more, by 1983 Mr Reagan and Congress were together attempting to do something about the deficit. Nowadays, no one with political power is bothering to try. All the Democratic presidential hopefuls want, to a greater or lesser degree, to repeal Mr Bush's tax cuts. Yet they aim to use the money not to bring down the deficit, but to expand public programmes. Mr Bush's own new legislation to pay for prescription drugs under Medicare, the federal health programme for the elderly, will cost $400 billion over the next ten years. A bipartisan conspiracy exists, it seems, to ignore the risks of a widening deficit.
  
  What risks? After all, a year or two of sharply higher government spending in the early part of Mr Bush's presidency—when economic growth slowed sharply, a stockmarket bubble burst, and America faced unprecedented and confidence-sapping security threats—may well have been for the good. Yet, even as evidence grows that there is a reasonable chance of economic recovery, the long-term prospects for the budget look as bleak as ever.
  
  A new and frank report by the Congressional Budget Office (CBO) shows that rising health-care costs and an ageing population mean that federal “entitlement” programmes—notably for Medicare, Medicaid and Social Security (pensions)—will claim a much higher share of the country's economic output over the coming decades. Currently, Social Security funds run a surplus that helps to finance other parts of government. But by 2015 surplus will swing to deficit, and by 2030, on current policy, the cost of Social Security will have risen from 4.2% ofGDP to 5.9%.
  
  Spending on pensions pales in comparison with health care. The range of estimates is necessarily vague, since they involve assumptions about the future rate at which health-care costs will grow faster than per-head GDP each year: since 1970, the “excess-cost growth” for retired people on Medicare has been around 3%. The CBO calculates that, if future excess-cost growth of both Medicare and Medicaid was only 2.5%, then federal spending on these programmes would jump from 3.9% of GDP in 2003 to 21% in 2050.
  
  It is clear that holding back the growth in non-entitlement (or “discretionary”) programmes, such as defence and transport, will not be enough to ensure a sustainable budget in the long run. Unless entitlement programmes are cut too, or taxes raised to unprecedented levels, or both, the country is on a financially unsustainable path over the next half-century. “An ever-growing burden of federal debt held by the public”, theCBO concludes, “would have a corrosive and potentially contractionary effect on the economy.”
  
  Some observers go further. In a paper presented to the American Economic Association last Monday, Peter Orszag of the Brookings Institution, Allen Sinai of Decision Economics and Robert Rubin, one of Bill Clinton's treasury secretaries, say that “substantial deficits projected far into the future can cause a fundamental shift in market expectations and a related loss of confidence both at home and abroad”—in other words, a full-blown, third-world-style financial crisis. Impishly, they quote Greg Mankiw, now Mr Bush's chief economic adviser, in a paper he co-wrote in 1995: “We can only guess what level of debt will trigger a shift in investor confidence, and about the nature and severity of the effects. Despite the vagueness of fears about [these effects], these fears may be the most important reason for seeking to reduce the budget deficits.”
  
  
  
  The White House claims that the budget it is preparing for the 2005 fiscal year will be “committed to fiscal restraint”. But this is an election year, after all. A report in the New York Times suggests that the administration will claim to be able to halve the deficit over five years by relying on future economic growth and on cruel cuts in such programmes as housing for the poor and job-training for the unemployed. Certainly, these vulnerable groups do not tend to vote Republican. Also certainly, such cuts will barely dent the budget deficit.
  
  Fortunately, others are thinking more seriously about the choices that need to be made to secure long-term deficit reduction. In “Restoring Fiscal Sanity”, a report to be published on January 13th by the Brookings Institution, edited by Isabel Sawhill and Alice Rivlin, once Mr Clinton's budget director, three options are offered.
  
  The “smaller government” path emphasises cuts in “corporate welfare” (subsidised insurance, loans, etc), the devolution of responsibilities to the states, savings from that old chestnut of “waste, fraud and abuse”, and deep cuts in entitlements. The “larger government” path emphasises tax increases as the main route to sustainability. The “better government” path argues, in Clintonian style, that the government can be more effective without absorbing a larger share of GDP. The problem with this path, as the authors admit, is the difficulty of measuring the effectiveness of various government programmes, and of dealing with resistance to cutting them.
  
  Given such resistance, it is more likely that higher taxes will play the largest part in plugging the deficit. The question, then, is whether the process of plugging begins sooner or later. Either way, Americans will soon have to accept that federal spending is rising to a permanently higher level, one closer to European levels of government spending. Perhaps they can soften the shock by taking their holidays in Paris.

• Cold Weather, Weakening Dollar Push Crude Oil Prices Higher
  From Wire Service Reports
  Saturday, January 10, 2004; Page E01
  
  Oil prices climbed well above $34 a barrel on Friday as traders responded to colder weather in the Northeast and the high cost of natural gas. The weak dollar also is pushing energy prices higher, analysts said.
  
  "It gives OPEC countries less buying power and literally no incentive to make any increases in output" of crude, which is denominated in dollars, said Tom Bentz, an analyst at BNP Paribas Commodity Futures in New York.
  
  Crude oil for February delivery traded above $34.55 yesterday on the New York Mercantile Exchange and closed at $34.31. The front-month oil futures contract has not closed above $34 since March 17, just a few days before the invasion of Iraq.
  
  The nation's commercially available inventory of crude is 3 percent below last year's levels. For the week ending Jan. 2, commercial supplies stood at 269.0 million barrels, down from 277.5 million barrels a year earlier.
  
  Still, Bentz said supplies of heating oil and natural gas are ample.
  
  On Jan. 2, commercially available supplies of distillate fuel, which includes heating oil, were 300,000 barrels above the five-year average at 135.5 million barrels. Commercial inventories of natural gas, meanwhile, stood at 2.6 trillion cubic feet for the week ended Jan. 2, or 8 percent above the five-year average for this time of year.
  
  Despite the fact that inventories are up about 10 percent from last year, prices have been hovering at very high levels since Thanksgiving. Analysts said they were surprised when prices first began to rise quickly in late November, and that they remain hard-pressed to find any supply data that substantiates these levels.
  
  Natural gas for February delivery closed at $7.30 per thousand cubic feet yesterday on Nymex.
  
  "I personally don't believe we should be up at these levels," Bentz said, noting that traders have ignored recent fuel-inventory reports that were bearish and focused instead on bullish factors such as the cold weather and the weak dollar. "When it's cold, the market does tend to have an upward bias," he said.
  
  Because some users of natural gas can switch to fuels derived from oil when prices are high, price trends for one can affect the other.
  
  Also yesterday, Royal Dutch/Shell Group, one of the world's largest oil companies, cut its estimate of proved oil and gas reserves by 20 percent and failed for a third year to find as much oil as it pumped. The shares fell as much as 8.5 percent.
  
  The disclosure is a blow to confidence in Chairman Philip Watts and increases investor concern about growth at Shell's exploration division, its most profitable unit. In October, Shell said it will miss its production target for 2003. The drop in Shell shares today is the biggest since July 2002.
  
  Shell's proven reserves at the end of 2002 were 15.5 billion barrels, not the 19.4 billion stated earlier, spokesman Simon Henry said. The 3.9 billion-barrel difference still has "scope for recovery" and may ultimately be produced, Shell said. London-based Shell said it replaced 70 percent to 90 percent of 2003's output, signaling reserves may fall further.
  
  The U.S. Securities and Exchange Commission has asked oil companies to review their assessment of reserves in the U.S. Gulf of Mexico, Henry said. The request was unrelated to Shell's review, which was triggered by studies done in the fourth quarter. Last year, BP Plc reduced its estimate of reserves in a Russian joint venture because of a change in SEC rules.
  
  The changes came because Shell is using a "tighter" definition of reserves, Shell's Henry, head of investor relations, said on a conference call. Watts and other executives, such as Chief Financial Officer Judy Boynton, were not on the call.
  
  In some cases, the reserves are no longer considered to be proven because development plans have changed, Henry said.

[Jon Abbey]

jesus, Chris, you just started three threads with almost identical titles. I'm as anti-Bush as you (although I spend about 1/1000 the time thinking about it), but this is getting ridiculous. start a blog or something already.

If you need instructions on how to not access a thread, please say so.

[Jon Abbey]

actually, I'm good, thanks. if you need instructions on how to post URLs instead of endless entire stories ad nauseum, I'd be happy to give you some pointers.

[Uli]

I actually appreciate your posting the articles instead of the URLs. Chris. But then, I am not getting a kick out of x-tra computer clicks ad nauseum as other peoples do.


From The Onion

Music News
Star Curator Announces EAI-wedding

“For my wedding reception next year, we're renting a club in NYC (maybe Tonic), and Keith Rowe, Toshi Nakamura and Günter Müller will play three duo sets. anyone who's not into it can hang out in the basement, but that's what my fiancee and I both want” star curator Jon Abbey posted on the “I hate music” bbs.

“It’s a superb match” says *Best* man Olewnick, “the bitch don’t like jazzy either”

From Salon.com

• The no jobs president
  Don't believe the Bush administration's hand-wringing over its pathetic record on employment. The president's backers want a stagnant job market -- it keeps the help from getting uppity.
  
  
  
  By James K. Galbraith
  Jan. 19, 2004
  
  On Tuesday night, President Bush will use his State of the Union to claim that tax cuts have restored economic growth, and he may mention the stock market's rise last year. But the transcendent economic issue this election year isn't the growth rate. It isn't the stock market. It also isn't the budget deficit the tax cuts caused. And it isn't even the rate of unemployment. It's the number of people in this country who have decent work -- and the number who don't.
  
  Here's a chart, taken almost directly from the Bureau of Labor Statistics. It shows the month-to-month change in total employment, and how it fell from an average gain of 236,000 during the Clinton presidency to an average loss of 66,000 per month under George Bush. (The chart shows payroll jobs, averaged over three months.) The arrow, which I added, shows when Bush took office.
  
  Economic numbers don't get more clear than this:
  
  
  
  Next, notice when the deep dive ends. That's right: It was just after Sept. 11, 2001. It's true that President Bush ought not to be blamed for the job losses of the Internet bust. But neither can he properly blame his troubles on Osama bin Laden: Job losses slowed down when the war on terror began.
  
  Bush should be judged on the record after that -- on the creation of jobs in 2002 and 2003. After all, the recession officially ended in November 2001. How many new jobs did we get since then? An average loss of 22,000 jobs every month.
  
  There are no new jobs. Total job growth in the Clinton years: 23 million. Total job losses so far in the Bush years: over 2 million. Total gains in the last six months, since the so-called recovery supposedly accelerated in the third quarter? Just 221,000. That's less than a single month's average under Clinton. And last month? One thousand new jobs.
  
  How many jobs should there have been? Crudely, the Clinton pace over three years would have yielded about 8.5 million. Allowing Bush a pass for 2001, matching Clinton in just two years would have meant 5.6 million new jobs, not the loss of another half a million. Want more? Lee Price of the Economic Policy Institute has a very useful study here.
  
  Bush's minions whitewash these figures by pointing to the household employment survey, which shows more (though not great) job growth. Here's the main difference: The household survey covers 60,000 households. The payroll survey covers 400,000 businesses (and millions of workers). The payroll survey measures real jobs. Most agree that the payroll survey, while not perfect (it misses some new jobs in the upswing), is the better of the two reports.
  
  The household survey does pick up many people who call themselves self-employed, independent contractors and the like. (When academics do this, we call it "consulting.") Some would have you believe that this is the future of the economy, but let's hope not. Most such work is stopgap, a way to scrape by when regular work is hard to find. Most people doing it would abandon it for a real job, if they could, in a minute. Real jobs -- with benefits and a semblance of security -- are better.
  
  True, the unemployment rate doesn't look so bad. But why not? Partly because many people who can't get unemployment insurance now get themselves on the disabled rolls if they can. (Disability, the refuge of the desperate, has been growing very fast.) And the jobless rate did fall in December. But why? Because many thousands of people stopped looking for work. Some retired; a few went back to school; most just went home to wait it out. Very sensible of them, under these conditions.
  
  The Bush years are a study in deliberately wasted effort: Repeal of the estate tax. Tax exemption for stock dividends. Ballistic Missile Defense. The USA PATRIOT Act. The war on Iraq. Each of these initiatives has a clientele. None of them seriously aims to achieve its stated goal, be that economic recovery or homeland security or national security writ large.
  
  The method is clear to any who choose to study closely: It is a method of subterfuge and deception. It is the systematic and relentless pursuit of partly hidden agendas, sold to the public with slogans. The tax cuts were not aimed to produce recovery and jobs; they were a reward to the rich. The war on Iraq was not waged to help the war on terror; it was about getting Saddam, as we have now had confirmed by Paul O'Neill's report on the Iraq agenda Bush carried from the beginning. Missile defense is not about North Korea, and still less about Iran or any other "rogue state"; it's about the contracts. In all these cases, the decision on what to do came first -- then the circumstances of the day were arranged to suit.
  
  So it is today on the economy. What does Bush want? He wants a growth rate high enough to get him through the election. That's obvious. After that, he doesn't care. His clientele -- the military contractors, oil companies, pharmaceutical firms and big media that control this government -- make their money on patents, contracts and the exercise of monopoly power. (Case in point: Bush is pressuring impoverished Central Americans, in trade negotiations, to add 10 years to the length of drug patents.) These people have no interest in full employment. They like unemployment, weak labor, low wages and a government that bullies on their behalf. And after the election, if Bush wins, that is what they will get for four more years.
  
  Bush has levers to keep the economy warm through the 2004 vote. Child credits kicked in during the third quarter of 2003. Households spent them at once, hence the 8 percent annualized growth rate that mesmerized the country for a moment. Tax refunds are due in the next few months; that should give spending another kick. The cost of war was the first big push that the economy got last year. Now much military equipment needs replacing; spending on that may be felt soon.
  
  Most important, monetary policy is toeing Bush's line. Alan Greenspan and his deputies were all over the economists' meetings in San Diego this month, promising that interest rates will stay down. Don't misunderstand me: This is the right policy. But for how long will it last? Low interest rates imperil the global dollar. The pressure to defend the dollar is out there. Will it prevail once the election is past? Remember: After November, George Bush will not care.
  
  And after the election, the stagnation his backers want will not be hard to achieve. Our economy still faces major barriers to sustained growth. Capacity utilization in industry is low: a barrier to sustained growth of investment. Household debt burdens are high: a barrier to accelerating consumer spending, which will be aggravated when the housing bubble eventually pops. Federal, state and local budgets are riddled with structural deficits; these will not go away with growth. In the states and localities, spending cuts and tax increases are the only agenda. At the federal level, the deficit hawks -- a well-meaning group, but prone to obsess on the wrong issue -- will be on the march next year.
  
  In short, the most likely outlook is for strong growth in the first half of the year, and stagnation thereafter. Businesses know this. So they will ramp up production to meet demand, but remain resolutely reluctant to hire new workers for the long term.
  
  The bad jobs picture is more than just a sign of the failure of trickle-down. It is a measure of the lack of confidence that ordinary American business has in the long-term future. Businesses in America are hard to fool, and they are not expecting another long boom.
  
  The election, in short, will be a race between the campaign propaganda of growth rates and the realities of scarce jobs, low pay and stagnant living standards. But reality has a way of holding its own in people's minds. It's not yet clear, by any means, that truth won't prevail.
  
  And so now comes George Bush, with two more great proposals to get the country moving again.
  
  The first is immigration "reform," ginned up just before a big summit in Monterrey, Mexico, to play to the Hispanic vote. The proposal promises minor conveniences to the estimated 8 million undocumented workers in this country. But at what price?
  
  The new class of migrants would have to leave when their permits are up, unless renewed. They would have to leave if fired from their jobs. In a word, employers would judge who stays in the country and who is kicked out. Forget labor rights. Forget unions. Also forget family, home, neighborhood, things like that. Anyone wanting to protect those things will stay out of sight.
  
  Worse, workers coming into the program would in practice be giving up their path to political rights. They would, for the most part, never become citizens. They would never get to vote. No one will represent their interests. No one will speak for their schools, their clinics, their wages. No one will stand in their defense when they are abused on the job, hurt, sacked, blacklisted, and sent home.
  
  There is worse still. Bush made clear that this program is not just for workers presently in the country, as the press has mostly been reporting. It is not just for those who may soon arrive. No, it is far broader than that. Here's the president's speech: "If an American employer is offering a job that American citizens are not willing to take, we ought to welcome into our country a person who will fill that job."
  
  This program will permit any employer to admit any worker. From any country. At any time. The only requirement is that it be for a job Americans are not willing to take. But it is easy to create such jobs: Cut wages. Terminate the unions. Lengthen the hours. Speed up the lines. Chicken farmers have known this for years. Bush's plan is a blank check for every bad boss this country has.
  
  There is no reason why principal recruitment of new workers would be from Mexico. It might be, very massively, from China. Or perhaps from India, with its large English-speaking population. Temp agencies would go out on recruiting missions. Some of this competition may displace Mexican and Central American nationals presently working illegally in the United States (and hoping to stay). That would only drive them even further underground.
  
  And for those who take up the program, register as temporary workers, and then see their permits expire? Bush is at pains to say that he expects this group to go home. But who will make them? Will the government organize a mass campaign of roundups and deportations? Or will the workers just quietly disappear back into the sub-underground of the truly illegal?
  
  And for those who do go home, who will replace them? Another cohort of strangers? This is a program to create a rotating underclass of foreign workers, who never assimilate to American ways or adopt American values. It's hard to imagine anything worse for our social life -- more productive of petty crime -- or for that matter, riskier for our national security.
  
  For millions of citizen workers, what would happen? The answer is clear: Bad bosses drive out the good. Good bosses will turn bad under pressure. The terms of our jobs would get worse and worse. Who would want a citizen worker? A bracero will be so much cheaper, more loyal, and under control. And who among us, in our right mind, would want to look for work? Unless, of course, we needed to eat. Or pay the mortgage. I am not exaggerating: This is a threat to us all.
  
  What indeed, would be left for citizens to do? Perhaps they will get first call on that other great Bush idea, the moon base and mission to Mars. Here we see the hand of Bush's space science advisor, Karl ("Spirit") Rove(r). NASA, you may have noticed, has just sent a mission to Mars. It was cheap as these things go, safe -- and spectacular. Rove would take that money and put it into sending up a human: dumb, dangerous, and expensive. But I'd be for it, if we could send him on the mission. And his boss.
  
  Happy New Year. We'll know in November if it really is.

About the writer
James K. Galbraith is a professor at the Lyndon B. Johnson School of Public Affairs, the University of Texas at Austin, and Senior Scholar with the Levy Economics Institute.

[BFrank]

Labor Secretary Has Her Hours Cut

WASHINGTON, DC—Deeming the move "regrettable but necessary," White House Chief of Staff Andrew Card announced Monday that Secretary of Labor Elaine Chao's work hours will be scaled back to 30 per week starting Jan. 26.


Above: Chao displays her reduced paycheck.

"It's merely a cost-cutting measure and says absolutely nothing about Elaine, who's done wonderful work for the Bush Administration since she came on board in 2001," Card said. "Once the economy turns around, the first thing we'll do is return Elaine to her original hours. That's a promise."

Chao's hours will be limited to six per day during a regular Monday-to-Friday workweek, her salary will be cut by 25 percent, and she'll lose the privileges of working flextime hours and earning time-and-a-half pay on weekends and holidays. In addition, Chao's relegation to part-time status means she'll no longer be eligible for health-insurance coverage, matching 401K contributions, or parking validation.

Chao expressed dismay over the decision during a cigarette break in the parking lot of the Labor Department's Frances Perkins Building.

"I sorta knew what was up when President Bush called me into the Oval Office, and Chief Brownnose was standing there beside him with this bogus sad look on his face," said Chao, referring to Card by the derogatory nickname reportedly used by the members of the White House staff. "The president said he was real sorry, but he either had to cut my hours or let me go. What could I do? I need the job."

Chao inhaled on her cigarette and added: "God, and I'm still making payments on that stupid rear-projection television."

On CNN's Crossfire Tuesday, Washington Post columnist David Broder predicted that Chao's workload will not be lightened to reflect her new, truncated work day.

"This is a woman who's used to working long hours and traveling extensively," Broder said. "While there may be some initial efforts to limit her duties, I doubt they'll last long."

Broder added: "Chao is the victim of her own administration's policies, which place economic issues like employment and job security second to foreign-policy matters and big-business interests."

As Labor Secretary, Chao is well aware of labor trends like corporate downsizing and the decline in personal income.

"Tables and graphs mapping the worsening situation of the average American worker crossed my desk all the time, but I never thought any of that stuff would affect me," Chao said. "I don't see [Treasury Secretary John] Snow fearing for his job. Then again, he's in charge of the money. The bigwigs see 'labor' in my job title, and they think, 'Hey, we can push her around.'"

Continued Chao: "If I were [Health and Human Services Secretary] Tommy Thompson, I'd start looking through the classifieds."

Several Cabinet secretaries have expressed dissatisfaction with the ways in which Chao's reduced schedule affects them. Secretary of the Interior Gale Norton reported that Card has already begun to foist extra Labor Department work on her.

"My assistant dropped a report titled 'Workplace Safety And Its Effect On Profitability' in my inbox the other day," Norton said. "It had a Post-it note on it from Card that said, 'Can you give this speech for Elaine Chao next Monday?' That's total crap. I told Brownnose 'No way.' How can he expect me to do work I wasn't even appointed for, for no additional pay?"

Card said he did not play a deciding role in the reduction of Chao's hours.

"Look, my role is to manage the staff, not make final decisions about salaries," Card said. "My job could be on the line here, too, incidentally. The president keeps saying, 'We gotta tighten our belts. We gotta cut where we can.' It's getting so bad that if George sees somebody standing near the water cooler in the West Wing, he asks me, 'What's that guy's name? Are you giving him enough to do, Andy?' I swear, he and [Bush political advisor Karl] Rove are walking the halls looking for an excuse to can someone."

Chao said she remains uncertain about her future. Mindful of the stagnant job market, she said she has no choice but to remain with the Bush Administration for the foreseeable future.

"A friend offered me a full-time position on the board of directors of her bank, but the pay was even less than what I make here," Chao said. "I thought I could do some freelance data analysis for extra scratch, but they've got my hours set up so that I have to come into the office every day. With the commute, it feels like a 40-hour work week, anyway."

"Whoa, look at the time," said Chao, glancing at her cell phone. "It's already 3 p.m.? Sorry, gotta go punch out now. New rules."

January 21, 2004

1. Bush Talks Job Training in Address, But Cuts Funds
   
   President Bush is visiting Ohio today to trumpet a $500 million job training/education proposal announced in his State of the Union address.1 But the president has recently proposed to cut almost $700 million out of the same job training and education programs he is now touting.
   
   As part of his new proposal, Bush said last night "I propose increasing our support for America's fine community colleges."2 Last year, however, the president sought to cut $230 million out of vocational/community college education, along with "eliminating funding for technical education."3. When lawmakers tried to restore the cuts in April, Bush was adamant that the cuts be preserved, and his allies in the Senate voted down the funding.4 The president also recently eliminated all $225 million in funding for youth job training grants.5
   
   The other key piece of Bush's proposal involves college funding. The president said last night, "I propose larger Pell grants for students." But he did not mention his recent decision to "cut the Pell Grant program by $270 million"6 - a move his own Education Department admits will cut off 84,000 students, and reduce grants for "an additional one million students."7
   
   Sources:
   
2. Fact Sheet: Jobs for the 21st Century, 01/21/2004.
   
3. State of the Union Address, 01/21/2004.
   
4. Community College Week, 02/17/2003.
   
5. Community College Week, 04/14/2003.
   
6. Bush Credibility Gap, 2004.
   
7. Chicago Tribune, 08/04/2003.
   
8. Chronicle of Higher Education, 08/01/2003.

[GoodSpeak]

What amazes me is these republicans, you know...the same ones who would gleefully piss all over Clinton...are now claiming an enconomic recovery on the basis of low paying/minimum wage jobs.

Wasn't that the SAME bullshit they threw at Clinton when his economic boom created more jobs, decreased unempoloyment [and I have yet to hear the unemployment figures for Dumbya's "recovery"] to it's lowest point in 30 years AND gave us a surplus in the budget?

Has ANYbody considered the record budget DEFICIT Dumbya gave us? I mean, even a little bit?

Yeah.

republicans INVENTED good economic policy.





Just like they invented Family Values.

























Bullshit.

January 27, 2004
OP-ED COLUMNIST

• Red Ink Realities
  By PAUL KRUGMAN
  
  Even conservatives are starting to admit that George Bush isn't serious when he claims to be doing something about the exploding budget deficit. At best — to borrow the already classic language of the State of the Union address — his administration is engaged in deficit reduction-related program activities.
  
  But these admissions have been accompanied by an urban legend about what went wrong. According to cleverly misleading reports from the Heritage Foundation and other like-minded sources, the deficit is growing because Mr. Bush isn't sufficiently conservative: he's allowing runaway growth in domestic spending. This myth is intended to divert attention from the real culprit: sharply reduced tax collections, mainly from corporations and the wealthy.
  
  Is domestic spending really exploding? Think about it: farm subsidies aside, which domestic programs have received lavish budget increases over the last three years? Education? Don't be silly: No Child Left Behind is rapidly turning into a sick joke.
  
  In fact, many government agencies are severely underfinanced. For example, last month the head of the National Park Service's police admitted to reporters that her force faced serious budget and staff shortages, and was promptly suspended.
  
  A recent study by the Center on Budget and Policy Priorities does the math. While overall government spending has risen rapidly since 2001, the great bulk of that increase can be attributed either to outlays on defense and homeland security, or to types of government spending, like unemployment insurance, that automatically rise when the economy is depressed.
  
  Why, then, do we face the prospect of huge deficits as far as the eye can see? Part of the answer is the surge in defense and homeland security spending. The main reason for deficits, however, is that revenues have plunged. Federal tax receipts as a share of national income are now at their lowest level since 1950.
  
  Of course, most people don't feel that their taxes have fallen sharply. And they're right: taxes that fall mainly on middle-income Americans, like the payroll tax, are still near historic highs. The decline in revenue has come almost entirely from taxes that are mostly paid by the richest 5 percent of families: the personal income tax and the corporate profits tax. These taxes combined now take a smaller share of national income than in any year since World War II.
  
  This decline in tax collections from the wealthy is partly the result of the Bush tax cuts, which account for more than half of this year's projected deficit. But it also probably reflects an epidemic of tax avoidance and evasion. Everyone who wants to understand what's happening to the tax system should read "Perfectly Legal," the new book by David Cay Johnston, The Times's tax reporter, who shows how ideologues have made America safe for wealthy people who don't feel like paying taxes.
  
  I was particularly struck by Mr. Johnston's description of the carefully staged Senate Finance Committee hearings in 1997-1998. Senators Trent Lott and Frank Murkowski accused the I.R.S. of "Gestapo"-like tactics, and Congress passed new rules that severely restricted the I.R.S.'s ability to investigate suspected tax evaders. Only later, when the cameras were no longer rolling, did it become clear that the whole thing was a con. Most of the charges weren't true, and there was good reason to believe that the star witness, who dramatically described how I.R.S. agents had humiliated him, really was engaged in major-league tax evasion (he eventually paid $23 million, insisting he had done no wrong).
  
  And this was part of a larger con. What's playing out in America right now is the bait-and-switch strategy known on the right as "starve the beast." The ultimate goal is to slash government programs that help the poor and the middle class, and use the savings to cut taxes for the rich. But the public would never vote for that.
  
  So the right has used deceptive salesmanship to undermine tax enforcement and push through upper-income tax cuts. And now that deficits have emerged, the right insists that they are the result of runaway spending, which must be curbed.
  
  While this strategy has been remarkably successful so far, it also offers a big opportunity to the opposition. So here's a test for the Democratic contenders: details of your proposals aside, which of you can do the best job explaining the ongoing budget con to the American people?

February 18, 2004

• Bush Officials Offer Cautions on White House Jobs Forecast
  By EDMUND L. ANDREWS
  
  RICHLAND, Wash., Feb. 17 — Treasury Secretary John W. Snow distanced himself on Tuesday from the Bush administration's official prediction that the nation would add 2.6 million jobs by the end of this year.
  
  That prediction, which is far more optimistic than that of many private sector forecasters, was part of the annual economic report released last week by the White House Council of Economic Advisers and was immediately echoed by Mr. Bush himself.
  
  But on a tour through Washington and Oregon to promote the president's economic agenda, Mr. Snow and Commerce Secretary Donald L. Evans both declined to endorse the White House prediction and cautioned that it was based on economic assumptions that have an inherent margin of error.
  
  "I think we are going to create a lot of jobs; how many I don't know," Mr. Snow said, adding that "macroeconomic models are based on a lot of assumptions" and are "not without a range of error."
  
  Unemployment and the nation's surprisingly sluggish pace of job creation has become a significant political weakness for Mr. Bush, who is on track to be the first president since Herbert Hoover to end his first term with fewer jobs than when he started.
  
  The nation has lost about 2.5 million jobs in the last three years, and job loss has been acute in the Pacific Northwest. Unemployment is 6.8 percent in Washington and 7.2 percent in Oregon, compared with 5.6 percent nationwide. The aerospace industry has laid off tens of thousands of workers, as have technology companies tied to the collapse of the stock market bubble and older manufacturers.
  
  Mr. Snow and other top administration officials are on a two-day tour through both states this week, traveling in a luxurious bus to promote the beneficial effects of Mr. Bush's tax-cutting plans and spread the word that the economy is humming once again.
  
  But while economic growth has been very strong for the last six months, the pace of job creation has been much slower than in previous economic recoveries. After losing about 2.8 million jobs since late 2001, the nation started to add jobs only last fall and has been adding them at the rate of about 100,000 a month.
  
  Most economists say the nation needs to add about 125,000 jobs a month just to keep up with increases in the number of workers, and that it needs to add more than 200,000 a month over a sustained period to significantly reduce the unemployment rate below its current 5.6 percent.
  
  To create 2.6 million jobs by the end of this year, the nation would have to add more than 230,000 positions each month from now until January. But many if not most economic forecasters expect a more modest upswing, largely because the nation's productivity has been climbing so rapidly that companies have been meeting higher demand without adding workers.
  
  Mr. Snow and Mr. Evans are traveling around the Northwest in a bus that has been used by touring performers like Bon Jovi and Styx. Secretary of Labor Elaine L. Chao and Hector V. Barreto, head of the Small Business Administration, are on the tour as well to promote the administration's job-training programs and assistance for new companies.
  
  The group announced new grants at a center in Spokane that acts as an incubator for high-technology start-ups, then held a roundtable meeting with women business owners in Richland.
  
  Mr. Snow and Mr. Evans said the economy was still recovering from the combined blows of a recession, the collapse of the stock market bubble, the terrorist attacks of Sept. 11, 2001, and the wars in Iraq and Afghanistan.
  
  But they said the fundamentals of the economy all pointed to strong growth for the foreseeable future and faster job creation. Brushing aside complaints about the federal government's large budget deficit, which the White House predicts will surpass $500 billion this year, Mr. Snow renewed the administration's call for making President Bush's tax cuts permanent, a move that would cost about $1.5 trillion over the next 10 years.
  
  Still stinging from criticism by Democrats about comments by a top White House aide in support of "outsourcing," or shifting jobs to low-wage countries, Mr. Snow said those remarks had been "misinterpreted" and were not meant to condone the loss of American jobs.

[Pete C]

Building Blue-Collar … Burgers?
NEW YORK, Feb. 20, 2004


Manufacturing jobs making things like airplane engines, cars and farm equipment are disappearing from the American economy.

Or are they? According to a White House report, new manufacturing jobs might be as close as your nearest drive-thru.

The annual Economic Report of the President has already stirred controversy by suggesting the loss of U.S. jobs overseas might be beneficial, and predicting that a whopping 2.6 million jobs will be created in the country this year.

As first reported by The New York Times, the fast food issue is taken up on page 73 of the lengthy report in a special box headlined "What is manufacturing?"

"The definition of a manufactured product," the box reads, "is not straightforward."

"When a fast-food restaurant sells a hamburger, for example, is it providing a 'service' or is it combining inputs to 'manufacture' a product?" it asks.

Manufacturing is defined by the Census Bureau as work involving employees who are "engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products."

But, the president's report notes, even the Census Bureau has acknowledged that its definition "can be somewhat blurry," with bakeries, candy stores, custom tailors and tire retreading services considered manufacturing.

"Mixing water and concentrate to produce soft drinks is classified as manufacturing," the president's report reads. "However, if that activity is performed at a snack bar, it is considered a service."

The report does not recommend that burger-flippers be counted alongside factory workers.

Instead, it concludes that the fuzziness of the manufacturing definition is problematic, because policies — like, for example, a tax credit for manufacturers — may miss their target if the definition is overly broad or narrow.

But reclassifying fast food workers as manufacturing employees could have other advantages for the administration.

It would offset somewhat the ongoing loss of manufacturing jobs in national employment statistics. Since the month President Bush was inaugurated, the economy has lost about 2.7 million manufacturing jobs, according to the federal Bureau of Labor Statistics. That continues a long-term trend.

And the move would make the growth in service sector jobs, some of which pay low wages, more appealing. According to government figures, since January 2001 the economy has generated more than 600,000 new service-providing jobs.

The annual economic report — most of which consists of charts and statistics — has been the focus of unusual scrutiny this year, perhaps reflecting the presidential campaign and concern about the lack of job creation despite an ongoing recovery.

The report first touched off a furor with a statement regarding the "outsourcing" of U.S. jobs overseas, where wages are lower.

"When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes," the report read.

The statement, which reflects standard economic theory about the efficiencies of trade, was denounced by Democrats and Republicans alike.

"These people, what planet do they live on?" asked Democratic presidential candidate and North Carolina Sen. John Edwards.

Even Republican House Speaker Dennis Hastert wrote to the White House protesting at the claim.

The president's top economic adviser and the lead author of the report, Gregory Mankiw, replied to Hastert that "My lack of clarity left the wrong impression that I praised the loss of U.S. jobs."

Critics of the White House also seized on a chart in the report that suggested the administration expects 2.6 million new jobs by the end of the year.

"I've got a feeling this report was prepared by the same people who brought us the intelligence on Iraq," said Democratic presidential candidate John Kerry, a Massachusetts senator.

The White House insisted the figure was just an estimate.

[Monte Smith]

Originally posted by Pete C
Building Blue-Collar … Burgers?
NEW YORK, Feb. 20, 2004

Goodness, that's a vintage perspective. Flashback to young Monte in college 1989-1993, where the mantra was that Generation X would be the first generation not to be better off than their parents and who would be "burger flippers" because the industrial capacity of the United States had evaporated. I believed it that time, because I was economically illiterate and innumerate. I'm no longer an undergrad.

Yet the more things change, the less rhetoric does.

[Pete C]

Originally posted by Monte Smith
Yet the more things change, the less rhetoric does.

It appears that you didn't bother to read the article.

[SinginSumo]

How unfortunate...

but what else is new?

February 24, 2004

1. Instead of Admitting Economic Truth, Bush
   Resorts to Statistical Manipulation
   
   President Bush, attempting to obscure his record as the worst economic steward since Herbert Hoover, has become so desperate that he is exploring ways to manipulate statistics.1 Just days after Bush reneged on his pledge to create 2.6 million jobs2 and said with a straight face that "5.6% unemployment is a good national number,"3 the New York Times uncovered a White House report showing that the president is considering re-classifying low-paid fast food jobs as "manufacturing jobs"4 as a way to hide the massive manufacturing job losses that have occurred during his term.
   
   As CBS News reports, "Since the month President Bush was inaugurated, the economy has lost about 2.7 million manufacturing jobs."5 But if the president enacts the statistical change he is considering, this number would be purposely obscured because lower-paying fast food jobs would be added to make the real manufacturing losses look smaller. Of course, fast food jobs typically pay much less and have fewer benefits than real manufacturing jobs, meaning the statistical change would also obscure the fact that, under Bush, "in 48 of the 50 states, jobs in higher-paying industries have given way to jobs in lower-paying industries."6 All told, jobs in growing industries like lower-paid service sector/fast food jobs are paying 21% less than contracting industries like real manufacturing.
   
   The president's efforts to manipulate statistics and mislead Americans are also getting a boost from his allies on Capitol Hill. Earlier this month, Senate Budget Committee Chairman Don Nickles (R-OK) pointed to an optimistic "household" jobs survey as proof that "we're at an all-time high in employment" and that "the employment situation has improved rather substantially."7 The problem is that Federal Reserve Chairman Alan Greenspan said definitively that "payroll data" - not the household survey - "is the series which you have to follow" in order to be accurate. The payroll data shows "a loss of more than two million jobs since 2001."
   
   Sources:
   
2. "George Walker Hoover?", Slate, 04/30/2003.
   
3. "Bush Backs Off Forecast of 2.6M New Jobs", ABC News, 02/18/2004.
   
4. Remarks by the President to the National Governors Association, 02/23/2004.
   
5. "In the New Economics: Fast-Food Factories?", New York Times, 02/20/2004.
   
6. "Building Blue-Collar…Burgers?", CBS News, 02/20/2004.
   
7. Economic Snapshots, 01/21/2004.
   
8. "Two Tales of American Jobs", New York Times, 02/22/2004.

Published: February 24 2004 9:59 | Last Updated: February 24 2004 17:48

• Dollar slides as consumer data disappoint
  By Jennifer Hughes
  
  The dollar fell back on Tuesday after a key US consumer confidence survey indicated sentiment was weaker than expected, prompting concerns about the strength of consumer activity.
  
  The euro, at $1.258 as US trading began, rose to $1.2705 after the data were released while sterling, already up about a cent after firm UK business investment numbers, rose another cent to $1.8919. Against the yen, the dollar eased to Y108.1 from Y108.4 earlier.
  
  The Conference Board's survey fell to 87.3 in February from a downwardly revised 96.4 last month. Economists had forecast the index would fall to about 92.5. February's reading was the lowest since October, and the biggest monthly drop in a year.
  
  "Maybe consumer activity going forward is a bigger problem than we had expected," said Tim Mazanec, senior currencies strategist at Investors Bank and Trust in Boston, who said the dollar and the euro looked to be stuck in their recent range.
  
  "The dollar closed poorly on Monday, but I don't see the euro uptrend back in place," he added. "This looks like consolidation for the next few weeks."

We have all seen our resident Bush apologists step in with snippy comments and White House spins whenever another layer of the Bush economy's veneer is peeled off. Well, they have been more restrained lately and there is good reason for that. Here's a relevant piece from today's NY Times.--CA


March 11, 2004

• Recent Slide in Stock Steepens, With Dow Falling 160
  By ALEX BERENSON
  
  Shares continued their recent slide yesterday as investors seemed increasingly worried about weakness in the economy and the prospects for growth in profits.
  
  This week's drop has wiped out the year's gains for the Nasdaq composite index and the Dow Jones industrial average, though the Standard & Poor's 500-stock index is still up slightly for the year. But several big investors said that stocks, while no longer cheap, were still reasonably valued and that the possibility of a steep pullback appeared slight.
  
  No single news event accounted for yesterday's slide, economists and professional money managers said. But investors appear concerned that the economy's growth over the last year has come mainly as a result of short-term stimulus from the federal government and Federal Reserve, not because of increased corporate investment or sustainable increases in consumer spending.
  
  Recent government reports showing that job creation has been weaker than expected have fueled those fears, said Thomas Giovine, a hedge fund manager in Los Angeles. Although the economy still appears solid, he said, investors no longer believe that growth will continue to accelerate unless the job market improves.
  
  "If you calibrate to the beginning of the year, the consensus was that we were going to get strong growth," Mr. Giovine said. "Because the consensus was bullish, there was very little room for any weak economic data."
  
  In addition, stocks have rallied strongly over the last year and are no longer cheap, said Scott Black, the president of Delphi Management. The S.& P. 500, which includes the largest publicly traded companies, has risen 39 percent over the last 12 months. The average S.& P. 500 stock trades at a multiple of 23 times its profits, well above the historical average of 15 times earnings.
  
  "It's tough to find cheap stocks," Mr. Black said. "In the bigger names that most people would follow, you're paying 25 or 30 times multiples for very little growth." For example, Coca-Cola trades at 26 times its earnings last year and 24 times its expected earnings for 2004.
  
  Yesterday, the S.& P. 500 index dropped 16.69 points, or 1.5 percent, to 1,123.89. The technology-heavy Nasdaq dropped 31.01 points, or 1.6 percent, to 1,964.15, and the Dow Jones industrial average fell 160.07 points, or 1.5 percent, to 10,296.89.
  
  But Mr. Black and Mr. Giovine both warned against overreacting to the recent downturn
  
  Despite this week's drop, the S.& P. 500 is still less than 3 percent from the high it reached in February. The Nasdaq, which rose even farther last year, has slid more sharply in the last month, dropping almost 9 percent.
  
  Stocks remain more attractive than alternative investments, Mr. Black said. With 10-year Treasury bonds yielding less than 3.8 percent, investors who buy them are taking a serious risk that inflation will eventually rise and erode their value, he said. European stocks also appear dangerous because the rise in the euro against the dollar will probably hurt Europe's economy.
  
  "There's nowhere to go," he said. "What's the alternative?"
  
  Other investments, including real estate and the bonds issued by Mexico and other emerging-market counties, are also unattractive, Mr. Giovine said. And the dividend tax cuts enacted last year have contributed to stocks' allure, he said. For example, the American depository receipts of BP pay a dividend of 3.7 percent, about the same as the 10-year Treasury note, with a lower tax rate and better protection against inflation, he said.
  
  "Do I want to be in bonds, do I want to be in cash, do I want to put more money in real estate, or do I want to be in equities and buy a yield that has a tax advantage?" he said.
  
  Richard DeKaser, the chief economist at the National City Corporation, a Cleveland-based bank, said he thought stocks were ready to slide because they have gained so steadily since March 2003. The S.& P. 500 has risen in 11 of the last 12 months and four of the last five quarters.
  
  "What I see is we have a stock market that is still fairly valued," Mr. DeKaser said. Last year, operating profits for S.& P. 500 companies rose 20 percent to 25 percent. This year they are expected to rise more than 10 percent.
  
  That level of growth can easily support the S.& P. 500's price-earnings ratio, which Mr. DeKaser calculates at less than 20, excluding certain one-time charges, he said.
  
  Low interest rates also help the market, both by making bonds less attractive as an alternative investment and by enabling investors to discount future corporate profits at a lower rate.
  
  Even weak job growth is not entirely bad for investors as long as productivity is rising, Mr. DeKaser said. High productivity translates into higher output, and if job growth is weak companies will not have to share much of their extra profits with workers.
  
  "Earnings are growing rapidly," he said. "And that phenomenon in many respects is the flip side of the jobless recovery."

[Monte Smith]

Here's my sneaky, insipid pro-Bush spin:

Oh my God, the market has been crap for four days!

OK, spin over. I have two goals. One is short term saving for my house. I'm very glad that I got out of agressive mutual funds for that stuff on February 26. I made my mark on what I need for a down payment (thanks to super growth in Q3 2003 and strong growth in Q4), and I figgered there was no payback in getting greedy. So I put my select equity dollars into money market: returnless and safe.

My other goal is retirement. I have all my roll on agressive equity. I'm betting on the market long term and I'm in for the haul. Who's up and who's down is all facade I tell ya!

[willy]

From townhall.com



Debating job growth

Emmett Tyrrell

March 11, 2004


WASHINGTON, D.C. -- Recently, I have been making my own scholarly contribution to political scientists' understanding of the 2004 election by identifying a rising new constituency within the electorate, the moron vote.

Those who compose it are the angry, the fearful and the unaccountably neurotic. When they beheld Dr. Howard Dean hollering in public about how very angry he was, they thought of Abraham Lincoln. Now, they behold Sen. John Pierre Kerry boasting of all the hair he has on his chest, the medals on his wall and his grim plans for President George W. Bush, and they think of John F. Kennedy or maybe Robespierre -- Kerry is still very French-looking, (BEG ITAL) n'est-ce pas? (END ITAL)

Yet Kerry has to cast his net more widely if he is to give the Bush of his tirades the promised heave-ho. Thus, he now goes beyond anger and personal braggadocio to speak of economics and foreign policy. In doing so, he is not merely addressing our country's morons. He is addressing the understandably confused.

For whatever reason, in addressing them he merely adds to their confusion. Possibly he, too, is understandably confused. He sees hostilities in Iraq that have gone on beyond four months and cannot understand why our troops are not en route home. Certainly, his experience in war lasted only four months and then it was homeward bound. He sees an economy that is growing at a brisk 4 percent or more and sees economic despair. He is the perfect candidate for the understandably confused.

Yet elections are not supposed to spread confusion. Those of us who relish democracy always hope that an election is an opportunity for debate and for spreading the truth. Once the Massachusetts Braggart has quieted down, allow me to file two caveats against his lamentations. First, in Iraq, we have won the war and seem to be winning the peace. Though it would be imprudent for our government to mention it, our casualties have dropped dramatically this past month. The Iraqis may soon be governing themselves with minimum involvement from us or our heroic allies, the French and the Germans.

As for the economy, its robust growth suggests that job growth must be strong also. Yet the Bureau of Labor Statistics publishes data declaring job growth is low, only 21,000 new jobs in February as opposed to the forecasted 125,000. Are these statistics sound? Kerry does not ask that question, but some economists are asking it. One, Brian Wesbury, a man distinguished for his reading of economic trends and business achievement, has looked carefully at the economy and found job growth where others have failed to look.

Wesbury claims that in the New Economy, invigorated as it is by developments in software and technology that make founding small businesses more feasible, job creation is missed by the old way of measuring it. The old way was through the job survey called the Establishment Survey. The new way is through the survey called the Household Survey.

The Establishment Survey takes into account business establishments nationwide by measuring (BEG ITAL) payroll employment. (END ITAL) "But," writes Wesbury in the April issue of The American Spectator, "payrolls are not where the action is today. The real growth is entrepreneurial. Self-employment and Limited Liability Corporations (LLC) are growing like weeds, and these types of employment do not fit into the normal payroll." They do fit into the Household Survey.

Whereas the Establishment Survey tells us that since the end of the recession in November 2001 payroll jobs have declined by 718,000, the Household Survey indicates 1.9 million jobs have been created. Naturally, Kerry, the candidate of confusion, relies on the Establishment Survey. I doubt he has ever paid any attention to the Household Survey.

Wesbury believes that he should. It not only calculates job growth more accurately than the other survey, it also has tracked a trend. For two decades, self-employment has represented an ever-larger percentage of post-recession job growth. In the months following the 1982 recession, self-employment accounted for 5.4 percent of job growth. In the months following the 1991 recession, it accounted for 9.3 percent of job growth. "Since the recession ended in November 2001," Wesbury writes, "total household employment has climbed 2.1 million, and self-employment has grown by 644,000 ... 31.1 percent of all job growth in the Household Survey."

Is it possible to have the healthy growth we now have and a decline in jobs? The understandably confused are confused by this, as well they should be. If Wesbury is right, the confusion is caused by economic statisticians' failure to keep up with our dynamic economy. The economy is growing, and so is the job market.

Willy, do you really believe that the last line is true? Your columnists of choice have a lot of spin out there, but the bottom line is something they shy away from: REALITY!

Ever heard of it?

[willy]

Outsourcing and other trivial pursuits

Alan Reynolds

March 11, 2004


The unemployment rate has fallen by half a percentage point over the past six months. If it merely continues to drop at the same pace, unemployment will be 5.1 percent in another six months (August) and below 5 percent before the election. Unemployment would then be the lowest ever for any president seeking reelection -- lower than it was for Nixon in November 1972 (5.3 percent) or for Clinton in November 1996 (5.4 percent).

If Sen. Kerry had hoped to make a big political issue out of an unemployment rate that is likely to be below 5 percent by election time, he had better start trying to change the subject as soon as possible. And his never-ending wisecracks about Herbert Hoover could to backfire, too, because Hoover enacted the same policies key Democrats now recommend -- namely, higher tax rates and tariffs.

Another non-issue that is sure to grow tiresome within a few more months is the maniacal anxiety about imports of business services -- a trivial pursuit that would have gotten no attention at all had it not been deviously mislabeled as "outsourcing."

That is not what outsourcing means. Outsourcing means having business services done by specialist firms rather than inside a manufacturing or financial firm. When I was a vice president at a Chicago bank, we had an entire floor of attorneys and a few dozen economists on the payroll. The bank could have gotten better service for less money by putting legal firms and economic consultants on retainer. It often makes sense to also let specialist firms handle accounting, employee benefits and payroll. That is outsourcing.

What uninformed politicians and journalists mean by "outsourcing" is importing services. They would have you believe the United States has suddenly been importing many more services. Yet the increase in service imports last year was precisely zero.

From 1997 to 2000, by contrast, U.S. service imports grew by 9.7 percent a year. So why did the media start fussing about imported services only after such imports stopped growing? Politics aside, this makes no more sense. Outsourcing is a senseless name for nonsense.

U.S. imports of both goods and services grew by 10.5 percent a year from 1992 to 2000 in real terms, but by only 1.5 percent a year from 2000 to 2003. Nobody complained about losing jobs to imports while imports were growing rapidly. The pretense that Americans are losing jobs to imports did not gain political traction until imports turned stagnant. Turning facts on their head is, of course, a familiar symptom of election-year mania.

Trade warriors have been staring down the wrong side of their canons -- imports, rather than exports. Imports have been weak for three years, but exports have been even weaker. That matters because the United States is by far the world's largest exporter of goods -- China ranks fifth. U.S. merchandise exports rose by 6 percent a year from 1990 to 2001, while exports from Europe grew by only 4 percent a year and exports from Japan by 3 percent. The United States is the world's largest exporter of services by an even wider margin -- India ranks 21st. Like China, India's imports of commercial services have doubled since 1995. Although India did achieve a tiny surplus in services in the past two years, the country has a sizable overall trade deficit.

By the fourth quarter of 2003, real U.S. exports of services were 5.2 percent higher than a year before. That is, the United States was exporting more "outsourcing" services, though service imports were flat. Real exports of goods were 7.2 percent higher. But those gains were still not enough to get exports back to where they had been before the global recession. Real U.S. exports in 2003 were still 0.6 percent smaller than they were in 2000.

Here is the problem: Just as U.S. imports grow only when the U.S. economy is growing (and shrink only in recessions), other countries' imports also grow only if and when their economies are growing. Strong economies, including ours, need more industrial imports and can afford to buy them. Unfortunately, the economies of our biggest trading partners have not been strong.

Canada accounted for 23.8 percent of U.S. exports last year, Mexico for 13.7 percent, Germany and France for 6.4 percent, and other OECD countries (mainly Europe) for 17.6 percent. If these economies don't grow, then neither can U.S. exports.

By the fourth quarter of 2003, real GDP in the United States was 4.3 percent higher than a year before, compared with only 1 percent in Canada and 2 percent in Mexico. GDP was up by a pathetic 0.2 percent in Germany and 0.5 percent in France -- two countries with unemployment near10 percent. When your biggest customers are broke, it is not easy to sell them more.

Blame Europe and Canada's weakness for relatively weak U.S. exports, not China's strength (which is helping Japan). As the year-end 2003 report from the U.S. trade representative noted, "Over the last three years, while U.S. exports to the rest of the world have decreased by 10 percent, U.S. exports to China have increased by 66 percent."

The United States would benefit greatly if there were more strong economies in the world, such as China and India, and fewer laggards like Germany, France and Canada. The latter countries could learn something from China and India, both of which found prosperity only after doing the exact opposite of what Herbert Hoover did in 1930-32 and what the Democratic Party now threatens to repeat.

The economies of China and India grew by drastically reducing tariffs and tax rates. China's average tariff on imports has fallen from well over 50 percent in the early 1980s to about 10 percent now, but actual tariff collections average less than 3 percent because so many goods are tariff-free. India slashed tariffs, too, and cut the top income tax rate from 62 percent in 1984 to 30 percent today, becoming just another in a long list of supply-side miracles.

Politicians now proposing that the United Stats should do the opposite of what China and India have done, and instead move closer to emulating Sweden and France, are amazingly slow learners.

Willy, your nonsense is soooooo transparent. I don't think you read any of the stuff you post, and the fact that you ignore my questions is ever so telling.

Have fun posting Coulter, et al, but you might consider looking for a BBS where the prevailing mentality is of the NY Post variety.

[willy]

"...but you might consider looking for a BBS where the prevailing mentality is of the NY Post variety."


There aren't any. Conservatives have jobs and don't have time to post hate-filled NYT rhetoric 24/7. They are busy making money and paying taxes so cry baby liberals can sit at home all day and complain on a BBS about how the greedy rich aren't paying their fair share

[Monte Smith]

Originally posted by willy
"...but you might consider looking for a BBS where the prevailing mentality is of the NY Post variety."


There aren't any. Conservatives have jobs and don't have time to post hate-filled NYT rhetoric 24/7. They are busy making money and paying taxes so cry baby liberals can sit at home all day and complain on a BBS about how the greedy rich aren't paying their fair share

Ho ho! If Grandpa Thorne was here, I know he would tell you that you haven't answered any questions with that insightful post.

I think we have all seen them, those Bush spinners (indeed, Bush himself), describing an economic situation that flies in the face of facts. It is amazing how they can lie so blatantly, almost with a religious zeal. The other day, in one of his highly orchestrated warehouse appearances, Bush turned to the company's owner and said something like, "You will be hiring new staff, won't you?" I think he was sorry he asked when the response came: "Yes, three." --CA


March 12, 2004
OP-ED COLUMNIST

• No More Excuses on Jobs
  
  By PAUL KRUGMAN
  
  As job growth continues to elude the U.S. economy, we're hearing two main excuses from the Bush administration and its supporters: that the real situation is much better than you're hearing, and that to the extent employment is lagging, it's the result of factors outside the administration's control. But after three years of extravagant promises and dismal results, the time for excuses has passed.
  
  Let's start with the real job situation. A number of readers have asked me about what Marc Racicot, who heads the Bush re-election effort, told Don Imus the other day. He claimed that those miserable job numbers are misleading, and that another survey presents both a more accurate and a much happier story. You can find the same claim all over the right-wing media. But it just isn't so.
  
  It's true that there are two employment surveys, which have been diverging lately. The establishment survey, which asks businesses how many workers they employ, says that 2.4 million jobs have vanished in the last three years. The household survey, which asks individuals whether they have jobs, says that employment has actually risen by 450,000. The administration's supporters, understandably, prefer the second number.
  
  But the experts disagree. According to Alan Greenspan: "I wish I could say the household survey were the more accurate. Everything we've looked at suggests that it's the payroll data which are the series which you have to follow." You may have heard that the establishment survey doesn't count jobs created by new businesses; not so. The bureau knows what it's doing — conservative commentators are raising objections only because they don't like the facts.
  
  And even the less reliable household survey paints a bleak picture of an economy in which jobs have lagged far behind population growth. The fraction of adults who say they are employed fell steeply between early 2001 and the summer of 2003, and has stagnated since then.
  
  But wait — hasn't the unemployment rate fallen since last summer? Yes, but that's entirely the result of people dropping out of the labor force. Even if you're out of work, you're not counted as unemployed unless you're actively looking for a job.
  
  We don't know why so many people have stopped looking for jobs, but it probably has something to do with the fact that jobs are so hard to find: 40 percent of the unemployed have been out of work more than 15 weeks, a 20-year record. In any case, the administration should feel grateful that so many people have dropped out. As the Economic Policy Institute points out, if they hadn't dropped out, the official unemployment rate would be an eye-popping 7.4 percent, not a politically spinnable 5.6 percent.
  
  In short, things aren't as bad as they seem; they're worse. But should we blame the Bush administration? Yes — because it refuses to learn from experience.
  
  Franklin Roosevelt, in his efforts to combat economic woes, was famously willing to try anything until he found something that worked. George Bush, by contrast, seems determined to try the same thing, over and over again.
  
  In 2001 the administration rammed through long-term tax cuts, heavily tilted toward the affluent. But employment didn't turn around, and by late 2002 many economists — including supporters of the original tax cut — were urging it to try something different. My own piece, "My Economic Plan," was fairly typical: I called for extended unemployment benefits, temporary aid to state and local governments, and rebates for low- and middle-income workers.
  
  Maybe this more or less textbook response to a depressed economy wouldn't have worked. But we'll never know, because the administration rejected all such proposals. Instead, it went for a clone of the 2001 tax cut — another big break mainly for those at the top. And once again this failed to deliver the promised jobs.
  
  Meanwhile, Mr. Bush has mortgaged the nation's future. If all of his tax cuts are made permanent, they'll reduce revenue by at least three times the amount that would be needed to secure Social Security benefits at current levels for the next 75 years.
  
  No sensible person blames Mr. Bush for the onset of the recession in 2001. But he does deserve blame for the fact that all he has to show for three years of supposed job-creation policies is a mountain of debt._

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