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WASHINGTON,
D.C. – U.S. Representative Jan Schakowsky (D-IL) issued “The Bush Administration
Misstatement of the Day” on the strength of the economy and job growth.
Following
the announcement that 112,000 jobs were created in June, President Bush
said: “our economy is strong and getting stronger” and “we're witnessing
steady, consistent growth" (President Bush, 7/2/04)
However,
according to a column by Paul Krugman in today’s New York Times,
the “1.5 million jobs” created over the past 10 months of the Bush
Administration “were barely enough to keep up with a growing working-age
population,” and that during “the Clinton years, the economy added
236,000 jobs in an average month.”
He
continued that the “economic growth is passing working Americans by”
because the “average weekly earnings of nonsupervisory workers rose
only 1.7 percent over the past year, lagging behind inflation. The
president of Aetna, one of the biggest health insurers, recently told investors,
‘It’s fair to say that a lot of the jobs being created may not be the jobs
that come with benefits.’”
July
6, 2004
OP-ED
COLUMNIST
Bye-Bye,
Bush Boom
By
PAUL KRUGMAN
When
does optimism — the Bush campaign's favorite word these days — become an
inability to face facts? On Friday, President Bush insisted that a seriously
disappointing jobs report, which fell far short of the pre-announcement
hype, was good news: "We're witnessing steady growth, steady growth. And
that's important. We don't need boom-or-bust-type growth."
But
Mr. Bush has already presided over a bust. For the first time since 1932,
employment is lower in the summer of a presidential election year than
it was on the previous Inauguration Day. Americans badly need a boom to
make up the lost ground. And we're not getting it.
When
March's numbers came in much better than expected, I cautioned readers
not to make too much of one good month. Similarly, we shouldn't make too
much of June's disappointment. The question is whether, taking a longer
perspective, the economy is performing well. And the answer is no.
If
you want a single number that tells the story, it's the percentage of adults
who have jobs. When Mr. Bush took office, that number stood at 64.4. By
last August it had fallen to 62.2 percent. In June, the number was 62.3.
That is, during Mr. Bush's first 30 months, the job situation deteriorated
drastically. Last summer it stabilized, and since then it may have improved
slightly. But jobs are still very scarce, with little relief in sight.
Bush
campaign ads boast that 1.5 million jobs were added in the last 10 months,
as if that were a remarkable achievement. It isn't. During the Clinton
years, the economy added 236,000 jobs in an average month. Those 1.5 million
jobs were barely enough to keep up with a growing working-age population.
In
the spring, it seemed as if the pace of job growth was accelerating: in
March and April, the economy added almost 700,000 jobs. But that now looks
like a blip — a one-time thing, not a break in the trend. May growth was
slightly below the Clinton-era average, and June's numbers — only 112,000
new jobs, and a decline in working hours — were pretty poor.
What
about overall growth? After two and a half years of slow growth, real G.D.P.
surged in the third quarter of 2003, growing at an annual rate of more
than 8 percent. But that surge appears to have been another blip. In the
first quarter of 2004, growth was down to 3.9 percent, only slightly above
the Clinton-era average. Scattered signs of weakness — rising new claims
for unemployment insurance, sales warnings at Target and Wal-Mart, falling
numbers for new durable goods orders — have led many analysts to suspect
that growth slowed further in the second quarter.
And
economic growth is passing working Americans by. The average weekly earnings
of nonsupervisory workers rose only 1.7 percent over the past year, lagging
behind inflation. The president of Aetna, one of the biggest health insurers,
recently told investors, "It's fair to say that a lot of the jobs being
created may not be the jobs that come with benefits." Where is the growth
going? No mystery: after-tax corporate profits as a share of G.D.P. have
reached a level not seen since 1929.
What
should we be doing differently? For three years many economists have argued
that the most effective job-creating policies would be increased aid to
state and local governments, extended unemployment insurance and tax rebates
for lower- and middle-income families. The Bush administration paid no
attention — it never even gave New York all the aid Mr. Bush promised after
9/11, and it allowed extended unemployment insurance to lapse. Instead,
it focused on tax cuts for the affluent, ignoring warnings that these would
do little to create jobs.
After
good job growth in March and April, the administration declared its approach
vindicated. That was premature, to say the least. Whatever boost the economy
got from the tax cuts is now behind us, and given the size of the budget
deficit, another big tax cut is out of the question. It's time to change
the policy mix — to rescind some of those upper-income cuts and pursue
the policies we should have been following all along.
One
last point: government policies could do a lot about the failure of new
jobs to come with health benefits, a huge source of anxiety for many American
families. John Kerry is right to make health care a central plank of his
platform. I'll analyze his proposals in a future column. |
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