The Democrats are Getting Worried
If the U.S. economy looks good in 2004, it will be difficult for a Democratic nominee to beat President Bush--and the Republicans are likely to do well in the House and Senate as well.
The recent reports on the U.S. economy are very positive--surprisingly so, to many--and there are signs that the Democrats are getting worried.
Exhibit A: The New York Times. (Requires registration; I get "Today's Headlines" dumped into my Hotmail account).
There are several stories in today's Times that say: don't be fooled by the good news; things aren't as rosy as they seem. Example:
"ECONOMIC VIEW
As Stimulus, Tax Cuts May Soon Go Awry
By LOUIS UCHITELLE
The tax cuts are helping to revive the economy by putting more spending money into people's pockets. But that will soon backfire."
The idea here is that the stimulus of tax cuts will end when the tax cuts end; Bush has proposed a schedule of gradually scaling back on the tax cuts; so there will be a diminishing stimulus, and diminishing economic growth, in the Bush plan.
This is weird: aren't there any "escalators"--if that is the word--parts of the economy that will add to growth once the stimulus of tax cuts has its effect? Is there no hope for growth at all now except for Bush's tax cuts? Hasn't Bush made it clear he would love to have more and deeper tax cuts?
I guess Uchitelle assumes there is a limit to how much anyone will cut taxes--given the many spending demands, and the deficit, both of which Bush has increased. Still, it is strange to give Bush so much credit for kick-starting the entire friggin U.S. economy, and then try to take away this credit, one brick at a time. Of course Uchitelle ultimately argues that stimulus in the form of spending--such as transferring money to states to pay nurses and teachers--would help more than tax cuts.
Example:
"OP-ED CONTRIBUTOR
The Unemployment Myth
By AUSTAN GOOLSBEE
There are more Americans without jobs than we realize."
Here the interesting twist is that Clinton benefitted from some fudging of the numbers for many years; now that Bush stands to benefit, the Times wants to blow the whistle.
The official good news is: the recession is over and "The government reported that annual unemployment during this recession peaked at only around 6 percent, compared with more than 7 percent in 1992 and more than 9 percent in 1982." The problem is that a significant group of people have simply stopped being listed as "unemployed."
"...once Congress began loosening the standards to qualify for disability payments in the late 1980's and early 1990's, people who would normally be counted as unemployed started moving in record numbers into the disability system--a kind of invisible unemployment. Almost all of the increase came from hard-to-verify disabilities like back pain and mental disorders. As the rolls swelled, the meaning of the official unemployment rate changed as millions of people were left out.
"By the end of the 1990's boom, this invisible unemployment seemed to have stabilized. With the arrival of this recession, it has exploded. From 1999 to 2003, applications for disability payments rose more than 50 percent and the number of people enrolled has grown by one million. Therefore, if you correctly accounted for all of these people, the peak unemployment rate in this recession would have probably pushed 8 percent."
Ah yes, there is another twist in there: as bad as the deception may have been in the Clinton years, when Clinton took credit for low unemployment, the fudging got much worse "from 1999 to 2003."
Example:
"OP-ED CONTRIBUTOR
The Productivity Paradox
By STEPHEN S. ROACH
We aren't working smarter, we're working harder."
Any stats that exist on "productivity" show the U.S. as the world's leader over many decades. I can remember when there were lots of predictions that both Japan and Germany would take over, but they haven't.
Now Roach argues that the stats are soft, and difficult to nail down, especially in service jobs. Not only that, they reflect out-dated assumptions such as a standard work week of 40 hours or less. To get the work done that is done today in that time really would be amazing--but of course, anyone senior enough to have a cell phone or pager is on call virtually all the time, and even "standard" work weeks have grown longer. So: Americans work harder than other people, while continuing to believe a myth that they work smarter as well or instead? Where exactly is the bad news here? If they knew the truth, more Americans would be lazy slobs?
Josh Marshall has noticed conflicting stories about retail sales this "holiday season." He doesn't really say, but I suspect he's enough of a Democrat that he hopes the economy isn't great for the next year.
According to CNN: "Analysts expect stronger sales this holiday season but [say] that discounts won't be as deep as last year's. There are reports that luxury retailers are even raising prices." OK, this is logical: demand is strong, so prices stay high. On the whole, this is evidence of a good economy, and a contributor to an even better one.
According to CNN business: "store traffic and the promotional activity is at lower levels than last year at this time."
Mickey Kaus, as he does so often, has a nice, concise "compare and contrast" (scroll down to "Times vs. Times"): two New York Times articles on rental housing, one from Nov. 29, the other from Sept. 9. One says housing is available, and rents are stable or falling everywhere except the big coastal cities (including New York and Los Angeles); the other says things are tight everywhere.
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