SharedThought

The Washington Post has an article today talking about how the Bush administration is taking another look at the steel tariffs they imposed in early 2002. According to the article the tariffs, which were intended to help Bush carry Pennsylvania and West Virginia in 2004, have actually cost him support in Tennessee and Michigan. Yikes! It turns out that autoworkers and manufacturers believe that the 30% jump in steel prices has led to the loss of manufacturing jobs. While jobs have been created in the steel industry, many more have been lost in manufacturing. I guess Bush was correct when he uttered this Bushism:

“Ann and I will carry out this equivocal message to the world: Markets must be open.” — Swearing-in ceremony for Secretary of Agriculture Ann Veneman, Washington, D.C., March 2, 2001

While the tariffs probably did lead to the creation of steel jobs in Pennsylvania and West Virginia, I doubt they had much to do with the loss of manufacturing jobs in Michigan and Tennessee. They would have been lost in any case. That has more to do with NAFTA and the continuing trend of moving manufacturing jobs abroad.

This does set up the interesting scenario that everbody may end up pissed off. The steelworkers union already didn’t give Bush a sought-after endorsement (that went to Gephardt) and if his administration reverses course and removes the tariffs on steel they’ll be pissed at the likely loss of jobs. Manufacturers and workers in the midwest are mad now and likely to remain so as they’ll probably still be facing losses due to overseas competition–even if the tariffs are removed.

The Bush administration has consistently argued that the September 11 attacks are responsible for the sluggish economy and increasing budget deficits. As recently as September 6 when president Bush discussed the economy in Indianapolis, the attacks were being blamed. Here’s what the President said:

Let me remind you of what we’ve been through. The attacks on America cost us about $80 billion. That’s a lot of money. The attacks hurt our economy at a time when we were beginning to recover from a recession. In March of 2000, the stock market started to decline. Investors began to realize, well maybe the economy wasn’t quite as strong as it had been in the past. And we were in recession in the first quarters of 2001. We had negative growth. People were beginning to look for work. Things weren’t good.

But the economy became to come back because we actually passed a really good tax bill out of the Congress. And then the enemy hit us, and it hurt. It hurt economically; it hurt the nation’s psyche to think that we were vulnerable to cold-blooded killers who could come and in one day take the lives of thousands of innocent people.

It’s not clear what was included in the $80 billion cost the President was referring to. If that’s total economic impact, then that represents about 0.4% of the GDP over the last two years. Even if he’s referring to the portion of the federal deficit over the last two fiscal years that is attributable to the attacks, then the impact on the roughly $560 billion in deficits is a relatively small 14.3%. As the Economic Policy Institute points out, the economic impact of the attacks has been relatively slight.

[UPDATE: See this link for Angry Bear's breakdown of the costs of 9/11 using numbers supplied by the CBO--ST 9/19/03]

Angry Bear has also done some calculations and come up with an estimate allocating the source of the current deficits:

Of the 80% of the deficit not related to terrorism, roughly 1/3 of the blame goes to increased spending and 2/3 to the Bush tax cuts.

According to figures gathered by Angry Bear, under president Bush federal spending is up over 20% of GDP (In Clinton’s last budget the figure was 18.6%), while revenues are down to 16%. The difference will have to be borrowed. That’s right, Republicans have become the borrow and spend party.

I heard about the latest Zogby poll on NPR last week. They pointed out both Reagan and Carter were polling similarly at this point in their administrations. Carter lost in a lopsided fashion, but Reagan was elected in a 49 state landslide the next year.

The news that Howard Dean is poised to select Wesley Clark as his VP running mate seems a bit premature to me. Clark is supposed to be announcing his decision on whether or not he will run for the Presidency within the next week. Although it’s hard to believe, it is probably too late for him to jump into the game on his own. I can’t imagine that he would accept an invitation to join Dean’s ticket (nor would Dean likely extend one) until the nomination has been decided. But it makes for a great story now.

This is what I would like to remember.

I’ve been engaged in a little exchange with Therapy Sessions regarding to what extent President Bush is responsible for the weak economic recovery we are experiencing.

Therapy Sessions pointed out that job creation is one of the last elements of a recovery. I agree. However, never before has employment lagged this long. The recovery started in 2001 and is in its 9th quarter without any job growth. In fact, more than a million additional jobs have been lost during the recovery. The other factor that will hamper this recovery, as opposed to the Clinton recovery, is the weight of the growing budget deficits. The higher interest rates that will inevitably result will be a continuing drag on the economy.

Therapy Sessions says it is a myth that the president controls the economy. I respectfully disagree. After all it is not my original thought to hold the president accountable for the current economic environment. Republicans spent almost a generation blaming Jimmy Carter for the nation’s economic woes. In fact some Republican groups found time away from Whitewater and Vince Foster conspiracy theories to attack the weakness of the “Clinton Recovery.” I find that a bit ridiculous when you consider the facts.

But I don’t give all the credit for the 90s expansion to Clinton. I think a great deal of the credit should go to George H.W. Bush. It was his tax increases and spending restraints in 1990 that laid the foundation for the later growth. The spending restraints, referred to as PAYGO (pay as you go) required OMB to identify spending offsets or revenue increases for any new legislative proposal. The increased taxes and spending restraints began bearing fruit when the economic recovery started in the spring of 1991, too late to earn George H.W. Bush a second term.

Clinton took office with an economic recovery already underway, but to his credit he stuck to what was already working. The policies that he pursued played to the bond market. Influenced by Leon Panetta and Alan Greenspan, Clinton pursued balanced budgets over spending programs. These policies led to the first budget surplus in over 30 years. With government finances in order, private enterprise had greater access to capital. In that healthy financial environment, the United States had the longest economic recovery in its history. Clinton deserves credit for this.

In contrast, when George W. Bush took office the economy was at the tail end of the recovery. It did not enter a recession until after he took office, and I don’t think he should be blamed for that. However, what he has done in response to the recession he should be held accountable for. During the campaign he promised tax cuts and balanced budgets. In office and faced with a recession, he delivered on the tax cuts but at the same time increased spending. And then faced with homeland security issues, wars in Afghanistan and Iraq and a lame economic recovery he again increased spending and cut taxes. As a result we have a job-loss recovery and a record federal deficit. So Therapy Sessions is right. I think George Bush deserves to be blamed for this.

I reported in an earlier post that I’d been having web hosting problems. Well, they’re finally resolved. I’ve spent much of the last three weeks trying to sort out a supposed “upgrade” to my account. I finally got everything working yesterday, but only after I gave up on my old web host. I’ve added in a few posts that were made on the old site that you may have missed while the new site was resolving. I’ve moved on and hopefully won’t have to worry about the technical stuff for awhile.

Why the confusion? The article accompanying the poll numbers points out:

[I]n declaring the end of major combat in Iraq on May 1, Bush linked Iraq and the Sept. 11, 2001, attacks: “The battle of Iraq is one victory in a war on terror that began on September the 11, 2001 — and still goes on. That terrible morning, 19 evil men — the shock troops of a hateful ideology — gave America and the civilized world a glimpse of their ambitions.”

Moments later, Bush added: “The liberation of Iraq is a crucial advance in the campaign against terror. We’ve removed an ally of al Qaeda, and cut off a source of terrorist funding. And this much is certain: No terrorist network will gain weapons of mass destruction from the Iraqi regime, because the regime is no more. In these 19 months that changed the world, our actions have been focused and deliberate and proportionate to the offense. We have not forgotten the victims of September the 11th — the last phone calls, the cold murder of children, the searches in the rubble. With those attacks, the terrorists and their supporters declared war on the United States. And war is what they got.”

Perhaps this will prove to be effective, expedient politics. However, it is an unacceptable remembrance.

The Washington Post has a sobering article discussing some of the latest economic numbers. Here’s a sample:

In 2002 and 2003, the economy has grown each quarter at annualized rates between 1.3 and 5 percent, but the number of payroll jobs has fallen an average of 0.4 percent every three months. Moreover, nationally, the number of hours worked per employee has remained steady, the Fed study said, pointing to “the emergence of a new kind of recovery, one driven by productivity increases rather than payroll gains.”

Basically, the economic “recovery” that we are in the midst of is a jobless one. There appear to be two sources for the stagnation in job creation. One is that increased worker productivity is allowing companies to produce more with the same workforce. Another is that jobs are being sent overseas.

Increased worker productivity is great, but so far the workers haven’t shared much of the wealth created by their production. Worker productivity in 2002 increased at the highest rate since the 1950s. In the last quarter worker productivity increased 6.8 percent. Yet, wages have increased less than 2 percent annually from 2001 to 2003.

As for sending jobs overseas, that’s supposed to be one of the early costs of globalization. But don’t anyone get worried about it because those jobs that are being sent overseas benefit us all in the long run. The stuff we buy at Wal-Mart is cheaper as result, and workers who lose their jobs will eventually find better ones in dynamic new industries.

That’s a nice story, but for now that’s all it is. In reality this exposes globalization for what it is: a race for the bottom.

NPR scores again! Last week NPR reviewed Erin McKeown’s new album Grand. The segment included an interview with the artist interspersed with cuts from the album. Here’s a real audio sample of a cut titled born to hum. I went out on Saturday and bought the album. It’s a great record. McKeown’s got a great voice and is a truly talented song writer. Here is how she describes her latest work:

“i love all kinds of music, and i think most people are like that. i love to move to music, i love to be surprised by music, so i wanted GRAND to be all these things NOW. . . . GRAND is my dream of what a record could sound like, of what i am interested in as a writer, what i want to be my contribution as an artist. you cant ask much more of your latest project.”

You can check out other samples of the album here. If you like it, you can buy it here.