WHY BUSH IS MAKING THE ECONOMY WORSE
When seasoned economists start coming out of the woodwork to badmouth Bush's economic policy, you know we're in trouble. Not because of the impending recession, we knew that was coming for almost a year, but because Bush is purposely making it worse to serve his ill-informed idea that passing a tax cut bill will somehow solve our economic problem, but it won't. While we all know that having confidence in the economy is considered by economists to be one of the three or four factors in having a robust economy, Bush is doing eveything he can to badmouth the present economy, all in the name of his tax cut. We had to destroy the village to save it.
This morning in the NY Times Bush said, "I'm sorry people are losing value in their portfolios. But with the right policies, I'm confident our economy will recover. The right policies, fiscal policies. And that means giving people money back, in plain language." NYT: "Reacting to criticism from former members of the Clinton administration that Mr. Bush's comments have fed the market's pessimism, Mr. Bush's aides say he is doing nothing more than being realistic." Bush has it all backwards. Since he's not the Acting-President, his job is to serve as a cheerleader and con the rubes in backwater military towns, like he recently did in Florida. Bush should let the economists, the people who know, be the realists. And most economists think Bush's idea to force tax cuts on the American people will have little to do with the economy, particularly considering where most of the tax cuts are going. If it's the people's money, why are the wealthy 2% getting back twice as much as they put in? If it's the people's money, why can't the money be used to pay down the debt and take care of Medicare and other social problems, which is what the polls tell us the people want?
Last week economic elder John Kenneth Galbraith jumped into the fray with great trepidation: "I am not, in my own view or that of others, a plausible political adviser to the Bush administration, but I would like to suggest that it could be on course for a powerful political disaster. Following a period of insane speculation, we are thought now to be facing a recession, possibly even, so far as there is a difference, a depression." Galbraith pointed to Bush's tax cut plan as a major culprit: "This, as support to the economy, was announced immediately by President Bush on taking office. Most of the benefit, as now more than amply agreed, goes to the very affluent. In an economic downturn, those so favored do not spend, because they have no particular need. That is an aspect of wealth. And given the uncertainties of the economy, they do not readily initiate or invest. It is true that middle- and lower- income folk do spend, but they do not get a significant share of the benefit, and the very poor get none at all. And such expenditure as there is here goes for the daily necessities of life, not for the things on which recovery depends. To repeat, those of middle and lower income are not the beneficiaries in any case. The effect of tax reduction is not on the economy but on the pleasure and political gratitude of those who receive it."
Galbraith is far from alone in these views. Yesterday in the NY Times fellow economist Paul Krugman said Bush wants to "spread fear" to get his way: "Officials at...the White House...have been making things worse....Ari Fleischer et al. [are] doing their best to spread panic, in the belief that fear sells tax cuts." During the battle for Florida Bush spokesman and voodoo economist James Baker kept saying that the stock market was going down due to the battle for the presidency, so there was an immediate need for Bush to be declared the winner in order that the stock market would rebound. Given that logic, the stock market must really be pissed that Bush, not Gore, was given the nod by the Supreme Court. Krugman has a different view: "Right now we are in a race between the natural forces of recovery and the self-reinforcing forces of contraction. The manufacturing slump that began last year was mainly an inventory cycle: companies produced too much, and then cut back their production in an effort to get rid of the excess. If that were the whole story, the economy would soon bounce back of its own accord. But it isn't the whole story: the manufacturing slump, falling stock prices and a general climate of nervousness are undermining both consumer and business confidence."
If consumer confidence is one of the keys, it would appear that Bush is doing what he can to undermine the economy while pretending to want to save it, and to what end? "George W. Bush continues to sell his plan as a recession-fighting measure, but his plan is almost perfectly designed not to serve that function. Or as a headline in The Wall Street Journal put it, "Tax-Cut Talk Is Big; Relief Would Be Small." In order to keep down the headline cost of their plan, Mr. Bush's economists delayed most of the big tax breaks until late in the decade. And they cannot do much to accelerate those breaks without making it obvious to everyone that they are planning to raid Medicare and Social Security." Since it appears that Bush is doing everything he can to harm the economy, not save it, why? First, he's more interested in paying back his rich friends, most of his cabinet, and the Cheney and the Bush families, among others, than he is in helping the country. Secondly, he depends upon his economic advisors, and most of them are retreads or followers of the Reagan-Bush administration, and they're the folks who got us in the economic mess that we've spent the last decade getting out of. --Politex, 3/15/00 |
