[Mb-civic] Economic Troubles: From Elevated to High By Howard Dean

[Michael Butler]

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  Economic Troubles: From Elevated to High
  By Howard Dean
  t r u t h o u t | Perspective

  Monday 11 October 2004

  The two critical issues for every president are national security and
economic security. While much media attention has been focused on Iraq and
al Qaida, most Americans have been quietly focusing on their economic
plight. What they are seeing is not pretty.

   President Bush asserts that the economy has "turned the corner" and that
his tax cuts are working to stimulate the economy and create jobs. A
critical look at the gross domestic product tells the honest story about the
economy. GDP is the sum of consumer spending, government spending,
investments and net exports.

   During the Clinton administration, consumer spending drove the economy,
increasing at an average of 1.77 percent per quarter. More consumer spending
on food, electronics, automobiles, durable goods and houses means more jobs
and a more robust economy. More spending meant more jobs.

  Despite the president's claim that his tax cuts increased consumer
spending, we now know that a big chunk of the money went to people who make
over $1 million per year. That does not help consumer spending, because it
has no effect on consumers who already had enough money to buy what they
wanted anyway. During the Bush administration, consumer spending has
sputtered, and in order to cut cost, companies have moved jobs to countries
where wages are between 50 cents and $2.50 per hour. That's why we are
seeing job losses, especially in America's manufacturing states like
Michigan and Ohio.

   President Bush's tax cuts of three years ago hurt the economy in the long
run. Politicians in this country have often promised tax cuts without
telling Americans what that means for local property taxes, local school
quality, and health care costs. Even our soldiers felt the negative
consequences of this tax cut. They were under-equipped when they went to
Iraq, and the administration sent 50,000 fewer troops than the Pentagon
recommended.

  The underlying assumption that a tax cut means more money for individuals
to spend on consumer products is valid. However, The United States as a
country, and Americans as individuals have high debt and a negative savings
rates. The monies from the tax cut are used mostly to pay off debt rather
than for new spending. Our next President must encourage savings.

  Earlier this year, the Labor Department reported that 32,000 net new jobs
were created in July. Little did people notice that during that month,
32,000 new government jobs were created. If it weren't for new government
jobs being created, the job numbers would have been worse.

   Government spending has dramatically increased during President Bush's
term, at a rate twice as fast as spending in the Clinton administration. A
rapid increase in government spending and tax cuts that mostly go to people
that make $1 million a year have created huge long-term deficits.

  Chronic deficits are bad for families, bad for businesses, bad for states
and bad for America. Not one Republican president has balanced the budget in
the last 34 years; only Bill Clinton did so. If it takes a liberal to
balance the budget then we need one in the White House.

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  Howard Dean, former governor of Vermont, is the founder of Democracy for
America, a grassroots organization that supports socially progressive and
fiscally responsible political candidates.

 

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