Tuesday, January 31, 2006
(BN) What You Won't Hear in the State of the Union
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What You Won't Hear in the State of the Union: Gene Sperling
2006-01-31 00:07 (New York)
(Commentary. Gene Sperling, author of ``The Pro-Growth
Progressive,'' was President Bill Clinton's top economic adviser.
He is a senior fellow at the Center for American Progress. The
opinions expressed are his own.)
By Gene Sperling
Jan. 31 (Bloomberg) -- If you have been following President
George W. Bush's remarks on the economy over the past few months,
you can probably guess what he is likely to say during the State
of the Union.
While there will likely be a brief, obligatory concession
that some Americans are still struggling, the president's text
and subtext will be straight forward.
The text will be that the economy ``has a full head of
steam'' due to his tax cuts, and that we better make them all
permanent -- even those directed to the most affluent -- to keep
the good times rolling.
The subtext will of course be, ``What the heck is the matter
with you? How can only 37 percent (according to a recent
Bloomberg/LA Times poll) approve of my handling of the economy
when we have had two solid years of growth?''
With fewer and fewer Republican incumbents wanting to run on
Bush's handling of Iraq, turning around public perception of the
president's economic leadership is no doubt a top political
priority for the White House.
Since you are unlikely to hear, either in the text or
subtext, any of the legitimate economic reasons Americans aren't
buying President Bush's economic message, I will perform a public
service by providing a few.
Economy, Workers
What you won't hear on the economy and typical workers:
The president will certainly recite some version of his
statement that ``The American economy heads into 2006 with a full
head of steam,'' by talking up recent gross domestic product
growth.
While real GDP growth of 3.2 percent has been significantly
below average compared with similar economic recoveries, the 4.2
percent and 3.5 percent growth in the last two years was solid.
What the president will not be talking about, however, is
exactly what most working families care the most about -- their
wages. Hourly and weekly wages in inflation-adjusted terms have
actually fallen slightly since the recession ended in November
2001.
While many Bush defenders seem to think it is unfair to talk
about anything other than the past two years of the economy, the
picture is just as bad during this oft-mentioned period after the
capital gains and dividend taxes were cut.
To be precise, real average weekly earnings have fallen 0.9
percent (to $550.60 in December 2005 from $555.65 in December
2003), while real average hourly earnings have dropped further,
down 1.2 percent (to $16.34 from $16.54).
Family Income
The story on family incomes is just as disappointing. Both
family and household incomes have fallen and poverty has risen
every year under this administration, according to the annual
census report on income and poverty. According to this official
tally, median household income has declined $1,669 from 2000
through 2004, falling each year since the recession in 2001. The
poverty rate jumped to 12.7 percent in 2004 from 11.3 percent in
2000.
What you won't hear on jobs:
You can bet your bottom dollar the president will highlight
recent job growth to show that his tax cuts have reignited the
great American job machine. By focusing on the more than 4.6
million jobs added since May 2003 the administration wants people
to ignore the unprecedented 1.1 million jobs lost during the
first 18 months of the recession and the mere 62,000 private
sector jobs generated a month in the Bush recovery -- all part of
the worst jobs recovery on record.
Below Average
The hope is that 4.6 million jobs sounds big enough that
typical voters and lazy reporters will just accept it as a sign
of strong job growth. But anyone who does the slightest bit of
analysis will see otherwise.
This level of job growth is 2.5 million jobs below the
average 2 1/2-year period under the Clinton Administration, and
more significantly represents less than half the average rate of
job growth in the similar periods of economic recoveries.
What you won't hear on unemployment:
While the president will definitely trumpet our 4.9 percent
unemployment rate, he almost certainly won't explain that the
unemployment rate can drop for two reasons: either because job
growth is strong (which is good) or because fewer people are
looking for work (which is generally not so good).
Dropping Out
Unfortunately, the story behind the unemployment rate's drop
has been one of Americans falling out of the labor market. The
main reason unemployment is low is that a smaller share of the
population is working or looking for work than when Bush took
office. If this weren't the case, the unemployment rate would be
6.6 percent to 7.2 percent -- numbers that I guarantee you will
not hear in the State of the Union.
This is in line with estimates by Boston Federal Reserve
economist Katharine Bradbury, who found that the decline in labor
force participation cuts 1 percent to 3 percentage points from
the official unemployment rate.
I want to be clear about one thing: I don't blame Bush's
economic policies for all of the weak statistics that will not
make it into his State of the Union. There are usually several
causes for the good and bad aspects in the economy.
But the president should certainly not be allowed to use
recent economic performance, which includes weak job and wage
growth, as a justification for fiscal policies that have ignored
our nation's critical investments in our future and led to the
worst fiscal deterioration in our nation's history.
--Editors: Greiff (lwo)
Story illustration: For a graph of the federal budget deficit,
see {FDEBTY <Index> GP <GO>}.
For a graph of the U.S. unemployment rate, see
{USURTOT <Index> GP <GO>}.
For a graph of the U.S. labor force participation rate, see
{USERTOT <Index> GP <GO>.}
For more Sperling columns, see {NI SPERLING <GO>}.
To write a letter to the editor, see {LETT <GO>}.
To contact the writer of this column:
Gene Sperling in Washington at (1)(202) 518-3401 or
gsperling@cfr.org.
To contact the editor responsible for this column:
James Greiff at (1)(212) 617-5801 or jgreiff@bloomberg.net.
#<529087.166543.2005-11-10T14:40:00.25>#
-0- Jan/31/2006 05:07 GMT
2006-01-31 00:07 (New York)
(Commentary. Gene Sperling, author of ``The Pro-Growth
Progressive,'' was President Bill Clinton's top economic adviser.
He is a senior fellow at the Center for American Progress. The
opinions expressed are his own.)
By Gene Sperling
Jan. 31 (Bloomberg) -- If you have been following President
George W. Bush's remarks on the economy over the past few months,
you can probably guess what he is likely to say during the State
of the Union.
While there will likely be a brief, obligatory concession
that some Americans are still struggling, the president's text
and subtext will be straight forward.
The text will be that the economy ``has a full head of
steam'' due to his tax cuts, and that we better make them all
permanent -- even those directed to the most affluent -- to keep
the good times rolling.
The subtext will of course be, ``What the heck is the matter
with you? How can only 37 percent (according to a recent
Bloomberg/LA Times poll) approve of my handling of the economy
when we have had two solid years of growth?''
With fewer and fewer Republican incumbents wanting to run on
Bush's handling of Iraq, turning around public perception of the
president's economic leadership is no doubt a top political
priority for the White House.
Since you are unlikely to hear, either in the text or
subtext, any of the legitimate economic reasons Americans aren't
buying President Bush's economic message, I will perform a public
service by providing a few.
Economy, Workers
What you won't hear on the economy and typical workers:
The president will certainly recite some version of his
statement that ``The American economy heads into 2006 with a full
head of steam,'' by talking up recent gross domestic product
growth.
While real GDP growth of 3.2 percent has been significantly
below average compared with similar economic recoveries, the 4.2
percent and 3.5 percent growth in the last two years was solid.
What the president will not be talking about, however, is
exactly what most working families care the most about -- their
wages. Hourly and weekly wages in inflation-adjusted terms have
actually fallen slightly since the recession ended in November
2001.
While many Bush defenders seem to think it is unfair to talk
about anything other than the past two years of the economy, the
picture is just as bad during this oft-mentioned period after the
capital gains and dividend taxes were cut.
To be precise, real average weekly earnings have fallen 0.9
percent (to $550.60 in December 2005 from $555.65 in December
2003), while real average hourly earnings have dropped further,
down 1.2 percent (to $16.34 from $16.54).
Family Income
The story on family incomes is just as disappointing. Both
family and household incomes have fallen and poverty has risen
every year under this administration, according to the annual
census report on income and poverty. According to this official
tally, median household income has declined $1,669 from 2000
through 2004, falling each year since the recession in 2001. The
poverty rate jumped to 12.7 percent in 2004 from 11.3 percent in
2000.
What you won't hear on jobs:
You can bet your bottom dollar the president will highlight
recent job growth to show that his tax cuts have reignited the
great American job machine. By focusing on the more than 4.6
million jobs added since May 2003 the administration wants people
to ignore the unprecedented 1.1 million jobs lost during the
first 18 months of the recession and the mere 62,000 private
sector jobs generated a month in the Bush recovery -- all part of
the worst jobs recovery on record.
Below Average
The hope is that 4.6 million jobs sounds big enough that
typical voters and lazy reporters will just accept it as a sign
of strong job growth. But anyone who does the slightest bit of
analysis will see otherwise.
This level of job growth is 2.5 million jobs below the
average 2 1/2-year period under the Clinton Administration, and
more significantly represents less than half the average rate of
job growth in the similar periods of economic recoveries.
What you won't hear on unemployment:
While the president will definitely trumpet our 4.9 percent
unemployment rate, he almost certainly won't explain that the
unemployment rate can drop for two reasons: either because job
growth is strong (which is good) or because fewer people are
looking for work (which is generally not so good).
Dropping Out
Unfortunately, the story behind the unemployment rate's drop
has been one of Americans falling out of the labor market. The
main reason unemployment is low is that a smaller share of the
population is working or looking for work than when Bush took
office. If this weren't the case, the unemployment rate would be
6.6 percent to 7.2 percent -- numbers that I guarantee you will
not hear in the State of the Union.
This is in line with estimates by Boston Federal Reserve
economist Katharine Bradbury, who found that the decline in labor
force participation cuts 1 percent to 3 percentage points from
the official unemployment rate.
I want to be clear about one thing: I don't blame Bush's
economic policies for all of the weak statistics that will not
make it into his State of the Union. There are usually several
causes for the good and bad aspects in the economy.
But the president should certainly not be allowed to use
recent economic performance, which includes weak job and wage
growth, as a justification for fiscal policies that have ignored
our nation's critical investments in our future and led to the
worst fiscal deterioration in our nation's history.
--Editors: Greiff (lwo)
Story illustration: For a graph of the federal budget deficit,
see {FDEBTY <Index> GP <GO>}.
For a graph of the U.S. unemployment rate, see
{USURTOT <Index> GP <GO>}.
For a graph of the U.S. labor force participation rate, see
{USERTOT <Index> GP <GO>.}
For more Sperling columns, see {NI SPERLING <GO>}.
To write a letter to the editor, see {LETT <GO>}.
To contact the writer of this column:
Gene Sperling in Washington at (1)(202) 518-3401 or
gsperling@cfr.org.
To contact the editor responsible for this column:
James Greiff at (1)(212) 617-5801 or jgreiff@bloomberg.net.
#<529087.166543.2005-11-10T14:40:00.25>#
-0- Jan/31/2006 05:07 GMT
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