The Fading Economy

Jeff Alworth

After what can only be called an entertaining three days at the Republican National Convention, President Bush will apparently lay out his "vision" for the coming four years tonight. One topic that's gotten precious little air time thus far at the convention is the relatively important health of the economy. (I know, I know, that's so 20th Century.) In preparation for his remarks, I'd like to mention a few stats that came through BlueOregon HQ over the past couple days. They may not be as sexy as the latest Al French allegation about John Kerry's war record, but at the end of the day, the average Oregonian might find them more relevant.

Bush will likely quote a few statistics to illustrate what the GOP is packaging as a healthy economy. For instance, yesterday he asserted: "our economy has been growing at rates as fast as any in nearly 20 years. Because we acted, over the past 12 months we've added 1.5 million new jobs. Because we acted, the national unemployment rate is 5.5 percent, well below the national average of the 1970s, 1980s, and 1990s."

Well, that's one way of looking at it. But last week the Census Bureau released data showing that if you're an average American, things look worse than they did when Bush took office.

According to the new Census findings (and more ably described by, unadjusted income of the mid-income wage-earners has declined by 1.2% since Bush took office. That group comprises the middle half of the US population, or households earning between $25k and $75k. Worse, the median household income has declined by $1,535 since Bush took office (-3.4%).

(In income statistics, it's always better to use the median, because that's the figure describing the person who's exactly in the middle of all Americans--half earn more, half earn less. The mean, or average, is skewed up by extremely wealthy families. That's why Bush uses means--so he can say the "average family will earn $x from my tax cuts"--but here the "average" includes only the top 20%.)

In Oregon things are a little better, income-wise. When Bush took office, the median household income was $42,440; over the period of his presidency, it has averaged $42,429, or down just marginally. Of course, Oregon has also suffered under the nation's highest unemployment rate, which adds to our woes.

A phrase you probably won't here the President mention is "poverty rate"--mainly because it's way up. (He'd rather highlight his "compassion"--lavished lovingly on those, ah, somewhat above the poverty line.) The national and state rates are 12.5%; that is, a family of four earning less than $18,810 is considered impoverished. (One could make the argument that this figure is far too low, but for now I'm sticking to Census numbers.) Since Bush took office, a shocking 4.3 million people have fallen into poverty--a spike of 13.6%.

These numbers are unadjusted to account for the rise in health care (more than 10% annually), education, or gasoline. They don't take into account growing personal debt, rising interest rates, or a ballooning deficit. They're just plain old dollars in your pocket.

Tonight, Bush will present a world in which the economy is healthy and growing. But if your perception is different, don't doubt your powers of observation. If you're an average American, you earn less now than you did when Bush was elected. Of course, you could ignore what you observe. Maybe Al French has a new commercial out.

  • Jayz (unverified)

    Come help us Canvass this weekend in Corvallis Oregon! We'll be Identifying progressive voters in this college town and registering them to vote.

  • brett (unverified)

    Jeff, I know it's heresy to mention, but you probably know as well as I do that Presidents have precious little influence on the state of the economy. Especially today, given our economy's reliance on the rest of the world. In other words, I'm not sure a President Kerry could do much to improve the economy. Neither, to be fair, could a second-term Bush.

  • John (unverified)

    Refer to this newsweek article for the influence (or lack thereof) that the president has on the economy

  • iggi (unverified)

    wtf? the president's policies have a huge impact on the's crazy brett.

  • brett (unverified)

    iggi: such as? The President doesn't even control monetary policy - the Fed does. All he can do is propose or sign stimulus legislation or tax cuts. Those things can help in the long run, but in the short run, they're like killing a mosquito with a shotgun. The economy is much more dependent on the business cycle and on the health of the worldwide economy than anything else.

    Besides, if you want to talk economy, let's talk. We're in much better shape now than we were post-tech bubble.

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    Brett, normally I'd agree with you. It's a general truism that presidential policy has a slow effect on the economy, but Bush has been radical in policy -- and the results are in large part the result of tax cuts, deficits, etc.

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    Brett, normally I'd agree with you too - but the Clinton Era experience argues otherwise.

    Back in 1992, I remember debating on Clinton's behalf on campus and one of the key points was the skyrocketing Bush deficit sucked money out of the investment markets since federal debt is so low-risk. So, if we reduced the deficit, money would have to find someplace else to go.

    Well, in 1993, Clinton and the congressional Democrats (with zero GOP support) started deficit reduction with a 50/50 equal mix of tax increases (on the rich) and budget cuts (guided by the REGO project). By 1996-00, the investment markets had turned to venture capital and were funding the massive explosion in technology.

    I'm not sure I want to fight the 1990s all over again, but the experience bears out a key point - presidential action (with help from congressional majorities) can, in fact, set the preconditions for economic growth or sluggishness.

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    Just to keep riding this hobby horse (hopping on where Kari jumped off), there are a couple other factors to consider, as well. Central among them is the war. Since WWII, war bumps have been declined (dramatically), but even through Gulf I--roughly comparable to Afghanistan and Iraq II--there has been a bump. Bush continues to flog the notion that he inherited a Clinton recession--a dubious point, but one I'll grant for the moment. If that's the case, then what we've seen since then has been the Bush recovery. In the early years of his presidency, he promised the immediate effects of his tax cuts on bolstering the economy through spending and Wall Street. Yet those effects--certainly reasonable to expect--haven't been as robust as expected.

    Where I do think we fall into the rhetorical hole is over jobs. The bursting bubble was bound to lead to jobs losses. Whether or not a Gore presidency would have turned things around substantially enough to avoid the "first prez since Hoover to lose jobs" moniker is arguable, but I think no president could have helped much. The real question about jobs is whether policies put in place during this administration will lead to a robust economy that will need skilled workers in the coming years. And on that score, I think Bush does fail.

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