It's Stupid's Economy
The Republicans have decided that the Economy is a better issue to run from their record on than Iraq. This is partially because it is easier to spin headline numbers. The attempt to spin deaths in Iraq came off as callous and nasty - one respected military history sold out and tried to start the talking point that deaths, compared to World War II were small. But people have realized that Saddam, compared to Hilter, was small as well. Some how running on "your legs didn't matter to us" didn't seem to work very well. It's hard to spin a civil war, once you can't deny it any more. That they are doing this in the face of GDP figures which are even worse than they look, shows how much trouble the Republicans are in this election.
The economy, in part because the numbers are under the control of the Republicans, is easier to spin. It doesn't mean the economy is that much better, it's just that it's easier to put lipstick on this particular pig.
(Click on the image for a larger graphic)
One of the most important Republican talking points is "NEARLY 6 MILLION NEW JOBS." This talking point is interesting, because it undermines an earlier spin of the numbers by the National Bureau of Economic Research - which changed the rules to declare an early end to the recession, so that it could be called "short and shallow". The funny thing is, that everyone talking about this expansion is no ignoring the NBER declared date, and using one from much later. The numbers practically shout that the recession continued into early 2003, not ending in late 2001, and that hiring picked up about 6 months later in September 2003. Without the NBER's confusion, this expansion looks like a normal expansion, with it, it has this funny convolescence period which looks, for all the world, like a 19th century panic's convolescence period. Even the 1960's recovery and the 1990's recovery - which were slow starters - didn't hold a candle to the 2000s recovery as measured by the NBER.
The chart above, originally posted at the agonist, is calculated as follows. Starting from the beginning of the hiring recovery, what was the percentage increase in the number of jobs. The "number of jobs" here is, technically, seasonally adjusted payroll positions as deteremined by the Bureau of Labor Statistics, or the "B" tables of the employment release. So for example if after 10 months the Ford part of the Ford-Carter recovery had created 2,774,000 jobs, and there were 76,519,000 jobs at the start of that recovery, which means the number of jobs had expanded by 1.78% in 10 months.
Dating the hiring expansion from August of 2003, this expansion looks normal, just lousy. It started out OK. One reason that Bush wasn't even more unpopular was that if you look at the early part of the exapnsion, it is low, but not dead last by a mile.
Now, however, it is dead last by a mile - half the 1990's and 1960's expansions, which were themselves slow starters - and much worse than any of the others. If you date it by the National Bureau of Egregious Republicans, it looks much worse still. But nobody does, and if they had any guts, they would admit their mistake, redate the recession correctly, and accept the fact that an economy that is robbing from wages to produce asset inflation, isn't growing.
So let me summarize this:
1. The Republicans admit that at around 21 months, the Bush recession was the longest of the post-war era, longer than the very sharp recession of 1973-1975, and rivaling the "double dip" recessions of 1980-1982 which totaled 22 months with only a 12 month break between them.
2. But even based on their own admission of the longest recession of the post-Great Depression era, the expansion in payrolls has been, by far, the worst of any long expansion since 1960. Implicit in this is that the Bush expansion at least isn't in the bin of complete failure - say the 1980-1981 expansion, but it's the kind of successful operation that can kill a patient.
The same story, in spades, applies to wages. Fewer jobs, less money. And Republicans wonder why the public is grouchy. They can shout "5 Million new jobs" all they like - because what it implies - the longest recessions since the great depression - does not work in their favor. And we haven't even touched the housing implosion that is going on.
Of course the GOP will spin the economy. Taxes, (their ubiquitous when-all-else-fails,play-this-fear-card),and the false claim they're stronger on national defense are the other two spins. The taxes thing just doesn't seem to have the legs the Republicans want this time. As for the we-can-protect-you-better, so-why-vote-for-anyone-else? the 500 pound gorilla in the room, Iraq, steals attention from that claim. Talk about a morally bankrupt Party that flounders; when they run ads about porn, race, an opposing member's novels, you know they have no message. And Bush calls the Republicans The Party of ideas. I suppose smear is an idea.
October 29, 2006 8:03 AM | Reply | Permalink
Taxes aren't working because, after 20 years, people are realizing that reducing federal revenues only means higher local taxes, less ability to leverage government, and greater federal deficit spending, which means paying more and getting less.
The pendulum is about to swing towards federalizing problems, in no small part, because Bush has started it in that direction.
Stirling Newberry http://www.bopnews.com
October 29, 2006 9:23 AM | Reply | Permalink
The Republicans may very well be full of it, but the Democrats will have a difficult time convincing the general public that we can spend our way out of a recession.
October 29, 2006 5:34 PM | Reply | Permalink
I have never felt particularly overtaxed. I have always felt under-served. I remember seeing, years ago, signs saying "your tax dollars at work here". But that was when my tax dollars worked here. I wonder how many of us are aware of the debt we owe to the New Deal which provided for its time (and ours) everything from post offices with some character to them to public sidewalks upon which one could actually walk without breaking one's neck. An amazing number of those amenities are still serving us (save where vandals of our own era have struck to remove the highly collectible WPA brass medallions).
aMike
October 29, 2006 8:19 PM | Reply | Permalink
...but the Democrats will have a difficult time convincing the general public that we can spend our way out of a recession.
Since the Democrats have had nothing to do with economic policy during the time period being analyzed this observation is obviously off point, Gettysburg. Off point. But it is consistent with the general theme of most of your posts: attempt to change the subject away from any criticism of your beloved Republican Party.
October 30, 2006 4:06 AM | Reply | Permalink
Bush and Reagan both spent our way out of recession.
Or are you a member of the "back to Hoover" movement?
Stirling Newberry http://www.bopnews.com
October 30, 2006 7:37 AM | Reply | Permalink
I'll have to bust some of your rhetoric, Rhetoric Buster.
I'm not a Republican :)
October 30, 2006 10:52 AM | Reply | Permalink
"Spend yr way out of a recession..."
When will people wake up to the fact that that's exactly what Bush and co have done? The classic right-wing Keynesian approach is to insist on lower govt spending while blowing out the budget on military spending-massively priming the pump of an economy like the ours- which is very seriously addicted to big-budget military expenditure. It doesn't look like leftist "tax and spend" for two reasons: military expenditure (and massive hand-outs to non-military corporations) isn't on the radar as wasteful and non-productive for most americans. (It certainly should be.) And they've financed it not with taxation, but largely simply by borrowing- or, as it's more accurate to say, by taxing our children.
October 30, 2006 12:27 PM | Reply | Permalink
And I'm not John, Paul, George or Ringo. But I can still love the Beatles...
October 31, 2006 9:48 AM | Reply | Permalink
There's a big difference between being a secular Libertarian and a Republican.
A very big difference.
October 31, 2006 10:33 AM | Reply | Permalink
Strikes me, Gettysburg, that you're more a 'selective' Libertarian.
By the way, finally got around to picking up a copy of War and Peace. Great stuff. Thanks.
October 31, 2006 4:40 PM | Reply | Permalink
Selective perhaps, but I would argue that more of our politicians need to be selective in certain circumstances. Being a political stalwart, as we have seen with Bush, does not work particularly well when things go wrong and adjustments are required.
Glad to hear you bought War and Peace. It's incredible.
November 1, 2006 10:15 AM | Reply | Permalink
Yes, Republicans would never be stupid enough to put support for Child Prostitution into their party's platform.
Libertarians are.
Stirling Newberry http://www.bopnews.com
November 1, 2006 10:28 AM | Reply | Permalink
US 'could be going bankrupt'
By Edmund Conway, Economics Editor
Information appearing on telegraph.co.uk is the copyright of Telegraph Group Limited and must not be reproduced in any medium
without licence. For the full copyright statement see Copyright
(Filed: 14/07/2006)
The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's
central bank.
A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is already bankrupt. "To paraphrase the Oxford English Dictionary, is the United
States at the end of its resources, exhausted, stripped bare, destitute, bereft, wanting in property, or wrecked in consequence of failure
to pay its creditors," he asked.
According to his central analysis, "the US government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this
context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush administration this week cut its forecasts for the fiscal shortfall this year by almost
a third, saying it will come in at 2.3pc of gross domestic product. This is smaller than most European countries - including the UK - which
have deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says: "The proper way to consider a country's solvency is to examine the lifetime fiscal
burdens facing current and future generations. If these burdens exceed the resources of those generations, get close to doing so, or
simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national
bankruptcy.
"Does the United States fit this bill? No one knows for sure, but there are strong reasons to believe the United States may be going
broke."
Experts have calculated that the country's long-term "fiscal gap" between all future government spending and all future receipts will
widen immensely as the Baby Boomer generation retires, and as the amount the state will have to spend on healthcare and pensions
soars. The total fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has made major tax cuts in recent years, and because the bill for Medicare,
which provides health insurance for the elderly, and Medicaid, which does likewise for the poor, will increase greatly due to
demographics.
Prof Kotlikoff said: "This figure is more than five times US GDP and almost twice the size of national wealth. One way to wrap one's head
around $65.9trillion is to ask what fiscal adjustments are needed to eliminate this red hole. The answers are terrifying. One solution is
an immediate and permanent doubling of personal and corporate income taxes. Another is an immediate and permanent two-thirds cut
in Social Security and Medicare benefits. A third alternative, were it feasible, would be to immediately and permanently cut all federal
discretionary spending by 143pc."
The scenario has serious implications for the dollar. If investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings of US Treasury bonds.
Prof Kotlikoff said: "The United States has experienced high rates of inflation in the past and appears to be running the same type of
fiscal policies that engendered hyperinflations in 20 countries over the past century."
Paul Ashworth, of Capital Economics, was more sanguine about the coming retirement of the Baby Boomer generation. "For a start, the
expected deterioration in the Federal budget owes more to rising per capita spending on health care than to changing demographics," he
said.
"This can be contained if the political will is there. Similarly, the expected increase in social security spending can be controlled by
reducing the growth rate of benefits. Expecting a fix now is probably asking too much of short-sighted politicians who have no incentives
to do so. But a fix, or at least a succession of patches, will come when the problem becomes more pressing."
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http://www.telegraph.co.uk/core/Content/displayPrintable.jhtml;jsessionid=FNCQ345KM1Z03QFIQMG... 7/17/2006
November 1, 2006 1:45 PM | Reply | Permalink
Should we mention the housing bubble, inventories rising at exponential rates across the country, and the reverse yield curve?
November 1, 2006 1:48 PM | Reply | Permalink
Stirling has addressed these points in his post "????????, or a story of desperate house wipes."
November 1, 2006 7:31 PM | Reply | Permalink