The bottom line for the Bush Administration is that it has not fulfilled its primary purposes: it did not improve the standard of living for most Americans; it was hardly a prudent steward of the taxpayers' money; it did not carefully regulate financially institutions that are important to the well-being of our economy; and it did not suppress foreign terrorism or catch bin Laden.

John McCain would be not just more of the same, but much worse. Of the many concerns about his candidacy, perhaps the most damning is that he does not realize that at a fundamental level the critical trends that underlie the future of our economy and society need to be changed. We are heading in the wrong direction, and yet John McCain thinks it is the right direction, and would have us move faster down the declining path.

Americans earn less than they should, pay more than they should for necessities, and work less than they want or need to do. They have less choice and opportunity to get education after high school. They have too hard a time getting trained for work in the modern economy. They should get, and they don't get, ever better, ever faster and ever cheaper transportation and communications services. They should get, and they don't get, easy, widely available and reasonably priced access on a long term basis to green electricity, high mileage vehicles and energy efficient buildings, including residential housing. They should have reliable and secure health care and pensions and savings plans; they don't.

When the national economy produces more and more, as it does most years, Americans should all see their incomes rise at more or less the same rate that the economy grows. They don't. The Bush economic policies that John McCain wants to continue enable people at the very top of the income ladder to take a disproportionate share of the growth and increase the value of their assets. People in the middle do not get a fair shake.

What you will see below are a series of charts and graphs that show some of the most troubling trends in the American economy. The charts come from various sources on the Internet, with special thanks to Brad deLong and Larry Bartels.

The starting point is what Americans make and sell.

Americans represent about five percent of the global work force and we make and sell 20-25% of the world's goods and services. This productivity advantage is the reason our incomes are so much higher than the world average income. We ought to be quite happy to see the rest of the world grow richer, but we should continue to aspire to produce a high share of the world's output.

So let's judge the Bush Administration in terms of production. How rapidly have we increased our production under this Administration? As seen in Figure 1, below, the Bush Administration has done a much poorer job than the Clinton Administration in terms of increasing production.

Figure 1: And 2008 will make this record look still worse

If Americans produce less, then we sell less, and we have lower incomes, and we can buy less, and our standard of living then does not rise as fast as it would if we produced more.

What are the reasons for the relative lack of growth under the Bush Administration as opposed to under the Clinton Administration? They include at least the following: (1) the Bush economic policy was to stimulate consumption, not production, largely by supporting along with Greenspan's Federal Reserve Bank the burgeoning of home equity loans that in an amount almost reaching $2 trillion dollars (more than 10 percent of the size of our annual production of goods and services) were taken out to fuel spending; (2) very low interest rates and lax regulatory policies (which have led already to the collapse of major financial institutions and an increasing number of small banks) were encouraged so as to drive residential real estate construction; (3) corporations were encouraged by regulatory policy and tax policy to merge and invest overseas, instead of to create new markets and enter existing markets in the United States; (4) markets in the United States were allowed to close, and barriers to entry were created, particularly in communications markets that had been opened by the opposite policy in the 90s.

McCain supported all these steps taken by the Bush Administration. McCain has never sought to open a new market in any sector during nearly three decades in Congress. He proposes to cut taxes by huge quantitative amounts for everyone making more than $250,000 a year, but he has no plans to encourage any of those wealthy people to invest in plants, processes, and equipment in the United States. He has voted against or not voted for numerous tax credits and other proposals that would encourage investment in new industries in the United States, particularly in alternative energy.

McCain hasn't shown any awareness that growth has been disappointing under Bush. He has said he doesn't know much about the economy. He has never demonstrated that he believes the next President should try to increase investment in the United States - even though quite obviously only new investment in non-residential fixed assets can lead to higher production in the future.

When growth in production is slower than one might hope, it's likely that growth in income will be slower too. But still, we have had some growth. So looking back not just to the Bush Administration but over 30 years, who got the income that came along with production growth? See Figure 2...

Figure 2

So pretty plainly for the past thirty years income gains have been hoarded by the top one percent of income earners. The rich have gotten much richer and the rest have not. In the Clinton years, eight of the 30 in this Figure 2, every rung of the income ladder went up, but under the outgoing President Bush, only those on the top rungs have seen their income rise. As a result the rungs of the ladder of income have tended to get farther and farther apart. Generally, Republicans encourage that result, as seen in Figure 3...

Figure 3: Attention should be paid

McCain has never shown any awareness that income inequality is increasing in America. He has never indicated any awareness that under Republicans inequality increases faster than under Democrats. His policies are designed to increase inequality because he would give smaller tax cuts to everyone below than $250,000 in income than would Barack Obama, and he would give huge quantitative tax cuts to those in the top 10% and even top 1%, whereas Obama would have those income earners pay a little more in marginal rate, as they did under the golden years of the Clinton Administration. Of course, as the Clinton years showed, even when the very top of the income ladder pay a higher marginal rate, they still can and tend to get much higher incomes year after year, as long as the economy is growing more rapidly. So under the Obama plan the very rich would get richer, but primarily through higher growth. McCain seems to prefer slower growth, and to seek to use tax cuts to make the rich richer. This is a policy that eventually will run out of gas, as a slow growing economy that takes on more and more debt every year, and invests less and less every year, eventually will see even its very richest income earners make much less than they would make in an economy that maximizes investment and makes everyone, instead of just a few, richer and richer every year.

McCain has, in one of his characteristically revealing off-hand remarks, said he doesn't know much about the economics. It is, therefore, highly unlikely that he knows that income has gone up at the same level for the rich under both Republicans and Democrats, as seen in Figure 4...

Figure 4: But what this shows is that while the rich do as well under Republicans and Democrats, the rest of the country does much better under Democrats than under Republicans

Presumably McCain thinks that the world will always have both rich and poor. Or maybe, since he said in another offhand remark (he really reveals himself primarily in this way) that being rich means making more than $5 million a year, he thinks of the world as dividing between rich and other. But if we regard everyone below $5 million a year as just Americans - since there are only a few thousand hedge fund managers, investors, Hollywood stars, sports figures, CEOs, and recipients of inherited fortunes who make $5 million a year in income - then we can use averages to take a look at America. In average terms, American incomes went up during the Clinton years, and were flat to down during the Bush years.

Figure 5: This is disappointing! And 2008 will be worse

It's not clear that McCain knows that the average American is not better off in the last seven years. He has said the economy is fundamentally strong. Actually it is fundamentally slow growth, with increasing income inequality and no income growth for the average or for 90% of the workers. In terms of fundamentals, we don't see enough investment in productive capacity; we are way behind the growth rate of numerous other countries; we don't share our income equitably; and our policies as put in place under Bush encourage all these bad results. Under McCain, assuming he became aware of what's going on, the policies would be more of the same - or he would have to reverse everything he has said in the campaign and everything he has stood for in Congress. It is worth noting that the so-called independent views McCain has expressed have never extended to any economic policy; indeed he is far more hard-right, Gramm-oriented, and ideologically blinkered than either of the Bush Presidents when it comes to economic policy.

Of course people can't earn any income if they can't find work. The first step in any economic policy for 2009 is to help Americans find work. It is true that the consumption-stimulating policies of the Bush Administration encouraged the creation of jobs in real estate - construction workers and real estate agents had good years. But overall the Bush policies did not create nearly as many new jobs as the Clinton policies. The Clinton policies, especially in the tech industry, encouraged new investment, new entrepreneurship, the development of new markets and the entry of existing firms into adjacent markets. The Bush policies have encouraged consolidation, lay-offs, and investment in other countries more than in the United States. The result is that while incomes are lower, job growth is also lower.

Figure 6: Another disappointment of the Bush era; again, 2008 will be worse

Again it is not clear that McCain knows that job growth is a problem. He doesn't seem to be aware that Americans need to find more work. One employment measurement, U6, now indicates that 11% of Americans who could work in fact are not at work. When incomes are flat, the lack of full employment is a critical additional blow to the health of the economy. For McCain to propose a huge tax cut for everyone making more than $250,000 and to offer no meaningful plans to create, for instance, a huge new alternative energy industry that could employ millions is quite a twofer: he doesn't seem to know or care that Americans are in quite unusually bad straits.

In this respect, McCain is part of a tradition of poor attention to job growth under Republican Administrations.

Figure 7: Back to 1952 Republicans have produced fewer jobs than Democratic Presidents

What are the reasons why a Bush or a McCain isn't the right choice for getting Americans back to work? They will bail out a low-employing investment bank, but they will do little or nothing to fix an ailing auto industry develop new engines and new cars, at least until the recent spate of government intervention in the economy. (As an aside, no Democratic President, including Roosevelt, has ever injected the federal government so deeply into managing the economy as the Bush Administration has done, although for the most part this Presidency has been managing symptoms as opposed to the underlying diseases that afflict our businesses.) Bush-McCain will help oil majors make money while sending American dollars overseas, but they will do little or nothing to create an alternative energy industry here in the United States. Ask how many jobs McCain's drilling plans will create in the next four years? The answer will be sad, although it is unlikely that McCain or Palin will accurately provide it. By contrast the alternative energy industries that neither appears to know or care anything about could create millions of new jobs in just four years.

It is sometimes believed that while Republican Presidencies are not so good for the real economy they are kind to the stock market. Even without the vertiginous drop of this dark September, the Bush Administration hasn't delivered for investors either as you see in Figure 8. The problem is that American firms, those principally listed in American stock markets, can't get rising stock prices without growth in the top line as well as the bottom line. And they can't increase top line revenues much when their American customers don't have increasing income with which to buy things and the American economy isn't growing very rapidly. McCain, like Bush, would be a disappointment for stock market investors, since he has proposed few if any ways to increase incomes or growth. His tax cuts for the very rich would be a consolation package for those rich who own American stocks, but of course they can diversify into foreign stocks and alternative investments. The very rich need a tax cut less than anyone in the economy, but that's where McCain would focus his policies. This is pure Gramm supply-side economics. The irony is that under a President Obama the very rich would very likely have so much more income as well as capital gains than under a McCain Presidency that even paying a Clinton-era marginal rate they'd be better off.

Figure 8: stock market investors should vote against McCain-Bush; and wait until the 2008 stats come in

With poor job growth and flat incomes, Americans might hope to see their standard of living stay up by means of having a strong currency. If the dollar is worth more relative to other currencies, then Americans can buy more with it. But under the Bush Administration, Americans were hurt in this respect as well .As you can see in Figure 9, the American standard of living was harmed as the worth of the dollar went down.

Figure 9: McCain thinks our economy is fundamentally strong!

In the short term the next President should adopt policies that increase the number of jobs, mitigate the expanding inequality of income, and stimulate productive investment in the United States. In the longer run, however, Americans can increase their standard of living only by obtaining on average and in general more education. The world economy grows more complex, and more technically oriented, every year. The centuries of uneducated labor and unschooled agrarian workers are much more part of humanity's past than its future. If Americans want to compete in producing for sale goods and services against Chinese and Indian and Russian and other workers, they need to be educated to an ever higher degree.

Under the Bush Administration, a terrible trend has continued: for the first time in the history of the United States the younger generation of workers has not been educated to a higher level than its predecessor generation, as shown in Figure 10.

Figure 10: Only Germany has done as poorly as the United States in terms of preparing its youths better than their elders

The reasons for this poor performance include at least the following: Americans are not graduating from high school at a higher rate than in previous years; tertiary education is getting more expensive even while incomes for most people are flat or down; college loan and other support programs are falling apart in the financial crisis. McCain has not shown any awareness of the education problem. He appear to be an advocate of traditional right-wing causes like charter schools, but the problem in this chart is tertiary education, and how to get it.

Education is an investment by a person in his or her future. Investment in the long-term productive capacity of the economy starts with spending money on research and development. Just as the Bush-McCain approach is indifferent or even negative for the goal of increasing tertiary education, so it is negative for research funding, as the next chart shows.

Figure 11: McCain would do nothing to fix this trend

It's obvious that Americans need to see their firms invest more in productive capacity. We need our youths to get more education. We need more investment in research. We need to share income gains more broadly so that, aside from mere fairness, which is awfully important, we actually have more consumers able to purchase goods and services.

But McCain shows his ignorance of all these needs by proposing a smaller tax cut for almost all Americans than Obama proposes. A smaller tax cut than Obama for almost everyone. Amazing! That bears repeating. It is shown below.

Figure 12: Only at incomes above $100,000 do the McCain tax cuts exceed Obama's. Most Americans of course make less than that level. And remember that when people earn more income, even if they pay at a higher marginal rate, they can end up better off. A rising tide does in fact lift all boats.

And McCain shows his indifference to good economics by proposing to increase the government debt much more than anyone but Bush has done. His method to this madness is to shower the rich with a huge tax cut, as shown below.

Figure 13: Why does McCain want to give the top 5% a huge tax cut? He doesn't say. We know they don't need the money. We know McCain shouldn't be increasing the federal debt. So why does he want to implement this huge break for the rich? He doesn't say, but particularly as the Bush Administration is taking huge private risk on the government books it's important to return to the prudential management of the fisc that characterized the Clinton era.

At least when Bush came in, he was dealing with a huge surplus. He frittered it away. But McCain has nothing to fritter away. Bush has run up an annual deficit of at least $500 billion. McCain may not be aware of this staggering record sum. But he proposes in any case to run up a still larger deficit by cutting taxes for those who can afford to pay more, and have no need for extra money. In this way he shows which part of the American people he puts first.