The most accurate statistics show a loss of 180,000 jobs, not 3.3 million, and 57,000 new jobs added in September.
Posted on 10/27/2003 12:08:30 PM PST by Cincinatus' Wife
After distancing themselves four years ago from his moral and ethical lapses, Democrats of all stripes once again are embracing former president Bill Clinton. They say they are anxious to associate themselves and their party with what they and much of the press consider his greatest achievement: the roaring economic growth of the 1990s.
As the 2004 election approaches, all the major Democratic presidential candidates are claiming to be able to reproduce the so-called Clinton economy, and they are contrasting these claims to what they say is the dismal economic performance under George W. Bush. "Two years ago, President Bush was handed the strongest economy in a generation, built by the courageous votes of Democrats and the hard work of the American people," declares the Website of Democratic presidential candidate and former House minority leader Richard Gephardt of Missouri. "But that growth and prosperity ended when President Bush took office." In a September speech shortly after he announced his candidacy, retired Gen. Wesley K. Clark tarred Bush with "the worst job losses since the Great Depression." A press release from the Progressive Policy Institute (PPI), a think tank affiliated with the moderate Democratic Leadership Council, is playing the same tune as Democratic officials move to the left in an appeal to their core nominating constituencies. "On President Bush's watch, the economy has reverted back from the boom years of the Clinton administration to the doldrums of his father's administration, with higher unemployment, slower wage growth and out-of-control deficits," the release states.
Much of the establishment media also paint a picture of economic stagnation while pointing to a rosy picture of Clinton economic policies that they credit with the 1990s boom.
The problem for Democrats in all of this is that an increasing number of business economists and finance analysts see something very different. They argue that Bush inherited a recession caused in many respects by the leftward drift of Clinton policies during the last two years of his administration and that because of Bush's change in direction economic statistics already were pointing upward when the United States was attacked by terrorists on Sept. 11, 2001. Indeed, they say that Bush's further actions laid the base for another boom.
Brian Wesbury, chief economist of Griffin, Kubik, Stephens and Thompson, a brokerage firm in Chicago's Sears Tower, says that in the year before Bush took office there were a great many signs the boom had ended, all ignored by the mass media. Now, he says, these same media are ignoring what he calls the new Bush boom. "In 2000, the stock market was down, housing was slowing, manufacturing was slowing, we had declining industrial production, job growth was slowing and you could clearly tell that we were going into a slower-growth period. And yet the media missed it," says Wesbury, who was chief economist for the Joint Economic Committee (JEC) of Congress in the mid-1990s. "What has happened in this past year is that the economy has been accelerating sharply, and yet story after story after story has been about how somehow there is something wrong with the economy, when in fact it's firing on all cylinders and accelerating sharply. ... What we're seeing here is an incredible turnaround."
One of the most visible signs of the economy's rebound to which Wesbury and others point is the stock market. The Dow Jones industrial average, which reached its peak in January 2000 and was about 10,000 around the time Bush took office, has been above 9,500 in the last few weeks. This is about 15 percent and 1,000 points higher than in late May, when Congress finally passed Bush's accelerated personal-income-tax cut and cut the tax rate for dividends to 15 percent. Wesbury also cites a host of positive indicators from the Federal Reserve Board's Beige Book in early October, which he says show the economy has turned for the better. The Fed reports, for example, that "the majority of [Fed] districts report a pickup in manufacturing activity, with several indicating significant improvement in a wide variety of industries. Machine-tool orders strengthened in the Atlanta and Chicago Districts; semiconductor producers saw a pickup in demand in the San Francisco District; contacts in lumber- and construction-related materials see improvement in several districts; and high-tech manufacturers in the Dallas District indicate gains."
Wesbury also points to higher-than-expected retail sales, which rose at an annualized 12.1 percent in June, July and August. And "high-tech spending and investment is once again leading the economy," Wesbury says. "We now see high-tech as a share of GDP [gross domestic product] at a higher level than it was back in 2000, so we're above the so-called bubble peak." What Wesbury is referring to is the category in the U.S. Commerce Department's reporting of GDP called "information-processing equipment and software," which peaked at 6.4 percent of GDP in 2000, slumped to 5.7 percent during the recession, and now is at 6.5 percent. Wesbury says this is important because "that's the real driver of our economy, the entrepreneurial, innovative, creative side of things." He notes that new orders for computers and electronic products also jumped at a 38.4 percent annualized rate in June and July.
The most accurate statistics show a loss of 180,000 jobs, not 3.3 million, and 57,000 new jobs added in September.
Although Wesbury is conservative and was appointed to his JEC job by Republicans, his optimism is reflective of what now is a standard outlook at many brokerage firms. "We are basically projecting that the economy is getting stronger," Joseph Lisanti, editor of Standard & Poor's The Outlook, which is distributed by many brokerage firms, tells Insight. "We're seeing very good indications of GDP growth. Right now, we're looking at third-quarter growth to surge to about 6 percent, and possibly as much as 8 percent. ... The stimulus package still has some oomph left to it, because people are going to see lower taxes on dividends that they would have to pay in 2004. That will give a little bit more boost in the early stages of 2004. All of these things put together indicate to us that while jobs have always been a lagging indicator and have lagged even more in this recovery, they should start picking up in the near future."
How long jobs (or the way job statistics are collected) will lag and how job growth will be spun by the media and Democratic candidates will be huge factors in Campaign 2004. Right now, Democrats are trying to make the most of their claim that about 3 million jobs have been lost since Bush took office. "It's really unprecedented on jobs," says Robert J. Shapiro, a top economic adviser for Clinton's 1992 campaign who now is advising the campaigns of Democratic Sens. John Kerry of Massachusetts and Joseph Lieberman of Connecticut, as well as the campaign of Clark. "Even his father's presidency was not a net loser in private-sector jobs, and this one will be a very large net loser. It's already right now 3.3 million, and if we get some job creation with the acceleration in growth, which we think is occurring right now, there's still going to be a net negative of a couple million jobs. We're running [Democratic political campaigns] against that."
But other Democrats warn that putting so much emphasis on job numbers could backfire. "Hinging their case almost solely on the jobs record is a high-risk strategy," Robert D. Atkinson, vice president of the PPI, whose group put out the alarmist press release quoted at the beginning of this article, tells Insight. "It's certainly conceivable and somewhat likely that we will see a rebound in employment over the next 11 months. If all Democrats have been doing is saying, 'Look, we've lost 2.7 million or 3.1 million private-sector jobs,' and it turns out jobs come back, then a key part of their argument has been taken out from under them. So I think what Democrats have to do is not just point to the current problems, of which there certainly are many, but point to why it is that the Bush approach is wrong and articulate some other more positive, future-looking vision of economic growth. If you don't do that, then you're hinging it on a pretty shaky ground."
Especially when that 3 million figure is so shaky. Democrats and the media cite the Labor Department's so-called "establishment survey," which asks established firms about payroll. Yet the Labor Department also conducts an employment survey of individual households that shows a much smaller net job loss of 180,000 since March 2001 and says that more than 1 million jobs have been added this year. Lisanti of Standard & Poor's writes that the establishment survey often excludes self-employed workers. And the elimination of second and third jobs shows up as job losses on this survey, even though that often is a sign of families getting back on their feet. And Wesbury points out that new small businesses that drive the economy often are excluded from the establishment payroll survey. "If I were a Democratic candidate, I would cite the payroll survey, but the household survey has been most accurate at predicting booms," Wesbury says.
But even the numbers on the establishment payroll survey are improving. It shows 57,000 jobs were added in September. This coincides with other upbeat business news, such as computer giant IBM's announcement in October that the company soon will hire 10,000 additional U.S. workers. But in the presidential campaign a lot will depend on how the good news is reported. On CBS, Dan Rather prefaced the story about 57,000 new jobs by proclaiming that "a lot of people who need jobs can't find them." He then focused the story on workers who allegedly joined the armed forces because they couldn't find other work.
Republicans would do well to remember that in the presidency of George H.W. Bush, according to the National Bureau of Economic Research, the recession ended in March 1991, yet the media let Clinton get away with calling the beginning of the biggest boom in U.S. history "the worst economy in 50 years." An Insight search on the Lexis-Nexis database shows that all during the election of 1992, New York Times stories repeatedly referred to the "sluggish recovery," and in a story reporting the improving economic indicators, the newspaper characterized the economy as "listless." One month after Clinton was elected, a Times story announced the good economic news, and actually credited it to hopes about his presidency.
It often is said that the press has a bias toward bad news, but that didn't prevent it from hailing the Clinton boom during the 2000 election, even though real GDP growth had fallen to 0.6 percent in the third quarter, confirming the contraction to be seen in the first quarter of the next year as Bush took office and began to put his people in place. "We had a bear market and slowing GDP in 2000, but lazy reporters were continuing late in 2000 to report the Clinton boom when the Clinton boom had already ended," says Pittsburgh financial consultant and radio host Jerry Bowyer, author of The Bush Boom: How a "Misunderestimated" President Fixed Our Broken Economy. "When Bush said the economy was slowing, many Democrats accused him of jawboning the economy downward."
In his new book, Legacy: Paying the Price for the Clinton Years, Rich Lowry of National Review writes that with the media's help Clinton "took office overselling a slowdown and left office overselling a boom." Unlike some on the left and the right, Wesbury and Bowyer deny that the 1990s growth years were a "bubble" and argue that the economic gains were more than justified by increases in productivity. While crediting Clinton with signing on to some good policies, such as financial deregulation and capital-gains tax cuts that were pushed through by the GOP Congress, they and other experts say the 1990s boom largely was an expansion of the Reagan-Bush boom with a brief hiccup in the early 1990s [see "Recession Shock," Dec. 31, 2001]. They add that Bush has put the economy back on track by reversing some of Clinton's leftward drift in 1999 and 2000 that broke the momentum.
While Wesbury blames the recession in part on Federal Reserve Chairman Alan Greenspan's panicky tightening of the money supply, he says Clinton's 1993 tax increases ended up hitting the economy at the end of the decade when productivity pushed more and more into the upper brackets through a phenomenon called real-income bracket creep. "In 1993, there were 3.4 million tax filers who paid taxes at one of the top three rates," Wesbury says. "By the year 2000, there were 6.4 million people paying taxes at one of those top three rates. Their tax payments crippled incentives. That stealth tax hike weakened us." Although he believes Bush made some missteps with new spending in the 2002 farm bill and overregulation of public companies through the 2002 Sarbanes-Oxley reform bill, Wesbury says Bush put the economy back on track by reversing Clinton tax policies with the dividend-tax cut last May. "I believe the day that was approved by the conference committee is the day this recovery truly started," he says.
Bowyer cites another Clinton policy that Bush reversed as helping to set the economy back on track - the highly publicized hounding of Microsoft for alleged antitrust violations as well as the increased blocking of mergers late in Clinton's presidency. "The dot-com model was such that the first one there would dominate that market," Bowyer says. "At the same time the dot-commers were building on that model, the government was saying to Microsoft, 'You're not allowed to dominate a market.' By doing that, in essence, they sent a message that the first-mover, market-dominant model was now declared illegal. All of a sudden your business model doesn't work anymore. And so the dot-com model was destroyed." Bowyer and Wesbury say the decision of the Bush Justice Department to settle with Microsoft without breaking it up was very important in setting the tech market back on track.
Bowyer maintains that despite what the media and candidates say, the "investor class," which now is one-half of all American adults through 401(k)s or other investment vehicles, is hearing the good news loud and clear. "The piece of news that they're getting that's the best piece of news is their quarterly or monthly statement," he says. "And brokers now call with good news more often than they call with bad news. I think most people understand the economy is improving pretty drastically."
John Berlau is a writer for Insight magazine.
They're switching parties? They're honoring Reagan? They're becomming Republicans?
BWAAAHAHAHA. Good luck. Without the Bush tax cut, the losers are going to go bankrupt if they win!
"It takes a a Republican to raise a country".
....and a Democrat to run it into the ground - economically and defensively.
CHAW! It doesn't take a rocket scientist to figure that one out.
Bank stocks rose sharply after Bank of America Corp. (NYSE:BAC - news), the third-biggest U.S. bank, said it agreed to buy FleetBoston Financial Corp. (NYSE:FBF - news), the No. 7 bank, for nearly $47 billion in stock, likely paving the way for more deals in the sector.
In the other hefty deal, Anthem Inc. (NYSE:ATH - news) said it would buy WellPoint Health Networks Inc. (NYSE:WLP - news) for $14.1 billion, creating the nation's largest health insurer, with vast negotiating power across the health care industry.
The return of large-scale mergers, rarely seen since the late 1990s stock boom, sends a signal to the market that corporations have confidence in business fundamentals and are comfortable with the prices of stocks.
"If people get the impression that M&A is going to pick up -- that has been quite low recently -- that's optimistic for the market as a whole," said Edgar Peters, chief investment officer at PanAgora Asset Management. "Plus, the market had sold off last week, so it was a good time for a rebound."
The Dow Jones industrial average (^DJI - news) was up 25.85 points, or 0.27 percent, at 9,608.31. The broader Standard & Poor's 500 Index (^SPX - news) was up 1.7 points, or 0.17 percent, at 1,030.61. The technology-laced Nasdaq Composite Index (^IXIC - news) was up 11.79 points, or 0.63 percent, at 1,877.38.
The Nasdaq suffered its second straight down week last week, while the Dow and the S&P 500 snapped a five-week string of gains.
FleetBoston's shares surged $7.70, or 24 percent, to $39.50, while Bank of America slumped 10 percent, or $8.06, to $73.80.
Other banks rose as investors bet on more deals in the sector. Comerica Inc. (NYSE:CMA - news) rose $2.81, or 6 percent, to $49.73, while SunTrust Banks Inc. (NYSE:STI - news) shares rose 3.51, or 5.5 percent, to $67.04.
Shares of Anthem tumbled $7.18, or 9.3 percent, to $70.08, while WellPoint shares were up $6.46, or 7.7 percent, at $90.40.
Two reports demonstrated that the housing sector -- an island of strength in an otherwise patchy economy -- is still holding its own. [End]
This story needs to be read by as many people as possible.
Well, we have to give credit where credit is due. The genious of Al Gore inventing the internet did bring us the tech boom. LOL. (www. I invented the Internet .com)
All Engineer's, all the time over here.
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No surprised that biased news anchors, LIBERAL talking heads and Democrat presidential candidates are peddling the lie of a disasterous economy as fast as they can.
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