The Growth Mystery

WashingtonPost ^ | 08/16/04 | Editorial

[Pikamax]

The Growth Mystery

Monday, August 16, 2004; Page A16

BETWEEN 1998 and 2000, the United States pulled off a rare and fleeting miracle: For the first time since 1969, it ran federal budget surpluses. This turnaround owed something to the tax increases passed in 1990 and 1993 and something to the spending discipline enforced by the Newt Gingrich Congress. But it also owed something to a mysterious revolution that occurred inside American businesses. The average American worker, whose output had been growing steadily at around 1.5 percent a year since the 1980s, suddenly clocked productivity gains of 2.7 percent per year between 1996 and 2000. That acceleration drove the economy's growth rate up to 4 percent, pushing tax receipts to an all-time high and creating budget surpluses that nobody had predicted.

If the Bush administration knew how to create the conditions for another growth spurt, critics might have to rethink their opposition to tax cuts. According to the Berkeley-Brookings projections we cited yesterday, the deficit is likely to register at around 3.5 percent of gross domestic product in 2014. But if the economy grows by just under 4 percent a year, rather than just under 3 percent as assumed in the projection, the deficit in 2014 would come to a far less alarming 0.5 percent of GDP.

[the Real fifi]

Maybe it's not so mysterious. The internet revolution has made it possible for more people to earn good livings as self-employed entrepreneurs and professionals and as independent contractors. These people do not show up on payroll surveys, but they are reflected in houshold surveys.
This may also explain why despite an only 36,000 increase in the employment rolls in June the U.S. unemployment dropped one tenth of a percent that month--

[bayourod]

"If the Bush administration knew how to create the conditions for another growth spurt"

Investment tax credits.

[IncPen]

Here we see the liberal media repeating the canard that there was a 'budget surplus'.

There is no mystery. Clinton lied about everything else; he lied about this too.

The average American worker, whose output had been growing steadily at around 1.5 percent a year since the 1980s, suddenly clocked productivity gains of 2.7 percent per year between 1996 and 2000.

Al Gore's Internet, anyone?

God Help Us, these liberals are stupid.

[GeronL]

This may also explain why despite an only 36,000 increase in the employment

Actually that is a statistical thing, it was over 100,000 but two months a year they remove a certain number to represent the 'small businesses' that are estimated to fail each year. This was one of those months. So the number could very well be over 100,000.

[MJY1288]

We here Clinton boast about the 22 million jobs that were created while he was in office. His basis for that, is the amount of people that were in the work force when he was sworn in, to the amount in the work force when he left office.

I challenge anyone to look at the total amount of people in the work force on January 20th, 2001 to the present number of people working today!. You will see that 4 million more people are working today than on January 20th, 2001

[Kiss Me Hardy]

I didn't know small businesses were included in the establishment survey. Now that I think about it, there's no reason they shouldn't be if they've been in operation however many years are required.

As I understood it, with all this new focus on "core competency", a lot of big outfits have been subcontracting out work like cafeteria management. Same workers. Same jobs. Same clock to punch. But because the new employer was probably a new, entrepreneurial business, those jobs no longer count in the survey.

If GeronL or any fellow Freeper can enlighten me on this matter, it would be appreciated.

[GeronL]

well I can't, you'd have to sludge through the murk and mire of the Labor Department website I am sure.

[taxcontrol]

Would someone please show to me the years in which the Federal government actually received more money than it payed out? That is a surplus. Name me one year since '69 when the Federal government did NOT have to barrow money.

I don't want to hear about some future number based upon assumptions of ideal or expected conditions - that is NOT a surplus.

If you ask that hard question, you will find that there never was a surplus.

[q_an_a]

look out Ethel this is the BIG ONE!! Did the Post say that tort reform and tax cuts will cause growth? Someone tell Kerry-Edwards that the Post has torpedoed their campaign.

[familyofman]

"According to the Berkeley-Brookings projections we cited yesterday, the deficit is likely to register at around 3.5 percent of gross domestic product in 2014. But if the economy grows by just under 4 percent a year, rather than just under 3 percent as assumed in the projection, the deficit in 2014 would come to a far less alarming 0.5 percent of GDP."

Increasing GDP is very difficult when you continue to set new records Balance of Payment DEFICITS month after month. When you consume goods produced elsewhere and continue to reduce domestic production - there is only one way to go, and that's down. A 'service economy' doesn't produce items that can be exported to offset the huge amount of goods being imported.

[expat_panama]

...1969, it ran federal budget surpluses. This turnaround owed something to the tax increases passed in 1990 and 1993...

Usually an "anyone but bush" post like this needs a "bs" or "barf alert".  

The Clinton tax hikes took the biggest bite the economy has ever known --higher than what the US had during WWII even-- and slowed the economy.  The surpluses were caused by cuts in spending forced by the Republican led congress upon an unwilling Prez and media.