Democrats & Liberals: Archives

To talk about the economy without reference to 9/11 is like saying, “Besides that Mrs. Lincoln how was the play?” Actually, I am surprised how well the economy rebounded from this body blow. I credit George Bush’s aggressive response to terrorism. The terrorists planned other attacks, but the unexpectedly ferocious American response disrupted their networks and their command and control. I like to think President Gore would have done as well. But no matter who was in charge, this was the right response. It cost a lot of money. We had to pay back much of the “peace dividend” we got in the 1990s. With unemployment at about 5.5% and the Dow at about 10,000, we essentially have been pushed back to where we were in 1998, bad but not the end of the world, considering what we have been through.

Presidents have a lot less power over the economy than they are given credit/blame and the economy does not turn quickly. The U.S. has done very well for about twenty years. Beginning in 1982 the economy began to grow more rapidly. There was a brief downturn in 1991, but the improvement began in 1992 (in March) and lasted almost exactly eight years until March of 2000. Those years almost coincided with the Clinton administration, although the upturn started before he took office and the downturn began before he left. Give Clinton, credit for good management, especially between 1994 and 1998, but recall also that this was a very benign period in world affairs (or at least it seemed so at the time). The period from 1998-2000 was frothier and the bubble inevitably burst. Notice that the economic cycles don’t coincide well with who is in the White House. Presidential policies make a big difference, but not directly in the short run. Much of the presidential influence comes from his effect on the world security environments. The breakup of the Soviet Empire was a fantastic plus for the world economy. Terrorist attacks dragged us back some.

The downturn that began in 2000 was exacerbated a year later by 9/11. Notice all the extra security at airports and malls? Ever wonder how new regulations effect trade and commerce? All of it costs a lot of money and that pulls impacts prosperity. It is like a terror tax. You can’t blame Bush. The bad guys are Osama and his helpers, but even if we eliminated them today the heightened security would have to remain, at least for a while, since they have now demonstrated what can be done. It is a new world we have to live in.

Sorry, I can’t give the Bush administration a pass on the economy. Yes, 9/11 undoubtedly had a psychological effect on depressing the economy. However, the administration’s cure for the situation was nearly identical to what it was before the attack happened. In general, the tax cuts were targeted towards the wrong segments of the economy for creating a short-term boost; they were never intended to provide a quick stimulus. In addition, the Republican congress was allowed carte blanche to stimulate the economy with defecit spending. There were no broad plans for the spending, and certainly no vetos, simply Republican politicians running amok. No plan, that is, if you don’t count Iraq. And for the additional psychological depressing of the economy caused by Iraq, the Bush administration has no one to blame, no one but itself. That was a war of choice; and as the grail knight at the end of “Indiana Jones and the Last Crusade” says:
‘He chose… poorly.’

We can’t blame Bush for anything?

Tax cuts while we wage a war, for the first time in our history. Legislation whose only purpose is to make it legal for the government to overspend more than it ever has before. A reticence to pass the kinds of financial regulations that would reassure Americans that what happened with Enron and WorldCom would not happen again anytime soon. No resolution to either of the wars we’ve endeavored to fight, no sense that Bush is trully hardening the homeland against attack. Additionally, even in Iraq, sabotage on the pipelines is causing repercussions in oil supply in the world.

The drag on the economy can be tied to Bush’s decisions.

Jack,

The numbers cited were a comparison from 2003 to 2004. Using 9/11/2001 as an excuse is ridiculous.

You’re right that a President’s power over the economy is small, and you’re right that historical forces need to be considered. However, when Bush is running on the economy, we have to look at his record. It’s not good. Strengthening our Economy and Creating Jobs were two of the five bullet points on a Bush/Cheney mailing I got last week (I have no idea how I got on that mailing list). The facts on the ground are that he hasn’t done well on either score.

Would another President have done better? It’s impossible to say. However, when he runs on something as a strength and the facts show it’s a weakness, we need to bring the facts out.

The 9/11 economic drag was much more than psychological. Extra security costs real money. Extra security interferes with free exchange. When I travel, I have to get to the airport an hour earlier than I used to. How much is an hour’s pay? Now multiply that by the number of travelers each day. And that does not even take into account the cost of the technology and guards. These costs were imposed after 9/11, not on that date. And they are still building up. I am convinced that absent the terror attacks, the economy would be doing much better. As it is, the economy is doing well. The unemployment rate at about 5.5% is lower than any time in my adult life except during the dot.com bubble. Inflation is under control. Productivity growth has been truly impressive. Despite a down month, jobs are being created. Ironically, productivity growth holds down job creation at first (more production, fewer workers) but then it kicks in big time. The median income is higher than it was in 2000. The poverty figures are troubling, but not unexpected at this point in an economic recovery. Corporate balance sheets are much stronger than they have been for five years and p/e ratios are more realistic. Barring an unexpected catastrophe, we are in excellent shape to move forward. If Kerry wins the election, he will get credit, but I wouldn’t mind blaming Bush.

To try and lay blame on anything except Bush’s economic policies is blowing smoke. Although 9/11 did cost this country around 1.5 trillion dollars, the facts still show that his economic policies, tax cuts, and lack of leadership has put this country at risk of losing $.40 cents on the dollar in the world market within the next year. That coupled by the facts that we owe $2.9 trillion in forgien investment and our running a $500 billion dollar deficit leaves our nation at risk of a financial attack that could make the Dow fall by 2000 points. Meanwhile the few jobs that Bush has created pay 2/3rds less pay than the jobs that have been outsourced, putting many middle income people back in poverty.

Has the economy got better? Yes, if you happen to be one of the top executives that have seen a 22% riase over the last two years. But if you add in the money lost in the market investment during his first two years, everyone has lost purchasing power. It is for that reason Bush won’t debate Kerry on the issues. Check the P&E statements on stocks and bonds, if the economy showed real growth these numbers would be increasing instead the market guru’s are holding their money in cash.

I don’t understand why most Democrats seem to imply that the state of the economy is solely a result of President Bush’s term in office. Weren’t we under the guidance of a Democratic president the eight years previous to President Bush? The way I see it, former President Clinton rode the crest of the economic wave left by President Reagan, and the mess President Bush is dealing with economically was left by President Clinton. This also goes for the present foreign policy. Had the Clinton administration dealt effectively with terrorism, we might not be at war right now. This is just my opinion but it is the reason I am again voting for Bush in 2004. I believe a tough stance on terror is essential right now. I might vote Democrat if it were anyone but Kerry. He’s just creepy.

Jack - I’m sure you know dropping unemployment numbers don’t mean less people are out of a work, it means less people are making unemployment claims. It only means less people are unemployed if you have positive job growth.

Given the negative job growth, that unemployment number is very soft. The larger number of people below the poverty line further supports this. So are you saying that we’re ‘in excellent shape to move forward’ because we can’t get much worse?

The strong corporate numbers and high productivity are great for people who benefit directly from corporate profits, which is a group strongly correlated to the people Bush gave tax cuts to. Coincidence?

We’re all better off when companies have better margins, true. But a select few of us are a lot better off than others, and that brings us to the increasing division of wealth, which is great if you’re on the wealthy side, so I can see why the top 2% vote for Bush. But we did away with the king/nobleman/serf model a while ago because the serfs figured out they were getting a raw deal.

I don’t understand how the tax cuts hurt the economy. Liberals say it was a cut for the rich. I just don’t get it. If I’m rich and pay more taxes, doesn’t it make sense that I will get more back when tax cuts happen? If I’m poor and pay less (or none) taxes, shouldn’t I get less back? Can anyone offer a valid reason why they actually think that I am wrong?

Tim -

If I make $200,000 a year taxable income and I get a 2% tax cut, I’ve got $4,000 more dollars to work with. If I make $20,000 a year taxable income, I get $400 more to work with. Sounds fair, right?

here’s how I look at it: if I’m making $200,000, I already have lots of disposable income. I can do things like take the family to Colorado for a ski vacation even without the tax cut, and I’ve certainly got enough money to buy food, clothes, and a nice, safe place to live. So getting that extra money back for me is great for my bottom line, but I can’t say it will give me a tangible improvement in lifestyle.

If I’m earning 20K, my family isn’t going skiing either way, but $400 pays for a lot of groceries, maybe a couple pairs of new shoes for my kids, new tires for my car, fix my furnace, whatever.

We can give 10 familes in the 20K range the $400 or we can give one wealthy family the $4000, for the same ultimate cost to the government. Yeah, wealthy people already pay more, so you could argue that they should get more back, fair enough. The question is what do you believe is really the right thing to do?

The other part is economics - the tax cut is supposed to spur spending to help the economy recover. It’s a pretty sure bet if you give a low income family $400, they’re going to spend it on something pretty quickly because they have some unmet needs. You give a wealthy family $4000 and they might use it on a vacation or a downpayment on a new car, but they also might just save it for a rainy day, because they can afford to, so the spending isn’t stimulated as much. That plus the record budget deficits made the tax cut biased towards the weathy a poor economic solution, IMHO.

Thanks Nate
You said “We can give 10 familes in the 20K range the $400 or we can give one wealthy family the $4000, for the same ultimate cost to the government. Yeah, wealthy people already pay more, so you could argue that they should get more back, fair enough. The question is what do you believe is really the right thing to do?”
If these tax cuts were for the wealthy then only the wealthy received money back then.
I must have gotten one over on the government then because I received my refund check also.
I really believe the right thing to do is to tax everyone fairly. If you make 200,000 a year and still have disposable income, then you budget your money pretty well and live within your means. You can still have disposable income if you only make 20,000 a year if you budget properly. I earn alittle under 23,000 a year, family of four. I can’t afford to go skiing but I can take my family on a vacation with the right planning. My biggest problem with all of this is simple, why should I expect other people who work but just happen to make more than I do, to pay more for the same services than I do? I’m not jealous of those people and don’t expect the governement to help support me and my family.
You also said “record budget deficits made the tax cut biased towards the weathy a poor economic solution” I still do not understand how the tax cuts were biased towards the wealthy. I received a tax cut and I am not wealthy. I used half of it for bills and put the other half in savings. I believe that personal responsibility and not being jealous of the wealthy is the only fair way to go.
One last thing please, obviously I can’t afford to be online all the time so I am somewhat lost with some of the acronyms, what does IMHO mean.
Thanks again for the dialogue.

Tim, IMHO = In My Humble Opinion

What is glaring obvious in the above enlightened discussion about the tax % paid, is a fundamental difference between the Democratic and Republican’s perspective; namely that everyone should be able to make $200,000 a year. Everyone can go to college, has business connections, can invest in real estate and stocks, can rise to corporate management and rig their own salaries, and that no one needs to work in retail, manufacturing, drive a truck, serve in the armed forces, work in sales, construction, food service and (praise to them) bartending. It’s that not so subtle elitist mindset in spades. That’s why I, an independent college educated professional with a realistic heart, am voting democratic down the line this year. As soon as all opportunity is created equal, then I’d vote for equal tax percentages. And the counter argument that such a human tax structure will discourage people from achieving is totally bogus. You can’t change human nature with a few thousand dollars.