Snow Job

Jared Bernstein give quite a convincing argument on how the Bush budget and tax cuts will cripple, not help, the economy. Snippet:

"Then there's all this nonsense about investors and small businesses, the latest target of the administration's economic spin machine. This is more pure supply-side fluff: Give rich people more money and they'll make productivity-enhancing investments. But does anybody really believe that what's holding investors back right now is access to capital? Interest rates are at 45-year lows, industrial capacity at a 20-plus-year low. Information-technology inventories are still overstocked. Ask any business economist not in this administration and they'll tell you that what's holding back investment is not the cost of capital or even cash flow, it's weak consumer demand outside of a couple of sectors, primarily housing and health care.

And by the way, there's another huge contradiction here. Remember that the target of supply-side economics is the rate of productivity growth -- the idea being that if you free up capital investment, you raise the trend in this key determinant of our living standards. But these same spinners brag about how well productivity growth is holding up in the recession. Their program targets the one economic variable that's doing well right now!"

And then there's all those lost jobs, as Harold Meyerson points out. Snippet:

"The private sector has shrunk by more than 2.6 million jobs since George W. Bush became president. That is, by any standard, quite a record: No American president has presided over a net loss of jobs during his term in office since Herbert Hoover grappled so disastrously with the real 1929. When Bill Clinton was in the White House, America gained an average of 239,000 jobs per month. Since Bush took office, the number of jobs has declined at a monthly clip of 69,000. On the basis of no credible evidence whatsoever, the White House boasts that Bush's proposed tax cut would create 1.4 million jobs by the end of 2004. Even if it did, Bush would still have presided over a net loss of 1.3 million jobs during the 2001–2005 presidential term.

Presidents do not really pay a penalty for holding office when the economy first implodes. Americans did not turn against Hoover because the market crashed; they turned against him because his recovery program, such as it was, failed to produce a recovery, because the economy cascaded downward for three and a half years while he rejected one plausible remedy after another. Likewise, no one holds Bush accountable for the dot-com bust or the shock of September 11. His problems are that he's enacted and proposed nothing that would arrest the current slide, and that his policies have actually worsened it. More precisely, his policy has actually worsened it. For it is the distinctive feature of the Bush presidency that there is but one economic policy come boom or bust, fire or flood. That, of course, is tax cuts, preponderantly for the rich. As a candidate in 2000, Bush argued for tax cuts because the government was actually running a surplus, and it was a more productive use of funds to return that money to taxpayers. Then the bubble burst, the surplus turned to deficit and those same tax cuts were repackaged as an economic stimulus. The $1.6 trillion tax cut of 2001 was so advertised, though it didn't really kick in for the better part of the decade, and most of it was targeted to the wealthy—the class of Americans least likely to spend it. Since it was enacted, it has stimulated the economy to the tune of 1.7 million jobs lost."

Additional commentary HERE and HERE.