Limping economy

...The first thing he did was try and find a culprit for the recession...

...If money is transferred from the Pentagon (which imports relatively little) to middle-class consumers (who buy more imports), the net effect on the U.S...

...Unemployment The most recent unemployment rate of 6.8 percent represents seven million unemployed workers...

...Although right-wing ideology may be in disarray, Ronald Reagan still casts a long shadow over the American political economy...

...Close to twenty million workers-15 percent of the work force—experienced at least one spell of unemployment last year...

...Unemployment has replaced drugs and crime as the nation's biggest worry...

...The long-run contradictions of American society (as Mike Harrington would surely say, if only he were here) are now its short-run problems...

...The problem lies in the deteriorating competitiveness of the economy itself, which has not been generating the level of income needed to maintain the living standards of the majority of working people...

...In his first televised address to the nation, two weeks after taking office, Reagan said, There were always those who told us that taxes couldn't be cut until spending was reduced...

...Most ominous of all is that real disposable income—the amount of money each American has after paying taxes—is now lower than when Bush took office...

...A democratic left program should focus on stimulating the economy, which means investing the peace dividend even if it results in a larger deficit...

...Unemployment has risen (from 5.5 percent in 1990 to around 7 percent in 1991), and wages have continued their slide downward...

...What is needed is a public-sector investment strategy...

...For black and Hispanic workers, one in five experienced at least one spell of unemployment last year...

...Poverty In 1990, 13.5 percent of all Americans33.6 million people, an increase of over 2 million from 1989—lived in poverty...

...Bush is being forced to at least appear concerned about the economy...

...Or we can cure their extravagance by simply reducing their allowance...

...The best explanation of why the deficit is not an important economic problem is in Robert Heilbroner and Peter Bernstein, The Debt and The Deficit: False Alarms/Real Possibilities...

...If Bush's confusion and inaction weren't hurting so many people it would be comical...

...Robert Heilbroner has illustrated the seriousness of the problem: if we were to double our public investment in infrastructure and human capital, we would just return to the relative level of public investment the United States made throughout the 1950s and 1960s...

...It was concern about the deficit that led to Walter Mondale's disastrous proposal to raise taxes in the 1984 campaign...

...The Democrats have yet to get over their fear of the deficit...

...Unless we substantially raise investments in our people and our technological development, real wages and incomes for most American workers will continue to decline, regardless of what we do with the tax system...

...A Washington Post-ABC survey showed that only 47 percent of WINTER • 1992 • 5 Comments and Opinions those polled were inclined to vote next year for Bush, down from 68 percent last March...

...Almost one in ten Americans now depends on government to put food on the table...

...According to Edward Tufte, author of Political Control of the Economy, real disposable income during an election year is the single most important economic statistic for an incumbent president's reelection prospects...

...That is nearly three times the number of jobless workers counted in the monthly report...

...More than one in five children are poor...

...Average hourly wages for nonsupervisory workers were lower, adjusting for inflation, in 1990 than in any year since 1964...

...But a closer look at the figures reveals a languid economy...

...Food Stamps Twenty-four million Americans (a record level) receive federal food stamps...

...economy will be a loss of jobs and income...

...A group associated with the Economic Policy Institute—especially Jeff Faux and Robert Kuttner — has argued that obsession with the deficit is more of a threat than the deficit itself, especially if it prevents us from making much-needed public investments...

...Overall Economic Performance A study by the Democratic staff of the Senate Budget Committee found that President Bush has the worst economic performance—the study looked at economic growth, job creation, and increase in the standard of living—of any president since the end of World War II...

...This meager uptick in GNP led the administration to proclaim—for the second time in three months—that the recession was over...

...Well, you know, we can lecture our children about extravagance until we run out of breath...

...In the 1980s the real problem was not the deficit, but that it was created by wasteful military spending and tax giveaways for the rich...

...6 • DISSENT...

...The Washington Post, in a report that must have sent tremors through the White House, compared this last speech to Jimmy Carter's invocation of a supposed national malaise...

...Indications of America's economic troubles abound...

...Reagan, or whoever ran the government while he was in office, purposefully created a large deficit to ensure that the federal government had no income to do anything even if it wanted to...

...Bush's befuddlement has led to contradictory statements—often in the same speech...

...He urged them to cut interest rates and they did...

...The Reagan era, which began with the dismantling of the public sector, will end with the reconstruction of the public sector...

...But even that would not bring us close to the level of investment currently being made in Germany and Japan...

...Indeed, more than 80 percent of the recent upward shift in the share of income going to the richest 20 percent of families is a result of changes in before-tax income...

...The Reagan deficits have had the desired effect—they have paralyzed the Democrats...

...It is now clear that the Laffer Curve rationale for Reaganomics —lower tax rates would spur people to work harder, stimulate economic growth, and return enough to the treasury to balance the budget—was never taken seriously...

...In fact, proposals to cut defense spending to fund middle-class tax cuts may actually make the recession worse...

...But this has had little effect...

...Even adding discouraged workers and involuntary part-time workers to the official unemployment figure does not capture the full extent of unemployment...

...This understates the problem because it does not include millions of Americans too discouraged to look for work or those in part-time jobs who would prefer to work full time...

...Tax relief for the middle class is worthwhile, but it is not a program for economic recovery...

...He couldn't blame the Federal Reserve...

...Lest anyone mistake this as an example of a generous welfare-state program, consider that the average benefit for each person, per meal (assuming three meals a day) is only 65 cents...

...The low level of public investment threatens permanent economic decline...

...Black children under the age of six have a poverty rate of over 50 percent...

...With the nation's festering economic problems dominating headlines, the presidential election, which after the war Democrats had all but ceded to Bush, appears very much up for grabs...

...Right after he pleads with Americans to spend more money on consumer goods and housing he urges them to save more and proposes tax incentives to encourage savings...

...Although equitable tax reform should be part of a democratic left program, Jeff Faux reminds us that taxes are not the most important cause of the increase in inequality: The problem of stagnant incomes—now reflected in the weakness of retail sales—is not fundamentally a problem of tax policy...

...It also led Michael Dukakis to refuse to run a populist campaign lest his credentials as a budget balancer be questioned...

...In October it was announced that real Gross National Product (GNP) increased by 2.4 percent during the third quarter...

...As I write (in late November), sales of existing homes fell for the third month in a row, new jobless claims are running at 450,000 a week, and commercial construction is at a sixteen-year low...

...As long as demand is weak, businesses will be reluctant to invest, and without a growth in investment there will be no recovery...

...Many forecasters expect GNP to fall in the fourth quarter of this year...

...In successive speeches Bush blamed bank lenders, bank regulators, credit-card companies, and finally the American people: "There ought to be, in my view, given the economic place where we stand now, more confidence...

...But the economic slowdown was not related to the war...

...They have proposed an assortment of tax cuts for the middle class that are all deficit neutral (the tax cuts would be "paid for" either by cutting defense spending or by increasing taxes on the rich...

...Most of the increase in GNP was accounted for by a buildup in business inventories rather than by consumer spending...

...This recession was brought on by weak consumer demand caused by eighteen years of falling incomes for most Americans and cutbacks in the welfare state under Reagan and Bush...

...For example, while Bush has been president the economy has grown at an annual average of only 0.6 percent, one-third of the previous low of 1.5 percent under President Ford...

...As bad as this is, poverty will almost certainly increase in 1991...