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Wednesday, October 28, 2009

Ponder the full extent of the Republican economic disaster

An article in Slate by Daniel Gross describing the implosion of the U.S. Chamber of Commerce (“The Chamber's Mistakes”) offers a description of the Bush administration that sums up the disaster succinctly. That Republican economic policies failed miserably is an understatement:

The Chamber of Commerce may not have ruled the country during the Bush years. But it had the next best thing: a Republican administration in the White House and Republican control of Congress for most of that period. The chamber applauded as they delivered cuts in marginal tax rates and in taxes on capital gains, dividends, and estates. The government was supportive of free trade and largely hostile to labor unions, which continually lost ground. We saw aggressive moves to outsource government functions and increase the use of private-sector contractors. We opened up energy resources to development. Interest rates were low. Regulation? Virtually nonexistent in many sectors. Business lobbyists were allowed essentially to write crucial legislation. These policies, the Bush administration economic team promised us, would be superior to the ones that prevailed in the 1990s. And the proof would be in the numbers: jobs, market performance, income, wealth.
But it didn't work out for anybody. By pretty much any measure, the years from 2001 to 2008 were lost ones. Job creation was extraordinarily weak by historical comparison. In September, on a seasonally adjusted basis there were 108.544 million private (nongovernment) payroll jobs, which is about the same number there were in June 1999. . . .."). Over the last 10 years, in other words, the private sector hasn't created a single job. That's pathetic, especially when you consider that the population grew 9 percent during those years, from 282 million in 2000 to 308 million today. Wealth didn't expand, either. In fact, . . . in this decade, income inequality rose, the percentage of people living below the poverty line rose, the number of people getting health insurance from their employers fell, and median income failed to budge. The stock market? Forget about it. Oh, and at the end of it, the financial system, which got precisely the regulatory environment it wanted from Washington, blew itself up, inflicting hundreds of billions of dollars of costs on taxpayers.


And he didn't even get to the part where a surplus that co-existed with low unemployment at the end of the Clinton – which should have been treated as an unexpected cushion for starting such necessary reforms as, ahem, universal health insurance -- was turned into a massive deficit that continues to make it harder to do things that would help us out of the current morass.

I would also hit more heavily the real meaning of zero private-sector job growth in absolute terms when population continues to grow as it always does. To be merely holding its own, the economy must add jobs in absolute numbers as fast as the population that needs a job is growing. The 9% figure for the whole population mentioned in the article is close to the growth rate in the working age population during the same period.

In real terms, in other words, private sector employment plummeted by almost 10%. That's more than pathetic, it's tragic, criminal and very scary. Figures seem to indicate that somewhere around 50% of college graduates are leaving the campus without a job waiting for them – far more than in the past. As someone said, a society that cannot employ it's youth is a society in deep, deep trouble. Fundamental things need to be done.

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