WHO LET THE DOGS OUT, ECONOMICALLY SPEAKING ?
BY JULIANNE MALVEAUX
President George W. Bush has come roaring back from his month off in
Crawford, Texas. He is hosting Mexico’s President, Vincente Fox, at a State
dinner this week, and spent Labor Day running from one union meeting to
another, pandering to the very working people he shafted with his $1.4
billion tax cut. Still, he tells workers, many who never saw the promised
$300 a person, $600 a family that he cares about them. “I am concerned about
working families,” he told Wisconsin workers, and enough of them clapped to
suggest that some believed him. He said the same thing in Detroit on Labor
Day – "I care. "
Caring and a quarter won’t get you a paper, not in most of our nation’s
largest cities, where the news will cost you 35 cents, maybe more. That
newspaper prices have risen is the least of the nation’s concern, though.
While inflation is flat, the employment situation is troublesome, with
especially pointed c consequences for people who work for companies like
AOL/Time Warner or Lucent Technologies. And while dot com world no longer
finds layoffs alarming, when they hit in other sectors. In the first six
months of 2001, the Bureau of Labor Statistics reported that 1.4 million
people were laid off, 40 percent more than a year ago. Some were dot com
workers, but the majority worked in manufacturing. While 1.4 million layoffs
in a workforce of 120 million is hardly significant, layoff headlines leave
most workers concerned about their economic security.
How did we get to the point where an economic surplus has been frittered
into a raid on the Social Security lockbox? Where a 4.5 percent unemployment
rate, a recent low, is not reassuring to workers? After years of
prosperity, who let the economic dogs out? Can they be reigned back in?
George W. Bush’s Labor Day performance suggests that he let some of the
dogs out. He vacillates between concern about the economy and predictions of
economic soundness. Sounds like the line he spun around the tax cut he so
badly wanted. That cut, he said, would not reduce the surplus and, in fact,
would stimulate the economy. But even as he made those speeches, he tried to
suggest that if the economy were in trouble, we might blame the previous
administration. The double-talking has clearly impacted consumer confidence,
the only thing that now stands between flat growth and negative growth.
While it is amazing that consumers spend despite economic bad news, it is
also apparent that they can’t spend indefinitely.
Federal Reserve Board Chairman may have let a few of the dogs out, what
with his cautious and gradual approach to spending-stimulating interest rate
cuts. His last cut, of just a quarter of a percentage point, made some
sense given that it signaled the Fed’s loosening of money reigns. The
problem was that this tool has already been overused, and can’t be much used
anymore. Further, the Fed has so toppled from a position of leadership to
sycophant status, that most stock-watchers build the quarter point interest
rate increase into their projections.
While some say our economic woes are temporary, others are forecasting
that it will take two or three years to turn the economy around. Congress
will make decisions in the next month or so that will shape the turnaround in
the next year or so, as they respond to a set of budget appropriations, and
make decisions about new government spending. The Congressional Budget
office says that without Social Security funds, the government will have
hardly any surplus to work with. But President Bush is committed to adding
more than $200 billion to the military budget, and he wants to set aside
funds for education, energy, and faith-based initiatives (spending $87.4
billion in the next ten years on the measure). The President who campaigned
on a platform of fiscal restraint may find himself returning to deficit
spending because of his ill-advised tax cuts.
As it deals with the 2002 budget, Congress should also deal with the
structure and stability of our economy. For all the ink spilled on issues
like immigration and stem cell research, many voters care as much about
economic stability, patients’ bill of rights, and minimum wage. Working
families experience the bite of the economy’s “dogs,” the layoffs, decreased
services, and increase of corporate power that limits their pocketbooks.
President Bush can tell union workers that he is concerned about working
families, but until his concern provides them with economic stability, he has
to shoulder the blame for letting the economic dogs out.