It’s Still the Economy, Stupid

We all remember the phrase, “It’s the economy, stupid.” It was made famous by political strategist James Carville, who hung it on a sign in Bill Clinton's Little Rock campaign office to keep everybody "on message" in the 1992 election. And it worked: President George Bush, soaring in polls after a victorious war against Iraq, was stunningly defeated because he was unable to effectively manage or spark a recession-battered economy stuck in a "jobless recovery."

Today it's possible that history may repeat itself. Bush Jr. is in similar straits as his dad, soaring in polls after a victorious war against Iraq but unable to effectively manage or spark a recession-battered economy stuck in a jobless recovery. But where his "read my lips" father was famously forced to raise taxes, the son is stubbornly sticking to an extreme conservative mantra: Spend more money on the military while cutting taxes for the wealthy and running a huge budget deficit.

"With a robust package of at least $560 billion dollars in across-the-board tax relief, we will create more than a million new jobs by the end of 2004," the president declared in a recent radio address.

Resistance to the Tax Cut

But the tax cut is actually not popular. Half of those asked in a recent NY Times poll said the cuts were unlikely to create jobs, and 58 percent agreed that they did not expect to find any new money in their paychecks. In addition, unprecedented organizing against the tax plan has stymied the Bush administration to some extent, as members of the Fair Taxes For All coalition, featuring progressive organizations and labor unions, have blitzed Congress and put TV and radio ads on the air across the country, particularly in districts of key members of Congress.

Yet, despite vigorous organizing efforts across the country by unions and concerned citizens fearing the impact of the plan, Bush is likely to get most of what he wants. The president is aggressively pushing the $560 billion tax cut, already passed by the House. The Senate voted Thursday for a smaller, $350 billion tax cut, and the final outcome is decided in Conference where the two bills are reconciled. But the White House will wield a lot of influence in the endgame, so look for the cut to be closer to the numbers Bush is now seeking.

Economy Is Far Cry from Two Years Ago

The activist groups point out that the current budget situation is a far cry from two short years ago, when politicians in both parties pledged to treat the Social Security reserves as if they were in a "lockbox." The rest of the budget was in surplus, and there was a projected unified budget surplus of $5.6 trillion for the coming decade. Now the fiscal picture has been reversed, with the federal government spending, not saving, the Social Security surpluses while it is about to run record-high deficits.

The Administration itself projects that, under its current budget, the national debt will climb to more than $5 trillion within five years -- at the very same time the baby boomers begin retiring. And that is without counting the uncertain costs of war and its aftermath.

We Need More Jobs

There is no question that our country needs more jobs. Unemployment is at 6 percent and 48,000 jobs were lost just in April. The Economist reports that, “500,000 jobs have disappeared in the past three months pushing the total lost under Bush junior over two million.”

“Long term unemployment at 1.9 million, is the highest in 10 years, and those numbers do not include the large numbers of discouraged workers (people who want work but have given up looking) and the larger number of underemployed (those who are working, but not as much as they would like to).”

But as John Cassady notes in The New Yorker, the link between tax cuts and jobs is decidedly murky. “Two years ago … President Bush persuaded Congress to pass the biggest tax cut in a generation. But since then, a million and a half jobs have disappeared. By contrast President Clinton raised taxes to reduce the budget deficit, and the economy created more than 20 million jobs.”