Bush's Fiscal Policy Not Creating New Jobs
How about that "jobs and growth" plan from the $350 billion in tax cuts that President Bush proposed and Congress signed?
This is more than an academic question. The jobless rate in June rose to 6.4 percent, or about 9.4 million workers, versus 6.1 percent, or 9 million workers, in May, the Labor Department reported.
Significantly, the administration had forecast the creation of 1.4 million new jobs by year-end 2004 after its most recent tax cut became law. Against that backdrop, 913,000 workers joined the ranks of the unemployed between March and June, according to the Labor Department.
It also noted: "In June, there were 2.0 million unemployed persons who had been looking for work for 27 weeks or longer, an increase of 410,000 over the year. They represented 21.4 percent of the total unemployed, up from 18.8 percent a year earlier."
Corporate America has been shedding workers in part to reduce its high ratio of debt to income accumulated during the 1990s. Corporations are bringing their high debt loads of the past decade closer into balance with current income with a vengeance.
Many examples of this trend can be seen in the airline, dot-com and telecom industries. This process is, in turn, weakening household spending, also at debt's door from a decade of buying based on borrowing.
Meanwhile, large-scale layoffs in the public sector are casting ominous shadows over the American workforce, increasingly female and nonwhite. Spending cuts by state and local governments swimming in red ink don't typically spur private-sector employers to spend on new workers.
In fact, such a contraction harms small firms more than large ones. The latter have more capital, and can survive business downturns longer than smaller companies.
The Bush administration's response to the budget crises being faced by local and state governments has been to cut taxes for the corporations and the rich for the third time. This policy, plus increased military spending to invade and occupy Iraq, has partly helped to shift the federal budget from surplus to deficit.
Federal deficit spending can be a useful policy. Uncle Sam can build daycare centers, hospitals and schools that the American people need.
This is especially the case when private-sector spending is slowing down relative to its income. As Martin Wolf wrote on July 2 in The Financial Times, the borrowing binge that the U.S. went on in the 1990s won't happen again this decade.
During such post-bubble times, government spending for non-military purposes can take up the slack in the economy. Uncle Sam can, as in the past, prime the pump when recession and stagnation arrive.
But such Keynesian stimulus to address the "soft patch" in the market is not on the radar screen of the Bush White House. It is, for now, focused on continuing the economic restructuring of the nation, couched in the vocabulary of a fiscal policy to create jobs.
Accordingly, working life is becoming more precarious for millions of people in America. Just ask them.
Seth Sandronsky is a member of Peace Action and co-editor of Because People Matter, a progressive newspaper in Sacramento, Calif.