Jewish World Review Nov. 11, 2003 / 16 Mar-Cheshvan 5764
Will the recovery last? The 7.2% solution
http://www.NewsAndOpinion.com | My first thought was that it had to be a typographical error. The economy grew at a rate of 7.2 percent last quarter?
Can you imagine what the Clinton administration would have made of a statistic like that? It would have been greeted like the Second Coming.
If Bill Clinton could describe the recovering economy of 1992 as the worst depression since The Big One in the '30s, he'd have pulled out all the stops celebrating a growth rate of 7.2 percent. At least if it had happened on his watch.
It's such good news that you'd have to be a Democratic presidential candidate to be saddened by it. Or a columnist for The New York Times.
This is the most dramatic, if short-term, leap in the economy in almost 20 years. This hasn't happened since Reaganomics took off. This is what astronauts must feel on liftoff. Thanks, we needed that!
Tell us again how the latest round of Bush tax cuts, the ones that went into effect immediately - before immediately, actually, since they were retroactive - would never work, how they were just a Tax Cut for the Rich, a Risky Prosperity Scheme, a . . . well, feel free to supply your own now hollow cliches. That 7.2 percent increase has reduced them all to last month's spin.
One of the joys of letting fashionable magazines like The New Yorker pile up for a couple of weeks is that on occasion you run across cartoons (still the best part of The New Yorker) that reveal how quickly the avant-garde can become the rear guard. In the Oct. 20 issue that I finally got around to flipping through, there's a cartoon in which one schoolboy tells another: "Don't tell anybody, but I still believe in the tooth fairy and in the ability of tax cuts to stimulate the economy."
It's not quite as witty this week, is it? Nothing dates faster than propaganda when it runs into reality. By now I wouldn't even bet against an appearance by the tooth fairy.
What those Tax Cuts for the Rich were, of course, were tax cuts for whoever paid taxes - specifically, income taxes - and therefore got some of their money back. And everybody who got one of those refunds apparently ran out and spent it, sending the wheels of the economy spinning 7.2 percent faster. Or they banked the money, or invested it, or paid off debts, all of which helps the economy go 'round, too.
Taxes, lest we forget, and those who always want to raise them would love us to forget it, are brakes on the private economy. And the brakes were eased. Hence the economy sped up. By 7.2 percent, according to this report. Which is Wow! speed.
That growth rate isn't likely to be maintained next quarter, but even half that increase wouldn't be bad in time for Christmas.
Ah, but where are the jobs? That's what Nancy Pelosi wants to know. She's the minority leader in the U.S. House, and it's her job to look at all economic reports through dark glasses. "Mr. President," she demanded, "Where are the jobs?"
Coming, Ms. Pelosi, coming. Normally there's a lag between the time the economy starts to speed up after a recession and when the jobs start to reappear. According to the Labor Department, unemployment claims have fallen again. That's the fourth straight week they've been less than 400,000 - the benchmark economists use as a sign that the economy is recovering from a slowdown.
But with more jobs going abroad, it may take longer this time for the unemployment figures to drop. I don't want to take the shine off this good news, but this Wow! of an uptick could prove just a spike instead of a trend.
This country has been steadily exporting low-wage jobs for years, and high-wage ones could follow in increasing numbers unless the American workforce becomes ever more skilled, more educated, more sophisticated.
The welcome increase in Productivity - the fancy term for fewer workers churning out more goods and services - means manufacturing jobs aren't going to be as plentiful as they used to be. Instead the American economy needs to keep producing new, higher-end jobs that call for new, higher-end skills. Before they, too, are exported to countries like India that have begun to specialize in supplying brainpower for computerized industries.
However rosy the short-term picture looks, in the long run there's no better way to create jobs than to educate the next generation that is going to create, fill, invent and invest in those high-skill, high-paying jobs. That'll take more than tax cuts.
Which brings us to another policy of this administration: Leave No Child Behind. That goal has never been more important.
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