Are we still as screwed economically as we were a month ago?

No More Excuses on Jobs
March 12, 2004
By PAUL KRUGMAN

As job growth continues to elude the U.S. economy, we're
hearing two main excuses from the Bush administration and
its supporters: that the real situation is much better than
you're hearing, and that to the extent employment is
lagging, it's the result of factors outside the
administration's control. But after three years of
extravagant promises and dismal results, the time for
excuses has passed.

Let's start with the real job situation. A number of
readers have asked me about what Marc Racicot, who heads
the Bush re-election effort, told Don Imus the other day.
He claimed that those miserable job numbers are misleading,
and that another survey presents both a more accurate and a
much happier story. You can find the same claim all over
the right-wing media. But it just isn't so.

It's true that there are two employment surveys, which have
been diverging lately. The establishment survey, which asks
businesses how many workers they employ, says that 2.4
million jobs have vanished in the last three years. The
household survey, which asks individuals whether they have
jobs, says that employment has actually risen by 450,000.
The administration's supporters, understandably, prefer the
second number.

But the experts disagree. According to Alan Greenspan: "I
wish I could say the household survey were the more
accurate. Everything we've looked at suggests that it's the
payroll data which are the series which you have to
follow." You may have heard that the establishment survey
doesn't count jobs created by new businesses; not so. The
bureau knows what it's doing - conservative commentators
are raising objections only because they don't like the
facts.

And even the less reliable household survey paints a bleak
picture of an economy in which jobs have lagged far behind
population growth. The fraction of adults who say they are
employed fell steeply between early 2001 and the summer of
2003, and has stagnated since then.

But wait - hasn't the unemployment rate fallen since last
summer? Yes, but that's entirely the result of people
dropping out of the labor force. Even if you're out of
work, you're not counted as unemployed unless you're
actively looking for a job.

We don't know why so many people have stopped looking for
jobs, but it probably has something to do with the fact
that jobs are so hard to find: 40 percent of the unemployed
have been out of work more than 15 weeks, a 20-year record.
In any case, the administration should feel grateful that
so many people have dropped out. As the Economic Policy
Institute points out, if they hadn't dropped out, the
official unemployment rate would be an eye-popping 7.4
percent, not a politically spinnable 5.6 percent.

In short, things aren't as bad as they seem; they're worse.
But should we blame the Bush administration? Yes - because
it refuses to learn from experience.

Franklin Roosevelt, in his efforts to combat economic woes,
was famously willing to try anything until he found
something that worked. George Bush, by contrast, seems
determined to try the same thing, over and over again.

In 2001 the administration rammed through long-term tax
cuts, heavily tilted toward the affluent. But employment
didn't turn around, and by late 2002 many economists -
including supporters of the original tax cut - were urging
it to try something different. My own piece, "My Economic
Plan," was fairly typical: I called for extended
unemployment benefits, temporary aid to state and local
governments, and rebates for low- and middle-income
workers.

Maybe this more or less textbook response to a depressed
economy wouldn't have worked. But we'll never know, because
the administration rejected all such proposals. Instead, it
went for a clone of the 2001 tax cut - another big break
mainly for those at the top. And once again this failed to
deliver the promised jobs.

Meanwhile, Mr. Bush has mortgaged the nation's future. If
all of his tax cuts are made permanent, they'll reduce
revenue by at least three times the amount that would be
needed to secure Social Security benefits at current levels
for the next 75 years.

No sensible person blames Mr. Bush for the onset of the
recession in 2001. But he does deserve blame for the fact
that all he has to show for three years of supposed
job-creation policies is a mountain of debt.

E-mail: [email protected]


http://www.nytimes.com/2004/03/12/opinion/12KRUG.html?ex=1080095258&ei=1&en=ae7c87f1c69312b8

CI (who originally posted this), any updates or changes?