On the rebound?

Bush's borrowing binge gives us a `recovery' we don't need

December 24, 2003|By John Atcheson

WASHINGTON - Before America allows President Bush to take bows on the economy, let's take a closer look at this recovery. A simple thought experiment will help.

Imagine for a moment that you took all your credit cards and maxed them out. Now take your mortgage and borrow the maximum on it. Cash in the kid's college fund, your rainy day savings, your 401(k) retirement savings. While you're at it, stop paying for your health insurance and the maintenance on your house, your car and your yard. Now take all that money and spend it. Feeling pretty flush? Sure you are. You just pumped tens, maybe hundreds of thousands of dollars into your pocket.

But you'd never do that.

Because you know that just because you'd be living large for the time being, you wouldn't be wealthier. In fact, you'd be getting poorer by the minute. And yet, that's exactly what Mr. Bush's recovery is - a giant borrowing binge. But he'd rather you didn't know that. In February, the administration buried a report from its own Treasury Department that said our current fiscal policies, the ones Mr. Bush likes to claim are bringing on a "recovery," would create more than $44 trillion in chronic debt.

As the London Financial Times noted, $44 trillion is roughly equivalent to 10 times the publicly held national debt, four years of U.S. economic output or more than 94 percent of all U.S. household assets. No wonder things seem good. We've cashed in everything we own at the Bush Pawn Shop, and now we're flashing a serious wad of walkin' around money.

The Democrats like to point out that we're still down some 2.5 million jobs since Mr. Bush took over and that, absent a miracle, Mr. Bush is likely to be the first president since Herbert Hoover to have fewer jobs at the end of his administration than when he took over. But the real story is, how can we not be living even larger, after borrowing all our children's assets and shrinking the Federal Reserve rate to the lowest level since 1958? What have we got to show for it?

An essentially jobless recovery. Mr. Bush likes to say the jobs will come. They'd better. Because right now, all he's managed to do is spend about $350 billion of "your money" to hire 328,000 checkout clerks and greeters at the local Wal-Mart. Meanwhile, we've shipped some 2.6 million high-paying manufacturing jobs overseas since January 2001.

Is this a success?

So if we're cutting taxes by $350 billion a year in order to stimulate the economy and the economy is growing, but we're only getting an anemic response in employment, what's up? Kenneth L. Lay's stock portfolio, for one thing. And the portfolio of those Bush pioneers we hear so much about. And, of course, Mr. Bush's campaign contributions. As for the rest of us?

Mr. Bush seems to think people can eat gross domestic product. But a growing economy doesn't mean a whole lot if it's not creating jobs. Unless you happen to be Ken Lay or one of those Bush pioneers who don't need a job to earn money. For them, so long as the rest of us keep mortgaging our future, they can keep getting richer.

Not a surprising result, really. Look at Mr. Bush's economic plan. He says the tax cuts were about "your money." But the truth is, if you're like 80 percent of Americans, most of the taxes you pay from "your money" are in the form of payroll taxes. And until Mr. Bush gave it away, you got "your money" and more back in the form of Social Security, Medicare and disability income.

Mr. Lay and his friends pay most of their taxes in the form of income taxes, dividends and capital gains. Guess which ones Mr. Bush cut? Not your payroll taxes. What's the biggest pot of money subject to double taxation? "Your money" - the payroll tax. What double taxation did Mr. Bush eliminate? Ken and friends' dividend tax. For some reason, Mr. Bush thought it was OK for you to be double taxed, but not all right for Ken and his CEO friends. Bottom line: Mr. Bush traded away "your money" to give his wealthiest millionaire buddies an annual tax cut of $40,000 or more each.

The Democrats seem to be trembling at the recent numbers on the economy. They shouldn't. We can't be a nation of Wal-Mart shoppers if we're all employed at Wal-Mart. And that's exactly where Mr. Bush's plan is taking most of us. Democrats should just quit worrying and give credit - or blame - where it's due.

John Atcheson has held a variety of policy positions in several federal government agencies.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.