These are bad times. Hardly any new jobs have been created at all in the U.S. economy. The rate of real GDP growth in the most recent quarter was below average, and it slipped from that of the previous quarter. Yet despite all this dreary news, Gene Sperling, one of the chief economic advisors to the John Kerry campaign, is actually upbeat on the economy, declaring that “the combination of economic numbers announced this week was good.”
Pretty generous of him in an election year, wouldn’t you say?
Alright. Back to reality. Sperling didn’t say these things last week, when it was announced that the U.S. economy added 32,000 payroll jobs including 10,000 in the manufacturing sector, with last quarter’s real GDP growth running at 3 percent. But Sperling did, nevertheless, say them. He made his optimistic statement to The Washington Post eight years ago, on May 4, 1996, back when he was an economic advisor to the Clinton administration. His words came right after it was announced that only 2,000 jobs were created in the economy the previous month, with 17,000 jobs lost in the manufacturing sector. For the previous quarter, real GDP growth ran at only 2.85 percent, which was a drop from the prior quarter.
Sperling was optimistic back then, when the news was tangibly worse than it is now. And what is Sperling saying now, when the news is tangibly better? For some reason he’s not quite so optimistic when the other team occupies the White House. Last week he told CNBC, “This is bad news for American workers. These are very disappointing, very anemic job numbers. Not only are we not turning the corner on jobs, it is not even clear we are headed in the right direction.”
This is just one of dozens of examples of the hypocritical and dishonest ways the Kerry campaign is trash-talking the economy. Consider some things Kerry himself said about the economy in his acceptance speech at the Democratic convention in Boston. For example, he claimed that “here at home, wages are falling.” That’s a lie. According to official numbers from the Department of Labor’s Bureau of Labor Statistics, average hourly earnings have risen 2.1 percent after adjustment for inflation since George W. Bush took office. Over the comparable period in President Clinton’s first term, they rose only four-tenths of one percent.
In the same speech Kerry claimed that the new jobs created during Bush’s first term “pay $9,000 less than the jobs that have been lost.” That’s a lie, too. Any honest economist could have told Kerry that statistics are detailed enough to prove that such a specific claim simply does not exist. Kerry, however, sourced his number from the liberal big-labor-backed think tank, the Economic Policy Institute. The EPI’s number is based on nothing better than Bureau of Labor Statistics data on changing employment levels in broad industry groups — statistics that say absolutely nothing about the relative value of jobs gained and lost. That $9,000 number might just as well have been pulled from thin air.
If Kerry was after the truth, he could have looked to the non-partisan Annenberg Public Policy Center of the University of Pennsylvania. Annenberg has obtained better data from the Bureau of Labor Statistics that breaks down job gains and losses by specific occupations, not just broad industry groups. This data shows “strong growth in higher-paying employment categories over the past year — more than 1.1 million gained — and stagnation in lower-paying job categories.” But, of course, we don’t hear Kerry quoting this research.
Let’s get real. While it would be nice to have the unemployment rate back down to 3.8 percent — where it briefly stood for one manic month four years ago at about the same time the Nasdaq was at 5,000 — at 5.5 percent today, it is better than the average rate of the past half century. More, the current unemployment rate is exactly where it was at the comparable point of the “Clinton prosperity,” those halcyon days that Democrats never stop waxing nostalgic about.
And in terms of overall economic growth, you don’t have to be nostalgic. These are the good old days. Gross domestic product adjusted for inflation has grown over the last twelve months at a faster clip than during any twelve-month period of the eight-year Clinton administration.
And if this economy is so bad, just what is John Kerry going to do to fix it? Well, we know he’s going to raise taxes on those he calls “America’s wealthiest people.” In case you can’t break this code, he’s talking about you.
Of course, the revenues from the Kerry tax hike won’t be used to fix the economy that isn’t broken in the first place. No, tax revenues will be applied to a laundry list of Kerry’s big-government spending programs.
That’s why, when asked by BusinessWeek how Kerry will afford his new spending proposals while at the same time fulfilling his promise to reduce the federal deficit, Kerry advisor Robert Rubin (Treasury secretary under Clinton) said,
I don’t think you can make proposals … until you’ve gotten elected and until you’ve organized effectively across both parties and both houses. If you start to put out proposals now, they would be vigorously attacked, and they would in effect become tainted so they couldn’t be used.
That’s Kerrynomics, folks. Trash-talk the economy today. Conceal what you’re going to do to the economy if elected.
Clinton said, “It’s the economy, stupid.” But just how stupid does John Kerry think the voters are?
– Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your comments at don@trendmacro.com.