Let’s see how many weeks it takes before John Kerry and Co. stop repeating the now discredited statement that American households are not keeping pace with inflation. Before the recent release of updated real wage and salary data by the Bureau of Economic Analysis, there were at least some scenarios in which the numbers could be gerrymandered in such a way as to find periods of time during the Bush presidency when certain kinds of income weren’t keeping pace. For instance, even though wages and salaries have beaten the consumer price index in growth since Bush took office, on a year-to-date basis they come up $48 short. Of course, a $48 loss in pre-tax income in one year is kind of blown away by a minimum of $300 in tax cuts for four whole years, but economic pessimists have got to find small favors where they can. But even that’s blown to bits: The July numbers show that average weekly earnings are strongly outpacing inflation.
All of this, however, misses a bigger point. While wages have more than kept up with inflation during Bush’s time in office, and while a short and mild decline in wages this past year has been reversed, the whole exercise of comparing wages to the pace of inflation is based on numbers that exclude many sources of income. Just as Kerry and friends do not consider self-employed people to be employed, they also don’t consider investment income to be income. Rent, consulting, interest, and dividends do not show up in the numbers that Kerry uses to show declining American income.
On foreign policy, John Kerry may be stuck in 1969, but in economic policy, he’s stuck in 1949. It’s as if there never was a small-business revolution, deregulation of the brokerage industry, and the accompanying democratization of securities ownership. When you treat Americans as the owners they are, and when you look at personal income as the measure of their prosperity — including income other than paychecks — you find that in the race between income and inflation during the Bush years, personal income is Lance Armstrong. Disposable personal income per capita is up 13 percent since Bush has become president, easily outpacing modest inflation.
In other words, the Kerry crew is wrong again.