Editore"s Note
Tilting at Windmills

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August 6, 2004
By: Kevin Drum

EMPLOYMENT.... The employment numbers for July were bad. Very, very bad. Over at Asymmetrical Information, Megan McArdle agrees that this news has pushed the George Bush Toast-o-Meter to "extra crispy," but then offers this odd, halfhearted defense of our president:

Not, mind you, that I think that the low jobs numbers are Bush's fault, and any people trying to tell you otherwise would, in my humble opinion, be tap-dancing equally credibly to explain why the exact same job numbers were no-way-no-how the fault of the incumbent, if he happened to be a Democrat. Oh, it's legitimate to say that you didn't like the structure of his stimulus package, but any stimulus package, Democrat or Republican, would long since have worked its way through the economy had it been passed in 2002 -- the lifespan of a stimulus package being ca. 18 months, 2 years at most. This new soft patch isn't anyone's fault. But I don't suppose that makes it feel any better to the poor bastards who are out of work now.

It isn't anyone's fault? Hmmm. As I recall ah, yes, here it is Bush signed his most recent "stimulus" package at the tail end of May 2003. It takes a couple of months for stuff like this to actually get implemented, which means that we ought to be right smack in the sweet spot of that stimulus right now. If those tax cuts had any effect at all, July 2004 is precisely when we should all be in clover.

But they didn't have much effect and it is legitimate to criticize them on those grounds. That 2003 legislation wasn't a stimulus package, it was a tax cut package that the Bush administration named a stimulus package. There's a big difference.

What's more, I think this is at the heart of a seeming paradox pointed out most recently by Michael Kinsley: on practically every economic measure you can think of, Democratic presidents do better than Republican ones. Economists, even liberal ones, don't think much of this argument, pointing out that the president has limited power over the economy, control of Congress is important too, and the statistics themselves are too coarse to be meaningful.

Maybe. And yet, measure them any way you want, over any period you want, and with any time lag you want, and the results hold up: Democratic presidents are better for the economy. Why?

I suspect the answer is simple: Democrats may fumble around as much as Republicans, but in the end we always end up focusing on the one thing that FDR taught us to focus on: employment. Republicans, conversely, have historically focused on a variety of conservative hobbyhorses: inflation, balanced budgets, low taxes, small government, and so forth. And while they have successfully convinced themselves that these other metrics eventually produce high employment think "supply side" economics or various "trickle down" theories it ain't necessarily so.

If you want a strong economy, the #1 thing to focus on is strong employment. And if you want strong employment, the #1 thing to focus on is....strong employment. Republicans either don't understand this or pretend not to it's hard to tell which and that's why Democrats are better for the economy.

A rational economic plan over the past four years would have produced considerably higher employment than we have now, and that in turn would have produced a stronger economy. Unfortunately, we didn't get a rational economic plan. We got George W. Bush instead.

Kevin Drum 5:56 PM Permalink | Trackbacks

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