Jobs and economy low on Bush’s list

The economy has been George W. Bush’s greatest success, and yet he barely talks about it anymore.

For the time being, the economy is doing fine. Nationwide, sales for the Thanksgiving holiday weekend were up 22 percent over last year.

But of course, some sectors face serious challenges. Layoffs continue, for example, in manufacturing and – gasp! – the media. For the most part, such layoffs are part of the inevitable technologically based “churn” of the economy. And so the best hope for laid-off workers, and for workers in general, is continued robust economic growth.

Happily, growth is doing fine. The economy grew at 3.8 percent for the third quarter of 2005, which compares nicely to the historic average, across all of U.S. history, of roughly 3 percent.

Such continued economic growth – despite terrorism, war and natural disaster – explains why employment continues to grow, too. More than 141 million Americans have jobs today, an increase of 11 million since Bush took office. Some might object that many of these jobs are “low wage,” but if so, that’s an argument for accelerating growth further.

Yet, on the horizon an economic storm is coming. Tax cuts Bush and the Republican Congress enacted early in this decade are due to expire between 2008 and 2010. Put another way, taxes on personal income, inheritance and capital gains and dividends are set to go back up to their old levels. In the case of dividends, the top rate will go from 15 percent to 35 percent. Is that a plan for improving investment and accelerating growth?

Two questions might be raised.

First, what about the deficit? Well, the deficit is substantial in dollar terms, about $318 billion, but that’s small in proportion to the overall U.S. economy of about $12.5 trillion. And Uncle Sam has been on a spending binge – so-called “discretionary” spending has risen by nearly half during the Bush years, according to the Cato Institute, nearly quadruple the rate of increase during the Clinton years. So it’s fortunate we’ve had strong growth to pay for such bingeing.

Second, don’t “the rich” benefit disproportionately from those tax cuts? Sure they do. But as long as we have an investment-driven capitalist economy, we will be dependent on a favorable business climate that stokes investor confidence. In fact, a look at the broadest possible measurement of investor sentiment shows that faith in the U.S. economy has been flat, even negative, for the past five years; that measurement, of course, is the bearish U.S. stock market. It’s an ominous sign for the American workers if other countries look better to world-savvy investors.

Yet, the gathering prospect of an economic crunch does not seem to worry Washington very much. Specifically, Congress has failed to extend – let alone make permanent – the about-to-expire tax cuts. Instead, lawmakers went on recess, taking no action on taxes, leaving investors increasingly pessimistic about a tax-hiking future.

One can see why partisan Democrats might be interested in letting taxes go up substantially starting in 2008: Why not let sand get thrown in the gears of the economy and then blame the Republicans?

What’s more mysterious is why the GOPers, who have power, and thus responsibility, are so little interested in their own political well-being.

The big variable is presidential leadership. Bush began 2005 on the right note, talking about the reform of both taxes and retirement. But he has been sidetracked by war, scandals and other disasters. A year later, he barely talks about the economy – the topic of the day is border control. Indeed, if one goes to the White House Web site ( www.whitehouse.gov) and looks at the “issues” section, one notes that “jobs and economy” is listed sixth.

That’s Bush’s choice, of course. He seems to have concluded that his presidential legacy will be measured by what happens in Iraq and, to a lesser extent, the Supreme Court.

But for most Americans the No. 1 issue is the economy, stupid.