Good Economy... Why?

[Dawgs]

I know many of you disagree that the economy is doing well; that's fine. I personally don't think it's doing all that well, but many do. There has been some strength that we have some in some areas, and these strengths have helped to keep the economy afloat.

My real question is what has helped to strengthen the economy? I am no expert, so I can only go by what I see. Bush thinks that he is responsible because of lower taxes, but we all know this is NOT true. I would hope that most Americans would see that Greenspan and the housing market has been the one thing that has kept the economy going; it seems pretty obvious to me.

Anyway, my point is that I don't think Democrats need to let Bush steal the headlines by proclaiming that he is the savior of the economy.

Who is really responsible, and how should the Democrats handle it?

[arachide]

1. pretty straightforward...

just ask people if they're better off now than they were 5 years ago. If, in fact, the economy is doing well, then people will believe that they are doing better, but I'll bet my bottom dollar that most people will respond with a rousing "who the heck are you kidding?" and all of this talk of a healthy economy will evaporate like the meaningless vapor that it really is.

[melody]

2. Bush is the assassin of our economy

The deficit itself will be its undoing. And interest rates are rising steadily. What "good economy"?

Bush is in no danger of stealing the headlines, imo.

[bahrbearian]

3. If Chimpy wants to take credit for it , Let Him..

Because the Deficit is just waiting to bite him in his Ronald RayGun wannabe ASS.

[K-W]

4. It all depends on what you mean by a good economy.

If you mean capitalistic growth. The economy is doing ok.

There are few other standards by which it is doing ok.

And by my standard, which is how well it provides for the common good, it is doing miserably.

[bigbrother05]

5. I,m on my way out the door

but had to remind everbody that the tax break was suppose to create jobs. An airline went bankrupt, last month. GM is laying off 30,000 people. You tell what jobs have been created by this tax cut for the rich?

[Armstead]

6. Cycles

One of the factors that determines the state of the economy is basic supply and demand.

Things can be getting worse in the bigger picture (which I think they are) but there can be ups and downs within that.

When times are tight, people and businesses cut back on purchases. For manufacturers that means reducing their backlog. But eventually, they have to replenish or replace things, which releases pent up demand. So a manufacturer orders more parts, which stimulates the supplier of those parts, etc.

So the economy is always going to swing up and down.

Also, I suspect that many people may be spending more for the holidays to cheer themselves up. The world has been so sucky this year, there may be a feeling that "I'm sick of this. I'm going to at least have a happy holiday season."

[iamjoy]

7. We Can Do Better

If Democrats point out all the ways the economy is in the tube and try a direct assault on Dubya's economic record, they will just get labeled as the negative party with no solutions.

So, we must find a back door way to point out the deficincies in the economy - rising household debt, increased number of people in poverty, etc.

Some may consider the Democrats who voted for the bankruptcy bill traitors, but those who did can talk about the deficit and promote responbility at all levels, personal and government. Those who voted against it could talk about a safety net and shared responsibility.

[OnionPatch]

8. I wonder

if those 30,000 GM employees that are getting canned think the economy is doing well. My own personal observation is that the job market stinks and that's how I judge the economy. If I'm stuck in my cruddy low-paying job and there are just no other options, the economy stinks as far as I'm concerned.

One thought I had was that Katrina boosted the economy. I heard that Americans donated something like a billion dollars to Katrina aid, not to mention the government money going toward reconstruction, etc. It seems to me that that much money injected into the economy has got to be a boost.

[gratuitous]

9. A couple of things: The dead cat bounce

That is, the economy has fallen so hard and fast that it's bound to come back a smidgen which looks like an improvement.

Second, consider this: The United States is borrowing billions of dollars every day, and Congress is poised to cut taxes yet again. If you managed your household like this, it would look like you have oodles of money right up until the minute the postal carrier came with the stack of bills that you had to pay off.

[orwell]

10. The Primary Reason...

Short term interest rates held below the inflation rate by the Fed. In essence this is free money. This was the major contributing factor which led to the real estate price explosion. When people buy houses, they buy all the things that go in a house. Also, the rapid rise in real estate equity allowed people to refi and pull money out of their houses for consumer purchases. This made up for stagnant to falling real wages which would normally impact spending.

But it all goes back to the cheap money being printed by the fed in the form of low interest rate loans through the banking system. This was also a major factor in the enormous profit increases at US corporations.

The tax cut as a stimulus is overblown. It was not the tax cut per se, but the resulting deficits in the range of 5% of GDP which added to consumption spending. This is pure Keynesianism. Stimulate demand with deficit spending to boost GDP.

The most important of these two however was the Fed's cheap/free money policy. That is where the real "gas" came from.

[Media_Lies_Daily]

11. Don't you understand that they're cooking the books???....

Unemployment is a LOT higher than the 5% claimed by the NeoCons.

Soup lines are operating in every major urban center in the U. S., and the number of homeless has grown by leaps and bounds since Katrina, Rita, and Wilma.

Utilities, gasoline, food, transportation, and all other costs are up by a very large percentage over last year at this time, and wages are down over that same period of time.

Interest rates are being jacked up, and most banks are raising their ATM fees.

The cost of housing has escalated beyond any reasonable limits, and is another bubble waiting to explode.

The number of foreclosures and bankruptcies are setting new records every month.

Iraq is a major financial "black hole" that is sucking in taxpayer funds at a remarkable rate.

And I sure as hell don't see the wealth from any of the tax-cuts to the Top 1% trickling down to those that really need it.

If you or anyone else believes that the economy is doing well, I have to really question what you're smoking.

[Ravy]

12. The massive debt (8.1 Trillion) is responsible.

Most of that money went to US corporations to buy goods for the military, wages, health care, roads and bridges, buildings, etc.

In another thread, I used the analogy that if I charged 8.1 trillion dollars today at Costco for goods, I would expect that they would be able to report a pretty good fourth quarter this year. Things would be very dismal for me in January though.

Without the government charge card to bolster up the Republican style economy, the numbers would be horrendous-- just like their economic policies.

Anytime some Republican economist spouts "good" numbers they should be asked what the unemployment rate would be if the government had to pay for its goods and services in cash, rather than charging them on Uncle Sam's credit card.

[OldLeftyTreeHugger]

22. Uncle Sam's credit card

Indeed, you max out your credit card and your economy will 'look' pretty damn good, too. Also, Clinton's efforts at reducing economic shock have kept this economy from tanking even with all the bad news. There will be a price to pay, however, and once again, it will probably (definetly) be a dem who fixes things. The belt tightening though will be tough.

Too bad the free spending republicans haven't done their duty to keep the charge card in check. It's our job to make sure they get the blame for the coming inflation. Bring it on!

===================

Thanks ahead of time for the DU welcomes. Have been a reader for sometime. OLTH

[bahrbearian]

23. Thank you for your "2 cents", There will be a price to pay,

and I wonder if anyone can fix it. Welcome, from One Tree Hugger to Another.

[PDX Bara]

24. Welcome!

This is a great place for any non-Republican to be and the news articles are the very best.

[newyawker99]

26. Hi OldLeftyTreeHugger!!

Welcome to DU!! :toast:

[Peter Frank]

13. China's holding a huge portion of our debt...

...just like Japan did under Reagan.

This hypocritical admin touts democracy & freedom while beholding our economy to the strongest Communist nation on the planet.

This stinks out loud! :puke:

[Strelnikov_]

14. Happytalk To Keep The Proles Buying Through The 'Christmas' Season

The chocolate ration is being increased.

The war with Eastasia is going well.

Does it feel like the economy is doing well?

One day, we are getting pronouncements like the recent one that the economy is strong. The next day, this or that failing will be blamed on the faltering economy.

I really shouldn't have skipped out on all those 'Basics of DoubleThink' classes at the academy . . .

[PowerToThePeople]

15. Good Economy? Where? I don't see it.. n/t

[Lexingtonian]

16. your guess is as good as mine

but seems to me to be two things. One is that the fairly radical shifting around of money relative to the Clinton economy- capital moving from stocks to housing or being consumed or to India/China, spending moving from Blue State electronic tech companies and manufacturing to Red State energy and 'defense' companies, plus the pharmaceutical and 'health care' and insurance/financial industries - forced a set of massive changes in economic efficiency over the past few years. The American workforce has apparently adapted. It's been bad on worker health, wealth, and rights- but the average American worker has been practical and accepted that there was a price to becoming competitive in the global and post-industrial marketplace.

In the process the relative bloat and economic inefficiency has basically been shifted to the corporate management class and a few industrial sectors that easy to fix once the American workforce decides that they themselves are no longer the significant problem. That'll show up as political will and unity/consensus. That would amount to reprogressing income and capital gains taxation, white collar crime enforcement, defundings ('defense' contracting), proper regulation (health care), and antitrust enforcement (energy).

There is a lot of trouble in the way the present gross inefficiencies have been financed- the massive borrowing. The relative amount of debt doesn't worry me- it's 6-8 months' worth of GNP, not that hard or painful to extract once the U.S. government is seen to be an honest and responsible and fair and careful economic player again that is pursuing the best enlightened interests of all its citizens. Relative levels of public debt were much higher during the Civil War and WW2. Going under about 1-2 months' worth of GNP of debt seems to cause outbreaks of a lot of irresponsible behavior, so one shouldn't go there. (T bills would become treated as speculative commodities, the nonmonetary value lying in their relative security, on the order of gold rather than being the face value-based instruments in the marketplace that make them work rationally.) The difficult bit is that paying off the 4-6 months' worth of U.S. GNP is in absolute terms an enormous amount of wealth to push back into the U.S. and world economy, though, far trickier to manage in its effects than the initial sucking of it out.

Moderate Republicans are to a large extent money-centric folks and they're not much fooled by Bush. They only care about the cost/benefit ratio, and the day that ratio goes permanently beyond what they are willing to bear they ditch their support for him. Hardline Republicans, otoh, don't care whether what Bush says is true or not in anything as long as he doesn't contradict his long term claims and their lives aren't utterly unmanagable.

Democrats imho simply have to stand on being the economically honest, white collar crime prosecuting, governing Party and earnestly promise to deal with the unbearable inefficiencies in the national economy once elected. Excessive CEO pay could be termed a fundamental economic inefficiency at this point. Bush trying to get more counterproductive tax cuts through and not rescinding the bad ones so far should make most of the argument for them.

It's probably also time to start pointing out that the insecurity people feel at this point is at bottom largely based in domestic social injustices that Republicans have allowed to fester. (The only people who will fight the point, i.e. be 'outraged' by this, are hardline Republicans anyway.)

[TahitiNut]

17. Because 1.5% more people were employed in November 2005 than ...

... November 2000. :eyes:

Between November 2000 and November 2005, the number of jobs increased by 1.5% (1,989,000 people)

1.5%

In five years!

You think I'm kidding? (I am. But the number is factual!)

[Media_Lies_Daily]

29. The "number is factual" compared to what?? I fail to see how the....

...unemployment number could be anywhere close to 5% based on the fact that Louisiana has an unemployment of 25%, Mississippi has an unemployment number of close to 13%, and thanks to the destruction of the shrimp fleet in Alabama, Alabama couldn't be below 5% unemployment.

Remember, the NeoCons like to count all of those part-time seasonal jobs as if they were meaningfully employed instead of picking up the slack over the holidays.

Additionally, some major corporations have announced layoffs over the last couple of months, and the housing construction industry has been cutting back on workers in the colder regions.

5% unemployment? I don't think so. 6% maybe.

[WCGreen]

18. Consumers are borrowing just to live...

Since the consumer accounts for somewhat over 65% of economic activity....

But the problem is that people are tapping into personal wealth, home equity, in order to finance purchases...

With income growth remaining fairly flat....

This simply can not last....

[rman]

19. "kept afloat" vs "stronger"

i'm not so sure it is stronger - so the question as to what made it stronger seems moot to me.

do you think it is stronger in spite of your thinking that it isn't doing all that well?

at any rate, what's the point of a good economy if so few people benefit from it?
or alternatively: who's economy are you talking about? theirs or ours?

[tlsmith1963]

20. I Bet That Most of Those New Jobs...

...that have been created are probably service-industry jobs that barely pay above minimum-wage. I won't consider the economy to be good until wages keep up better with the cost of living. It's the *quality* of the jobs, not the quantity.

Tammy

[BuyingThyme]

21. Taxes delayed.

Taxes are the funds Americans have to pay.

Whenever the deficit increases, taxes increase (more money is owed by Stupid America).

The only difference between a deficit increase and an income tax increase is that you have to pay interest in the deficit increase.

George W. Bush has raised taxes more than anybody in the history of the world, but nobody's being asked to pay yet.

Yes, this is way beyond anything Stupid America can understand.

[Zinfandel]

25. The stock market hasn't moved in five years bouncing between 10.5 and 10.9

for five fucking years...the market was 11,541 when Bush took office in 2001.

[Yupster]

28. Stock Market did more than bounce around for five years

First, the Dow Jones Industrials, which I'm assuming is what you're referring to with the number 11,541 was not anywhere near 11,541 the day Bush took office.

In fact on 1-20-01, the day Bush took office it closed at 10,587. Today it is somewhere around 10,800 or 10,900 which gives Bush an impressive return of about 2.5 % for the last five years or about .5 % per year. No wonder he's bragging.

The Dow Jones made its all-time high on 1-14-00 at 11,723. It had an awful time after that and in fact, Clinton's last year in office was the stock market's worst year in 20 years.

However, that record didn't last long as the 2000 9 % drop was followed by the 2001 12 % drop which was followed by the 2002 22 % drop.

By then the Dow had fallen all the way down to 7,400 or so.

Anyway, the idea that it's hovered around 10,500 for the last five years is very wrong. Actually, there was an incredible drop from 11,700 to 7,400 and then a climb back up to the current 10,800 or so.

The year 2003 was a very good one for the market which was up way more than 20 %. The year 2004 was up about 10 % and this year is somewhere around 5 % going from memory only.

[tom swift]

27. Economy

Dawg, there are a lot of reasons for the growth in GDP, including, for example, durable goods. In the latest period Boeing received a large order which will be completed over 10 years, I think, but the full value is in this month's #s.
The short-hand reason for the good numbers is tax cuts, deficit spending, home sales and hurricane recovery spending. The trickle down theory is nonsense as is supply side economics. The Bush economic myths are comparable to the Reagan myth.

[applegrove]

30. The government spending (at a time of possible recession) has been

solely in the stock market & in War on Iraq. That is what has kept the economy going. The workers fight inflation (that would occur due to oil increases) by not getting jobs (unless they sign up for Iraq) or taking jobs a lower pay. So interest rates can stay low - and fund the market (which has to slow down if interest rates go high).

That is why the government spending is ourside of the USA in Iraq. So the defence industry, & the people in the stock market benefit. And buy homes.

Everyone else is kicked out of this round of government spending and the economy.

So that they can do their job of fighting inflation while the rich do dick all. And benefit!