Paid for by NDN.
Challenging the Republican Economic Record
by Simon Rosenberg, NDN President and Robert J. Shapiro, Globalization Initiative Director
September 28, 2006
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To: Interested Parties
From: Robert J. Shapiro, Globalization Initiative Director and Simon Rosenberg, NDN President
Date: September 28, 2006
Subject: Challenging the Republican Economic Record
Under George Bush, the American economy is not benefiting most families. It makes a big difference: We compared how little the income of the average American family has increased over the last four years, with four years of comparable GDP growth during President Clinton’s terms. We found that the dismal Republican record has cost the average family $5,054 in income gains. This “prosperity gap” of more than $5,000 per family helps explain why President Bush’s economic approval ratings remain low and why, throughout this campaign, Democrats must speak loudly and clearly about the economy. Whether gas prices rise or fall over the next five weeks, progressives must hold conservatives accountable for their major failures of economic stewardship -- stagnant wages & incomes; fiscal mismanagement, and misunderstanding globalization.
A recent CNN poll showed that the economy is the voter’s number one concern this election season. Despite four years of healthy GDP and productivity growth, the latest CBS / New York Times poll found that only 37% of Americans approved of the President’s handling of the economy. It’s unsurprising, given how little most Americans have benefited from that growth. This morning’s Wall St Journal reports that “President Bush appears to believe that the economy ranks among Republicans' strongest weapons in the 2006 fight.” If so, they’ll be shooting with blanks -- and running desperate attacks ads claiming once again that Democrats will raise people’s taxes.
We have to fight back, based on a real understanding of why Americans are so concerned about their economic lot. There has been a lot of talk about falling gas prices – and lower prices at the pump are great news for the American people. But as Figure 1 shows, gas prices have not greatly influence the President’s ratings. In fact, there’s really very little connection between the two. The last time gas prices fell sharply in the fall of 2005, the President’s rating stayed flat – as it has this time.
What is the reason real reason for the President’s weak ratings? We think it is the huge gap between how much most families benefited from the last economic expansion, and how seriously they’re struggling this time. You only have to compare the last four years of strong economic growth under President Bush (20002-2005) with the final four years of strong growth under President Clinton (1996-1999). Under President Clinton, the real income of the average American household rose 10%; under President Bush, it’s actually fallen 0.5%. As Figure 2 shows, if average incomes over the last four years had risen as much as they did during comparable years in the latter 1990s, the average American family would be better off by more than $5,000 today.
Figure 1: President Bush Unpopular on the Economy Despite Gas Price Fall
Figure 2: The $5000 Income Gap for an Average American Family
Progressives should take this economic message on the road over the coming month, and hold Republicans accountable for their three major economic failures.
- Stagnant Wages and Incomes. Adjusted for inflation, most Americans earn less today than when Bush took office. GDP, productivity and corporate profits all have shot up. But the most recent Census Bureau data show that the median income in 2005 was 5.9% lower than it was in 2001, when President Bush took office. While the prices of many middle class necessities continue to rise, hourly and weekly wages remain stuck where they were in 2001 (see Figure 3). If GDP growth begins to slow significantly – and there are signs that it’s happening already -- this could be the first economic expansion in modern times that produces no real gains in average wages. As it is, this administration has the worst record on incomes and wages of any since World War II, and it should be held accountable.
- Poor Fiscal Management. Under President Bush, our Government has to borrow more than a billions dollars every day, much of it from foreign governments, to keep itself going. And trade deficits under this administration are even larger than their budget deficits. Yet, with all this stimulus and all this debt that our children and grandchildren will have to pay down, this administration also has the worst record on job creation of any presidency since the Great Depression. Even today, job growth is running at just half the rate it did at a comparable point under President Clinton. Just as Bill Clinton did in 1992, progressives should hammer their Republican opponents for the ballooning deficits and rising debts of this administration.
- Managing Globalization. This is a time of profound changes and the strongest growth on record for the global economy. Yet Republicans have done nothing to help the American people share in the enormous worldwide gains from globalization. The administration doesn’t understand or doesn’t care how Americans are affected by the entry into the global economy of hundreds of millions of new Chinese and Indian workers. Nor do they understand or care about how or why two of the central relationships in our economy - between how fast productivity rises and how much wages go up; and between how fast GDP grows and how many new jobs are created – have broken down (see Figure 4). They even stood by while the Doha trade talks collapsed, threatening our national consensus on the importance of expanding trade.
This administration’s economic record is most notable for its bad decisions, weak understanding, and unmet challenges. In this area as in many others, President Bush and his allies have left America weaker than they found it. Their record represents a historic failure of economic stewardship. This election year, American voters must hold them accountable.
Figure 3: Stagnant Wages and Incomes
Figure 4: The relationship between rising productivity and incomes breaks down
Sources: Gallup / Department of Energy (Figure 1); Census Bureau (Figure 2); BLS (Figure 3); BLS / Census Bureau (Figure 4)
