ECONOMY - New Gallup Poll And Labor Numbers Challenge Bush's Assessment Of Economy

DEC 1 - 15, 2003

VOL. 1 ISSUE 16

ECONOMY

NEW GALLUP POLL AND LABOR NUMBERS CHALLENGE BUSH'S ASSESSMENT OF ECONOMY

by Ben F. Terton

(with guest-writer Jackson Thoreau)

DECEMBER 13, 2003 - According to a Gallup poll just released this week (which the rest of the press ignored completely,) three out of four investors are "spooked" by the deficit.

As Gallup reports, "The latest UBS/Gallup Index of Investor Optimism survey reveals that it's not just a few alarmist economists who are worried about the deficit."

They then directly suggest the findings show that the massive deficits created by Bush's tax cuts and massive spending are "hurting the investment climate."

In other words, while cyclically the economy may be trying to turn around, the record deficits President Bush's tax cuts have created have not just a few, but 75% of professional investors worried. Again, that's not even just 75% of the American public, that's 3 out of 4 people who work directly in the investment business - the people who were supposed to be happiest about President Bush's tax cuts.

Just as President Bush took, in the words Senator Joseph Lieberman (D-CT) used back in 2001, "what (was) essentially a head cold and turn(ed) it into pneumonia" by talking down the economy handed to him by Clinton, now President Bush has taken what should be a recovering patient and bled him until he barely has enough blood to function.

While in the short run, the money pumped into the economy by President Bush's tax cuts created a jump in GNP and corporate profits, none of this has translated into long term benefits for the economy, like jobs. That will only happen when investors and CEO's feel secure enough that the economy is actually in good shape. This poll shows that, thanks to the President's tax cuts, 75% of them do not.

In addition, one has to remember that when we hear about the economy growing a certain percentage over last year, that last year the economy was frozen because we were on the verge of the President's drive to war in Iraq. In addition to the already troubled economic state, war worries tamped things down through at least March. So, of course numbers will be better this year than last - but 8% or 9% better than abysmal doesn't mean much.

The measure of a good economy is not GNP but unemployment, and the reality is that the number of people who exhausted all of their unemployment benefits without finding any work was at the highest level ever this past year.

As guest-writer Jackson Thoreau reports, "You want some more numbers from the Labor Department? Look at layoffs, a statistic that is rarely reported these days by the mainstream media. Some 1.6 million more employees were given pink slips in the first ten months of 2003, not far off the 1.7 million in the same period of 2002 and the 1.9 million during the same ten months in 2001, when we saw more layoffs than any year in at least 20 years. About half of those laid off did not find jobs before exhausting government unemployment benefits - the highest level ever recorded."

So, 3 out of 4 investors are seriously "spooked" about the deficits the Bush administration has created, to the point where they are leery of investing. 1/2 the people who were laid off went through all their benefits without finding other work.

Just an FYI, the way unemployment figures are generated now, these people who have exhausted benefits without finding work are no longer counted on future reports as unemployed. That's right, they figure if they didn't find work they must not want to, and so they consider them happily without employment and don't let them make the unemployment figures seem... as bad as they actually are.

There is one fundamental flaw in the current sate of the economy, as set up by President Bush. The idea was that tax-cuts for the top would lead to jobs and higher pay for everyone else. The problem: there is no mechanism to make that happen. In fact, it is exactly the opposite.

A 1998 Chicago Tribune Business Section headline read, "Wages Begin To Inch Up, Stock Market Tumbles." If wages begin to climb, the market begins to go down because it creates a fear that corporate profits will be hurt and inflation might move in.

So, in fact, all of the investors and businesses who are supposed to take the money they were given via the Bush tax cuts and put it toward wages want nothing less than to put that money toward wages, because if they do, their stock prices will "tumble."

President Bush and the media are currently touting the state of the economy as in a "recovery," and the numbers they present, they say, demonstrate that the economy is growing. But in fact, what just happened was that all the money that was given out in tax cuts - which we couldn't afford to give, so we have massive deficits to show for it - ran up corporate profits for a quarter or two. Investors see this was a one time, short-term thing, and that what looms on the horizon is not continued growth but massive deficits that "spook" them. This means that long-term investments, like job creation, won't be happening anytime soon.

As Thoreau points out, "Most companies making these huge layoffs continue to rake in hefty profits. For example, New York-based financial firm Citigroup Inc. announced it would slash 7,800 jobs in November 2001, then went on to record a whopping $14.1 billion in profit in 2001 and another $15.3 billion in 2002. That came on top of making $13.5 billion in 2000 and $9.9 billion in 1999. Why did Citigroup need to cut almost 8,000 employees when it made so much and paid its chief executive, Sanford Weill, an obscene $225 million in 2000?"

Yes, the stock market is up a bit at the moment - the stock of a company like Citigroup does well when profits are high - but that doesn't mean this stock market rise is helping the economy. As we see, it can be exactly the opposite.

So while the President and the non-Moderate Independent American media will continue to point to rising stock prices and some numbers showing growth, the reality is that this little bit of stock price rise and short-term growth is just, as we reported a few weeks ago, like the toilet filling up with water because the handle has been pulled. Yes, it seems like suddenly there is such an increase in water in the tank, but in fact the tank above that used to be full has been completely emptied out and after a few whirling moments of watery excitement, both the bowl and the tank will be completely emptied.

The rest of the media has bought the notion, sold by Dick Cheney more than anyone else, that the stock market equals the economy. In other words, if the stock market is up, that means the economy is doing well. There is no sense to that measure at all and in the past it was not used, but now the non-M/I media has allowed itself to be bullied into reporting the two as if they were the same. Stock market up? That means economy doing well. All economists know that the economy is not the stock market and the stock market is not the economy, but the press doesn't let that get in the way.

We promise to let you know if and when the economy does actually start turning around. Truly, it won't happen until fiscal responsibility is restored and mechanisms are put in place encouraging businesses to hire and put money toward wages.

For now, all we can say, yet again, is if you want to read nothing but the lies the right-wing wants you fed, read any other American news source. If you want the truth, stay tuned to The Moderate Independent.