Wednesday, January 31, 2007

Bush On The Economy

Recently (1/30), President Bush gave a speech about the Economy at Caterpillar, Inc.

In this speech, Bush touches on the recession and the effects of his tax cuts. Bush claims that he provided tax incentives to small business owners and brags about how sizzling hot the economy has become.

One of the real claims I have a huge difficulty with is "We're the largest exporter in the world. Last year we exported a record $1.4 trillion worth of goods and services. Now, in order to export something, somebody has to make it." Bush fails to mention that the export surge is nowhere close to balancing America’s trade. The US imported more than $2 trillion worth of goods and services, or about 50 percent more than they exported, resulting in a trade deficit of about $700 billion. The trade deficit means that the US as a whole is more in debt and has more interest to pay.

Further in the speech, Bush asserts "In other words, when I talk about numbers, behind the numbers is people who are providing the service and/or making the product. So the more one exports, the more likely it is people are going to be working."

Quite the opposite is true. Companies have improved profits for American companies, but have actually cut the number of workers. Before the last recession there were 17.2 million U.S. manufacturing jobs and today there are only 14.2 million, according to the Labor Department. This constitutes a loss of 5 million manufacturing jobs. American firms have managed to squeeze more goods out of their plants with the same number of workers. This means more productivity, more profits for the companies, but less pay for the remaining workers. Due to rising energy costs, remaining workers have had less money to buy stocks and thus have not had the opportunity to share in the dividends the companies have paid out. Americans have less money left to invest into the next economic cycle because they are more in debt than they were previously.

I don't think things are as rosy as Mr. Bush paints them. The 7.2 Million jobs created since the recession ended in 2003 are not high-paying manufacturing jobs, but low-paying service industry jobs - more Starbucks baristas, McDonald's burger flippers and more people to answer phones. Even those jobs are being outsourced these days. The sad part is that the 7.2 Million jobs created does not even account for the normal growth of the workforce over the last three years.


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