Bush & the Economy

I'm getting pretty involved in recruiting at work, specifically on the Columbia University team, which is, you know, fun. A good diversion from actual work, at least. It'll be nice to be on the other side of the table grilling the kiddies on why they want to go into I.T.

We're looking to hire quite a bit this year, after a couple of down years in terms of hiring. I was telling someone (okay, it was my mom) this and she said that the economy must be turning around, and that must be a vindication of Bush's economic policy. And while some indicators aren't as miserable as they were last year, I think the uptick in hiring is somewhat localized to the financial services industry, which has benefitted disproportionately from Bush's pro-business fiscal policies, and is just a result of playing catch-up with staffing after a couple of exteremely lean years.

But anyway, it's disheartening that something like a company's, or even an industry's, hiring strategy is enough to sway people's opinions one way or another about an issue as complex as economic policy--especially when it shifts the focus away from any long-term consideration of the direction Bush is steering the economy.

The current administration injected a large amount of real money into the economy for consumers to spend and industry to invest. Which, if that doesn't lead to some fairly immediate, short-term gains in the overall indicators, something is completely fucked up. But any reasonable person would criticize the sheer amount of money distributed relative to the amount of money the government is taking in, and if not that, at least be more than a little peeved that the money was overwhelmingly (and I mean overwhelmingly) distributed to the already-wealthy. Who, if you ask me, are a lot less likely to go out and spend their tax cuts, which was one of the expressed intentions of the administration when giving the cuts, than someone who might be really struggling to get by financially. Though I guess the fear is that a working-class individual might go and pay off some of the credit card debt that consumers are becoming alarmingly reliant on, and the administration isn't too keen on paying off debt.

Infusing massive amounts of cash into a struggling economy is a good way to get a bounce in the economic indicators leading up to an election in which you have to have some positives to point at, but any rebound we have now is meaningless in comparison to the sort of trouble we're in for a couple of years down the line with the projected budget deficits the country is looking at. These deficits are something that Bush will never take responsibility for--blaming the shortfall on the massive amount of money being laid out to "fight terror" (which is really just about the biggest mind-fuck you can come up with: the money is being poured into funding operations in Iraq, which has nothing to do with fighting terror, and embarking on such an expenditure was wholly Bush's decision). The economist in me hopes that Kerry will seize on the looming catastrophe that these budget deficits are during the campaign and remind the voters that Bush is, in the most literal sense of the word, mortgaging away this nation's future, but I just don't think the people will want to hear that. Given the amount of personal debt our population is carrying via credit cards and home equity financing, even if the average person cared about anything other than short-term job numbers, I don't think they'd want to consider the implications of owing so much money. But just to throw out a couple of numbers from the projected budget deficits analysis done by Congress, between 2005 and 2009, the government will have had to pay 1.24 trillion dollars in net interest payments as a result of the borrowing it's doing, and by 2014 we're going to be 13.1 trillion dollars in debt.

Whenever Bush does talk about the budget deficit he usually mentions that he's looking to cut the deficit in half by 2005 (or 2006, or 2007... depending on how much the costs of Iraq have escalated to in a given week). It's really easy to get misled by talks of reducing the deficit. What he means is that in, say, the span of 12 months representing the fiscal year of 2006, the government will incur an additional debt of half as much as it incurred in 2004. The total debt that the country owes will increase each year, but at some point in the future we'll be burning money at half the rate we did this year. Think about running up a $10,000 credit card bill one month that you have no way of paying back, and then the next month citing "improvement" because you only spent an addition $5000. Sure, you're not incurring as much additional debt, but you're still no closer to (and are in fact $5000 further from) meeting your options on what you owe.

If you don't believe that this is a major problem, read what Bush's Chairman of the Council of Economic Advisers had to say about deficits in the years before becoming a huge tool of the administration (he's probably been a huge tool for a while, but at least he didn't ignore economic fact back then).

Even the Republicans know that these sorts of deficits are untenable--there's still a fiscally-conservative wing of the constitutiency that has to be livid about Bush. But what's really disturbing are the Republicans who know that we can't maintain this level of debt but are happy about the current spending and tax breaks, because they're looking forward to a fiscal crisis so severe that the government has no choice but to make monumental slashes in its funding of social programs--downsizing the government is a euphemism for screwing the poor and elderly out of (meagre) health care and Social Security. Krugman had a really good piece in the Times magazine about year ago detailing the budget crisis and getting quite a few people to speak openly about their desire to absolutely bleed Social Security and Medicare/Medicaid to death.

This is exteremely scary stuff, and one of the many reasons why another four years under Bush will amount to the continued dismantling of everything this country should stand for. I hope the people in, say, Ohio, notice, because I have no say in this election.

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