Friday, April 07, 2006

Jobs: Bush's Rhetoric and Reality

Bush is currently threatening to veto spending bills if Congress does not sufficiently reign in the federal deficit. This move appears more of a concern for Bush's promise to cut the deficit in half before the end of his second term. We have already been offered a taste of what kind of programs will be targeted by spending cuts the GOP-led Congress will consider: health care for the elderly and education. Don't expect any new thinking and look for even more budget cuts in these areas should Congress heed the President's demand.

But just as Bush insists that spending must be cut, he refuses to allow his tax cuts for capital gains and dividends to expire, telling us that they are crucial to continue the asserted booming job growth:
To keep our economy creating jobs and opportunity, Congress needs to show its trust in the American people and make the tax relief permanent.
Bush claims that some 5.1 million new jobs have been created in last five years. This number, apparently, does not reflect the 3 million jobs that have been lost during his presidency but only the total gross number of jobs created. Despite the rosy rhetoric, the White House continues to tout the make-believe notion that the jobs picture in American is grand. But as Paul Craig Roberts details, the five million jobs figure is a standard White House fiction: this number does represent the net jobs gain, which is far less:
According to the Bureau of Labor Statistics payroll jobs data, from January 2001 - January 2006 the US economy created 1,054,000 net new private sector jobs and 1,039,000 net new government jobs for a total five-year figure of 2,093,000.
A net 2 million jobs have been created during Bush's cited time period, half of which were new government positions under his bloating federal bureaucracy. But the numbers don't begin to tell the real story, which is far, far bleaker than one simple number can convey. While Bush insists on continued tax cuts to keep things "moving forward," the reality is that his presidency has one of the worst job creation records in history.
During Bush's presidency the US has experienced the slowest job creation on record (going back to 1939). During the past five years private business has added only 958,000 net new jobs to the economy, while the government sector has added 1.1 million jobs. Moreover, as many of the jobs are not for a full work week, "the country ended 2005 with fewer private sector hours worked than it had in January 2001."

[Ed: the discrepency between the number immediately above, 958,000, and the previous cited jobs number was due to Labour Department readjustment of figures. Either number still represents historically poor job growth.]
But things get far worse as we drill down:
McMillion reports that during the past five years of Bush's presidency the US has lost 16.5% of its manufacturing jobs. The hardest hit are clothes manufacturers, textile mills, communications equipment, and semiconductors. Workforces in these industries shrunk by 37 to 46 percent. These are amazing job losses. Major industries have shriveled to insignificance in half a decade.

During Bush's presidency, the US has lost its trade surplus in manufactured Advanced Technology Products (ATP). The US trade deficit in ATP now exceeds the US surplus in Intellectual Property licenses and fees. The US no longer earns enough from high tech to cover any part of its import bill for oil, autos, or clothing.

This is an astonishing development. The US "superpower" is dependent on China for advanced technology products and is dependent on Asia to finance its massive deficits and foreign wars.
Should some doubt the claim that advanced technology is now coming from China, it is given support by the story of Magnequench, an Indiana company that specializes in sintered magnetics and whose devices are used, among other applications, in guidance systems for cruise missiles and JDAM bombs. In September, 2004, Magnequench shuttered its doors, fired its 450 employees and shipped its tools to China. More amazing is that Magnequench has been owned and controlled by Chinese firms closely tied to the Chinese government. And the Pentagon has been, and is, Magnequech's biggest customer.

This is what is happening to the high tech sector of the American economy, the one so proudly cited by the administration as the one area indicative of the future capacity of the American economy. Will Bush ever tell Americans what is really going? This is an entirely rhetorical question, to be sure, and it is based on a reality with which Bush would prefer not to deal.


Blogger InitialN said...

Trade deficit is a tango that US goverment dances for a long time. It takes two to tango.
If Federal government doesn't keep on the overdraft fiscal policy, there won't been such a huge deficit to be funded by foreign capital.
Say US don't want to tango with China now. It doesn't mean that US will stop tango. Who's gonna finance the overspending in the private and public sector: medicaid&medicare,War on terror, congress spending,and bubbling property development etc? If US don't want China, It must be Japan, Korea, Malaysia or whoever can pick up the dance shoes and dance with it.
Closing the door to a debtor doesn't mean you don't own debt anymore: if you don't make more and spend less, you'll still ask someone else to lend you money and you'll end up with more debt.
sometime Federal goverment spends money just like a drunken sailor.
I heard a story from Chris Edwards about redundant and unefficient grant program spending: Technology development venture capital fund ,created in the 1996 telecom reform bill,funds technology start-up companies in recent years by spending 22 million dollars, of which 11 million dollars are used to pay adminstration salary. 50% of the money is paid for the officials to carry out the paperwork.What a grant wasteful bureaucracy! and the official grant website is under construction by Northrop Grumman under a $22 billion federal contract.22 Billion with a b just for a website is remarkable.In fiscal year 2004 the federal government paid out $418 billion in grants. With today's gigantic budget deficit,government really should reform the current unefficient and resouce-consuming grant system.
But that's not good for election. States and voters need grants to get some federal money love.
Sometime when you do the right thing,you don't think about the seats in the parliment. but That's just what I think.
Obviously Bush adminstration doesn't think so. That's why bush signed in law four major tax cuts in his first presidency even when the fiscal deficit was reaching the historic level. So who's gonna pick up the tax bill for him. Next president. But Bush's won two presidency already.Mission accomplished. Let tomorrow worry about tomorrow.
It's all about election, isn't it?
Sometime it's so hard to do the right thing even when you know what's the right thing: at least a tax reform is much needed.

1:17 AM  

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