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Supplementary » October 24, 2004

The Economy

By Dean Baker

  1. Laboring for job loss. Bush is the first president since Herbert Hoover to actually lose jobs during his term. (Typically, the economy creates 8 million jobs in four years.) The economy has 913,000 fewer jobs today than when Bush took office in 2001. Tax cuts for the rich were not an effective stimulus.
  2. Building up the housing bubble. The limited economic growth since 2001 was driven by a housing bubble. The unprecedented run-up in home prices spurred a construction boom and a massive wave of consumer borrowing. When the bubble bursts, millions of homeowners will be devastated and we will have another recession.
  3. Driving the dollar toward disaster. President Bush has continued the high dollar policy of the Clinton administration. The over-valued dollar makes U.S. goods uncompetitive in world markets. We are now borrowing more than $650 billion a year from abroad to cover our trade deficit.
  4. Amassing massive deficits. Locking in tax cuts for the rich threatens the country with massive budget deficits far into the future. Taxes to finance general government—which excludes Social Security and Medicare taxes—are less than 10 percent of GDP, their lowest level since before World War II.
  5. Pumping up the Pentagon. Bush boosted military spending by $100 billion a year in addition to his war-related spending. This is a major economic drain. Standard economic models show that this additional spending will lead to the loss of about 1 million jobs.
Dean Baker is co-director of the Center for Economic and Policy Research and co-author of Social Security: The Phony Crisis (University of Chicago Press, 2000).

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Appeared in the November 15, 2004 Issue
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