Dan Spillane: Economic Failure In The Bush Admin.
Bush Got ‘C’s at Yale--But His Friends Got ‘F’s in Economics 101
From Dan Spillane - Citizens for Corporate Accountability
-It isn't just Harvard
economist Mankiw who fails
-Bush Fed crony Bernanke, and US Treasury Secy Snow actively involved in failure
-Low interest rates set by Fed are connected with credit issuance--but disconnected with jobs, creating a dangerous scenario related to mortgages and consumer debt
-Jobs to be lost, and perhaps houses, unless reality is faced quickly
(SEATTLE) 02/27/04 - Recently, Democrats called for the resignation of Greg Mankiw, the chairman of the White House Council of Economic Advisers, and a prominent Harvard University economist. While Mr. Mankiw's statements regarding jobs and outsourcing raised controversy, actions or inactions by him at this point can have little effect, given the miserable failure of the Bush "growth and jobs plan" - already past the point of no return.
But Mr. Mankiw isn't the first or only one having serious problems with economics. A March 13, 2003 news release by the Heritage Foundations economist went so far as to say "This isn't a tax cut for the wealthy- it's a job-creation machine." Yet, the Heritage Foundation, like Mankiw, is just one more mouthpiece of a very expensive and failed program.
On the other hand, two Bush appointees are actively involved in economic matters, and are therefore capable of making the failed program even worse. Namely, US Treasury Secretary John Snow, and Federal Reserve appointee Ben Bernanke have made statements which show they are even more out of touch than Mankiw. For example, Mr. Snow promised a significant number of jobs before the end of 2003, which never materialized. And Mr. Bernanke persistently claims job growth is "just around the corner." Further, perhaps in denial, Bernanke has gotten in the habit of blatantly contradicting the contents of economic reports--such as those which show unambiguous and dramatic increases in inflation.
The question is, in these hands, just how much worse can "bad" get?
To understand this question, one needs only revisit basic college economics, related to supply and demand. To wit, when it comes to any market, there are basic issues related to supply and demand--employment is no different. But in the current US case, there is absolutely no reason to believe an increase in corporate production and employment demand will lead to an increase in domestic hiring-that is, when domestic corporations have no reason to hire domestically.
And corporations cannot or will not hire domestically, for at least two reasons. First, due to a marked rise in US inflation resulting from ultra-low US interest rates, corporations choose to offset material costs by cutting labor costs. Specifically, they are doing this by utilizing an essentially infinite supply of offshore workers and/or factories. That is to say, given any level of US worker training or re-training, there will likely be a cheaper offshore alternative waiting, perhaps at the other end of an Internet connection. Hence, a very jobless and unsustainable US recovery (as compared to other recoveries, there should be an additional two to eight million jobs at this point).
On the other hand, US and Fed moves encouraged by Mr. Snow and Mr. Bernanke have led to a major increase in the credit demand, in the form of both consumer debt and federal deficit-without a corresponding supply of jobs to meet the demand (you know, those little things known as "bills"?) For example, while jobs have not grown over the past few years, houses have gone up almost ten percent in price in the last year alone, and the average vehicle financed has gone up nearly thirty percent since 2000.
Moreover, despite blame being put on mortgage giant Fannie Mae, current low-interest Fed policy is unquestionably contributing to rapidly expanding mortgage debts, which Fed Chairman Greenspan recently described as "surely leading to significant problems." This means Mr. Snow and Mr. Bernanke, are in line for resignation right behind Mr. Mankiw. And they might as well bring Mr. Bush in tow--while he may have gotten 'C's at Yale, it appears he and his crew must have gotten 'F's in Economics class.
The sorry part is that our jobs--and if something isn't done quickly, even our houses--will likely disappear before the Bush crew is done.