Increased job loss led to a purge of sorts in the Bush White House following
the Dec. 6 announcement that the nation’s official jobless rate rose from
5.7 percent in Oct. to six percent in Nov., nearly a nine-year high.
Subsequently, the president ousted two of his top economic advisers.
One of the purged was Treasury Secretary Paul O'Neill, a former CEO of Alcoa
Inc. He supported the elimination of the corporate income tax. That would
put more money in the hands of the top one percent of income earners whose
income is equivalent to the income of the bottom 40 percent of the U.S.
O’Neill also backed the high value of the dollar. This harmed U.S.
manufacturing by making its products (priced in dollars) more costly than
those of global competitors. The human cost of this currency policy has
In Nov., 45,000 jobs were lost in U.S. manufacturing, the biggest drop of
any employment sector. Factory payrolls have fallen for 28 straight months.
Over three million manufacturing jobs have been lost since 1997.
The president has tapped Jack Snow to replace O’Neill. Snow, a Republican,
is also the chief of CSX Corp., a rail freight firm that has benefited from
government deregulation of the industry. The White House has claimed that
Snow has “Main Street experience.”
The other purged policymaker was Lawrence Lindsey, head of the National
Economic Council, who the Dec. 7 New York Times reported was more willing
(than O’Neill) to ponder the course of “aggressive tax cuts.” That is,
cutting taxes to boost the buying power of ordinary people, a view that
appears to be a blasphemy to some in the GOP. Significantly, Lindsey was a
driving force behind the president's $1.35 trillion income-tax cut in 2001.
The president has chosen Stephen Friedman to fill Lindsey’s shoes.
Friedman, a former top Goldman Sachs executive, also has a leadership role
in the Concord Coalition. The group “has repeatedly issued documents that
grossly exaggerated the size of future (federal) deficits,” wrote economist
Dean Baker, co-director of the Center for Economic and Policy Research (http://www.cepr.net/Economic_Reporting_Review/november_25_2002.htm).
In the meantime, black American workers might perhaps be wondering when the
benefits of the not-yet permanent Bush income-tax cut will arrive. Their
official unemployment rate in Nov. climbed to 11 percent, up 1.2 percent
from 9.8 percent in Oct. In Nov. the jobless rate for white workers was 5.2
percent, up a tenth of a percentage point from 5.1 percent in Oct.
Thus in Nov., African Americans' joblessness rose at a rate 12 times that of
whites! If the U.S. was the beacon of freedom that the White House claimed
it was, the newly appointed economic experts would promptly address such
racialized joblessness. Corporate journalism could help push these new
palace guards to address the economics of racism.
That ideal reality confronts another, which may well divert the focus of
corporate journalists. Namely, the White House’s desire to build a better
image for its economic policies. “A fresh team, administration officials
said, should be better able to sell the president's pre-existing agenda,”
the Dec. 7 New York Times reported.
In other words, new wrapping for a fiscal policy that accelerates the
transfer of tax dollars away from low- and middle-income households to
high-income households. The Bush $1.35 trillion income-tax cut over 10
years is a case in point. He and the GOP call it “economic stimulus,” on
tap to be broadened and quickened next year.
True, the tax cut has put some cash back in the hands of the U.S. public.
But this tax refund has generally been a drop in the bucket to what’s needed
by low- and middle-income people to boost their buying power. Against this
backdrop, local and state governments are facing fiscal fragility
At the same time, a so-called third economic stimulus package is on the way
from the White House. It includes many tasty treats for rich people such as
cutting the tax that investors pay on stock dividends. But does the U.S.
economy need more money to be invested in financial speculation?
And a likely White House proposal for 2003 to exempt the Social Security
payroll tax from the first $10,000 of workers’ wages? Big business
executives back this tax code change. Perhaps they think it will in part
serve to weaken public support for Social Security, which is fully funded
through 2041 without any adjustments.
It is worth noting that Friedman and Snow have backed the idea of balanced
federal budgets. However, a new round of up to $300 billion in tax cuts
next year will likely increase the federal deficit. How will these
anti-deficit advisers sell the president’s plan to stimulate the U.S.
economy through tax cuts that will expand the national deficit?
Meanwhile, workers’ growing joblessness is causing the U.S. economy to
sputter. Harsh spending cuts by local and state governments will deepen
this job market trend. There’s a lot of pain out there being felt by
unemployed workers and their families.
Bush’s purged economic advisers have their wealth and power to fall back on.
The nation’s workers don’t have this cushion of privilege. The U.S.
economic divide is growing.
Seth Sandronsky is an editor with Because People Matter, Sacramento's progressive newspaper. Email: email@example.com