Sanjay Paul
Patriot News
August 8, 2003
In their bid to reclaim the Presidency next year, the Democrats appear to be
outgunned. President Bush’s approval ratings, although down a bit recently,
remain fairly robust. The controversies surrounding the Iraq war seem to have
faded from the public mind. The discredited 16-word sentence in the State of
the Union address claiming to show Iraq’s intent to procure nuclear weapons,
the continuing failure to unearth weapons of mass destruction, the inadequate
efforts at reconstruction of a battered economy, the inability to develop the
vestiges of a civil society in Iraq, the sharp disapproval of U.S. policy from
the international community – these no longer figure prominently in public
discourse.
Even the frequent killings of American soldiers, once met with consternation and cries of alarm at home, now evoke little response from the citizenry here, so routine has the grim urban guerilla warfare in Iraq become.
With the Iraq issue largely sidelined, Democrats have pinned their hopes on the economy. In a peculiarly perverse fashion, they take gloomy satisfaction in the listless performance of the U.S. economy. They note the the lack of efficacy of the tax cuts implemented over the last three years. Look, they say with dark relish, what have the massive tax cuts accomplished? They were a sop to the rich. They failed to provide economic stimulus. And they caused the budget deficit to explode.
The data largely support the Democrats’ contentions. The cuts in the dividend tax and the top marginal tax rates did leave the wealthy far better off. The reductions in the tax rates failed to ignite spending by consumers and businesses. And the budget deficit has soared beyond the $400 billion mark, and shows little sign of descending in the near future.
But, counter the Republicans (after dismissing the first charge as contemptible class warfare), the tax cuts will take time to make themselves felt. Eventually, they will lead to greater investment by corporations and thus faster economic growth. As tax revenues grow, they argue, the budget deficit will shrink, and the current hullabaloo over the resurgent deficit will have proved to be no more than a tempest in a teapot.
And in any case, the rise in the deficit is not entirely the result of Bush’s tax cuts – the increased spending on defense and homeland security have had a significant role to play in the growing fiscal imbalance. Surely, the Democrats would not wish to underfund the War on Terrorism, would they?
And so the argument goes. In the meantime, recent data suggest that the U.S. economy is showing signs of incipient recovery. The gross domestic product, or the output of the economy’s goods and services, rose 2.4 percent in the second quarter – faster than most analysts had expected. Business spending is beginning to pick up. The unemployment rate has fallen.
The decline in the July unemployment rate is somewhat illusory, however. It came about as almost half-a-million workers grew discouraged at the lack of employment opportunities and ceased looking for work. They were thus considered to have quit the labor force, thereby causing the official unemployment rate to fall.
Such mathematical quirks in the computation of the unemployment rate are of scant comfort for the Democrats, but for now they will have to do.