Bush Proves He's an Upper-Class Act
The president calls it a "jobs and growth" plan, but it's neither.
His latest round of proposed tax cuts won't create jobs and won't grow the economy. It will only do more of what his last round did -- make the rich even richer.
The economic problem right now is too much capacity relative to demand. Too many factories are idle, too much equipment isn't being used, too many people don't have jobs. The nation is having a hard time coming out of its slump because there still aren't enough buyers for all the goods and services the American economy can produce.
But there's also a long-term problem, and it's as much a social problem as an economic one: We're splitting into three separate societies.
At the top is a regal class with more wealth and income than any aristocracy has ever had. They're also receiving a bigger slice of America's total income now than at any time in the last 60 years. In the middle is a big, anxious class that's just a bit better off than a decade ago but still having trouble making ends meet. At the bottom is a large underclass whose income and sparse wealth declined through the 1980s and mid-1990s, then picked up in the late '90s when the national rate of unemployment dipped to 4% and employers had to scrounge to find workers. Now that the official rate of unemployment is back at 6%, the underclass is falling backward again.
The short-term problem is related to the long-term one. For years, American productivity has been rising at a healthy clip. Computer and Internet technologies have dramatically increased our capacity to produce more goods and services. That's a major reason why the economy could grow so quickly in the '90s without igniting inflation.
Alan Greenspan deserves credit for recognizing this when he allowed short-term interest rates to fall and unemployment to drop. Despite the "irrational exuberance" that caused stock prices to soar in the late 1990s and plummet between 2000 and now, the productivity revolution continues. That's why our businesses have all that new capacity.
But here's the rub. All the goods and services that can now be produced have to be bought by someone. Individual consumers account for two-thirds of what's purchased in the nation. And because of the productivity revolution, a lot of items can be made cheaper. But they're not so cheap that consumers can afford to buy all of them on paychecks that haven't gone anywhere.
