by Rod D. Martin
June 1, 2004
As the media continues its “if it bleeds it leads” bias on Iraq – despite tremendous positive news from that front – and the President’s poll numbers reflect that, it’s hard for many conservatives to remember that iron law of politics given us twelve years ago by James Carville:
It’s the economy, stupid.
One reason it’s easy to forget this wise counsel right now is that the public’s perception of the economy is much worse than the reality. Indeed, that was the case in 1992 as well, when Bill Clinton got away with the most ludicrous of lies, that we were living in “the worst economy since the Great Depression” during a period of surging economic growth coming out of the brief 1990-1991 recession; and George W. Bush would do well to learn the lesson.
But the facts on the ground are much, much better than in 1992. And despite the Alphabet Media’s best efforts, it’s going to get harder and harder to conceal that fact as the year progresses.
Some statistics are in order. Despite ongoing left wing claims of a “jobless recovery”, 1.1 million jobs have been created just since August. Indeed, according to today’s much-anticipated Institute for Supply Management (ISM) report, employment is now at its highest level since April 1973.
This is just one of the dramatic effects of the President’s supply-side tax cut enacted last year. Since the tax cut, real economic growth has exceeded 5% – it hit an eye-popping 7.2% this May – with only 1.6% inflation. The homeownership rate now stands at an enormous 68.6%, while total household net worth is $44.4 trillion, the highest level ever. Spendable income has increased 4.9%, consumer spending is up 4.3%, business spending on equipment and software is up 12.5% and (perhaps most important for continued job growth) business profits are up an impressive 37%, after adjusting for depreciation and capital consumption. And all of this is in spite of the rise in the price of oil, itself in part a consequence of Democrats’s refusal to pass the President’s energy bill.
These are just some of the reasons the Conference Board states that 2004 will be our best year economically in 20 years.
The major stock indices are up roughly 40% over a year ago, and though in a mild correction currently, look increasingly strong through the end of the year. And while the NASDAQ has not regained its high from the Clintonian period Alan Greenspan once termed “irrationally exuberant,” some other comparisons to the Clinton era might surprise you.
Under Clinton, the family poverty rate averaged 10.5%; under President Bush, it has averaged 9.4%.
During Clinton’s first three years in office, inflation fell from 3.3% to 2.75%; in Bush’s first three years, it’s fallen from 3.75% to under 2%.
And crucially, two years before Bush’s tax cuts – during Clinton’s tenure – our private-sector GDP growth rate was 2.5%. Once again, by the first year after the Bush tax cut, it was 5.3% annualized, 7.2% in May 2004.
All of this equates to yet another validation of the power of supply-side tax cuts as the engine of growth in an over-taxed economy. Learning well the lessons taught by John F. Kennedy in the 1960s and Ronald Reagan in the 1980s, George W. Bush slashed the punitive federal tax bite on investment by nearly 50% last year, as well as federal income taxes across all income levels by 7%. Small businesses – Mom and Pop – were the chief beneficiaries, just as they are the chief victims of tax hikes like those proposed by John Kerry.
As President, the junior senator from Massachusetts would quickly kill this growing boom, with tax policies born of class warfare ideology which completely ignores this truth. In the Wonderland world of the labor union-bound left, the only jobs that count are those held by AFL-CIO members in giant Rust Belt steel mills. The truth is far different: 80% of all American jobs are in the realm of small business, the sole proprietorships and partnerships that, because they aren’t giant corporations owned by millions of shareholders, make their owners look “rich” to Democrats when in fact they’re just getting by. At the margin, the incentive power of tax cuts is the principle driver of these business’s growth, because they frequently make the difference between an expansion or a contraction for a small business which, to it, is truly enormous. If you have two employees and have to lay one off, that’s 50%. Mr. Kerry doesn’t understand this at all.
Fortunately, George W. Bush understands it perfectly, and his understanding has given us the best economy in 20 years. Will these numbers get through – despite the media – in time for the election? Yeah, probably so. And when they do, get ready for John Kerry to join Michael Dukakis and Teddy Kennedy in yet another long Massachusetts oblivion.