John McCain, while publicly distancing himself from President Bush, has presented an economic program that is a continuation of Bush’s policies. So an assessment of the administration’s record is in order.
In his Aug. 30 radio address, Bush cited recent statistics to show the economy is “beginning to improve.” It put me in mind of a Scottish protest song from the 1950s (roughly translated):
They say we have never had it so good
But who in the hell are they trying to kid?
Bush cited a respectable 3.3 percent rate of growth from April through June, along with an increase in durable goods orders. But these indicators were both helped by the one-time stimulus checks, and were probably boosted by the usual election-year surge in government spending, particularly military orders. Neither effect is likely to last.
Bush also cited a leveling off of home sales. The situation may be getting worse a little more slowly. But in July, foreclosure proceedings were started on 197,000 homes — a new record. More “good” mortgages are now being affected than sub-prime loans. This financial hurricane that is destroying up to 2 million homes each year shows no sign of abating.
Whether you look at families’ living standards, or the economy as a whole, the prospects are worse than they have been for at least a generation.
Family living standards
In August, the Census Bureau issued figures on household income for 2007, the sixth, and almost certainly the last, year of an economic expansion. Analyzing those figures, the Center for Budget and Policy Priorities found that, compared with the previous peak year of 2000:
• income for a typical (median) working-age household fell by $2,000,
• poverty and child poverty rates increased,
• Americans without health insurance increased from 39.8 million (2001) to 45.7 million.
Keep in mind that 2007 should have been a “good” year. In 2008, jobs have been lost every month, and the official unemployment rate has shot up to 6.1 percent. Using a more realistic measure, unemployment is at 10.7 percent. Hard times extend from young people who are finding it harder to get jobs, or to get college loans, to seniors who are filing for bankruptcy in record numbers. Prices, led by food, gas and heating oil, are outpacing wages. Millions of families are working multiple jobs in a desperate and often unsuccessful effort to save their homes.
The overall picture
You can still find economists — and headlines to match — saying there is no recession, or the recession will be mild and the economy will turn around in a few months. I don’t think so, and here are some of the reasons.
• The latest rescue of the bondholders and investors in Fannie Mae and Freddie Mac is unlikely to solve the problem. Working families are trapped with unpayable levels of credit card, mortgage, education and medical debt. Without a rescue plan for these families, the financial crisis will continue.
• State and local governments, facing budget shortfalls, are cutting back on jobs and spending.
• The continuing collapse of the private pension and health systems are further squeezing working families, businesses and governments.
• Years of squandering the nation’s wealth on unproductive investment, prisons and war have left the U.S. with inadequate physical infrastructure (rail, bridges, levees, energy, water), inadequate social infrastructure (education, public health) and a weakened manufacturing sector.
• The vast military budget and foreign military commitments are a drag on the rest of the economy.
Policy makes a difference
The next president will face an economy with deep structural problems, weakened by eight years of misrule. We know how John McCain would respond. Like Bush, he will maintain corporate profits and private wealth at the expense of the environment and of living standards of workers in the United States. He will increase military adventures (and expenses, and lives lost) to maintain multinational corporate power abroad.
Barack Obama has explicitly rejected the Republican “ownership society,” which leaves each individual “on their own” to confront employers, insurance companies and social decay. Obama has pledged to provide health care, to support good jobs at union wages, to rebuild the infrastructure and to invest in renewable energy. There will be many times when the effort to fulfill these promises will run into furious opposition from corporate interests and the investor class. The outcome will depend, in large part, on how well organized the progressive forces are and the extent to which the election results for Congress as well as president are seen as a clear rejection of the right-wing Republican corporate agenda.