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Drop in income to impact election

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One of the anecdotes one hears about Ronald Reagan is he famously asked voters if they were better off after he was elected president than before. What he meant by ‘better off’ was whether their incomes had risen. If voters were pleased with having more money in their pockets, they were to vote Republican. It would not be a good idea for George W. Bush to borrow that ploy from the Reagan play book. Because some liberal said so? No, the source of the information is much more formidable than that. The Internal Revenue Service has spoken.

The New York Times has the story.

I.R.S. Says Americans’ Income Shrank for 2 Consecutive Years

. . .The overall income Americans reported to the government shrank for two consecutive years after the Internet stock market bubble burst in 2000, the first time that has effectively happened since the modern tax system was introduced during World War II, newly disclosed information from the Internal Revenue Service shows.

The total adjusted gross income on tax returns fell 5.1 percent, to just over $6 trillion in 2002, the most recent year for which data is available, from $6.35 trillion in 2000. Because of population growth, average incomes declined even more, by 5.7 percent.

Adjusted for inflation, the income of all Americans fell 9.2 percent from 2000 to 2002, according to the new I.R.S. data.

The report credits two factors for the decline in income:

•The fall in the stock market in 2001, and

•The unavailability of enough well-paying jobs since the turn of the century.

But, will the Bush administration take a Reagan-like approach in the last months of the campaign season? The resounding answer to the question of whether one is better off since Bush took office is ‘no,’ for most Americans. That even applies to many who are wealthy, who were unable to recoup their losses through tax breaks. Considering the source of the data, it will be difficult, if not impossible, for the Bush administration to discredit it. Perhaps they will ignore it or try to get people to look elsewhere instead.

With public opinion divided over the viability of the invasion and occupation of Iraq, a strong economy would have provided a welcome focus for the GOP. However, with neither the economy nor the war on terrorism going well, the GOP may feel it needs to resort to its old dirty tricks. ‘Social’ issues are likely to be exploited as fully as possible. The process has already begun. Though the federal effort to amend the Constitution to forbid gay marriage failed, it distracted the citizenry from more important matters, including the occupation of Iraq and our economic doldrums. And, expect that message to continue to be sent. It is a time proven tactic that providing people with enemies, internal or external, will distract them from the problems that are really plaguig them. The Christian Right will increase its determined efforts to scapegoat homosexual Americans as the national election, and showdowns over ballot initiatives seeking to ban gay marriage, near. As the campaign season ripens, I expect to see similar messages sent in regard to race, religion and abortion. The ultraconservative Club for Growth began that process with its funding of extreme Right candidates such as Pat Toomey and Jack Ryan. Though it failed to drive moderate Republican Sen. Arlen Specter from office, that race was extremely close. Ryan fell over his own feet, or Illinois would be considering a candidate for the Senate who opposes just about every progressive aspect of contemporary society. However, other candidates favored by the far Right will communicate the divisive messages that are part and parcel of the Southern Strategy and other schemes. In that sense, we are returning to the Reagan years — becoming the divided society that was the srongest characteristic of that era.

Reasonably related

•A far Right attack on a Republican senator, Arlen Specter, failed.

•The senatorial campaign pitting Barack Obama against Jack Ryan highlighted the differences between the parties.

Note: This entry also appeared at Mac-a-ro-nies.

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About The Diva

  • People certainly will vote their perceptions but polls don’t really tell us what those perceptions are. I spent decades in marketing and advertising – trusting poll and survey results was something I learned not to do early on.

    One of the main problems is the principle that the very fact of measuring something changes the thing you’re measuring. With people, I’ve found they switch from being themselves and tend to give responses that they would want their neighbors or colleagues to see them professing. Much of the time, actual behavior is very different for many (some of you may be old enough to remember the Edsel).

    Today, I’m getting the sense that – polls, schmolls – there’s the possibility of a huge Kerry groundswell developing, with Bush losing by several percentage points (6% maybe? More?).

    People are starting wake up to the idea that when Bush states that “Results matter” he has created nothing but bad results for most of them, and when he says we have “turned the corner” that we are headed in the wrong direction.

    But I’m not putting any money on it yet. (A major event or a strong smear campaign could change the outcome.)

  • Politics isn’t about reality, it’s about perception.

    And the reality that helps Bush is that the polls have shown consistently over the last couple of months that Americans increasingly BELIEVE the economy is turning the corner and improving. It’s certainly true that job growth and wages are lagging behind growth in the recovery, but that’s a level of quibbling that most Americans don’t come to in making up their minds about the economy.

    Bush will likely win this election because people think they’re better off and that the economy is getting better. The polls show that. It’s a shame, but that’s why he’ll win.

    That is all.

  • Your Labor Department figures on jobs continue to support my Myth of Job Recovery item of last February.

    At the time, new jobs were paying 21% less nationally than the jobs that had been lost, with pockets where the problem was much worse. In California it was 40% less, Pennsylvania 23% less, Idaho 13% less, Colorada 35% less, Missouri 25% less, etc.

    Bush needs to flip his approach because so far he’s a flop on the economy.

  • Tom, as you note, the IRS has not reported on tax returns for 2003 and 2004.

    However, there is a lot of data out there showing that real income has shrunk for Americans – people are worse off than they were four years ago.

  • bhw

    More news:

    One in five Americans laid off from a long-term job in the last three years was still unemployed in January, and most who had found jobs were paid less than they were before, government data showed on Friday.

    In a report that adds fuel to the debate over the quality of new jobs, the Labor Department said only 65 percent of the 5.3 million workers who were laid off from January 2001 to December 2003 were reemployed by January 2004.

    Another 15 percent had left the labor force and were not counted as unemployed.

    Of those who lost full-time wage and salary jobs and found new ones, 57 percent earned less than they had in the positions they lost — the worst result in 10 years.

    “About one-third experienced earnings losses of 20 percent or more,” the department’s Bureau of Labor Statistics said in the report.

    This is a bad trend and one that we need to figure out how to remedy … and quick!

  • bhw

    The numbers from 2002 aren’t irrelevant. They’re significant because, as the quoted article states, it was the first time since WWII that income declined two years in a row.

    Sorry, when an economic indicator changes like that after 60 years, it’s significant.

    Also, I read today that consumer spending was way down this past spring, in part due to concerns about the price of oil.

  • Tom

    The numers you cite are from 2002, and are irrelevant now. I will look into 2003 numbers, and 2004 numbers are not in yet.

  • I am still waiting for the I.R.S.’ data, saying incomes are depressed, to be refuted. But, I have a feeling that is not going to happen.

  • um, “2002.”

  • No, in 2000 voters did not lean Republican: the Democraats got most of the votes.

  • 40% of American workers belong to occupation/industry groups where the median pay is $559 a week or more. Yet employment growth in those higher-paying groups accounted for well over half of total job growth during the past year.

    True, but many more higher-paying jobs were lost in the first place, so it’s not that meaningful. I’m also not sure that $29,000/year is a good cut-off point. I wonder what would happen if you raised that to $575/week.

    Average GDP Over Most Recent Three Quarters
    · 1996: 3.1%
    · 2004: 5.6%

    The GDP is not the economy; it’s a measure of spending. The refinancing boom threw billions of dollars into spending. And of course, military spending is up 20%, Medicare up 37%, and on and on …

    Note also that your three-month average masks the fact that the GDP growth is currently at a 3% rate, lower than in 1996.

    And just out of curiosity, why 1996?

    Jan-June Average Unemployment
    · 1996: 5.5%
    · 2004: 5.6%

    The figure is technically right, but it masks reality, too.

    In 2000, there were 5,692,000 unemployed. Last year, the figure was 8,774,000. Things have improved a bit since then, and last month there were 8,200,000 unemployed.

    In addition to that, 1,500,000 workers were counted as “marginally attached” – they had no jobs but had not looked in the previous four weeks. And on top of that, the number of those who have dropped out of the labor market increased somewhere between 3 and 5 million (depending on your sources). And there’s the million or so that have run out out unemployment benefits.

    We’re easily looking at a real unemployment rate of over 10%.

    And unfortunately, the recent job growth is tapering off and unemployment is still rising. Last month 112,000 jobs were added but 45,000 were added to the unemployment rolls, so the net looks pretty grim, especially when you consider that about 135,000 new workers were added to the workforce that month.

    It’s grim and it’s not getting better, no matter how many times the right says it is.

    30 year fixed rate conventional mortgages
    · 1996: 8.32%
    · 2004: 6.29%

    That’s nice, but just in the last four years (never mind since 1996), the national median price for a home has risen 39%. A 2% drop in the mortgage rate is comparatively insignificant.

    June Consumer Sentiment
    · 1996: 92.4
    · 2004: 95.2

    You can fool most of the people most of the time? Or maybe they like what the Democrats are doing? If the latter, it’s going to be a blood-bath in November.

  • Tom

    If you guys have to spin a good and contiunally improving economy for your guy to get elected than that is pathetic.

  • LOL! 1996, eh? When Reagan asked if people were better off, he meant that to apply to when he took office, not J.F.K’.s tenure for chrissakes. As is clearly put in the entry, we are discussing the economy of the last four years, particularly the present. As the I.R.S. data reveals, most people are not ‘better off.’ Yes, it is possible to cherry pick areas of employment that are faring better than the norm, but that is not the point. The big picture is. The big picture has the GOP running around screeching homosexual marriage will be the end of the world. Rove and company know the economy is not in their favor. Therefore, I believe we will be treated to even more hysterics in regard to ‘social issues.’

    Consumer confidence is a measure of how optimistic people feel. It is not a measure of actual well-being and does not refute the I.R.S.’ data. Furthermore, the people surveyed are participating in the economy. The voices of those sidelined by it are not even heard.

  • This administration is a flop on fiscal management, too.

    Do I hear a bit of desperation here? Was 9/1l President Bush’s doing? Was all the fake income generated by the unreal expectations of the .com industry the President’s fault? How about the corporate scandals that the Bush Administration had to deal with? Did they all come about only AFTER Bush took office?

    The average person doesn’t give a fig about all this crap we are discussing. First of all, they want to be safe. Now, you can argue all day long that Kerry will do a better job, but he hasn’t even given us a plan yet, other than get France and Germany to send troops. Very impressive.

    Secondly, people want to know that things are getting better. They are. Are there bumps? Of course, there were in the mid-90’s as the economy was recovering then, and we didn’t have to deal with a whole new war on terrorism then.

    In 2002, voters leaned Republican because Democrats were not showing consistency on issues of national defense. Whats changed since then?

    I’d love to hear an intelligent answer on that one.



  • Here are some additional statistics for you:

    BusinessWeek: Economy Creating More High-Paying Jobs Than Low-Paying Jobs. “According to BusinessWeek’s analysis, 40% of American workers belong to occupation/industry groups where the median pay is $559 a week or more. Yet employment growth in those higher-paying groups accounted for well over half of total job growth during the past year. Average monthly employment in the higher-paying groups was 744,000 higher in the 12 months ended in June, 2004, than in the previous 12-month period. By contrast, only 408,000 jobs were added in groups whose median pay was $553 a week or less, even though they account for 52% of total jobs.” (“Another Look At Those Job Numbers,” BusinessWeek, 7/26/04)

    Average GDP Over Most Recent Three Quarters
    · 1996: 3.1%
    · 2004: 5.6%

    Jan-June Average Unemployment
    · 1996: 5.5%
    · 2004: 5.6%

    30 year fixed rate conventional mortgages
    · 1996: 8.32%
    · 2004: 6.29%

    June Consumer Sentiment
    · 1996: 92.4
    · 2004: 95.2

    So, if, as you say Mac, that we should ask the question, “are you better off now than you were four years ago,” consumer sentiment would seem to answer “yes.”



  • @#$% make that 445 and 25.

    But while I’m here, I see that the administration released the number with spin: a few months ago they released a tentative number of $500 billion (the business/financial communities sneered) and are now saying that this huge deficit is good news because it’s less than the ridiculous fake number they gave out earlier.

    I have to admit that I can’t stand all this lying from the White House – what happened to honesty and integrity?

  • Oops, the deficit has to be upgraded:

    The White House just said it’s going to be $455 billion, $35 billion higher than the previous figure.

    And GDP growth has shrunk to a 3% rate for the last quarter.

    This administration is a flop on fiscal management, too.

  • Tom: Since then we have posted 8 straight months of job gains, and unemployment is comparable now (5.6%) to this same time in 1996 (5.5%).

    The job gains aren’t as rosy as they appear in aggregate, as they seem to be diminishing. Last month, 112,000 jobs were added and unemployment increased 45,000 – not a great picture.

    Unemployment during this adminstration has risen several million. At the end of 2000, unemployment was just under 6 million. Last month, it was 8.2 million. Additionally, there are another 1.5 million who are “marignally connected”: they don’t have jobs but didn’t look for one in the previous four weeks.

    That’s nearly 10 million unemployed, not a pretty picture.

    Even the employed aren’t doing all that well, and their quality of life is gradually diminishing.
    The rich get richer, everyone else gets the squeeze
    U. S. Expected to forecast $420 billion deficit (WSJ subscription)

    Tom: If you want me to go by the sole barometer of “Am I better off now than 4 years ago?”, then my answer is a resounding yes!!

    Okay, you’ve got yours and everyone else can go screw. But that’s not the picture for most of America:

    Better off now than four years ago?

  • The study is current. The precipating events occurred in 2001 and 2002, but the effects are occurring now. As for sources, I read several. They were all mainstream. Nothing in what Clubhouse Cancer has said so far refutes the I.R.S.’ contention that incomes are depressed. Comparing data from 2004 to that in 2003 for only some jobs is not refutation. At most, it suggests there may be an upturn in construction and related jobs, which are what is being referred to. If he has information that does refute that proven assertion, I hope he will post it. He should feel free to take all the space he needs.

  • “Irrefutable?” sure as your post is written your correct, you only have one source. A source whose data is two years old and was impacted by the inevitable “internet bubble burst” (at a time when more Americans, in fact a majority, had investments in stocks and bonds in history)prior to Bush taking office. The studies data is impacted by 9/11 which even the most partisan have to admit did trillions of dollars damage to the econ.

    But it isn’t “Irrefutable”, there is evidence on both sides, even in this example: “As we sort out the raw data, employment has recently increased by more than 1 million in categories that on average paid above the median earnings of $541 per week, while employment was virtually unchanged in categories paying below the median. That’s comparing the most recent 12 months with the same period a year earlier. By that measure, the jobs gained are overwhelmingly good jobs — the very opposite of the claim made by Kerry and his allies.”

    To go further the Kerry “outsourcing” bugaboo is very disputable: “But recent Labor Department data underscore what even Democratic economists have said for some time — outsourcing jobs overseas, or “offshoring,” accounts for just a small fraction of the many millions of jobs that are lost each year even in a good economy.

    There is indeed a tax break for US-based multinational corporations to locate operations overseas. Bush isn’t to blame for it — it’s been there for decades. It’s also true that Bush doesn’t support Kerry’s proposed remedy, which is controversial.”

    “There are no official figures on the total number of jobs that have gone overseas, but in May 2004 the Labor Department made its first-ever report on the portion of “mass layoffs” attributable to “overseas relocation.” Their survey showed that only 2.5 percent of major layoffs in the first three months of 2004 were a result of outsourcing abroad.

    That survey only covers companies that have laid off 50 or more workers at one time for 30 days or longer, and so may not be representative of all companies and all job loss. But it gives scant support for Kerry’s theme.”

    “Irrefutable?” Not hardly, except for you Mac, at least judging by your posts, which always contain one side.

  • Your response offers a perfect example of the difference between the perspective of a progressive and a far Right Winger. You are interested in yourself. If Tom Bux is doing okay, everything is hunky dory. I, on the other hand, care about the big picture. If I am living in a society where millions of people are needlessly suffering, I want that wrong righted. Millions of people are suffering, in the U.S. and world, because of the Bush administration’s policies, both domestic and foreign. Those suffering most are families with children they can barely afford to care for. I am not part of that demographic, but that does not mean I find it acceptable for them to suffer, as you do. Nor am I a service person in Iraq or Afghanistan because I couldn’t find a job in the depressed economy. Or, a homosexual feeling assailed because the whole country is focusing on them as the scapegoat of the moment. But, those people’s suffering matters, too. The far Right can try to project ‘hate’ onto liberals and progressives as much it likes. But, even a cursory glance at their beliefs shows who really holds other people, especially those who are not white, wealthy, Christian and straight, in contempt. Bush’s policies reflect that perspective.

  • Tom

    If only what you say were true. It isn’t. And, the data is irrefutable.

    What 2002 data? Come on, you’re better than that.

    And if your life sucks, maybe you should redirect some of your hatred of George Bush into making a better life for yourself. Hate is poison, and no one likes a poisoned person.

  • If only what you say were true. It isn’t. And, the data is irrefutable. Personal anecdotes aside, the overwhelming majority of Americans are not better off than they were four years ago. And, the national interest? Needless invasions of other countries. Erosion of civil liberties. Corporate wrongdoing that rivals the ’80s. And, the list goes on. You may be living in your own private Idaho, but the rest of us aren’t.

  • Tom

    However, with neither the economy nor the war on terrorism going well, the GOP may feel it needs to resort to its old dirty tricks.

    More distortions from the left.

    You are citing information which is two years old. In 2002 we were still reeling from terrorist attacks, and the recession was strengthened by them.

    Since then we have posted 8 straight months of job gains, and unemployment is comparable now (5.6%) to this same time in 1996 (5.5%).

    Just past week great consumer confidence numbers were posted.

    So the economy is doing well, and is forecast to continue to grow through 2005

    If you want me to go by the sole barometer of “Am I better off now than 4 years ago?”, then my answer is a resounding yes!!

    In the last few months of the Clinton administration I was downsized from a telecom firm when the bubble burst (incidentially around the time Janet Reno pursued suing the crap out of Microsoft).

    I now have a job paying twice as much as I’ve ever made in my life, I own my own home, and am generally happier.

    In that case. I will vote for George Bush on that alone.