The Dubya Economy
July 23rd, 2008 by Wil Robinson
First we were granted the usual denials-in-the-face-of-reality by President Bush. No recession here. The economy is strong. Why? Because the ‘decider’ said so.
Then we heard Phil Gramm tell us it was all in our heads. McCain quickly refuted his comments, but his own economic plan (the status quo is good) doesn’t exactly disagree with Gramm’s assertion that we are in a “mental recession.”
Then the political and economic pundits got on the talk shows and assured us that “No, we are not in a recession because a recession means ‘two consecutive quarters of falling gross national product.’”
Whoop-tee-doo. GDP/GNP has always been a misleading statistic, never truly indicative of the majority of a population’s economic status. Just because the country as a whole is making money doesn’t mean it’s distributed. The rampant poverty of India has made that abundantly clear (India has an annual GDP growth rate in the 8-10 percent range). Don’t believe what you hear about “India becoming middle class.” For 800 million Indians, it’s simply not true.
Now Bush tells us (accidentally) that “Wall Street got drunk, and has a hangover.” So what? I suppose we should treat the elites of Wall Street like his own family treated Dubya after his foray into alcoholism. Assume that Wall Street “found God” and let them back to the dinner table.
Technical economic or theoretical definitions of “recession” matter little to average Americans. Elizabeth Warren, a law professor at Harvard, made this point in written testimony to the U.S. Congressional Joint Economic Committee.
Since 2000, average American households have watched their annual income decline by $1,175 (adjusted for inflation).
Yet while our incomes haven’t risen, what we are paying for goods and services has. Americans pay an average of $2,195 more per year for gasoline. Food costs an additional $220. Health insurance has increased by $363. And mortgage payments have gone up an average of $1,729 per year. Just for shits and giggles, throw in phone bills (not including cell phones) and appliances at an extra cost of $148.
That means since George W. Bush took office, the average American family has a total gap of $5,830 per year in extra expenses and lost income.
Wait - that doesn’t include the expenses associated with having children. Daycare has increased by $1,508 per year. After-school childcare has gone up an addition $622. And state college tuition is up more than $1,000.
But we’re not in a recession, right?
When incomes are stagnant (or in this case, falling) and prices are rising, the economy sucks. You don’t need a Ph.D. from M.I.T. to know that. Sure, for those families making $150,000 or more a year, an extra $8,000 in expenses can be absorbed with smart budgeting. But those wealthy families only account for five percent of the population.
Most Americans make far less than $150,000 a year. And for them, a $8,000 gaping hole in their budget is more than a matter of psychological perceptions or metaphorical cocktail binges.
It’s a matter of life.
Tags: middle class, Bush, expenses, Gramm, united states