Jared Bernstein is an economist and senior fellow at the Center on Budget and Policy Priorities. He was formerly chief economist to Vice President Joe Biden and a member of President Barack Obama’s economics team.
In early 2005, the Bush administration released its budget for fiscal year 2006 (which goes from October 2005 to September 2006). And, for the first time, the Bush administration serves up big spending cuts. So it's worth checking out for whom the axe falls. In addition, the longer-term priorities of the administration and its backers are just under the surface.
First, the short-run impacts, primarily spending cuts to human services programs, have gotten the most attention. But the long-run implications are particularly worrisome. Lurking behind these reams of tables and numbers is a mission to significantly shrink government.
Just in case you missed it, the central economic problem of our time was revealed on January 28 at 8:30 a.m.
On that chilly morning, the government released two reports that, taken together, capture a critical imbalance embedded in our economy. We learned that the nation's gross domestic product, our most comprehensive measure of economic performance, grew 4.4 percent last year, the best year for GDP growth since 1999. A second report, on employers' costs, revealed that inflation-adjusted wages, on average, fell slightly for the year, the first time that's happened in more than a decade.
Don't despair, progressives. I bring a message of hope, and it comes from those renowned laboratories of democracy: the states.
I just returned from the annual meeting of the Economic Analysis and Research Network, or EARN, as we call it around here. EARN is a collaboration of progressive state-level organizations engaged in research and advocacy, and the message from this year's meeting was crystal clear: If anything good happens, it's going to happen in the states.
The Economic Policy Institute helps to run the EARN network, and its director here at EPI is Michael Ettlinger. Michael was kind enough to grant me an interview for this story (translation: I mugged him at the water cooler).
There are many lessons to be learned from the 2004 election, but one that the conservative pundits are sure to glean is that “It's not the economy, stupid.”
That's what that other George W. (i.e., Will, on ABC's This Week) said a few weeks before the election. “That's what we've learned. … the American economy is now so well run and so resilient and so productive, it's hard to dislodge it from wealth creation, and we've gone on I think to worry about other things.”
Other than vague generalities about turning corners, you don't hear a lot these days from the Republicans on how middle-income American families are doing. The strategy of the Bush campaign is to blame most of our economic woes on September 11, which brings the electorate right back to fear and terror, not changing horses, and painting the other guy as too indecisive to take it to the enemy.
Thus, when conservative economist Kevin Hassett of the American Enterprise Institute writes an article dismissing the notion of a middle-class squeeze, it's worth taking notice.