In presidential election years, the basic rule is politicians and journalists can say anything they want about the economy… so long as it isn’t true.
For some strange reason, I keep getting fund‐raising letters from the Kerry campaign. But I don’t contribute to this particular cause (big government), because I already gave at the office (to the Internal Revenue Service).
A recent letter said, “The first thing John Kerry will do is fight his heart out to bring back the 3 million jobs that have been lost under George W. Bush.” How they came up with that number is fascinating. From January 2001 to August 2003, payroll employment fell 2.6 million. Those more interested in politics than economics began describing that as “nearly 3 million.” At times, they forget the word “nearly.”
On March 9, Kerry Campaign Chairwoman Jeanne Shaheen awarded George Bush the Herbert Hoover Award, saying, “On behalf of the nearly 3 million people who have lost their jobs under this administration, we are awarding George Bush the first ever ‘Herbert Hoover Award’ for having the worst jobs record since the Great Depression.”
This was nothing new. John Kerry and his running mate, Sen. John Edwards, began comparing President Bush to Herbert Hoover soon after that bizarre analogy first appeared in a September 2003 report from the Economic Policy Institute.
Six months later, the Kerry campaign began running a TV ad in Ohio with the senator solemnly saying, “Three million jobs lost… that is an astonishing failure.” By then, the 3 million figure had evolved from bogus to preposterous.
Payroll employment rose 1.5 million from August through June. Normally, it might seem reasonable to subtract that 1.5 million from 2.6 and come up with a net job loss of 1.1 million. But this is not a normal year. It’s an election year. So the Kerry for President Web site still complains about the “3 million jobs that have been lost.”
By early July, Mr. Kerry moved closer to reality by saying, “We have a million and a half jobs lost, and I don’t believe that’s the best that we can do.” Of course that isn’t the best we can do. We are doing better every month. He said his campaign is not about pessimism. But what on Earth has he been thinking by repeatedly comparing a relatively mild cyclical job loss to the Great Depression?
The loss of payroll jobs in this slump never amounted to more than 2 percent — much less than the 2.8 percent job loss in 1974–75, 3.1 percent in 1981–82, 4.4 percent in 1957–58 or the 5.2 percent job loss in 1948–49. The pace of job recovery appeared faster after those deeper recessions mainly because many more jobs were lost.
The unemployment rate since 1970 has averaged 6.3 percent; the current rate is 5.6 percent. It would normally be considered insane to equate today’s below‐average unemployment rate with the Great Depression. But this is not a normal year. It’s an election year. In election years, insanity becomes perfectly acceptable. “Fahrenheit 9/11,” for example.
The 1992 Clinton‐Gore campaign book (which I renamed “Putting Lawyers First”) said the first President Bush had “compiled the worst economic record in 50 years… since the Great Depression.” Messrs. Clinton and Gore apparently thought Herbert Hoover was president in 1942. In a June interview in Money, Mr. Kerry again said, “This president has the worst job performance record in 50 years.” Mr. Kerry apparently thinks Hoover was president in 1954.
In the same interview, Mr. Kerry said, “Jobs are a four‐year measurement.” That may sound fair, but it isn’t. What happens to employment over a four‐year term depends on where you start. Many presidents took office shortly after a recession had run its course — notably, Presidents Kennedy, Carter and Clinton — so employment was then close to a cyclical low point. President Bush took office two months before the all‐time record high of 132.5 million payroll jobs. Since it took 120 months to climb to that peak, how can we reasonably expect to have regained the peak after only 39 months?
Alan Blinder, a former Clinton economic adviser, says, “You can legitimately attack the four‐year record, charging that Bush compounded bad luck with bad policies.” Bad luck, yes. Mr. Blinder surely did not intend to suggest lowering tax rates caused higher unemployment, since such a suggestion would instantly subject him to professional ridicule. So, what were the “bad policies”?
I am not happy with the Bush administration’s spending and tariffs, yet Mr. Kerry promises to do much more of the same. I also believe the recovery was set back by the president’s support of the Sarbanes‐Oxley law of 2002, which added substantially to the cost and risk of doing business.
Indeed, Mr. Blinder wrote an op‐ed at the time (July 21, 2002): “The reaction to President Bush’s recent speeches was instructive. If Wall Street were truly opposed to government help, one might have thought that market participants would have breathed a sigh of relief: The president spoke loudly but carried a small stick. Instead, stock prices tanked.”
Of course stocks tanked. Higher costs of regulation and litigation were bad for profits, and therefore bad news for stockholders and employment. But Mr. Kerry and Mr. Edwards supported Sarbanes‐Oxley.
The only other policy of the current President Bush that might plausibly be blamed for hurting employment is Iraq — specifically, the paralyzing uncertainty before and during the invasion in March 20, 2003. Payroll employment was flat between August and November 2002, and then suddenly fell by 374,000 through March 2003.
Mr. Blinder or Mr. Kerry might argue the Iraq invasion was bad for jobs, but not for long. Besides, as Sen. Joe Lieberman, Connecticut Democrat, remarked last October, “I don’t know how John Kerry and John Edwards can say they supported the war but then opposed the funding for the troops.”
Mr. Kerry has another statistical problem. He promises to add 10 million jobs in the next four years. But the labor force is projected to grow 1 percent a year (and only 0.6 percent after 2009), which adds up to only 6 million added workers. If employment rose by 10 million while the labor force rose 6 million, the unemployment rate in January 2009 would be 2.8 percent. That is quite unlikely, to put it kindly.
There are only two explanations for all the bogus job statistics coming out of the Kerry campaign. Either Mr. Kerry and Mr. Edwards are genuinely ignorant about the economy, or they believe American voters are, as fantasy filmmaker Michael Moore put it, “the dumbest people on Earth.” The Kerry campaign either lacks economic competence or lacks integrity.