Right. So family income is down and poverty is up. Bush blames Clinton. OK, that’s just normal. But then comes the howler (as reported in today’s New York Times:
“Mr. Bush said today that he remained optimistic. ‘When you combine the productivity of the American people with low interest rates and low inflation, those are the ingredients for growth,’ Mr. Bush said.”
Of course, if output is growing slowly, and productivity is rising quickly, then mathematically it must be the case that hours worked are going down, which means either shorter workweeks or more unemployment. Sound like good news to you? It probably doesn’t to the guy who just got laid off.
As to low inflation, does Bush really not know that serious economists are now seriously worried about the risks of deflation, with prices already falling for most goods and services? (Overall inflation is still in positive territory because of rising costs in education, heath care, and gasoline.) Brad DeLong explains why deflation would be a bad thing, and argues that the threat is substantial. Here’s a quick shortcut through the analysis: does the name “Japan” ring a bell?
Hey! I’m not sweating it; I’ve got tenure, a variable-rate mortgage, and an overfunded defined-benefit pension plan. Bring on the deflation, I say. But those panhandlers can get so annoying!
One possibility is that GWB really is Alfred E. Neumann, and has no idea that the economy could actually be in deep doo-doo. Another is that he understands, or at least partly understands, but just decided to blow smoke up the American people because he thought he could get away with it. That has to be the more likely story.
But doesn’t Bush, or anyone around him, care that the credibility he sacrifices with this sort of nonsense doesn’t magically reappear when he starts to talk about Iraq? Falsus in unum, falsus in omnibus. If he lies about easily ascertainable fact, why should anyone believe him when he starts citing top-secret documents?
Of course, his comment yesterday was of a piece with his entire somewhat non-quantitative approach to economic policy. And I understand that most of the country doesn’t much care. But some of us regard fooling around with the numbers as worse — morally worse — than fooling around with the interns.