Since I've criticized Paul Krugman on more than one occasion, I want to take this opportunity and say something good about the man. Krugman's March 12 column is a good critique of the administrations economic policy that does what Krugman was hired at the New York Times for: explain economics to laymen. Krugman writes,
But wait — hasn't the unemployment rate fallen since last summer? Yes, but that's entirely the result of people dropping out of the labor force. Even if you're out of work, you're not counted as unemployed unless you're actively looking for a job.
We don't know why so many people have stopped looking for jobs, but it probably has something to do with the fact that jobs are so hard to find: 40 percent of the unemployed have been out of work more than 15 weeks, a 20-year record. In any case, the administration should feel grateful that so many people have dropped out. As the Economic Policy Institute points out, if they hadn't dropped out, the official unemployment rate would be an eye-popping 7.4 percent, not a politically spinnable 5.6 percent.
In short, things aren't as bad as they seem; they're worse. But should we blame the Bush administration? Yes — because it refuses to learn from experience.
Franklin Roosevelt, in his efforts to combat economic woes, was famously willing to try anything until he found something that worked. George Bush, by contrast, seems determined to try the same thing, over and over again.
In 2001 the administration rammed through long-term tax cuts, heavily tilted toward the affluent. But employment didn't turn around, and by late 2002 many economists — including supporters of the original tax cut — were urging it to try something different...
..the administration rejected all such proposals. Instead, it went for a clone of the 2001 tax cut — another big break mainly for those at the top. And once again this failed to deliver the promised jobs.
Meanwhile, Mr. Bush has mortgaged the nation's future. If all of his tax cuts are made permanent, they'll reduce revenue by at least three times the amount that would be needed to secure Social Security benefits at current levels for the next 75 years.
No sensible person blames Mr. Bush for the onset of the recession in 2001. But he does deserve blame for the fact that all he has to show for three years of supposed job-creation policies is a mountain of debt.