Posts filed under “Politics”

Is President Bush a closet Keynesian?

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Alternative title: Personal Income Growth vs. Governmental Hiring

In our previous post, we noted that one of the seven factors Forbes looked at in their econometric election model was “Personal income growth.” In reviewing how those factors fared under President Bush, the article stated that “income growth has lagged as well.”

That’s a pretty ambiguous declaration. I was curious about how much of a lag? The fuzzy answer got me thinking about where Personal income growth actually is, and how much the lag has been relative to prior Presidential terms of office.

I all but forgot about it — until this morning, when I saw New York Time’s business reporter Floyd Norris addressed that very same issue.

Buried in a piece titled “In the Bush Years, Government Grows as the Private Sector Struggles,” was this little economic tidbit:

“In the area people think of when they hear about personal income – wage and salary payments – the picture is not as pretty. The entire increase there comes from the government payroll. Adjusted for inflation, private industry is paying almost exactly the same as in 2000. To be precise, private spending on wages is up less than 0.1 percent.

No administration back to John F. Kennedy has done as poorly. The two that came closest – a 1.4 percent rise under the first President Bush and a 3.3 percent gain in the term that ended with Gerald Ford in the White House – each ended with incumbents losing the election.” (emphasis added)

Norris puts his focus on an underlying growth area within this stat: Government spending and hiring. It turns out Uncle Sam is repsonsible for all the growth in personal income (wage and salary).

Is it true? Is President Bush a closet Keynesian?

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Graphic courtesy of NYT

Here’s an additional exerpt:

“The share of wage and salary income coming from the government can be seen as a measure of the size of government relative to the economy. It began to rise in the 1950′s and peaked in the second quarter of 1975, under Mr. Ford, at 21.8 percent of total wage and salary income. It declined under Jimmy Carter and Ronald Reagan, rose a little under the first President Bush and then fell rapidly under Bill Clinton, hitting a low of 16 percent in late 2000.

It has risen under the current administration. The latest quarterly figure showed 17.4 percent of all wage and salary payments came directly from the government.

Some of that is simple economic cycles. Government salary payments tend to rise less rapidly than private ones in good times and not to fall in bad times. But it also shows that this administration has not cut the size of government.

A bigger government and tax cuts are the main reasons that real personal incomes are up since 2000. The big question for the economy is whether the stimulus has been enough to produce a self-reinforcing recovery. More signs that the private economy has turned around will be needed before that can be deemed a sure thing.”

Yes, its true: Forget Supply Side economics: President Bush is actually a Keynesian!

Sources:
In the Bush Years, Government Grows as the Private Sector Struggles
Floyd Norris
New York Times, September 3, 2004

http://www.nytimes.com/2004/09/03/business/03norris.html

It’s Not The Economy, Stupid
Dan Ackman and Mark Hazlin,
Forbes, 08.25.04, 6:00 AM ET

http://forbes.com/home/business/2004/08/25/cx_da_0825economy.html

Is the Presidential race roiling the markets? Or are the markets roiling the race?
Karyn McCormack
Business Week, August 30, 2004

http://www.businessweek.com/bwdaily/dnflash/aug2004/nf20040830_5077_db049.htm

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Projected Electoral College Vote: Swing States, 8/23/04

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click for larger chart
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Chart courtesy of WSJ

Yet another fascinating poll, courtesy of WSJ. The recent SBVFT commercials seemed to have had an impact nationally, narrowing the gap between the challenger and the incumbent. According to this most recent WSJ/Zogby poll, conducted Aug. 16-21, there seems to be little impact in the Battleground States. Kerry now leads in 14 states (up from 13 early August). President Bush leads in two states.”

Here’s the Journals take on the polling data’s internals:

The contest for the White House remains tight, according to the latest Zogby Interactive poll of likely voters in 16 battleground states. Although the map is awash in blue, with President Bush leading in only two of the battleground states, down from the three states he held three weeks ago, the results in three-quarters of the states in the survey are within the margin of error — meaning those states remain very hotly contested. Mr. Kerry holds the top spot in 14 of the 16 polled states, up from 13 in the previous poll.

Mr. Bush’s lead is outside the margin of error in one state, but it’s a key one: Ohio. Only two 20th-century presidents have been elected without carrying the Buckeye State, and no Republican has won the White House without Ohio’s support since the party was founded in 1854. Mr. Kerry has top spots outside the margin in three states: Oregon, Washington and electoral-vote rich Pennsylvania.

In addition, several states continue to switch their allegiances. The survey results were closest in Florida and Missouri, where the margins between the two candidates are less than one percentage point. Both states, with their total of 38 electoral votes, have flipped between Messrs. Bush and Kerry more than once, most recently landing in the Democratic column. Similarly, the two states Mr. Bush leads in this poll, Ohio and West Virginia, have been led by both candidates at different points in the poll series. For further analysis of how these results could play out in the Electoral College, view this article

RNC in NY in one week . . .

Sources:
Battlegrounds States Poll – August 23, 2004

http://online.wsj.com/public/resources/documents/info-battleground04-0823print.html

Interactive version

http://online.wsj.com/public/resources/documents/info-battleground04-frameset.html

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