David Lazarus
San Francisco Chronicle
August 11, 2004

Sometimes I sympathize with President Bush. Really.

Last week's dismal report on job creation -- a scant 32,000 jobs created versus 240,000 expected -- left our re-election-seeking president little wiggle room on the economic front.

"Economic growth is strong and getting stronger," Bush told a gathering of minority journalists after the jobs number was released.

It can't be easy to have to defend your economic policies when all evidence suggests that average Americans are worse off today than they were four years ago.

Here are just a few of the numbers:

• When Bush took office on Jan. 20, 2001, the Dow Jones industrial average was at 10,587.59. It closed Tuesday at 9,944.67.
• When Bush took office, the unemployment rate was 4.2 percent. It's now 5.5 percent, according to the Labor Department.
• When Bush took office, U.S. consumer debt totaled almost $1.7 trillion. It's now $2.038 trillion, according to the Federal Reserve.
• When Bush took office, bankruptcy filings during the previous year totaled almost 1.3 million, down 5 percent from a year before. By Dec. 31, 2003, bankruptcies had hit a record of nearly 1.7 million, up 5.2 percent from 2002, according to the American Bankruptcy Institute.
• When Bush took office, the federal budget had been balanced for three straight years and was, in the 2000 fiscal year, running a surplus of $236 billion -- the largest in U.S. history. The White House is projecting a record budget deficit this year of $445 billion.

All this must be placed in context, though. When Bush came to power, the U.S. economy was at the tail end of a dot-com-fueled bubble that couldn't have been sustained under any circumstances. A recession, most economists believe, was all but inevitable.

Then there was Sept. 11.

A tough hand

"Every president is dealt a hand of cards," said John Shoven, a Stanford University economist and senior fellow at the conservative Hoover Institution. "Bush inherited a pretty tough hand."

The average American is indeed worse off now than four years ago, he said. But Shoven gives Bush "a passing grade, maybe a B-plus," for his handling of the economy.

"Overall, the economy has performed pretty well given the shocks it has faced," he said, adding that credit for this "has to be significantly shared with Alan Greenspan," the Fed chief, who boosted a key interest rate Tuesday by a quarter-point.

Jared Bernstein, senior economist at the liberal Economic Policy Institute in Washington, agreed that Bush was dealt a tough hand when he took office.

"What he failed to do, though, was take decisive action to ameliorate the problems he inherited," Bernstein said.

The president's key economic error, he said, was to attempt to stimulate the economy by skewing the benefits of three tax cuts toward wealthy Americans.

According to Citizens for Tax Justice, a liberal-leaning Washington think tank, nearly 40 percent of the benefits from Bush's tax cuts will go to the richest 1 percent of Americans, those earning on average $1 million a year.

By contrast, only about 17 percent of the benefits will go to the 60 percent of the population earning $45,000 or less.

"The tax cuts made no sense as a stimulus measure," said Bob McIntyre, director of Citizens for Tax Justice. "If you want to stimulate the economy, you have to give money to people who don't already have it."

Bernstein said a crucial problem for many Americans today is that wages are significantly lagging behind inflation.

Prices up 3%

During the past 12 months, average hourly earnings increased by 1.9 percent, according to the Labor Department. Consumer prices, meanwhile, have risen by about 3 percent.

"The middle-income family is definitely worse off than four years ago," Bernstein said.

He noted that it would take extraordinary growth -- about 400,000 new jobs a month between now and November -- for Bush to avoid the dubious distinction of being the first president since Herbert Hoover to see a net decline in jobs during a term of office.

"We are more than a million jobs below where we were at the employment peak in March 2001," Bernstein observed.

Even Shoven at the Hoover Institution had to acknowledge the seriousness of the job-loss situation. "It's bad," he said.

People I spoke with in random encounters this week conveyed a clear perception that things are tougher for them economically than when Bush first took power.

"Real estate's through the roof, gas prices, tolls, food, movies, cigarettes -- everything's gone up," observed Ron Cairns, 40, a Redwood City electrician. "But wages have stayed the same."

Cairns, a Democrat, blamed Bush for most of the current difficulties.

"Everyone's in a state of fear," he said, "worrying about the war and worrying about their next paycheck."

Niles Helmboldt, 37, a San Francisco banker and a Republican, offered an almost identical perspective.

"I'm not as well off as I was," he acknowledged. "My cost of living has gone up, but wages have not kept pace."

Not helping

Is this Bush's fault?

"I don't see his economic policies helping," Helmboldt replied. "It's not a pretty picture."

After it was reported last week that just 32,000 jobs were created in July and that 61,000 fewer jobs were created in May and June than previously estimated, the president did his best to put all the grim news in a positive light.

"Today's employment report shows our economy is continuing to move forward," he said. "And it reminds us that we're in a changing economy and we've got more to do.

"I'm not going to be satisfied until everybody who wants to work can find a job," Bush added. "I'm running (for re-election) because I understand how to take a strong economy and make it stronger."

All evidence to the contrary notwithstanding.

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