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The U.S. economy’s on the table

Opinion pieces and speeches by EPI staff and associates.


The U.S. economy’s on the table

By  Jared Bernstein

How about a little election year Jeopardy? Answer: “Are you better off than you were four weeks ago?” Question: “How are the Republicans hoping to play the economy in the upcoming midterm election?”

For the party that controls the White House and both houses of Congress, the fact that retail gas prices are down 70 cents over the past two months is unquestionably a boon. Sure, there’s a lot going on right now that’s making conservative strategists as jumpy as spit on a skillet. But incumbents are hoping that the drop in the price of oil takes the economy off the table as a resonant issue for challengers to exploit.

It’s true that voters have a lot on their minds right now: the Iraq war and terror are at the top of issue-priority polls. But the economy is consistently right behind them, typically in second or third place ( And this is significant, given a) Karl Rove’s strategy of raising the terror threat to the point where it crowds out any other concerns, and b) the gas price decline.

There are at least two good reasons why the economy remains solidly in play as an election issue: first, the negative trends affecting working families, and second, the way the administration has tried to spin those trends.

Start with the second point. When asked recently about why the administration’s good news on the economy was failing to reach the public, Treasury Secretary Henry Paulson responded “That’s the $64,000 question.”

Well, Paulson’s $64,000 question has a $3,000 answer. That’s how much the inflation-adjusted income of the typical working-age household is down since 2000.

Rob Portman, the head of the Office of Management and Budget, said the problem was that “we probably haven’t done as good a job communicating the strength of our economy.”

Or maybe it’s the fact that the buying power of the typical, full-time worker’s weekly paycheck is down 3 percent since this recovery got underway in late 2001.

On this point, two top Bush economic officials recently assured readers of The Wall Street Journal that real wages would be rising were it not for higher energy costs, and helpfully reminded wage earners of all the wonderful attributes of the energy bill the president signed last year.

Among the millions of workers who’ve lost ground in recent years, I’d be amazed if you could find one person who was moved by that argument. “Gee, it’s been tough paying the bills lately – were it not for that sweet energy bill last year, I’d be feelin’ pretty disappointed about now.”

It’s not that these officials are wrong about some impressive aspects of the current economy. Productivity growth, a vital indicator of our increased efficiency in producing goods and services, has been quite stellar in recent years. But put that together with these wage and income trends, and you see the problem: These officials are praising the bigger and better pie baked by the American work force, but they’re missing the fact that the bakers are walking away with smaller slices.

Granted, we in the electorate have short memories and we’re easily distracted. And sure, we’re better off than we were a few weeks ago when prices at the pump were higher. But the protracted gap between the economy that the elites are crowing about and the economy working families live in every day remains fair game.

For those who want to win that game, the challenge is clear: Tell us what you’re going to do to help reconnect growth and living standards.

Jared Bernstein is the Director of the Living Standards program at the Economic Policy Institute in Washington, D.C.