Who's Got Something to Say on the Economy?

The U.S. Department of Labor released this morning new numbers on employment and wages for the month of August. The take-away?  The U.S. economy lost 84,000 jobs, the eighth straight month of job losses. The unemployment rate rose to 6.1 percent, the highest since September 2003. Industries hardest hit are manufacturing (housing-related manufacturers and automakers) and services. Healthcare and mining sectors added new jobs. Losses in the construction sector slowed. Average hourly wages crept up a meager 7 cents. 

Let’s hope that this new data sounds the alarm for U.S. Sen. John McCain and Gov. Sarah Palin. It’s been a long week of vapid, sarcastic, anecdotal talk about our nation’s economic health.  Nary a word about just what Team McSame would do to create jobs, increase wages, grow the economy, or raise the median income. Maybe we can just drill, baby, drill our way out of recession. (See Rob's take earlier today.) U.S. Sen. Obama, on the other hand, has been responsive to news on the economy. In the middle of the DNC in Denver last week, he released a statement on Census’s new report on income, poverty, and health insurance:

"Today’s news confirms what America’s struggling families already know – that over the past seven years our economy has moved backwards. We have now lived through first so-called economic ‘expansion’ on record where typical families saw their incomes fall, and working-age households lost more than $2,000 from their paychecks. Another 816,000 Americans fell into poverty in 2007 – including nearly 500,000 children – bringing the total increase in Americans in poverty under President Bush to 5.7 million. And on Bush’s watch, an additional 7.2 million Americans have fallen into the ranks of the uninsured. This is the failed record of George Bush’s economic policies that Senator McCain has called ‘great progress.’ While Senator McCain is promising four more years of the failed Bush economic policies, my economic plan will restore bottom up economic growth that benefits all Americans by cutting taxes for working Americans, providing affordable, accessible health care for all, and investing in new energy, education and infrastructure so we can create millions of good jobs here in America," said Senator Barack Obama. 

Today he released another statement on the August unemployment numbers:

“Today’s jobs report is a reminder of what’s at stake in this election – John McCain showed last night that he is intent on continuing the economic policies that just this year have caused the American economy to lose 605,000 jobs.  John McCain may believe that the fundamentals of our economy are ‘strong,’ but the working men and women I meet every day are working harder for less, the typical working age family’s income is down $2,000 since George Bush took office, and their purchasing power is as low as it’s been in a decade.  John McCain’s answer is more of the same:  $200 billion in tax cuts to big corporations and oil companies, and not one dime of tax relief to more than 100 million middle-class families.  If I am President, I will cut taxes for 95% of all working families and provide an immediate $50 billion to struggling states so that they don’t have to cut back on health care and education and can rebuild roads and schools. That’s the change working families need right now,” said Senator Barack Obama.      

Sen. Obama is doing the right thing in staying on message on the economy. After all the hubbub about lipstick-wearing pitbulls dies down, Americans will return to the core issues, the main one being the economy. We can’t predict at this point if either candidate’s plan will turn the ship around, but Obama does indeed have a plan and he’s talking about it. He’s offering specifics and inviting debate. And that’s a good start.

On the issue of the economy, check out Alan Blinder’s piece in the New York Times, Is History Siding with Obama’s Economic Plan?  Blinder says the facts show that the U.S. economy has grown faster under Democratic presidents than under Republicans. Blinder references a new book by Princeton professor Larry Bartels, who makes the case that: 

when Democrats were in the White House, lower-income families experienced slightly faster income growth than higher-income families — which means that incomes were equalizing. In stark contrast, it also shows much faster income growth for the better-off when Republicans were in the White House — thus widening the gap in income. 

The article doesn’t provide many explanations for these trends, but Blinder suggests that tax and income transfer policies have played a large role starting with Reagan:

We know, for example, that Republicans have typically favored large tax cuts for upper-income groups while Democrats have opposed them. In addition, Democrats have been more willing to raise the minimum wage, and Republicans have been more hostile toward unions.

And the coup de grace:

The two Great Partisan Divides combine to suggest that, if history is a guide, an Obama victory in November would lead to faster economic growth with less inequality, while a McCain victory would lead to slower economic growth with more inequality. Which part of the Obama menu don’t you like?