"Uh-oh," say Democrats

Alex Berezow
Political Hot Zone

In what had to have been one of the worst weeks for Democrats across the nation, CNN reported Oct. 30 the U.S. economy was growing at a nearly 20-year high. The gross domestic product was increasing at a rate of 7.2 percent in the third quarter of 2003, and this was the highest growth seen in the GDP since 1984.

"Uh-oh," said the Democrats.

The CNN article went on to report consumer spending rose 6.6 percent because "child tax credit checks and lower rates of income tax withholding helped fuel the third-quarter spending surge." Chalk one up for the Bush administration's tax policies.

To be fair, this upturn in the economy has not yet translated into jobs. As House Democratic leader Nancy Pelosi cheerily pointed out, this upturn is merely a "jobless recovery." Well, Nancy, it does not take an economics genius to figure out jobs are not far behind.

Now, before President Bush and the Republicans can take full credit for turning the economy around, I feel it is important to bring one very important point to the table: the economy, for the most part, operates in cycles, and the president (and Congress) has little to do with that cycle. Whoever is in office when the economy is strong gets the credit; whoever is unfortunate enough to be in office when the economy is not strong gets the blame.

Having said that, certain policies can and do trigger economic growth. Cutting taxes for "everyday folks" (even if it is only a few hundred dollars) allows them to re-invest their money in the economy by purchasing things. That is exactly what happened in the third quarter of 2003: people went out and bought stuff.

To benefit an economy as large as that of the United States, other tax policies must be in place. Yes, that means cutting taxes for the wealthy. The idea behind this is wealthy people and businesses will, just like the everyday folks, re-invest their money into the economy. Unlike the everyday folks, however, wealthy people can create jobs when they re-invest their money. That is the principle behind "trickle-down economics." Besides, when was the last time a poor person, or even a middle-class person, created thousands of jobs?

Contrary to popular (liberal) belief, raising taxes actually hurts the economy. Just ask former California Republican Gov. Pete Wilson. According to the Cato Institute, when Wilson raised taxes in his state in the early 1990s, California actually lost income tax revenue in the following fiscal year. Why? Because when taxes are raised, people tend to hold on to their hard-earned money. This includes wealthy people and businesses; and when they hold on to their money, that hurts everybody because new jobs are no longer being created.

Fast-forward to the current Bush administration. President Bush inherited an economy heading toward recession at the end of the Clinton administration. Despite outcries from the Democrats, Bush cut taxes. Now, the economy is finally turning around.

Regardless if this economic turnaround is due to Bush's tax cuts or if it is just the normal cycling of the economy, this is very bad news for the Democratic presidential candidates, who have based their entire campaigns on two issues - the economy is weak and the war in Iraq was wrong. Much to the chagrin of the Democrats, the first claim has now been shown to be entirely untrue. And Republicans are still working on the second one.

If Democrats cannot find it within themselves to bring new and positive ideas to the table, they have little hopes of recapturing the White House. Their only hope now is the economy makes one huge belly flop, and if it does not, President Bush will be winning a second term in November 2004.

I remember (only a few weeks ago) in my first article as a guest columnist to the Daily Egyptian, I said President Bush was doing a good job getting the economy to turn around. Several people responded saying how wrong I was, but alas, I (and all tax-cut supporters) was right. In the words of Rush Limbaugh, "See, I told you so."

Political Hot Zone appears every Thursday. Alex is a senior in microbiology. His views do not necessarily reflect those of the Daily Egyptian.

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