The nation's pace of hiring slowed dramatically last month, the Labor Department reported today, reinforcing the increasing belief that economic growth in this election year is hitting a rough patch.
Gary Blank, economic adviser for the Bush-Cheney campaign, discussed the latest economic numbers.
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The transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
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Anonymous:
The Bush Administration claims that the economy has created over one million jobs in 2004. Please cite specifically the industries that are creating high paying career oriented jobs.
Gary Blank: Thanks and welcome everybody.
According to the payroll survey from the Bureau of Labor Statistics, the economy has added jobs for 11 months in row for a total 1.5 million jobs. Here's a few examples of industries adding jobs that pay above the national average: 177,000 jobs in construction, 320,000 jobs in education and health services and 495,000 jobs in professional and business services.
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Alexandria, Va.:
What would be some of the negative effects, if any, of Senator Kerry's proposal to repeal the President's tax cuts?
Gary Blank: Senator Kerry has proposed to raise a number of taxes, but primarily he has discussed increasing taxes on individuals and small businesses earning more than $200,000.
90% of businesses pay taxes through the individual income tax system rather than the corporate income tax. Senator Kerry's tax increase would hurt hundreds of thousands of successful small business owners and entrpreneurs.
7 out of 10 new jobs are created by small businesses. Obviously increasing their taxes isn't what our economy needs.
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Vienna, Va.:
Is the payroll employment number accurate? It seems there are lots of other employment figures that indicate an improving job situation -- such as weekly jobless claims, the low unemployment rate in the household survey from BLS, and the ISM indexes. In fact, the household survey reported something like 600,000+ more working Americans in July alone, right?
Second, what is the President's agenda to create better jobs in the future. Is education and training a priority, and if so what is the plan?
Gary Blank: The non-partisan Bureau of Labor Statistics is responsible for collecting the job numbers. It's a tough job in our changing economy. They rely primarily on two surveys that a provided in the same monthly: a payroll survey that relies on company payrolls, but doesn't count the self-employed, and a household survey that contacts about 60,000 households each month. The two surveys show a significant and unique discrepancy. The payroll survey, which shows 32,000 jobs were added in July, will be revised several times over the next few years. Economists will debate for just as many years why the two surveys are showing such different results.
This much we know, both surveys show jobs increasing and the tax increases John Kerry has called for won't add more jobs.
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Rochester, N.Y.:
Your administration has had nearly 4 years since the shallowest recession in history and received all of the tax cuts that it has demanded to stimulate the economy. The effects of those tax cuts appear to be waning. The cash provided by low interest rates and refinancing is drying up. The U.S. has a nearly a half a trillion dollar deficit spending this year. What is your economic policy for the next four years?
Gary Blank: Good question. You're right that real GDP -- the most common measure of the overall economy -- did show one of the mildest recessions on record. GDP started to contract in 2000 and then into 2001.
Our economy has shown how fundamentally strong it is when you consider investment bubble of the late 1990s, the recession, the 9/11 terrorist attacks, corporate misdeeds and the War on Terror.
Chairman Greenspan has stated that it turns out the tax relief was remarkably well timed and has helped the recovery. President Bush isn't satisfied and has a 6-point economic plan to strengthen the economy (e.g. curbing frivolous lawsuits that burden our economy).
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California St NW, Washington, D.C.:
Re. small business owners paying icreased income taxes under Kerry's plan, isn't that the way the tax structure was layed out?
My Dad was a Doctor and had his own practice--a small business. His income tax was high because his business was a success--he earned a lot of money. Is it Bush's position that people who are successful and business that do well should pay less tax than someone who doesn't make as much income?
Gary Blank: The President believes that everybody who pays taxes should get tax relief. It's their money, not the government's money. The tax relief passed into law by President Bush and Congressional Republicans reduced income taxes across-the-board for everybody who pays income taxes.
111 million taxpayers will receive an average tax cut this year of $1,500.
Because most small businesses pay the individual income tax, not the corporate tax, 25 million small business owners are getting tax relief too.
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Washington, D.C.:
Isn't saying that jobs are increasing misleading? It seems to me like the work force is increasing faster than the number of jobs, and saying that there are more jobs this month is like saying that I make $7/hour now versus $6/hour in 1965, so I am making more money.
Gary Blank: The labor force is measured by the other employment survey called the household survey. That employment survey shows jobs increased by over 600,000 in July and that the unemployment rate dropped to 5.5%.
We need to do more, but that's headed in the right direction.
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Phoenix, Ariz.:
The Wall Street Journal recently reported that less than 4 percent of U.S. small business owners have enough profits to be taxed at the highest marginal income tax rates, yet your response to Alexandria, Va. suggests that small businesses would be disproportionately impacted by Senator Kerry's proposal to restore the marginal rate structure for the top 2 percent to the level that existed under President Clinton. Please explain your position with specific supporting facts and citations to government data.
Gary Blank: Fair question. You can go to the website of the U.S. Treasury Department for statistics of how the tax relief has impacted small businesses.
Keep in mind Senator Kerry's full proposal. He proposes to reduce the top tax rate for corporations from 35% to 33.25% while increasing the top tax rate for small businesses from 35% to 39.6%.
Even if you disagree about the exact number of small businesses that pay taxes in the top two individual income tax rates, why should even one small business have to pay higher taxes than corporations? It's unfair and bad economics.
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Vancouver, Wash.:
Hello Mr. Blank,
Economists generally agree that our economy needs to generate somewhere between 150,000 and 200,000 jobs per month to just stay even with population growth. By that metric, Mr. Bush - who has been in office 41 months now -should have generated over 6 million jobs, (even using the lower figure 150,000).
It looks like he's short around 5,000,000 jobs! Note that in 8 years, on the Clinton Administration's watch, over 22,000,000 million jobs were created.
Why should Americans who are concerned with the economy re-hire Mr. Bush? So far, his economic policy has been an extraordinary failure -- and I haven't even mentioned the record budget deficits/national debt.
Gary Blank: Thanks. Your question relates to one of the earlier ones we had about the labor force.
The unemployment rate, and the household survey from which it is derived, try to capture the number of people who have jobs versus the number of people who want them.
The unemployment rate has dropped to 5.5%. It's headed in the right direction and it's already below the average for the 1990s.
We need to do more to reduce the costs of doing business in the U.S. so our companies and workers are even more competitive. Increasing taxes as Senator Kerry has proposed will hurt, not help.
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California St NW, Washington, D.C. follow-up:
OK I see you point re. tax relief.
You say it is the people's money not the government's.
However, the government has continued to spend the people's money like a drunken sailor--Bush included! He has NOT cut spending.
So he gave the people money back and spends with IOUs. That is sound fiscal policy?
Gary Blank: Thanks, fair question. The President does believe that we need to control government spending. Unlike Senator Kerry, President Bush actually has a budget. The President's numbers add up and his budget cuts the deficit in half in 5 years.
The President's budget has done the hard work of actually identifying savings, rather than just talking about them like Senate Kerry has. The President's budget identifies over 100 programs for elimination or major spending reductions that would save over $14 billion in the first year alone.
The President's budget gives priority to needs like national security and homeland security. Other spending is limited to an increase of less than 1%.
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Lakewood, Colo.:
Are the tax cuts that Bush imposed proportional to the taxes paid by individuals? In other words, if the top 20 percent of income earners paid 70 percent of the taxes in this country (arbitrary number here), did these 20 percent also receive 70 percent of the tax cuts?
If not, which way were these numbers scewed?
Gary Blank: Nearly 5 million low-income individuals no longer pay any income taxes at all because of the tax relief we've passed over the last three years.
The proportion of all income taxes paid has actually increased for the top 1% of earners.
Why? Because key provisions of the tax relief were the creation of a low 10% tax bracket, doubling of the child tax credit to $1,000 and making the child credit refundable.
Thanks everybody. I'm over my time. Have a good weekend.
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