Snow Concedes Economic Surge Is Not Benefiting People Equally

By Jonathan Weisman
Washington Post Staff Writer
Tuesday, August 9, 2005

Treasury Secretary John W. Snow acknowledged yesterday that the fruits of strong economic growth are not spreading equally to less educated Americans, as he and the rest of President Bush's economic team prepared to meet today to discuss wages and income distribution in an otherwise surging economy.

The meeting at the president's ranch near Crawford, Tex., will be convened amid evidence that the economy is gaining steam and that voters are dissatisfied with Bush's handling of the economy. Snow and other administration officials say strong consumer demand for housing, cars and other big-ticket items indicates that the negative message voters are giving pollsters on the economy is belied by their open wallets.

But Snow diverged yesterday from his positive economic message to raise questions about lingering economic misgivings. And he hinted at new policy initiatives.

"The idea there is to explore the things that produce broad-based prosperity," he said of the meeting's purpose. "One of the things we know is that less educated people have seen their incomes and wages grow more slowly. That's what the numbers tell us.

"So that points you in the direction of greater emphasis on education," he told reporters, adding that savings rates among low-income Americans are also lagging.

White House officials have launched a push to win credit for the rash of positive economic news. The Labor Department announced Friday that payrolls rose by 207,000 jobs in July. Factory orders are climbing, and businesses are investing more in new equipment and software. Inflation is tame except for energy costs, and interest rates remain low. The economy expanded at a 3.4 percent annual rate in the spring, and analysts see the pace quickening this summer.

Yet last week, a CBS News poll found that 52 percent of respondents disapproved of Bush's handling of the economy, while 42 percent approved. In part, Bush is suffering from a "reverse halo effect," said Democratic pollster Mark Mellman. Concerns over the war in Iraq are coloring voters' opinions about Bush's policies in other arenas.

But Mellman and other analysts say dissatisfaction with the economy is real. Celinda Lake, a Democratic pollster, said a participant in a focus group two weeks ago was happy to offer his opinions of the economy, because "the economists don't know what they're talking about."

"People are feeling vulnerable to global economic conditions," said Stanley Greenberg, another Democratic pollster. "The difficult labor market continues. There's a sense that they lack clout, an ability to command higher wages."

A study released yesterday by the nonpartisan Congressional Budget Office focuses on "unprecedented" declines in the workforce in the wake of the 2001 recession that continued through early 2005. Job growth in this economic recovery has been substantially slower than previous recoveries, the CBO said.

Administration officials now acknowledge they have a problem, at least with voters' perceptions. Bush will huddle with his Treasury, agriculture, labor and commerce secretaries, his budget director and his two top economic advisers to review the farm economy, overall economic growth, wages, income levels, income distribution and trade, Snow said.

"If the country as a whole is going to undergo economic growth, then the population has to be able to take advantage of opportunities," said Randal K. Quarles, Treasury's undersecretary for domestic finance. "And to the extent out there that there are differentials, significant differentials in the population in their ability to take advantage of those opportunities, that's one of the things we have to consider."

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