Patrice Hill reports that Phil Gramm thinks the economy is doing just great:
“You’ve heard of mental depression; this is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.” “We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy, he said. “We’ve never been more dominant; we’ve never had more natural advantages than we have today,” he said. “We have benefited greatly” from the globalization of the economy in the last 30 years.
Gramm thinks the economic growth rate has been great? We’ve had one decent annual growth rate since 2000 – that being the 3.6% in 2004 which only partially made up for the slow growth rates from 2001 to 2003 (0.8%, 1.6%, and 2.5%). Real GDP grew by 3.1% in 2005, 2.9% in 2006, and only 2.2% in 2007. I guess that’s why the employment to population ratio fell from 64.4% down to 62.0% by September 2003 only to crawl back to 63.4% by December 2006. The employment to population ratio has since declined 62.4%. People know that the labor market is currently quite weak but I guess Phil Gramm has not gotten that into his head yet.
As far as benefiting from globalization – while it is true that export demand growth has been strong for the last few years, real exports fell during each quarter from 2000QIV to 2001QIV and from 2002QIV and 2003QIII. And during 2007, imports exceeded exports by almost $700 billion.
Mr. McCain would tackle intransigent budget deficits by wrestling down burgeoning benefits programs and aggressively attacking wasteful spending whether it’s in the Pentagon’s procurement and weapons budget or congressional pork-barrel bills, he said. A proven “instrument” of bipartisan reform and change in many areas, Mr. McCain would seek out Democratic leaders like Senate Majority Leader Harry Reid of Nevada to fashion a bipartisan reform of Social Security. Mr. Gramm said a bipartisan deal might include raising the retirement age to 70 over 30 years, indexing the benefits of wealthier retirees to inflation rather than the more generous wage rate, and creating a private account program for younger workers.
I’m all for eliminating waste and ending the practice of pork-barrel spending but if anyone thinks this will significantly reduce the massive Federal deficit and pay for McCain’s tax cuts, let me suggest they return to kindergarten and start over with their math skills. It would seem, however, that the McCain camp is signaling that they want to reduce Social Security benefits. After all, McCain considers this program to be a disgrace. As a Democrat, I’d love this Republican position to get a lot more air time with the mainstream media.