Conservatives Try (and Fail) To Deal With The Economy

Conservatives appear confused what argument to make about the struggling economy: pander with newfound populism, make excuses for tax handouts to CEOs, and/or insist everything is going fine.

Mitt Romney outpandered [1] John McCain and Mike Huckabee in Michigan, finally winning with Republican voters earning less than $100,000 [2]. But it is far from clear that any of them have enough intellectual consistency, specificity and credibility to overcome the past seven years of conservative failure on the economy.

The National Review's David Gitlitz [3] is going with the happy talk:

...the most recent employment report showed a 0.3 percent increase in the unemployment rate to 5 percent. Historically, however, a 5 percent unemployment rate has been considered extremely low. Over the last 30 years, unemployment has averaged better than 6 percent. During the economic revival of the 1980s, the rate never went below 5 percent.

But conservatives like Gitlitz who lean on "historically" low unemployment ignore the currently reality of underemployment and insufficient wages. Today's New York Times paints a stark portrait [4] of today's economic reality:

Middle-aged men moving in with parents, wives taking two jobs, veteran workers taking overnight shifts at half their former pay, families moving West — these are signs of the turmoil and stresses emerging in the little towns and backwoods mobile homes of southeast Ohio, where dozens of factories and several coal mines have closed over the last decade, and small businesses are giving way to big-box retailers and fast-food outlets.

Here, where the northern swells of the Appalachians lap the southern fringe of the Rust Belt, thousands of people who long had tough but sustainable lives are being wrenched into the working poor.

The region presents an acute example of trends affecting many parts of Ohio, Michigan and other pockets of the Midwest.

Slammed by the continued decline in the automobile and steel businesses, Ohio never recovered from the recession of 2001-2, and blue-collar families who had made it partway up the economic ladder find themselves slipping back, with chaotic effects on families and dreams.

Throughout the state, the percentage of families living below the poverty line — just over $20,000 for a family of four last year — rose slightly from 14 percent in 2005 to 16 percent in 2007, one study found. But equally striking is the rise in younger working families struggling above that line. The numbers are more dismal in the southeastern Appalachian part of the state, where 32 percent of families lived below the poverty line in 2007, according to the study, and 56 percent lived with incomes less than $40,000 for a family of four.

“These younger workers should be the backbone of the economy,” said Shiloh Turner, study director for the Health Foundation of Greater Cincinnati, which conducted the surveys. But in parts of Ohio, Ms. Turner said, half or more “are barely making ends meet.”

Meanwhile, the conservative minority in Congress is angling to shape an economic stimulus package with tax goodies for corporations. But those conservatives got smacked with some facts [5] from the Congressional Budget Office. The Associated Press [5] reports:

Economic stimulus proposals favored by Democrats, including tax rebates, extended unemployment benefits and a temporary increase in food stamps, are cost-effective ways for Congress to try to boost the economy, the Congressional Budget Office said Tuesday.

At the same time, CBO said, some options floated by Republicans such as extending President Bush's tax cuts, cutting corporate tax rates and giving businesses new incentives to invest may be less cost-effective in the short term.

The nonpartisan CBO echoed the views of many economists who say the most effective way to stimulate the economy is to provide money — either through tax cuts or direct payments such as food stamps — to people most likely to spend it quickly.

One always hopes that past failure can lead to new understanding. From the right-wing, that remains to be seen. As the AP noted, congressional conservatives simply rejected the CBO's analysis.