Despite growth, economy isn’t helping GOP

Even though the economy generally is strong, as the White House proclaims, new data illustrates why President Bush’s polls are low: Wages haven’t been rising and workers are losing health coverage.

White House aides assert that worker compensation has begun to rise as the economy continues to grow, but they acknowledge the word is not getting out in time to help Republicans in the November elections.

The latest Gallup Poll shows that Bush’s overall approval rating is 42 percent, but on the economy, it’s only 39 percent.

Gallup also found that Americans favor Democrats to handle the economy by a margin of 52 percent to 38 percent.

Conventional political wisdom is that attitudes on the economy suffer under a dark shadow cast by the Iraq war, but some top administration aides acknowledge that economic concerns may have their own bite.

This week’s report from the Census Bureau shows that the nation’s median household income rose slightly in 2005 – but only because more family members were taking jobs to make ends meet.

And a front-page New York Times analysis of economic data showed that both median hourly wages and total worker compensation – wages plus benefits – fell between 2003 and 2005, despite surging productivity and corporate profits.

Meanwhile, the bureau’s report showed another jump in the number of Americans lacking health insurance – up 1.3 million in one year to 46.6 million, or 15.9 percent of the population.

Of the 1.3 million, fully 961,000 were employed all year – evidence that employers are continuing a trend of dropping coverage.

When they do, workers’ children also lose coverage – and the bureau showed that the percentage of children lacking insurance rose from 10.8 percent to 11.2 percent.

And the report showed that economic recovery has not diminished the nation’s poverty rate, which held steady at 12.6 percent.

The data suggests that, while the overall economy has recovered strongly during the Bush administration, the benefits have not accrued to average workers – a trend that definitely helps Democrats in the fall elections.

When the Commerce Department issued its latest figures on economic growth on Thursday – 2.9 percent for the second quarter – the director of the Office of Management and Budget, Rob Portman, issued a statement saying it showed that “the economy is on sound footing.

“Today’s report shows the economy has grown 3.6 percent in the past four quarters, well above the 40-year historical average of 3.2 percent,” Portman stated.

He also touted the fact that growth is generating more government revenue than expected, lowering estimates of the federal deficit.

In an interview, Edward Lazear, chairman of Bush’s Council of Economic Advisers, said new data shows that total compensation – wages plus benefits – has risen 6 percent this year.

“This has happened in every recovery since the 1960s,” he told me. “When you come out of a recession, the first thing that happens is that productivity and corporate profits go up because employers try to increase output without hiring more workers or paying them more.

“Eventually, though, as the economy gets stronger, unemployment falls, labor markets get tight and workers get paid more. With unemployment at 4.8 percent, this is happening now.”

He said the trend likely is to continue. While second-quarter growth was down from the blistering 5.6 rate in the first quarter, overall growth is expected to be 3.5 percent this year.

That may be true, but earlier this month, Bush’s new Treasury secretary, Hank Paulson, was forced to acknowledge that “amid this country’s strong economic expansion, many Americans simply aren’t feeling the benefits.

“Many aren’t seeing significant increases in their take-home pay. Their increases in wages are being eaten up by high energy prices and rising health care costs, among others.”

The New York Times reported that while average family income is up overall, the gains mainly accrue to those in the top income brackets. But even for workers in the top 10 percent bracket – making more than $80,000 a year – inflation has outpaced pay increases over the past three years.

The deflation of the “housing bubble” has softened home prices and lessened owners’ ability to borrow against equity and spend.

Consumer confidence, which some pollsters say correlates with presidential approval and in-party election prospects, also has taken a recent hit.

On the health insurance front, Bush’s former Health and Human Services Secretary, Tommy Thompson, criticized Congress for doing “not much” about the growing ranks of the uninsured.

Congress, he pointed out, failed to pass even medical malpractice reforms that might limit rising health costs and association health plans that eventually would cover only 600,000 of the 47 million uninsured.

And deficit-hawk groups such as the Concord Coalition said while revenues will reduce the budget shortfall in the next few years, it will balloon after that as the baby boom generation retires.

In all, the administration has good news to report, but it’s not getting through in time to help Republicans in November. As one White House official told me, “We need more time, and there’s not enough before the election.”

(Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill.)

Copyright 2006, Roll Call Newspaper

Distributed by Newspaper Enterprise Assn.

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