Summary
We found some puffery in President Bush’s State of the Union address. He proposed a 20 percent cut in gasoline use, which turns out to be only an 11 percent decrease from current levels. The President claimed to have cut the federal deficit in half, which hasn’t quite happened yet. He trumpeted the 7.2 million jobs created since the worst of the 2003 job slump, ignoring the 2.7 million jobs lost during the first part of his tenure. And once again Bush spoke of “energy independence,” though the nation’s dependence on imported oil has grown steadily since Bush took office despite all the talk and enactment of his energy legislation.
Sen. Jim Webb of Virginia, in a nine-minute response from the Democrats, also chose his data selectively. Trying to put a gloomy cast on a generally upbeat economy, he claimed that worker wages “are at all-time lows as a percentage of national wealth.” Webb would have been more accurate had he said “national income” rather than “wealth,” but it’s true that real wages (after inflation) are rising nicely after a long stagnation.
Analysis
Bush delivered his State of the Union address Jan. 23, concluding that “the State of our Union is strong [and] our cause in the world is right.” That broad judgment we’ll leave to others to evaluate. Some of the specific facts the President cited, however, we found to be selective, and one we found to be incorrect.
Gasoline Cut
Bush overstated matters when he proposed to slash the nation’s use of gasoline by one-fifth over the next decade:
Bush: Let us build on the work we’ve done and reduce gasoline usage in the United States by 20 percent in the next 10 years.
But, compared to what? In reality, Bush’s stated goal is not so grand as he made it sound. A White House “fact sheet” says in the fine print that he’s talking about a 20 percent from projected levels, not from what motorists are using today.
There’s a big difference. The Energy Information Administration predicts that if current trends continue American motorists will consume 12 percent more gasoline than they do currently by the year 2017. Cutting that projected consumption by 20 percent works out to a level that is just 11 percent less than current consumption. That would still be a historic reversal and a major accomplishment, but roughly half of what Bush’s words seemed to promise.
Foreign Oil
Bush – once again – spoke of lessening dependence on Middle Eastern oil and imported oil generally:
Bush: For too long our nation has been dependent on foreign oil.
He didn’t mention that the nation has become significantly more dependent on foreign oil during his time in office. According to the Energy Information Administration, the U.S. imported 60.2 percent of the oil it consumed in 2006, up from 52.9 percent in Bill Clinton’s last year in office. Dependency has grown in each year of the Bush presidency save one, despite all the talk and enactment of his energy legislation.
Federal Deficit and Fiscal Discipline
Bush called for fiscal restraint and claimed credit for cutting the federal deficit in half:
Bush: What we need is to impose spending discipline in Washington, D.C. We set a goal of cutting the deficit in half by 2009, and met that goal three years ahead of schedule.
Actually, Bush inherited a budget with a comfortable surplus, and then ran up enormous deficits that continue to the present. Under Bush, the national debt (debt held by the public) has increased by more than $1.5 trillion. The annual deficits peaked at $413 billion in fiscal year 2004, and has declined since then. But in fiscal year 2006 (which ended last Oct. 31) the deficit was still $248 billion. The latest estimates from the nonpartisan Congressional Budget Office project a further reduction in the current fiscal year, to $172 billion. That would indeed be less than half the worst of Bush’s deficits, but it would be only two years prior to fiscal 2009, not three.
As for spending restraint, Bush has shown little if any to date. He allowed spending to soar 42 percent during his presidency, and didn’t veto a single spending bill. (His only veto was of a bill to loosen restrictions on federally funded stem-cell research.) He did sign massive tax cuts, and revenues increased only 21 percent during the same period.
Education
The President called for reauthorization of the No Child Left Behind Act, saying:
Bush: Students are performing better in reading and math, and minority students are closing the achievement gap…the No Child Left Behind Act has worked for America’s children.
According to the government’s own National Center on Education Statistics, the overall achievement gap between minority students and white students has decreased between 2002, when Bush signed the law, and 2005. But the act’s impact on math and reading scores is debatable. Students in 4th and 8th grades performed at historic high levels in math in 2005. However, scores had been on the rise since before the law passed. In reading, there was no difference between 4th graders’ scores in 2002 and 2005, and the scores of 8th graders actually dropped two points in that interval. The reading scores in 2005 were barely different from those in 1992.
The Economy
When it came to describing the economy, Bush was pretty much on the mark.
Bush: Unemployment is low, inflation is low, and wages are rising.
In fact, the 4.5 percent unemployment rate for December was well below the historical average. For all months since 1948, when the BLS started publishing its current statistical series, the average rate has been 5.6 percent. The current rate is not far above the 4.2 percent rate that prevailed when Clinton left office.
Inflation remains reasonably low. The Consumer Price Index rose 2.5 percent during 2006, less than the 3.4 percent rise of 2005.
And it’s also true that wages are rising, and finally rising faster than inflation. According to figures from the Bureau of Labor Statistics, average weekly earnings for rank-and-file workers rose 2.1 percent last year even after adjustment for inflation. But last year’s rise came after many years of stagnation. In December workers were earning only 2.9 percent more per week than when Bush took office, taking inflation into account.
Job Gain
The President puffed up his description of the economy using an apparently bogus number. And in fact, when we dug into this we found that the White House has been using inflated numbers for job gains for more than four months.
Bush: We’re now in the 41st month of uninterrupted job growth, in a recovery that has created 7.2 million new jobs — so far.
The 7.2 million figure is correct according to the Bureau of Labor Statistics, counting an unusually large upward adjustment in the figures for total non-farm employment that the BLS announced in October. However, as in the past, Bush concentrated only on the period since August 2003, which was the low point of the prolonged job slump that plagued the first 2-1/2 years of his presidency. Since 2.7 million jobs were lost that time, the net gain from the time he took office has been 4.6 million jobs, a respectable number but still not so large as the one Bush highlighted.
Democratic Response
In contrast to the President’s upbeat description of the economy, Democratic Sen. James Webb of Virginia painted a rather bleak picture:
Webb: Wages and salaries for our workers are at all-time lows as a percentage of national wealth, even though the productivity of American workers is the highest in the world.
As previously mentioned, real wages (after inflation) are actually rising, and certainly not at “an all-time low.” When we asked what Webb was talking about, his aides cited a recent article by the Economic Policy Institute, a liberal think tank, that cited “unprecedented income inequality.” Another liberal-leaning think tank, The Center on Budget and Policy Priorities, using data from the federal Bureau of Economic Analysis, found that wages and salaries as a share of all national income was at an all time low. In other words, income from such things as stock, bonds and rents is rising faster than paychecks.
– by Brooks Jackson, with Viveca Novak, Justin Bank and Emi Kolawole
Sources
Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National),”Total Nonfarm Employment, Seasonally Adjusted”
Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National, “Average Weekly Earnings, 1982 Dollars”
Energy Information Administration, “Table 2. Energy Consumption by Sector and Source,” Annual Energy Outlook 2007 with Projections to 2030 (Early Release).
Energy Information Administration, “Table 1.7 Overview of U.S. Petroleum Trade.”
Aron-Dine, Aviva and Isaac Shapiro. “Share of National income Going to Wages and Salaries Remains At Record Low,” Center on Budget and Policy Priorities. 16 January 2007.
Mishel, Lawrence and Jared Bernstein. “New data reveal unprecedented income inequality,” Economic Policy Institute. 17 Jan 2007.