June Jobs Report: A Reality Check

When does 77,000 actually equal 112,000? Only in the attempt to spin this month's jobs report into something remotely favorable to the Bush Administration. When we tuned in last month, the estimate for total nonfarm payrolls stood at 131.224 million. This month's nonfarm payroll estimate weighed in at 131.301 million, or 77,000 higher. But the announcement was made that 112,000 jobs were created in June, simply because the BLS corrected the last couple of months downward, losing 35,000 jobs in the process. After that adjustment, the new figure is indeed 112,000 higher than the new figure for last month.

But wait, there's more.

The "birth/death model", the BLS's statistical technique for guesstimating the number of jobs they think were created by businesses they don't know exist yet, added 182,000 jobs to this month's (unseasonally adjusted) total. (See earlier post for an explanation of how the BLS imputes the existence of new jobs from new businesses by looking at the number of jobs destroyed by recently deceased businesses.) When you do all the math involved, it turns out that the BLS actually detected a job LOSS of about 68,000 jobs through it's direct sample measurements, and that only by virtue of applying the birth/death statistical fiction could any positive number be discussed at all.

But Even That's Not All.

In that recent blog entry "Most of Those New Jobs Reported Are Imaginary", I calculated that 85% of the new jobs touted as created since March 2003 are the imaginary product of statistical fiction. Updating the charts and numbers with the just-announced June numbers and the April and May downward revisions, it's even more drastic. At this point only 97,000 of the 1,380,000 jobs purported to have been created since March 2003 were actually measured by the BLS sample surveys. The other 93% were "imputed" by the birth/death model. Here's the updated graph:



So What's It Mean?

It means that job growth is far less robust than what's been advertised. That carries with it all kinds of implications for stock markets, interest rates and business decisions. So Caveat Emptor. Here's what it doesn't mean: It doesn't mean the BLS are a bunch of lying scoundrels. The birth/death model is a serious attempt to measure something real, albeit undetectable: the number of jobs created by new enterprises that haven't checked in with the unemployment insurance offices that the BLS samples to collect it's establishment job data. The BLS has been completely straightforward in it's admissions of the shortcomings of the statistical estimation techniques it uses to guess at the undetectable. The BLS has also said that birth/death modeling stinks at detecting changing trends. (I'm liberally paraphrasing.) It also doesn't necessarily mean that all the jobs imagined by the birth/death model don't exist. SOME of them do, since there has to be some new businesses out there that DID create some jobs that haven't reported in to their state bureaucracies yet.

However, when looking at other employment measures, it doesn't look too good for too many of those imputed jobs to be real. We've been stuck at 5.6% unemployment for months now. The number of unemployed is up 84,000 from April to June. There is very little evidence that we have anything more than the same "jobless recovery" we've been experiencing for months. If most of these imputed jobs have not come to pass in reality, then we should see that in ongoing lackluster jobs reports, as the unrealistic projections of the birth/death model continue to be reconciled with reality and month after month of data ends up being revised downward gradually. June's BLS release at least follows this pattern.

Footnotes

There's been an ongoing discussion about my methodology in the comments section of my previous post. Thanks to a handy and brand new FAQ posted at the BLS site, many of the issues in question are now put to rest. Some comments about all of this are posted to the comments page of this post.

The Party Of Job Creation

In previous blogs, I've raised the issue of how robust economic growth is strongly associated with Democratic Party control of government, and outlined how a Democratic administration typically stimulates job growth in contrast to how Republicans have approached the issue. Well the proof is in the pudding as they say. If the Democrats are better at job creation, then we should see it in superior job growth through different administrations, business cycles and economic situations.

And see it we do. Since World War II, the Democrats have held the White House for 27 years and the Republicans for 31. According to Bureau of Labor Statistics data, during the Democrats' 27 years in power, over 59 million nonfarm jobs were created. During the Republican's 31 years, only 31.3 million jobs were created. You have to go back to 1950 to find any Democratic President presiding over an annual net job loss. By contrast, Republican administrations have presided over net annual job losses eleven times. On average, Democratic administrations oversaw a monthly gain of over 182,000 jobs, while the Republicans have averaged only 84,000 per month.

This of course has a profound effect on unemployment rates. Since World War II, again according the Bureau of Labor Statistics unemployment data, on average unemployment rates went down by 5% every year during Democratic administrations while unemployment rates rose a yearly average of 9% under Republicans.



This is not due to a single aberration. As this chart shows, the overall record of each Democratic administration is profoundly different than Republican performance.

As to why this is so, one could argue that Republicans being the party of the affluent and the major corporations are less interested in full employment than the Democrats since a high unemployment rate makes for a cheaper and more compliant labor force. You could also argue that the ideology of the Republican Party makes it impossible for them to embrace the kinds of Keynesian economic solutions that have been proven to work for a century or so. Regardless of the reasons for the difference in performance, no one can possibly doubt that there is a statistically significant difference in the parties' relative success in promoting job creation. An additional 28 million jobs created under Democrats is about as significant as it gets. If you want a full employment economy, you really have no choice this November.

Welcome to the Democratic Party.

Most of Those New Jobs Reported Are Imaginary

John Crudele's jobs commentary in the New York Post caght my eye last month. He reported that a huge number of the new jobs being reported by the Bureau of Labor Statistics were actually the imaginary invention of a statistical method known as "birth/death modeling". This model attempts to correct the notion that the employment figures don't account for jobs created by new businesses that haven't reported in to state Unemployment Insurance agencies yet. So long term studies showed that the rate of dying business was very similar to the rate of new businesses formed - on average, over the business cycle. So, the birth/death model imputes a number for new businesses based upon the number of old businesses that died that month. (If population rates were calculated this way, we would 'discover ' that, among other things, fatal traffic accidents cause babies.)

Intrigued, I looked closer. To their credit, the BLS publishes their entire methodology online. All you have to do is wade through explanations of statistical number crunching as described by Washington bureaucrats. What I found suggests that Crudele may have been understating the problem. When you actually reproduce the BLS methodology described in the BLS Handbook of Methods (Chapter 2), you arrive at the conclusion that fully 85% of the new jobs claimed to have been created since March 2003 are imaginary.

To arrive at a monthly estimate of nonfarm payrolls, the BLS creates a benchmark universe of jobs through compiling Unemployment Insurance records from all 50 states and the District of Columbia. This benchmark is updated each year, about eleven months after the fact. The latest benchmark data is March 2003, which was compiled in February 2004. Then, each month the BLS takes a random sample of the universe and counts the jobs found within. They then compare that figure with the corresponding figure from the prior month's sample. So if the latest month's sample found 26,000 jobs, and last month's found 25,000, then the conclusion is made that the job market grew 4%. They then multiply that percentage growth against last month's estimate of total jobs. But that's not where it stops. They then arbitrarily add a figure for jobs created by new businesses they imagine were created, based on the number of businesses went dead that month (which are signified by the number of businesses in the sample that either reported 0 employees or didn't report at all.) The assumption here is that a dead business in the sample automatically means another business was created that month that hadn't gotten around to report to the state unemployment insurance agencies. Of course this doesn't account for all those businesses who laid off their employees because their jobs were outsourced to India, but I'm sure that's not a problem. Right.

The insidious thing about this is that these imaginary numbers appear to be cumulative. That is, if BLS imagined that 1,000 jobs were created in one month by businesses they can't see, then that 1,000 gets added to next month's total as well. Here's the formula:

(Last month's Total Jobs X Growth Rate of Sample) + New Jobs Imagined By BLS = This Month's Total Jobs

So this month's imaginary figure gets rolled into next month's figure, and next month's etc.

Applying this method to the actual nonfarm payroll data, we find that 1,104,000 of the 1,303,000 new jobs reported by the Department of Labor since March 2003 are basically made up out of thin air. Here's how it translates graphically:



When this birth/death model was created in 1998, it was expected that it would change the results to a modest "small and stable" degree. Indeed for the 11 months from March 2003 through January 2004, a modest 37,000 average jobs per month were added by this technique. Something happened though after that. Over the last four months (February through May 2004) this modeling technique padded the total job growth by over 730,000 jobs, about 183,000 per month.

In February 2005, there will be a new benchmark calculated from universal UI data that will reconcile these figures to the real world at least through March 2004. Most likely, what will be found is that job growth came in somewhere in between the 1.3 million announced and the 199,000 jobs actually detected. This is because there should be SOME new business creations adding jobs. However, how many of those businesses reported zero jobs to BLS did so because they outsourced to India instead of creating a vacuum where a new company grew domestically? When given other well known measures of employment showing no movement at all through this period, we are likely to be surprised how bad things really have been all the while our leaders were telling us how lucky we are.

(Thanks to comments shown in the comments page for this post, the numbers are slightly revised. See comments for full discussion.)

If You Want to Live Like A Republican, Vote Democratic (part II)

In a recent blog I laid out the fact that economic growth under Democratic Party controlled administrations is significantly higher than under Republican administrations, at least for the last 52 years. Further, the highest average growth rates have occurred under Federal governments with a Democratic President and a House of Representatives controlled by Democrats. (Budget/finance bills originate in the House, not the Senate, by order of the US Constitution. So Party control of the House is much more important on economic issues.) Well, 2003 data has been added to the mix, so we now have 53 years of data to look at. We've had 17 years where we had a Democratic President working with a Democratic House. In those years, inflation-adjusted real GDP growth averaged 4.5% per year. In the 6 years when a Democratic President had to contend with a GOP run House, GDP growth averaged 3.9%. In the 26 years when we had a Republican President and a Democratic House, GDP growth averaged 3.0%. Finally, in the five years when the Republicans controlled both the House and the White House, GDP growth was a tepid 2.1%.

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My reasons for reposting this topic are two fold. First, I wanted to update the numbers with 2003 figures, which, by the way, come straight from the Bush administration's Office of Management and Budget's FY2005 Budget report. Included in the historical tables is an Excel spreadsheet that lists each year's GDP along with a "GDP Deflator" that, when multiplied against GDP, gives you an inflation adjusted constant dollar GDP. A little spreadsheet work from there gives you averages under different regimes. The second reason is to test Blogger.com's new support for imbedding images with the chart above that graphically illustrates how much more profitable it is for the country to go Blue.

Iraq Wars II: Attack of the NeoCons

I've been hanging on to this essay for awhile, feeling it was a little over the top. However, with the expanding revelations of torture, rape and murder in Iraq at the hands of military intelligence and mercenary led soldiers, as well as reports coming out of the notorious resumes (like affiliations with South African apartheid death squads among other things) of some of these crazoid mercenaries, I thought it was time to post this.

Remember the last installment of the Star Wars franchise? We KNEW full well that Chancellor Palpatine was the ultimate bad guy. Here he was maneuvering the Republic and the Separatists into a bloody costly war with each other. You could see how he manipulated the Republic Senate, the Jedi Council and our heroes on the one side and the various factions of the Separatists on the other. Was there anyone in the theater who doubted for a second that the evil Darth Sidious was our Emporer Palpatine under the hood?

How many kids, young and young at heart, didn't want to shout at the silver screen when Obi Wan Kenobi, Yoda and Mace Windu were fretting about how the future was clouded: "it's Palpatine you freakin' idiots!!"

That's how it is with George W. Bush and his neocon handlers. If this were a Saturday picture show and not reality as reported by American MegaMedia Inc., the audience would obviously see how the only characters benefitting from 9/11 was the Bush crew and their approval ratings. The same Bush crew whose lives and finances intersected closely with the Saudis and Bin Laden for decades. We would see that the anthrax attacks against Democratic Senators (Still unsolved. Who da thunk it?) coincided neatly with the panic atmosphere needed to pass the USA Patriot Act without much opposition.

The Saturday picture show movie-goers would have had to step out for popcorn to miss how our leaders manipulated the good guys into warring with Iraq, possibly the biggest enemy of Bin Laden in the Islamic world there ever was. The theater audience surely would have seen how our war with Iraq actually strengthened the fortunes of all sides of this unholy alliance - Bin Laden and his ilk have millions of followers now where before they had mere hundreds.

The position paper of the Dark Lords of the Sith, otherwise known as the Project for a New American Century, did in fact lay it all out. In September 2000,. Darth Rumsfeld, Darth Cheney, Darth Wolfowitz and a host of their disciples and retainers unveiled their first strategy paper, called "Rebuilding America's Defenses". It called for hiking up military spending to 5% of GDP and redeploying American forces to create an invincible military presence in the oil fields of the Middle East and other strategic parts of the planet. The paper observed that it was unlikely that their platform would be implemented "absent some catastrophic and catalyzing event – like a new Pearl Harbor" (page 51). The paper also recommended that Saddam Hussein's Iraq be used as the pretext for deploying a massive U.S. force in the Persian Gulf. "While the unresolved conflict with Iraq provides the immediate justification, the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein" (p.14).

One year later, 9/11 happened. One year and one day later, Darth Rumsfeld and others were preparing for the Iraqi invasion, long before even the bodies were recovered from NY's ground zero. We're told that Darth Rumsfeld has a shard from the WTC on his desk as a grisly souvenir. Beware the Dark Side of the Force.

So now Obi Wan Kerry tries to think it all through and the Democratic Party Jedi Council furrows their brow and tries unsuccessfully to see through it all. "everything the future is, the Dark Side clouds" laments the Democrats on the Jedi Council. "It's Palpatine you freakin' idiots!!" shouts the audience. Will we have to sit through four more movies before the Emporer is dethroned?

May the force be with us.

Gutting National Security

What do the Lincoln Tunnel, the Holland Tunnel, the George Washington Bridge, the United Nations, the New York FBI Office, and the Los Angeles International Airport have in common?

They are all standing today because, according to the 9/11 Commission's staff report, US intelligence and law enforcement agencies foiled terrorist plots to destroy them in the 90's during the Clinton administration. The first bombing of the World Trade Center was enough of a wake up call for the Clinton administration. After that attack, not one foreign terrorist attempt to attack within the United States succeeded. All foreign terrorist plans within the US were foiled. Every single one, for 7 years. Until 9/11.

John Ashcroft would have us believe that one memo from Jamie Gorelick so hamstrung the FBI that it couldn't do the job it needed to do to prevent 9/11. Somehow though, the FBI under Clinton managed the record above. That's at least six landmarks saved (Some officials have hinted there were more plots foiled). Then along comes Ashcroft and the Bush Administration. Suddenly, the WTC is destroyed, the Pentagon attacked, people murdered by domestic anthrax attacks. And Ashcroft, our top cop throughout all of this mayhem, wants to blame the folks who were getting the national security thing done right?

All of the laws supposedly hampering the FBI, CIA etc. from doing their job were in place for the entirety of the Clinton administration, and numerous attacks were prevented by sound national security practices over many years. Logically therefore you can't blame those laws for the Bush administration's multiple failure to accomplish the same thing..

So what DID change to make us so vulnerable to terrorist attacks? Without getting into judgments as to the merits of the personnel involved, there are three specific, objective changes that served to weaken the United States' defenses in 2001:

(1) A wholesale disabling of the information sharing apparatus of the intelligence, law enforcement and military agencies. The very first National Security Policy Directive crafted by the Bush administration went into effect February 13, 2001, just two weeks after the Bush administration moved into their offices. Most other people would barely know where to find the bathrooms and the supply closets by this time, but somehow the Bush administration felt comfortable enough with their surroundings that they restructured the entire organization of the National Security Council, abolishing every single working group that facilitated top level infomation sharing on terrorist activity by the FBI, CIA, Departments of Defense and State and National Security Council. In it's place were a bunch of committees controlled largely by Condoleeza Rice and her appointees. Some committees were separated geographically, thus "Near East and North Africa" was separated from "Europe and Eurasia" or "South Asia". Terrorist matters were split up between new committees named "Counter-Terrorism and National Preparedness", "Proliferation, Counterproliferation, and Homeland Defense", "Intelligence and Counterintelligence", "Records Access and Information Security". Condoleeza Rice was given the authority to name each committee chair and assign staff. Then, committees with the same names as the earlier counter-terroism working groups were reconstituted as sub-groups under the "Counter-terrorism and Natioanl Preparedness" committee. This placed two, perhaps three additional bureaucratic levels between the main decision makers of government and terrorist information and recommendations. Anyone who has studied the nature of bureaucracies can easily understand that this amounts to a kiss of death for any notion of quick counterterrorist response. Hats off to contributing writer Margie Burns at Online Journal for pointing this out (scroll down).

(2) A crippling dismantlement of the procedures used to protect U.S. airspace from hijackings and air attacks. If the Pentagon had been operating under the air security procedures held in place for decades, the WTC would probably be standing today. Normal procedures call for fighter jet interception of any suspicious aircraft activity reported by air traffic control to NORAD within minutes of first suspicion. So why weren't those procedures followed on 9/11? Turns out the procedures were sacked on June 1, 2001, to be replaced by a much more cumbersome procedure adding bureacratic layers to the response process. Under the new rules, air traffic control notifies the Federal Aviation Administration (FAA). The FAA passes the info up the line to the FAA chief. The FAA chief then forwards the info to the NMCC (National Military Command Center). The NMCC notifies NORAD to get them to figure out where some jets who can intercept might happen to be. Once NORAD gives an answer, then NMCC locates and contacts the Secretary of Defense for authority to scramble the jets. That's at least five steps to go through, each one capable of being foiled by voice mail or a lunch appointment. What utter nimrod ordered this? Here's the memo itself, signed by a Vice Admiral S. A. Fry. The big question is, who ordered him to do it? Hats off to Jim Rarey of Medium Rare for the 411 on this one.

(3) A deliberate removal of counter-terrorism from the national priority list. The Center for American Progress has this one nailed. Never mind the complete absence of speechifying on bin Laden or terrorism from inauguration to 9/11. Never mind the obvious fixation on missile defense and a national oil company welfare plan...er I mean national energy policy. This is nailed in writing. First, Janet Reno's list of priorities. Reno's budget goals in 2000 say: "In the near term as well as the future, cybercrime and counterterrrorism are going to be the most challenging threats". Then, John Ashcroft's priorities in the corresponding document revised one year later on his watch. Terrorism isn't mentioned among the seven strategic goals listed.

So in objective documentable fact, we see that terrorism was removed as a priority, the ability for intelligence agencies to share information was crippled, and the ability to respond quickly to air hijackings was eviscerated. All within five months. No wonder this administration tried as hard as it did to stop the 9/11 Commission from getting off the ground.

How to Create Jobs

One of the typical responses to Resident Bush's disastrous jobs record from our good friends on the right is to call into question the ability of government to create jobs in the first place. "Employers create jobs, not government!" goes the mantra.

Problem is that Federal government policies have a profound effect on job creation. That's how I came to assert such in a recent Yahoo forum discussion. In that I said: "Any semi-competent Washington policy wonk knows exactly how to stimulate job creation in this economy."

Of course, that was immediately challenged by a friend of mine, who replied: "Not being a semi-competent Washington policy wonk, I guess I don't know, so I'll bite. How?"

The answer is my attempt at a primer on how Washington policy wonks would approach it, using Keynesian, post-Keynesian as well as monetarist strategies that are fairly well known and understood. Problem is, these prescriptions are opposed by the power structure of the Republican Party today, resulting in the unpleasant fact that our Resident Bush will be the first President since Herbert Hoover to preside over a net job loss during his administration.

"OK. You asked for it. There are two main ways that the Federal government can stimuate economic and therefore job growth. In the short term, trade spending/tax policies that generate very little growth to policies that generate more (duh.). A one pager exec summary of an important Economy.com study (the folks behind the Dismal Scientist) is a good backgrounder.

Basically, expenditures targeting low to middle income people grow the economy short term far more than expenditures targeted to affluent people. For example, committing more funds to extending unemployment benefits adds $1.74 to GDP for every $1.00 spent. By contrast, reducing taxes on stock dividends only adds 9 cents to GDP per dollar of taxes reduced. So doing a little math here, if you repeal the dividend tax cut, and take the estimated $36 billion in revenues split evenly between increased benefits to the unemployed and to reducing the budget deficit, that action would increase GDP by $28 billion in the first year alone (about a 0.3% increase in growth.) You'd lose $3.24 billion in GDP growth from repealing the dividend tax reduction, (.09 X $36 billion) and gain $31 billion in GDP from extending unemployment benefits, (1.74 X $18 billion).

Paying more money in unemployment benefits to reduce unemployment seems to be counter-intuitive. But, if you think it through, it makes sense. An unemployed person receiving unemployment benefits is the person most likely to spend those benefits quickly in ways that keep the money recycling through the domestic economy: food, rent, bus fare, utility bills etc., which are all provided courtesy of employed workers, very few of whom could possibly be outsourced to India.

Follow this trade-off policy throughout the budget: More state aid instead of more generous business depletion allowances etc etc. and in each instance take the revenue generated and split it between paying down the deficit and paying for high-growth initiatives. In all, I suggest trading about $100 billion in tax cuts to the affluent in favor of about $50 billion in human needs spending increases such as unemployment compensation, food stamps, housing credits, AFDC, child care and education, mostly administered on a state or local level.

Then, do the same math on another dimension: capital intensive government spending happens to offer less growth bang for the dollar than labor intensive enterprises. This means a road construction or a mass transit project will offer more growth than military spending. Right now we have $75 billion in military spending going toward outmoded cold war era weapons systems designed to fight the Soviets in Europe. The list of them was put together by a group I'm involved in called Business Leaders for Sensible Priorities by Ronald Reagan's former asst Secy of Defense Lawrence Korb.

Now take that $75 billion and put $45 billion into education (school construction/repair), providing health insurance to all uninsured children, reducing class sizes to 15 for all kids grades 1-6 and fully funding Head Start so every kid who's qualified for it gets it. Then, take $10 billion for energy tax credits to jump start alternative energy industries. Take $20 billion to reduce the deficit. Switching from military spending to state level domestic spending of this magnitude would add, net-net, about $35 billion in additional GDP growth per year.

Doing these things will tangibly increase short term economic growth by about $85-90 billion, or about 0.8% additional growth than what we are doing right now. At the same time, we also accomplish a $70 billion decrease in the budget deficit per year. That's just the first year. Two things happen which compound the benefits over the long term.

(1) Every dollar we take from the deficit reduces the amount of interest we have to pay on the national debt. So next year's mandatory budget demands decrease. As economic growth recycles through the economy, the need for unemployment, food stamps etc. decreases, which also reduces Federal budget needs next year. Funding children's health insurance, Head Start, after school programs etc. also increases the work force, as single moms are not forced onto welfare and Medicaid to treat sick kids. That raises payrolls, payroll taxes and simultaneously reduces Federal budget needs next year. This means we can cut the deficit more next year.

(2) At the same time, reducing the budget deficit also reduces the supply of government bonds which must be bought by investors. (I say must be bought, because by definition the money has to come from somewhere and the Feds will be forced to raise the yields they pay on Treasury bonds higher and higher until they find enough buyers.) Private entrepreneurs compete with the government for financing. If the Treasury market is paying X% for guaranteed bond investment, then entrepreneurs seeking risk financing must offer (X+Y)%, where Y is a big enough number to get people interested. If there's a ton of new Treasuries to finance, longer term rates will have to rise relative to shorter term rates to attract buyers. This directly raises the cost of capital for entrepreneurs, as they have to compete with gov't paper. Pay down the deficit, or better yet, return to a surplus, and you remove a huge expense for entrepreneurs.

When the Clinton administration was paying down the deficit and moving to a budget surplus, long term Treasuries were actually paying less interest than money market accounts at the time, simply because of supply and demand. (By contrast, the return to deficit spending means that 10-yr Treasury rates are now 3-4% higher than money market rates, meaning risk capital financing is now more expensive relative to risk free idle cash.) Check out the chart that shows the correlation of deficits and interest rate spreads. Federal Reserve Board Chairman Alan Greenspan is on record crediting this 1990's fiscal policy with fueling the incredible financing boom that brought us from 386 Dos-based computers to the computer age we enjoy today. On july 18, 2001, Greenspan reported to Congres that the return to surpluses and the consequent rise in national saving "provided resources for the technology-driven boom in domestic investment in recent years."

So all of this creates a feedback loop. Short term economic stimulus via domestic, human needs spending increases short term growth, which increase next year's Federal revenues as well as reduces mandatory spending needs, thereby increasing the bite you can take out of the deficit next year. Meanwhile by chipping away at the deficit, and turning them into surpluses over time, you unleash private investment directed to entrepreneurial activity that otherwise was shackled to government bonds, and a long term economic growth engine is built.

It's a textbook case of economic karma. To enjoy enormous bounty yourself, you first take care of those who need it the most.

This is exactly what Bill Clinton did in 1993 with his long term economic growth plan. The Republicans thought it was nonsense and would cause a huge recession. Rep. Newt Gingrich summed up their feelings about Clintonomics in August 1993: "The tax increase will kill jobs and lead to a recession, and the recession will force people off of work and onto unemployment and will actually increase the deficit." What followed was the largest, longest economic growth period in human history, creating more jobs, starting more businesses and accumulating more millionaires than even the Republican's most exotic fantasies could imagine. From Clinton's inauguration in 1993 to Bush's inauguration in 2001, 22.1 million non-farm jobs were created.

Welcome to the Democratic Party.

The Unelectable Candidate

Let's say we're at the Democratic Party convention. After a raucus primary and caucus season, the nominee is chosen. He gets up to give his acceptance speech. He shocks the nation with a bold and aggressive speech demanding action on multiple fronts:

--National health insurance
--A national low rent housing construction program
--Raise the minimum wage
--Increase direct Federal funding of schools
--Expand Civil Rights
--Reduce the national debt by taxing the rich
--Gear any tax relief to benefit those with lower incomes
--Fund pubicly owned energy sources.

On foreign affairs our candidate endorsed a huge foreign aid program and the United Nations, saying "we must see that the United Nations continues a strong and growing body, so we can have everlasting peace in the world."

Summing up his campaign, he brands the Republican Party as favoring "the privileged few and not the common everyday man." He says of his campaign is "attacking the citadel of special privilege and greed."

Surely Karl Rove is licking his chops by now at the strident radical left wing rhetoric of this candidate. Surely the Democrats have shot themselves in the foot playing the "class warfare" card and backing unpopular spending programs. Who is this hapless candidate that every pundit said was unelectable? Dennis Kucinich? Al Sharpton?

No, that was Harry S Truman. The year was 1948. The liberals of his day walked out on him because he wasn't progressive enough. 56 years of red baiting right wing control of the terms of debate has sent us so far to the right that Harry Truman appears to be a leftist radical. Only he wasn't. And those ideas weren't. They were, and are, mainstream American values.

Here's his whole speech. The Democrats should be proud of what they stand for. It won in 1948 when no one thought they would. 56 years later, we can do it again.

Clash of Civilizations?

It's become quite popular to brand Islam a backward and evil religion spawning all manner of violence and barbarity. Neocon pundits have pushed the idea of the "clash of civilizations" between the enlightened West and backward Islam.

Over the holidays, I was fortunate enough to be able to relax at Myrtle Beach with my family. Walking along the beach on Christmas Eve, I looked up and saw Venus shining brightly very close to the crescent moon. This, I had heard, was the Muslim symbol of peace. Somewhere, centuries ago, someone a half a world away looked up at this same sky with the same desire for peace. A small, quiet moment of shared brotherhood across time and space.

Yesterday, I was fortunate enough to be a part of an interfaith delegation for peace meeting with Rep. Dutch Ruppersberger, my Congressman. One of my fellow committee members, Recco El-Amin of the Masjid Al-Inshirah, wrote a small message describing the Islamic viewpoint for world peace. I thought it powerful enough to scan and post here.

"In the name of Allah, the Compassionate, the Merciful

January 12, 2004

Interfaith Coalition for Peace

ISLAMIC VIEWPOINT

Nuclear Weapons Policy

Surah 99, Ayat 7 and 8. "Whosoever performs an atom's weight of good deed will see it (rewarded accordingly). And whosoever performs an atom's weight of evil shall see it".

Over 1400 years ago, the Holy qur' an had already discussed the weight and size of an atom in relationship to man's good deed. On the contrary, if one performs an evil deed compatible with the weight of an atom, one will be rewarded accordingly. It is the responsibility ofthe international community to research the mysteries of (atoms) atomic energy Inuclear energy and to discover their positive and negative effects and to implement its positiveness to the benefit of mapkind and not for their destruction.

Man should put in every effort within his capability to ensure total peace, happiness and prosperity of mankind based upon the fear of G-d and of course, rid the world of atomic and nuclear warfare. In their endeavor to establish this noble command of the Almighty G-d and should they put in an effort compared to the weight ofthe atom, they will be rewarded accordingly. This is the practical solution to the World's problems and crisis. What does Islam say on using weapons of mass destruction in combat? As I know, our religion is peace and it never encourages such brutality to be displayed during warfare. Remember the atomic bomb was what had 'earthquaked' Hiroshima and Nagasaki. We want to say also that Islam cares for keeping mankind, and the environment clean and pure so that man can lead a better natural and healthy life free from any diseases or illness that this calamity might bring.

A Security Perspective

Surah 16, Ayat 126. "And if you catch them out, catch them out no worse than they catch you out: But if you show patience, that is indeed the best (course) for those who are patient."

It may be that each country, has it's own sets of controversies, human right struggles, disputes and fights, coupled with their international differences. But we believed that each country should take the best course that G-d has set with the strictest equity, that you are not entitled to give a worse blow than is given to you. But those who have reached a higher spiritual standard do not even do that. They restrain themselves, and are patient. Lest you should think that such patience only gives an advantage to the adversary, you are told that the contrary is the case: the advantage is with the patient, the self possessed, those who do not lose their temper or forget their own principles of conduct in war. It is those positions that we take that is known best to G-d. ."

Recco EI-Amin
Representative of the Office of
Iman Mutee Mulazim, of Masjid Al- Inshirah, Inc.
The Mosque Cares"

Thanks to Recco El-Amin for permission to post this.

If you want to live like a Republican, vote Democratic.

Supposedly, happy days are here again. Announcements of job gains, and a slight improvement in the unemployment rate, together with a bullish sentiment reading in a poll of manufacturers, has the major media gushing all over the Bush administration for solving the economic crisis. This is, to use James Kilpatrick's favorite word: "balderdash". I'm going to defer to Gene Sperling's excellent column at Bloomberg to lay out how bogus the story of economic recovery really is. The failure of Bush's three record breaking tax cuts and equally ill advised budget decisions to jumpstart the economy should come as no surprise. After all we've been getting the same lackluster results from GOP borrow and spend policies for decades. The raw numbers show very clearly the truth of the old saw: "If you want to live like a Republican, vote Democratic". Here's why:

Any budget policy ideas are going to transfer money and resources from one place to another place. (duh.) Thing is though, that some transfers add more to the economy than others. A dollar spent on a public works project or a social welfare check will recycle quicker and more often in the domestic economy than the same dollar spent on the military or in a tax cut redirected back to the affluent. This is because a poor person will not only spend that dollar faster than an affluent person, but a poor person is more likely to spend that dollar in turn on things that in themselves will recirculate dollars quicker. (food, shelter, heat bills versus savings, luxuries or foreign travel for example.) These relationships are pretty well known and economists can tell well enough how much growth a dollar spent on each type of activity will cause. So professional policy wonks know full well what kind of budget spending will jump start the economy and what kind of spending won't have much effect.

The problem is that the immediately obvious beneficiaries of pro-growth budget policies are all interest groups lumped together in one political party - the Democrats. Each party wants to reward their own base, so you see the Democrats spend more on social/domestic spending and the Republicans spend more on the military and on tax cuts to the affluent. The former will grow the economy, the latter will not. You can see this dynamic in the inflation-adjusted growth rate of the economy since 1950. The average yearly GDP growth under Democratic administrations from 1950-2002 is 4.4%. The average growth rate under Republican administrations over the same period is 2.8%.

Looking at party control of Congress as well as the White House show a clear correlation between Democratic Party control of government and maximum economic growth. Let's look at which party controls the House of Representatives (since the House originates the budget bills), which party controls the Executive, and average the annual inflation adjusted growth of Gross Domestic Product for each combo. Since 1950 there were 17 years in which the Democrats held the House and the Presidency. In those years GDP grew an average of 4.5%. In the 6 years where the Democratic president had to contend with a Republican House, GDP growth was a little less, averaging 3.9% per year.

There were 26 years in which a Republican President had to contend with a Democratic House. In those years GDP growth was much lower, averaging 2.9%. Finally, for those who feel that Republican spending policies would really only benefit the country when the GOP owned the House and the White House, during the four years that this was the case, growth came in the smallest of all, averaging only 1.9% per year.(My source for GDP, and the GDP deflator, when applied to GDP gives you GDP adjusted for inflation is President Bush's last Budget message to Congress, the historical tables of which are available here.)

This is very clear cut. When Democrats run the economic show, we have robust growth of the economy. Add in Republican power participation in increments and each step of the way reduces economic growth. This shows the reality of the theory of the velocity of money, explained in my previous essay below titled: "Whatever Goes Around, Comes Around".

Why is this important? Well imagine just for a moment the 2000 election. Change 275 Florida votes (and/or 1 Supreme Court vote), and change about 20,000 votes that would have given the Democrats control of the House. If the Democratic tandem delivered 4.5% economic growth the way they have before over the last 52 years and we have a completely different country right now. Given that kind of growth over the last three years, we would have seen over $900 billion more economic activity in 2003 than we had. Goodbye unemployment problem. Goodbye budget deficit. Hello stock market success. If you want to live like a Republican, vote Democratic.