Bush’s ’fine’ economy sees millions go hungry WALL STREET David Nason

BUSINESS

Bush’s ’fine’ economy sees millions go hungry
WALL STREET
David Nason
February 27, 2006
GEORGE W. Bush went to Milwaukee last week to talk more about America’s addiction to oil. But before turning to his latest obsession, the President gave a precis of the US economy.

Bush declared the economy "strong and gaining steam" and rattled off the positives — a healthy 3.5 per cent growth rate; unemployment down to 4.7 per cent; more than 4 million new jobs created in the past 30 months; home ownership at record levels; and after-tax income up 8 per cent since 2001.

"We’re doing fine," Bush assured his audience before posing the rhetorical question: "How do we keep doing fine?"

Three waves of the Bush magic wand provided the answers.

First, the President praised the virtues of low taxation, saying it would remain a guiding economic principle of his administration.

Next, he advocated careful government spending, although mention of the budget deficit was carefully avoided.

Finally, Bush spoke of the wonders of modern technology, reminding the good folk of Milwaukee that Americans once used typewriters instead of computers; payphones instead of mobiles and carbon paper instead of laser printers.

Now, Bush said, there was a technology explosion under way and just ahead were electric and ethanol-powered cars and power from the wind and the sun.

"In the life of this nation we have seen incredible and rapid advances in technology," Bush said. "I believe the greatest advances are yet to come."

But like his recent State of the Union address and like several speeches since, Bush spoke as though hybrid and electric cars and alternative energy sources had never been heard of before.

In this bizarre fantasy land, the American people didn’t need an economic vision.

All they needed was faith in Bush and a few gadgets.

Three days after Milwaukee, the US Federal Reserve published its triennial survey of consumer finances while Second Harvest, the nation’s largest domestic hunger-relief organisation, released the latest figures on US poverty.

The data give a different perspective of the "fine" US economy.

The consumer report showed that median net worth in the US had grown just 1.5 per cent between 2001-04 — the period of the Bush administration — compared with 10.3 per cent between 1998-2001.

The reduction was due mainly to a sharp rise in household debt — particularly home mortgage debt — and a decline in real wages. Adjusted for inflation, wages have actually fallen 6.2 per cent.

Wages falling this much in a period of low unemployment certainly does not augur well for the next jobs crisis, but there was more worrying news in the figures on savings and share market investment.

The number of families saying they had saved money in 2005 fell 3.1 points to 56.1 per cent while the percentage of families that bought shares directly or indirectly through mutual funds fell 3.3 points to 48.6 per cent.

Significantly, the reduction in stock ownership was the first recorded by the Fed since the consumer finance survey began way back in 1989.

But the most alarming news was in the growing number of people in Bush’s fine economy who are hungry.

The Second Harvest report, using figures compiled before hurricanes Katrina and Rita, showed that 25 million Americans had been forced to get food from the organisation’s network of food banks, soup kitchens and shelters in 2005, up 9 per cent from 2001.

The hungry included 9 million children (aged under 18) and 3 million elderly people.

The trend is reflected in data collected last year by the US Department of Agriculture, which found that more than 38 million Americans lived in hungry or "food insecure" households — an increase of 5 million since 2000.

Second Harvest questioned about 30,000 food distribution agencies as part of its survey. More than 40 per cent of them said funding problems threatened their future work.

But the statistic that stood out most was the one that said 36 per cent of people who came seeking food lived in households where at least one person worked.

It means increasing numbers of working people in the US don’t earn enough for their families to eat properly.

In the fine economy of George W. Bush, that is serious food for thought.