Pelosinomics

INVESTOR'S BUSINESS DAILY
Posted 10/6/2006

Political Economy: Now that it's all scandal, all the time in Washington, the Democrats are letting their guard down a bit to tell us what they'll do with the economy after they win in November. Maybe we should listen.

House Minority Leader Nancy Pelosi has been all over the place talking about what Democrats will do after they win Nov. 7. But it's hard to take her seriously when she promises to "jump-start our economy and reform our economic policy...to address the needs of working families."

Huh?

"Jump-start the economy"? That's what President Bush did in 2003, when he pushed through bold, broad tax cuts to end a slump that began in 2000 under a Democratic administration.

Since the cuts took effect, the economy has added $1.26 trillion in real output, $14.4 trillion in net wealth and 5.8 million new jobs, while productivity has grown 10% and business investment 24%. Since 2000, total consumer spending has risen $1 trillion — nearly $8,000 per household — after adjusting for inflation. The Dow Jones industrial average is hitting new highs.

Then there's the budget deficit, which the Congressional Budget Office reckons will come in around $250 billion. By our calculations, that's about 1.9% of total output. In early 2004, when Bush vowed to halve the shortfall, it stood at 3.6% of GDP.

The fact is — and we're dealing with facts here, not fantasies — this economy has done better than anyone expected, especially given the mammoth hits it took in the months just before and after Bush took over in January 2001. Democrats know this full well, despite their rhetoric.

They know that nearly $7 trillion in wealth was washed away by the stock market's collapse in 2000 and 2001. They also know that business investment essentially collapsed for three years as a result of that market meltdown and 9/11.

And yet, as noted in a new report from Congress' Joint Economic Committee, ours has outperformed every other major industrial economy since 2001. Reason: tax cuts and low interest rates.

What do the Democrats promise to do about all this prosperity? They'll let the tax cuts lapse, socking millions with billions of dollars in higher levies. They'll raise the minimum wage, hurting the working poor and those with the fewest skills and the least education. And they'll extend jobless benefits, a move that in the past has kept unemployment high (but which today, at 4.6%, is below the average of the last 40 years).

They'll also try to impose new regulations across the economy on everything from energy to broadband, punishing industries they don't like and subsidizing those they do.

Worst of all, they'll do nothing — absolutely nothing — to stop the growth in entitlement spending that will start to engulf the treasury beginning in 2009. Their solution as always: more taxes.

And this is just what they'll admit to. Who knows what else is in store.

How sad the Foley scandal has sucked all the air out of the debate over the nation's future.

How tragic that many will now sit this election out for all the wrong reasons. When they wake up to find their taxes raised, the economy stumbling and their incomes falling behind, they'll regret their lassitude. But then it will be too late.