Election year or not, the economy is always a hot social and political topic. As with other issues, much is said that misrepresents the facts. It is easy to feel lost in this flood of information, to fall into the misconceptions that are sold as fact. But fear not! If your head spins from merely hearing the word economy, let the Krummey Truths to Three Common Economic Fallacies be your guiding light.
Economic Fallacy Number One: no jobs are being created in President Bush’s economy. When the initial job creation figure of 32,000 new jobs came out in July, there was an outcry that economic growth had slowed, Bush was getting too much credit for his economic plan, and the world was slowly coming to a screeching halt. Why all the pessimism? Since then, the number has been revised to 74,000 new jobs and 144,000 jobs created in August alone. What’s more, household survey, that includes independent contractors and the self-employed, indicates that 629,000 new jobs were created. America has been through a lot in the last five years a bursting – a technology bubble, September 11, corporate scandals and growing trade deficits. When you boil it down, the Krummey Truth is that the economy is rebounding right on schedule.
Economic Fallacy Number Two: Bush’s overall economic strategy has failed. The unemployment rate, 5.4 percent, is the lowest since September 2001 (the same rate during most of the Clinton administration). New home purchases are the highest they have ever been – which is a big indication of American confidence in the economic recovery. The economy has grown at a rate of three percent for the last three years. True, America is not experiencing the level of prosperity of the mid 1990’s. But, the world is in a state of economic transition, which includes some growing pains as America struggles to gain an identity in the global marketplace. President Bush has taken measures to give the power back to the consumer, which will continue to stimulate economic growth for years to come. New economic issues, such as the trade deficit, outsourcing, and immigration will require more firm confrontation in the future. But the Krummey Truth is that the economy has and will continue to grow as a result of the Bush administration’s efforts.
Economic Fallacy Number Three: There are Two Americas, one that does the work and another that reaps the rewards. This image is a great emotional rallying point for gathering voters (or is it?), but the facts paint a different picture. Based on a report by the Tax Foundation, 44 percent of Americans will not pay income taxes in 2004. The breakdown of who does pay income tax is as follows: the top 20 percent of income earners pay 80 percent of all income tax; the top 50 percent pay 96.5 percent. A more accurate description of the Two Americas is that one America works and pays virtually all federal income tax – the other group works and pays little or no federal income tax. The fact is we live in One America, where there is tremendous income mobility and income is determined mainly by the ability to produce goods and services that satisfy a need. This notion that the vast majority of Americans are tirelessly bearing the burden on low wages while the elite pay nothing is simply not true. The Krummey Truth is that the two Americas business is just envy politics.
In this age of endless news and analysis, it is often difficult to wade through the superfluous information to the actual facts. Hopefully now the economy, when mentioned in class or conversation, won’t invoke a blank stare.