Economic growth: reality or chimera

everyone is crowing about the 7.2% growth rate for the most recent fiscal quarter, as if this is the arrival of our economy at its long-awaited point of rebirth.

people are going further to attribute this to the "Bush Tax Cut" and its benefits to ordinary citizens.

No one seems to be addressing some underlying facts which turn the illusion into reality:

1. Enormous deficit spending is fueling the growth.  The government is artificially propping up the economy with deficits that will have to eventually be paid by someone WITH INTEREST.  When the bills come due, what happens to the economy then?
2. Cheap money is fueling the growth.  The fed has been desperately trying to kick off growth with the cheapest interest rates in virtually anyone's memory!  a 1% fed rate, and the extended period of time it has been in place, would eventually cause the dead to rise.  It does not mean it is sustainable.
3. Cheap dollar artificially boosts the competitiveness of US manufacturing for sales overseas.  There are of course major trade offs to the cheap dollar, such as eventually seeing the enormous foreign investment that has been propping up our deficit spending go back overseas.
4. The War Economy:  it is axiomatic that a war that expends enormous amounts of munitions and equipment must rev up the manufacturing sector to produce more of these goods.  The Bush war economy basically artificially supports the war industries and props up the economy temporarily.  Unfortunately, unless you have a PERMANENT state of war, this effect must eventually disappear.  Maybe that is why the Bush administration is trying to set up a state of permanent warfare.  But of course, the down sides of permanent warfare making this eventually unsustainable.
5. Record levels of personal debt.  People are having to make ends meet by record levels of personal borrowing.  This also fuels artificial economic growth, until of course, the bills come due, bankruptcies rise, businesses write off debts and personal spend then grinds to a halt.
6. Relaxation of pollution standards artificially props up large company income but creates health and environmental costs that eventually create bills to be paid.
7. Artificially low energy costs to prop up the fossil fuel based economy rather than recognizing the real costs (pollution, global warming and the effects on increased storm severity and natural disasters that result from it, etc.)

It is also dis-ingenuous to talk about "job creation" when we have both an artificially sustained economic boom AND a huge reduction in our real workforce capability through the numerous reserves and guard units on active duty, directly pulled out of the jobplace.  When these individuals return to the work force, where will those people go who are currently filling their jobs?  Onto the unemployment lines.

The reality is that the Bush tax cut went over 90% to the very high wealthy sector of the economy that already has more money than it can spend, and thus, simply gets stuck away into offshore accounts and tax advantaged investments.  The few hundred dollars the average person received was not even enough to pay for the increases in health insurance (if they can afford health insurance), nor the increased gas prices for automobile and household heating, nor the losses in their pension funds through corporate fraud and mismanagement, much less to provide discretionary funds to fuel a spending boom.

Every day we hear of more people feeling the real effects of this "artificial prosperity" in the form of higher health insurance costs, more people without insurance, rises in personal bankruptcies, layoffs by big companies, more people suffering health problems like asthma, emphysema and other environmental-related disease conditions, and of course more people being injured or dying in the state of permanent warfare that we have now embarked upon to prop up our fossil-fuel based economy.

And meanwhile, the ultra-rich are getting richer and storing up their gains faster than anyone can count them.  The gap between rich and poor continues to accelerate.  Not content with having more than they could ever possibly use, the ultra-rich donate money like crazy to the Bush re-election campaign so they can get more tax cuts, more special breaks, more war-time economy benefits to their companies, more exclusions to the need to act in a responsible manner, more corporate rip offs, etc. etc.

The press ignores these realities in order to act as cheer-leaders for this enormous deception.  How does the public debate take place when no one is willing to talk about the real issues in public?

Santosh Krinsky

Twin Lakes, Wisconsin

November 4, 2003