Help me come up w/ an argument against Bush and the GDP?

I've been arguing with conservative friends (gasp) about this:

Them: See? Bush isn't all bad, the economy is doing great, look at the GDP figures.
Me: But look at the number of people layed off, jobs outsourced, etc
Them: Well, the booming economy means more jobs are getting created to replace those

How can I argue that Bush isn't good for the economy... it really isn't getting better, is it? I have no faith trickle down economics works but I don't know what to say.

7.2% increase does not mean more jobs
Jobs are the key to an economic recovery
It is most likely military spending

Productivity and profits have increased to an extent, but a good portion of that increase is military spending and the not a single net job has been created despite the fact that the recession supposedly has been over for more than two years.

The best response won't be available for another 3 months, when the next quarter's numbers are released. In all likelihood they'll show a return to moderate growth (2-3%). But especially if they really take a nosedive, the "deafening silence" will be more than just a saying.

At any rate, there are some pretty good numbers & arguments in Paul Krugman's latest column (http://www.nytimes.com/2003/10/31/opinion/31KRUG.html). But the jobs thing is what really needs to be hammered home.

http://www.urbansurvival.com/week.htm

figures are meaningless unless you know how they're derived.

This administration has lost almost 3 million jobs most of them in manufacturing. When the consumers are out buying all these products they are not made in the U.S. . Thats why we are not creating more jobs.

Krugman:

To put it more bluntly: it would be quite a trick to run the biggest budget deficit in the history of the planet, and still end a presidential term with fewer jobs than when you started. And despite yesterday's good news, that's a trick President Bush still seems likely to pull off.

US:

If it was real, the market would have charged up 200 or 300. Didn't happen because at least a few folks can still read.

Then, tell your new loser republican ex-buddies that the $550 billion dollar deficit was created by the Bushies borrowing the money for the tax-cut that has only temporarily lifted GDP at the expense of at least 2 future generations of Americans.

Tell your ex-buddies that their children and grandchildren will be paying this debt back and the $44 trillion future debt that's being ignored for a quick political scam.

Finally, tell them that a significant portion of the 7.2% increase coincides with more consumer debt that will be the financial ruin of more than 1/2 of the US population who still carry almost $80,000 of personal debt with zero savings.

Also, trickle down doesn't work because the 1% of elitists who get the money hoard it, save it or simply buy a few more luxury items. People who need to spend money to survive don't ever see a dime of it.

Make notes of their agreement then wait about 3 to 6 mos. when the economic stimulus peters out and the administration's policies tank the economy.

Another point is that the initial stimulus resulting from tax rebates to the middle and lower class was a Democratic idea not a Republican idea.

IMHO, the economy is in an extremely dangerous position. Incomes and jobs are not keeping up with consumer spending. The spending is being financed by consumer debt. As the US dollar devalues vs other currencies (Bush's unofficial official policy) foreign investment in US treasuries will decline resulting in rising interest rates and a crash of this credit bubble.

The result may be disasterous. The debt is so high that deficit spending will cause problems by raising treasury rates by increasing the supply of treasury notes out and the prime rate is so low it can't help much to lower it more. Look at what happened to Japan.

The improvement in the economy so far has been the result of incredible government stimulus of a size and scope never seen before. That stimulus includes near record low short term interest rates set by the Fed, longer term interest rates at or near 40 or 50 year lows influenced by the Fed, a huge increase in the money supply of well over $400 billion since the first of the year, record deficit spending by the federal government this year and next, a decline in the dollar of around 20%, and the Bush tax cuts. None of this stimulus can be repeated and most can not be sustained for too many more months, especially the low interest rates. Bush is hoping that it will last long enough for him to win in 2004, and it might.

Even with decent economic growth though Bush still may be vulnerable on the lack of job creation. In the fourth quarter of this year and the first quarter of next year GDP growth is likely to be at least 3% and maybe 4%. In the second quarter of next year people will receive larger tax refunds because of the tax cut so growth may be even better then. However, the possibility of rising interest rates is a big wild card that could lower these estimates substantially. And these growth rates will not be high enough to create a lot of jobs so unemployment likely will decline only 3 or 4 tenths of a percent, if at all. It may rise for several reasons, including increasing productivity, globalization, foreign outsourcing, merger and acquisition activity, and the excess capacity which still exists with a lack of pent up demand to drive the creation of additional capacity.

The recent economic growth most resembles that under LBJ except that LBJ had much smaller deficits as a percentage of GDP and much better economic growth. LBJ's "guns and butter" fiscal policy contributed to the inflation of the 1970's and 1980's. Bush is taking us in the same direction.

Bush not only is emulating LBJ, he also is repeating the same republican mistakes that account for the incredibly pathetic republican record on job creation, federal deficits, and the performance of the stock market.

Job Creation

Republican presidents are always, always, always bad for job creation. Since the 1920's, the annual rate of job creation under republican presidents has always been lower than under democratic presidents. Bush is much worse on job creation than the typical republican president.

Since the depression, not a single republican president has had a better rate of job creation than any democratic president. The highest rate of job growth under a republican was 2.2% per year during Nixon's time in office. The lowest rate of job growth under a democrat was 2.3% per year during Kennedy's time in office. Bush has had a -0.7% annual rate which is the first negative number since the depression.

Since WWII ended, a total of 57.51 million jobs were created during the terms of democratic presidents which is an average of 2.054 million jobs per year. During the terms of republican presidents a total of 31.11 million jobs were created which is an average of 1.003 million jobs per year.





Fedral Deficit

Since Kennedy was president, republican presidents have always run higher federal deficits in current dollars, in constant dollars and as a percentage of GDP, than democratic presidents, except for 1968. The publicly held national debt is now just under $4 trillion. In the 42 years since Kennedy's first budget, the US has increased the publicly held national debt by roughly $3.5 trillion. $3.2 trillion of this debt piled up in the 22 years under republican presidents. $300 billion piled up in the 20 years under democratic presidents.

http://www.whitehouse.gov/omb/budget/fy2004/sheets/hist01z3.xls

Note that the estimates in the table for 2003 and subsequent years are no longer applicable. The current estimates are much higher. Also, the numbers for the first year of a presidential term are from the budget of the preceeding term.

Stock Market

The stock market also performs better under democratic presidents.

The excess return in the stock market is higher under Democratic than
Republican presidencies:nine percent for the value-weighted and 16 percent
for the equal-weighted portfolio.The difference comes from higher real stock
returns and lower real interest rates,is statistically significant,and is robust
in subsamples.The difference in returns is not explained by business-cycle
variables related to expected returns,and is not concentrated around election
dates.There is no difference in the riskiness of the stock market across
presidencies that could justify a risk premium.The difference in returns
through the political cycle is therefore a puzzle.

http://www.personal.anderson.ucla.edu/rossen.valkanov/Politics.pdf

This analysis covers the years 1927-1998 and separately examines the years from 1927-1962 and 1963-1998. Results which included the years from 1999-2003 would show an even greater difference.

Resistance is futile. Besides the GDP number wasnt total bullshit. Oh sure, it's inflated but it was well into the positive side.

The basic reasons why are already into the mainstream. One time tax refunds to the middle class and that enourmous fiscal stimulus. Most of all, having nothing to do with stated economic policy at all, is the continued acceleration of consumer, corporate and government borrowing. (I say not stated because while unrestrained credit growth is THE overiding economic policy nobody is willing to admit it or even to acknowledge its existence as a factor)

It isn't really about Bush, nor his policies, if you can call them that. Attributing the economy to the president on a quarterly basis is a silly silly game. THe Bush partisans will of course cliam his authorship of boom just as we might decry his fault when the numbers are bad.

We are living in an unprecedented financial bubble. The markets, particularly the credit market, are essentially a Ponzi scheme. The whole world is in on it. The latest rube is the Chinese central bank, buying up excess dollars by the billions, soon to be trillions. The strange thing is that they know they are playing the fools, but do so willingly anyway.

Such is the nature or our dillema. Nobody want's the game to end. The alternatives are too unpredictable and scary.