Mar. 27, 2006 - 18:34 MST

BEARS REPEATING

I don't always agree with Paul Krugman of The New York Times but his article today is, I think, quite pertinent. I once heard a man say, if you want fifty million different opinions on any one thing, put the question to the economists. Macro, micro or just plaino there seem to be more opinions than economists. But Mr. Krugman has about the same outlook as I do. His column today in the Rocky Mountain News -- here -- in full:

ECONOMIC INEQUALITY HAS COME ROARING BACK

Dear John Snow, secretary of the Treasury: "I'm glad that you've started talking about income inequality, which in recent years has reached levels not seen since before World War 2. But if you want to be credible on the subject, you need to make some changes in your approach."

"You shouldn't claim, as you seemed to earlier this week, that there's anything meaningful about the decline in some measures of inequality between 2000 and 2003. Every economist realizes that, as The Washington Post put it, "much of the decline in inequality during that period reflected the popping of the stock market bubble," which led to a large but temporary fall in the incomes of the richest Americans."

"We don't have detailed data for more recent years yet, but the available indicators suggest that after 2003, incomes at the top and the overall level of inequality came roaring back. That surge in inequality explains why, despite your best efforts to talk up the economic numbers, most Americans are unhappy with the Bush economy."

"I find it helpful to illustrate what's going on with a hypothetical example: Say 10 middle-class guys are sitting in a bar. Then the richest guy leaves, and Bill Gates walks in. Because the richest guy in the bar is now much richer than before, the average income in the bar soars. But the income of the nine men who aren't Bill Gates hasn't increased."

"Now think about what happened in 2004 (the figures for 2005 aren't in yet, but it was almost certainly more of the same). The economy grew reasonably fast in 2004, but most families saw little if any improvement in their financial situation."

"Instead a small fraction of the population got much, much richer. For example, Forbes tells us that the compensation of chief executives at the 500 largest corporations rose 54 percent in 2004."

"In effect Bill Gates walked into the bar. Average incomes rose, but only because of rising incomes at the top."

"Finally, you should stop denying that the Bush tax cuts favor the wealthy. I know that administration number-crunchers have produced calculations purporting to show that the tax cuts were tilted toward the middle class. But using the right measure -- the effects of the tax cuts on after-tax income -- the bias towards the haves and have-mores is unmistakeble"

"According to the non-partisan Tax Policy Center, once the Bush tax cuts are fully phased in, they will raise the after-tax income of middle-income families by 2.3 percent. But they will raise the after-tax income of people like yourself, with incomes of more than #1 million, by 7.3 percent."

"And those calculations don't take into account the indirect effects of tax cuts. If the tax cuts are made permanent, they'll eventually have to be offset by large spending cuts. In practical terms, that means cuts where the money is; in Social Security and Medicare benefits. Since middle-income Americans will feel the brunt of these cuts, yet receive a realtively small tax break, they'll end up worse off. But the wealthy will be left considerably wealthier."

"Of course, my suggestions about how to improve your credibility would force you to stop repeating administration talking points."

"But you're the secretary of the Treasury. Your job is to make economic policy, not to spout propaganda. OH, WAIT

+++++++++++++

The old saw, "Figures don't lie, but liars figure," gives an idea how statistics, charts and graphs will say whatever the originator wants them to say. Of course the upper echelon doesn't give a damn about groceries, rent, Social Security, Medicare and all that, as they are far above needing any of that assistance.

Just like global warming and other important things, many are saying and few are listening. All this, I believe, BEARS REPEATING . . . . . . . . .

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