State Representative David Bly, MN District 25B

Ray Cox responded to my economic blog in a roundabout way, saying he is, “very optimistic about the national economy and our state economy as well. Some folks are out there with the same old “doom and gloom” rhetoric but I don’t buy into that message at all….in fact, it is a very pessimistic, stale message. Our economy IS improving with every month that goes by.”

Apparently Ray’s missing the point of my blog, which I thought was pretty clear — that although the economy is doing very well for some folks, for many it is not doing so well. Ray quotes an article in the St. Paul Pioneer Press, entitled “Manufacturing up again.” He makes the article and the report sound better than it is.

I checked the data the article quotes from The Institute for Supply Management, and although it indicates manufacturing is showing some gain, employment is down from June to July. What can this mean? As I pointed out, gains in the economy for management, for supply manufacturers, are not gains for working people. We know the part that outsourcing is playing in our economic recovery and how that alone can “show” that things are “improving” but that really productivity is up and employment is down. Here’s another example, where one person’s improvement is another’s uncertainty or worse.

The article Ray quotes interestingly relates a downturn in Construction spending, something he should be paying attention to. It says,

In Washington, meanwhile, the Commerce Department reported that construction spending slipped 0.3 percent in June to a seasonally adjusted $985.2 billion after expanding a revised 0.1 percent in May. The industry is particularly sensitive to interest rates, which have been on the rise since spring. The construction report was weaker than economists expected and represented another sign that the economy hit a rough patch early in the summer. The construction figures were further evidence that the nation’s economic expansion appeared to slow at the end of the second quarter as interest rates rose and fuel costs climbed higher.

Among voters I talk to, I am not hearing the optimism that Ray claims to hear. Among voters I talk to, I hear concerns about health care costs (38,000 lost coverage as a result of legislative cuts to Minnesota Care), deep cuts to local schools, loss in wages and fear of loss of their jobs, outsourcing good Minnesota jobs, and disproportionate tax and fee increases. But Ray reports, “The message I heard from so many people last night was that Minnesota is moving ahead in a proper direction. People want to see family values protected, see good jobs available, have access to quality schools, and know that the state is taking care of fragile and vulnerable individuals.”

I agree those are things Minnesotans want, but I am hearing constituents say they are not getting them in today’s economy nor are they getting any help from state government, and they are very concerned about their future.

On the National level Michael Kinsley offers some insight about why Minnesotans are not getting what they want and need:

Michael Kinsley: Do the math: Democratic presidents shine

Michael Kinsley
Los Angeles Times
Published August 4, 2004

It turns out that Democratic presidents have a much better record than Republicans. They win in a head-to-head comparison in almost every category. (The underlying data can be downloaded at www.gpoaccess.gov/eop/index.html.)

Real growth averaged 4.09 percent in Democratic years, 2.75 percent in Republican years. Unemployment was 6.44 percent, on average, under Republican presidents, and 5.33 percent under Democrats.

The federal government spent more under Republicans than Democrats (20.87 percent of the gross domestic product, compared with 19.58 percent), and that remains true even if you exclude defense (13.76 percent for the Democrats, 14.97 percent for the Republicans).

What else? Inflation was lower under Democratic presidents (3.81 percent on average, compared with 4.85 percent). And annual deficits took more than twice as much of GDP under Republicans than Democrats (2.74 percent of GDP versus 1.21 percent).

Republicans won by a nose on government revenue (i.e., taxes), taking 18.12 percent of GDP, compared with 18.39 percent. That, of course, is why they lost on the size of the deficit.

Personal income per capita was also a bit higher in Republican years ($16,061 in year-2000 dollars) than in Democratic ones ($15,565). But that is because more of the Republican years came later, when the country was more prosperous already.