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|  | FEBRUARY 26, 2004
Jobs: Desperately Seeking Answers [Page 2 of 2] FAVORED FRIENDS. This fiscal mix "will get the biggest bang for the buck," argues ex-Clinton economic adviser Gene Sperling, since cash poured into wages for teachers and construction workers is more likely to be spent than are tax savings for the wealthy. Dems would also turn homeland security and energy policy into public-works programs. Kerry, for instance, would give states $50 billion over two years to stem budget cuts in education and health care. He would boost police hiring and pour federal money into equipment for "first responders" -- especially the firefighters who have rallied to his campaign. Kerry also proposes an ambitious bid to make the nation energy-independent by 2015 -- which he claims will create 500,000 jobs. To boost factory jobs, Kerry would offer manufacturers a tax break equal to two years' payroll-tax payments for new hires. REOPENING NAFTA. That's all standard Democratic fare. But on trade, the party is rapidly moving away from Bill Clinton's embrace of globalization and toward protectionism. The job migration has Edwards loudly proclaiming his opposition to trade deals that lack strong protections for workers and the environment -- a stance that Kerry, to appeal to industrial-state primary votes, now echoes. Both say they would reopen NAFTA. Bush is no stranger to targeted tax breaks: His 2005 budget calls for 42 new tax subsidies for everything from health insurance to decommissioning nuclear power plants. But the President is counting on economic growth stimulated by his budget-busting 2001 and 2003 tax cuts to boost employment. The White House also calls for regulatory reform -- most notably, raising the barriers to product-liability and malpractice suits against businesses -- to clear the way for robust, job-creating investment. The Administration decries the Democrats' tilt toward protectionism -- though its own free-trade record is tarred with vote-seeking protections for steelmakers, sugar producers, and cattle farmers. Faced with Bush's policies and the Democratic Rx, voters have "a choice between atrocious fiscal policy paired with pretty bad trade policy, vs. pretty bad fiscal policy and atrocious trade policy," says Everett M. Ehrlich, director of research for the business-backed Committee for Economic Development. So the agenda of both parties could crimp growth. MORE DIRECT HELP? Bush's proposal to lock in lower tax rates threatens to balloon the deficit -- already expected to hit $521 billion this year -- even further. That would hasten the day when bond-market investors demand higher interest rates, thus slowing the economy. And Democrats' trade restrictions, if carried out, could curb imports and raise prices for U.S. consumers -- an economic effect that would quickly outweigh any benefit from added wages earned by workers in protected jobs. In short, the impact of the two parties' policies is unlikely to be much different -- or address workers' anxiety. "We ought to be paying more attention to the costs that are being imposed on individual workers," argues Peter R. Orszag, an economist at Washington's Brookings Institution who has advised Democratic candidates. For example, neither party has endorsed such ideas as wage insurance -- extra pay from unemployment-insurance funds to soften the blow of accepting a lower-salaried job. Republicans are praying that job anxiety will have quieted down by Labor Day, when voters really start paying attention. "This is a country that's turning around," declares Ohio Governor Bob Taft, a Republican who has seen 160,000 factory jobs vanish in his state since Bush took office. "All of the economic indicators are moving in the right direction, and jobs are up." Maybe so. But on economics, Bush has the disadvantage of the incumbent: His policies and their ramifications are on full display, while the Democrats need only paint a picture of a rosy future. Unless employment comes roaring back soon, the war President may find job insecurity trumping national security in voters' minds.
 By Richard S. Dunham and Mike McNamee, with Howard Gleckman and Paul Magnusson, in Washington Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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