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Published: Friday, 9/17/2004

Our turbulent economy

EXCEPT for the 1 percent of the population who hold one third of the country's wealth, the current picture of the American economy is not pretty.

Dueling economic data as part of a presidential campaign are perfectly normal. At the same time, it is important for voters to somehow sort through the rhetoric and make sense of it.

President Bush will maintain that an economic recovery is on track, fueled by his tax cuts. Senator Kerry will point out problems and argue that he would change things for the better.

There are scary, ambiguous, and encouraging facts.

Employment data are the most confusing. The economy needs to create 150,000 new jobs per month to stay even with population growth. It produced 144,000 in August and 73,000 in July, and has lost a net 913,000 since Mr. Bush became president in January, 2001.

At the same time, the unemployment rate dropped from 5.5 percent in July to 5.4 percent in August. Here in Ohio, however, unemployment outpaces the national average; to the east, Cleveland has been especially hard hit.

Back on the positive side, the overall U.S. growth rate is projected to be a respectable 3 percent to 4 percent over the year. More ambiguous is that profits are strong but wage and salary growth is weak. Oil prices are still high and more volatile than ever.

Here is the scary part. Health benefit costs to employers went up 11.2 percent this year, after rising 13.9 percent last year, with a total increase since 2001 of 59 percent. That means employers are hiring less, paying more overtime, and contracting out, including outside the country.

And there's more.

Medicare premiums will go up 17 percent in January, after a 14 percent rise last year. Most Medicare premiums are deducted in advance from a recipient's Social Security check. If that weren't enough, Federal Reserve Board Chairman Alan Greenspan continues to sound the alarm on long-term funding of both Medicare and Social Security running out unless the government does something about it.

Mr. Greenspan suggests cutting Medicare and/or Social Security benefits or raising the retirement age for receiving full benefits from an already scheduled age 67 to older.

Also, Americans' indebtedness is rising at a rate of 8.6 percent a year, a lot of it borrowed at variable interest rates.

Competition for money to borrow between private Americans and the government which needs it to finance the largest budget deficit in history, an awesome $400 billion-plus, is forcing the Fed to raise interest rates gradually to stifle inflation. Higher interest rates on the debt of some Americans will simply wipe them out financially.

The economy overall presents a discouraging picture, and neither candidate has told us how he'll deal with these difficult problems.

For Mr. Bush, it can't be more of the same: cut taxes, help the rich and the corporations, and hope they'll invest their gains so that the jobs will come.

For Mr. Kerry, it can't be just trust us, we're with you, we'll do better.

Let's hear the candidates address the interrelated issues of jobs, medical benefit costs, and Medicare and Social Security funding, with the frankness that the issues, and certainly the American public, deserve.



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