Here is the whole Lawerence Kudlow article from today's WSJ.
It's the Economy, Smarty Pants
By LAWRENCE KUDLOWOctober 13, 2004; Page A16
You'd think that a high-performance economy, producing above-average growth and below-average inflation, would be a re-election ace. After all, during the 10 recovery quarters since the end of the 2001 recession, real GDP -- the most comprehensive measure of the economy -- has averaged 3.4% growth, in line with the average post-World War II expansion rate. Since the supply-side tax cuts were passed in Spring 2003, real economic growth has jumped to 4.8%, putting it at the head of the class of the past 20 years.
Somehow -- blame it on many media outlets -- this message is muted. Yet over the past year:
• Inflation-adjusted consumer spending is up 3.6%.
• Residential housing investment is up 13.2%.
• Capital-goods investment by businesses is up 13.9%.
• Spending on machine tools for heavy-industry manufacturing is up a whopping 54.2%.
• Exports and imports are up nearly 11%.
• After-tax corporate profits are up 19.5%.
• Industrial production is up 5.2%.
• High-tech production is up 23.7%.
• Productivity has reached an astonishing 4.6% rate.
• Household wealth is up 11.1%, hitting a record high of $45.9 trillion.
• The GDP deflator is up only 2.2%.
• The core consumer-spending deflator (excluding food and energy) is up only 1.4%.
• Interest rates are at 45-year lows, with short-term rates at less than 2%.
• 15-year mortgage rates are just above 5%.
• Home ownership stands at a record 69.2%.
Impressive? No, remarkable, considering the economy was up against an inherited recession, a busted tech bubble, corporate scandals, 9/11, two wars and an oil-price shock. The strong performance also sharply contrasts with ongoing weakness in Europe. John Kerry may love Europe, but GDP there is growing at less than 2%, with unemployment between 9% and 10%.
Despite all this, the Kerry campaign has managed to define the economy in terms of a relatively weak set of jobs numbers taken from the non-farm payroll survey of established businesses. Team Kerry has flogged George W. Bush with the fact that payrolls have fallen (by 585,000) since the beginning of the president's term. Kerryites talk of a "Hoover" economy, even though two million payroll jobs have been recovered in the past 13 months.
In his own defense, Mr. Bush should highlight the household survey (the number of people actually working), which shows that 1.69 million more are employed today than when he took office. An additional 3.4 million have gone to work since the end of the recession, with 140 million Americans currently employed -- a new record. With all these new job entrants, the unemployment rate has dropped to 5.4%. This is no Hoover economy. But to make this point, Mr. Bush must use numbers on GDP and household employment. He must also stress personal income -- the best gauge of family spending power -- which is growing at a 5% pace. And he cannot be bashful about defending his tax cuts.
Mr. Kerry has already agreed with Mr. Bush on middle-class tax cuts. But when the senator from Massachusetts launches his class-warfare attack on tax cuts for the rich, Mr. Bush should inform debate watchers that taxpayers in the top 1% earn only 14.8% of the nation's income but pay 34.4% of individual income taxes. Similarly, taxpayers in the top 5% -- the biggest income losers during the downturn -- make a quarter of the income but pay over half the income taxes. Why not share tax relief with those who pay the most taxes?
Punishing successful earners and investors, as Mr. Kerry would do, is no way to grow an economy. Tax hikes on dividends and capital gains are nothing but tax hikes on the whole stock market and the 50% of households that own shares. And what good will it do to set up tax barriers for those who wish to climb the ladder to $200,000 salaries ($146,000 for single earners)? Mr. Kerry may say he likes jobs, but he doesn't seem to like the businesses that create them. By taxing capital investment more, business financing will shrink, as will the jobs that businesses create. (Who's the Hoover candidate now?) Mr. Bush will find that a few well-placed facts will go a long way in tonight's debate.
Mr. Kudlow co-hosts CNBC's "Kudlow & Cramer."
URL for this article:http://online.wsj.com/article/0,,SB109763214580043832,00.html