No jobs, No WMD, No Osama

By the criteria the Bush Administration set for itself in 2002 (and perhaps early 2003), the past two years can hardly be judged a success. Osama is still wanted, dead or alive. It turns out that Saddam had disarmed, so we did not need to disarm him. And job growth has lagged far behind the Bush administration’s own forecasts, forecasts made when the Bush Administration decided to sell cutting taxes on investment income as a short-term jobs program. Check out the charts produced by Kash at the Angry Bear.

Incidentally, the private sector jobs deficit (and particularly the dearth of manufacturing jobs) is not divorced from the way we have been financing our fiscal deficits -- the trade deficits associated with borrowing from abroad to finance fiscal deficits hurt manufacturing intensive states like Ohio. Of course, the large purchases of government bonds and other fixed income assets by Asian central banks are also helping to keep property values up, at least in coastal cities that don’t depend on manufacturing. After all, borrowing from China keeps interest rates below what they otherwise would have been. More on the sectoral implications of current macroeconomic imbalances later.