Memo To CNN: It's (Understanding) The Economy, Stupid.
There should be a rule that television reporters should do their homework before scheduled interviews -- especially during election years.
Homework might have helped CNN's John Roberts, subbing for Late Edition host Wolf Blitzer. Instead, Roberts offered a fact-challenged interview Sunday morning with Labor Secretary Elaine Chao.
The questions were reasonable, but when Chao recited well-rehearsed talking points and used creative math to justify the Bush Administration's economic record -- Roberts should have been prepared with follow-ups. Instead, he moved on to other topics.
The result? Roberts essentially provided a platform for Chao to offer administration spin.
Let's break down the key points of the interview:
HOW MANY JOBS ARE BEING CREATED?
ROBERTS: The latest jobs report, 129,000 jobs created. That's versus a monthly average this year of 140,000. Another sign the economy is slowing?
CHAO: No. I think we are entering Labor Day and with the 36th straight consecutive month of job growth. Our economy has produced well over 5.7 million net new jobs in the last two years. ...
ROBERTS: But many economists will say, Secretary Chao, that it takes 150,000 to 200,000 jobs to keep up with economic growth, and that that's not happening.
CHAO: We're seeing about a monthly average about 140,000 net new jobs. This is just about that rate, which is necessary to have sustainable growth. Basically, we want wages to increase. We want the economy to grow. But not at a rate that's going to produce inflationary pressures. So right now, this rate is what we call not too hot, not too cold. It's just about right and sustainable.
ROBERTS: It's the Goldilocks effect, I guess you could say. ...
Let's review. Roberts should have combined the first two questions. Instead of asking the vague "Another sign the economy is slowing?" -- a question that sets up Chao to say "No." -- Roberts should have simply stated the fact that 140,000/month job growth isn't enough to keep up with the 150,000/month job growth economists say is needed to match population growth.
Chao says as much. She makes it sound as though the difference between 140,000 jobs/month and 150,000 jobs/month is nominal. But take away the spin, and what is Chao saying? During the strongest economic period for the Bush Administration, job growth is not keeping up with population growth.
For comparison sake, average job growth during the Clinton presidency was 236,000/month, according to the Bureau of Labor Statistics.
Roberts doesn't provide that context, though, instead offering banter.
Another relevant topic is the nature of the jobs being created. Are they high-wage jobs, or are they minimum-wage jobs? Are the new jobs ones with health care, or without? Neither Roberts nor Chao provide that context.
WHY DON'T AMERICANS FEEL GOOD ABOUT THE ECONOMY?
ROBERTS: Hey, listen, the economy is going to be a big issue in the upcoming election. People will vote, in part, on how they feel about the economy, how their wallets feel to them. But according to your new treasury secretary, what he said in a speech to the Columbia business school on August 1st, not everyone is feeling that extra fatness in their wallet. Let's take a listen to what he said.
(BEGIN VIDEO CLIP)
HENRY PAULSON, U.S. TREASURY SECRETARY: Amid this country's strong economic expansion, many Americans simply are not feeling the benefits. Many aren't seeing significant increases in their take-home pay. Their increases in wages are being eaten up by high energy prices and rising health care costs.
(END VIDEO CLIP)
ROBERTS: Secretary Paulson says not everyone is feeling it. Secretary Chao, what's going wrong?
CHAO: Well, first of all, overall wages have increased dramatically since 2001. So when we're talking about overall income, first of all, let's make it very clear, we are talking about increases in overall wages.
And the debate is really about how much one group may have increased their wages versus another. But everybody's wages has increased.
Now, when we talk about wages, we need to talk about total compensation. Because that is what's most important. And total compensation includes not only wages but also retirement benefits, health benefits, paid leave.
Overall compensation has been up well over 6% since 2001. So overall, compensation overall is strong and it's overall, compensation numbers that we should be looking at.
CHAO: Let me just finish one other thing. When we talk about personal income as well, let's talk about disposable, after-tax income. And after-tax income is what's, after all, in people's pockets. And that has increased to well over 8.2% since 2000.
Now, think about these two numbers. What does a 6% jump over five years in "overall compensation" really mean?
First off, it means that compensation is growing at a pace of 1.2% per year. With inflation at about 3% per year, that's not "growth." That's "not keeping up with inflation." Furthermore, current compensation "growth" -- putrid as it is -- does not keep up with the compensation growth of the past seven economic growth periods.
How about average after-tax income? There's a joke that if Bill Gates walked into a room with nine impoverished men, one could say that on average, the 10 men were billionaires. Furthermore, by charting the change in average income, one could say that nine of the men had astronomical income growth.
Obviously, that's not a fair way of presenting statistics. But it's not far-removed from the parlor trick that Chao is playing.
Let's start with something simple. While real after-tax income rose 8.2% ($2,398/household) from 2001-2006, according to the Admininstration. But that's not close to the rise of $5,400/household of from 1996-2001, or the rise of $4,700/household from 1991-1996.
But not everyone's income rose equally (to be fair, that's true no matter which party holds the presidency. An analysis of changes in real after-tax income from 1979 to 2003 shows that while the Top 1% of wage-earning households saw a 129% increase and the Top 20% of wage-earning households saw a 54% increase, the Bottom 80% of wage-earning households saw increases of just 4-25% increase, or no more than a 1% increase/year.
Getting back to Roberts' question -- "Secretary Paulson says not everyone is feeling it. Secretary Chao, what's going wrong?" -- the correct answer is that "Real after-tax income is growing as quickly under the Bush Administration as it did under the Clinton Administration, and furthermore, only the Top 20% of wage-earning households saw any appreciable gain in income."
But again, Roberts wasn't prepared to provide any context to Chao's spin.
WHY DOESN'T BUSH GET CREDIT FOR "GOOD ECONOMIC GROWTH"?
ROBERTS: But I wanted to ask you. The administration has not gotten credit for good economic growth. It was 5.6% in the first quarter this year, that reduced to 1.9% in the second quarter. But still, it's moving ahead. Yet at the same time, in polling, in an ABC News-Washington Post poll, 64% of Americans said that the economy is either not good or poor. Only 36% said it's excellent or good. What's going on with that perception?
CHAO: Well, Pew Charitable Trusts has another survey. Basically, they conclude -- there's one strong factor everyone agrees upon. And that is our workers, our workforce needs more training and more retraining. ...
Chao goes on for another minute about job retraining. She doesn't answer the question -- "What's going on with that perception?" -- and Roberts doesn't steer her on track. I'm betting that the reason 64% of Americans said the economy is not good or poor is because their incomes aren't keeping up with inflation -- as stated above.
Economics isn't easy. But a little preparation by Roberts would have made for a better interview. It's not difficult to guess what Chao may say to defend the Bush Administration -- many of her arguments are talking points available on the White House or Department of Labor websites. But unfortunately, Roberts took the easy way out, asking questions that were little more than platforms to allow Chao to spin.
CNN viewers don't benefit from that sort of journalistic effort.