Trick Question: Are You Better Off?

The political economic war in Washington is heating up.

Both Democratic and Republican politicians are firing rapid statistical salvos on the status of the economy at each other, with victory at the polls in November the ultimate goal.

Meanwhile, politically neutral statistical agencies keep producing the ammunition - the numbers - used in the war - often on a selective basis.

Today, for example, the Census Bureau publishes a report showing that the rich did get richer and the poor poorer between 1979 and 1994. Bureau economist Daniel Weinberg looks at the numbers four different ways and comes up with the same result - more income inequity.

It's an issue that Bill Clinton talked about as a presidential candidate in 1992.

Then late last year, Rep. Charles Schumer, a Democratic congressman representing Brooklyn and Queens in New York City held an "informal round table" on income disparity - a subject that would interest many of his poorer constituents. Although not a congressional "hearing," the meeting was covered by C-Span, The Washington Post, and other newspapers.

Labor Secretary Robert Reich, meanwhile, devotes a good chunk of his speeches to income inequity and wage stagnation for those below average in income.

Now the Democrats have company on the issue - Republicans. With 3-1/2 years of President Clinton's term past, Republicans are hammering at his economic record.

Bob Dole in a speech June 3 in Warren, Mich., criticized the "Clinton crunch," saying, "Workers saw their wages stagnate. Families had to work harder to make ends meet. No wonder more American families feel they are falling behind."

Low-income Americans have not seen their wages climb "very fast, if at all, over the last four or five years," notes Brookings Institution economist Gary Burtless. But he says income inequity could be "a painful issue" for Republicans, since they are linked with a sharp deterioration of income distribution in the 1980s and early '90s under Presidents Reagan and Bush.

Whoever is to blame, the Republican majority of the Joint Economic Committee (JEC) has been firing off missives attacking Clintonomics. "Workers' Shrinking Paychecks" is the headline on the latest; "Job Lock Update" the title of the one before that, dealing with the issue of American workers feeling trapped by uncertainty in their current jobs. Another says that slow growth under Clinton costs an average family $3,116 this year.

Lee Price, the staff director on the Democratic minority side of the same committee, admits to being "partisan," but charges the Republican side with being "blatantly partisan," so much so that some economic releases are "not very impressive" and "overreaching."

Democratic one-upmanship is reflected in a minority study released in March, which boasted that the economy under Clinton has performed better than the consensus forecast of economists and better than even the "rosy" forecast of the outgoing Bush administration.

There's a tendency to exaggerate the role the White House can play in such 20-year trends as income inequity, says Mr. Price. "There has not been much improvement under Clinton," he adds.

Nonetheless, Price says Democratic programs, such as raising the minimum wage, would help reduce income inequity, while GOP programs, such as cutting federal spending on education and training and trimming the earned-income tax credit, would "make things worse."

ON the other side, the Republicans hold that tax increases under Clinton "stopped the momentum" in the economy, distorting incentives, hindering investment, and slowing growth. Further, new regulatory burdens and the threat of government-run health care worsened the economy's problems, notes a JEC release.

The Census Bureau plans to issue its next analysis of income distribution and poverty in September, close to the election. It will be based on a survey conducted last March of the incomes of families and households in 1995. Considering the decline in unemployment from above 6 percent in 1994 to about 5.7 or 5.8 percent in 1995, the average family should have registered some income gains, Price says. The poorest households may not have experienced much improvement, he adds. But poverty probably has shrunk.

Price suspects the public is not as concerned about the economy as many political observers suppose, offering as evidence the result of various polls this spring.

Many economists argue that the government role in enlarging or shrinking income inequity is relatively small. The well-to-do benefited from higher interest rates and stock-market gains, as well as greater demand for skilled and educated workers. Those with lower incomes were hurt by weaker trade unions, a decline in the real value of the minimum wage, advancing technology, and international competition.

There is "no single villain," says Burtless.