Tuesday, April 13, 2004

John Kerry introduced his Middle-class Misery Index Monday. Based on seven economic statistics selected by his campaign, Mr. Kerry’s Middle-class Misery Index moved in the wrong direction during the Bush presidency. Mr. Kerry’s new index begs two questions. First, why the need for a new misery index? Second, how does Mr. Kerry’s new index stand up against the historical record?

The original misery index was used by Jimmy Carter during his 1976 campaign against President Ford. Intuitively appealing because it was both simple and easily understandable by all voters, Mr. Carter’s misery index represented the sum of the inflation rate and the unemployment rate. Depending on the size of the misery index, either challengers or incumbents consistently cited it during each of the five previous presidential elections involving an incumbent since. With inflation running at nearly 5 percent during 1976 and the unemployment rate averaging nearly 8 percent for that year, Mr. Carter’s classic index totaled 12.6 percent, significantly higher than in all previous postwar presidential campaigns. It was a brilliant gambit in 1976, but it backfired on Mr. Carter four years later, when it hit 19.6 percent.

It is easy to understand why Mr. Kerry wants to jettison this reliable standby statistic. As it happens, with inflation totaling 1.7 percent during the past 12 months and unemployment currently 5.7 percent, the misery index today stands at 7.4 percent, the lowest level since President Lyndon Johnson faced voters 40 years ago. Inflation in an election year has never been lower since 1964, and the current unemployment rate is below the average rate during the 1970s, 1980s and 1990s.

Clearly, the misery index used since will not suit Mr. Kerry. So, to create his own self-serving Middle-class Misery Index, Mr. Kerry chose his own statistics — median family income (which excludes the 95 percent-plus income tax cut that President Bush pushed through Congress for two-parent, two-child families earning $40,000); college tuition (which has increased in recent years because, according to a Cato Institute study, state spending from 1990 to 2001 rose sharply); health costs (which Mr. Kerry demagogued during the Democratic primaries in his successful bid to defeat Howard Dean); the cost of gasoline (whose federal excise tax Mr. Kerry wanted to increase by 50 cents a gallon during the mid-1990s); bankruptcies (which dramatically increased during the 1990s boom because of widespread abuse of bankruptcy laws, whose reform Senate Democrats blocked last year after bipartisan agreement in the House); the homeownership rate (which is now at a record high); and lagging private-sector job growth.

Regarding the answer to the second question — How does Mr. Kerry’s new index stand up to the historical record? — suffice it to say that Mr. Kerry’s index actually improved during Mr. Carter’s presidency and regressed during Mr. Reagan’s. Enough said.

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