Unemployment rate sparks political sparring, analysis
WASHINGTON (CNN) -- As the nation's unemployment rate shot up to its highest rate in nine years -- 6.4 percent for the month of June -- the financial analysis and the political finger-pointing began simultaneously.
The White House rushed to remind everyone that the unemployment rate is a "lagging indicator of the economy" and said that the president's tax cuts, some of which are going into effect this summer, will bolster a slowly rebounding economy.
William Dudley, chief U.S. economist for Goldman Sachs, said the jobless rate was not as bad as it looked. He agreed that new tax cuts should generate a positive jolt to the economy.
"By our calculations, consumers are going to get about $122 billion in tax cuts over the next four quarters. So that should help support the economy," Dudley said during an appearance on CNN's "Live From."
But to White House spokesman Ari Fleischer's comment that the recession has been "short and shallow," Dudley noted that while the recession has been mild, "We've also had a very subpar recovery. This is a jobless recovery, probably getting to the point of being even worse than what happened in...1991, '92."
Looking ahead, he said while the tax cuts will "provide some support" for the next three or four quarters, the "real question is what happens after that? ....I think what's going to happen is the economy is going to start to slow down again later next year."
As for how much blame President Bush deserves for all this, Dudley said Bush isn't responsible for what happened early in his administration. "An investment boon that was turning to bust," Dudley concluded.
But, in a comment that should concern the White House, Dudley added, "Obviously, as this goes on longer and longer, the responsibility does shift to the administration."
For their part, the 2004 Democratic presidential candidates aren't giving the president even a temporary reprieve: they jumped on the June unemployment figure as an opening to knock the Bush's economic record.
Sen. John Kerry of Massachusetts: "The president's insistence on reckless tax policies is only making this jobless economy worse. I think everyone knows that the only person in this country who deserves to be laid off is George W. Bush."
Former Vermont Gov. Howard Dean: "New unemployment figures show that more Americans are unemployed than at any time since the end of the last Bush recession. For the first time since Herbert Hoover, there may be fewer Americans with jobs at the end of a presidency than at the beginning."
And Missouri Rep. Dick Gephardt: "This administration has no plan, no vision, no answer beyond simplistic knee-jerk tax cuts for the wealthiest among us."
Gephardt's point echoed a final observation by Dudley. While he agreed with Bush that tax cuts are what the economy needs, he said the formula pushed by the president won't be as helpful as tax cuts aimed mainly at low and moderate-income households.
"Obviously, you know, if you cut taxes for wealthier people, more of the taxes are going to be saved rather than spent," Dudley concluded. "And if you're trying to stimulate spending (and create jobs), that's probably not going to give you as much bang for the buck as you could have had."
Judy Woodruff is CNN's prime anchor and senior correspondent. She also anchors "Judy Woodruff's Inside Politics," weekdays at 3:30 pm ET.