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Tuesday, February 10, 2004 - Page updated at 12:00 A.M.

Bush report: Sending jobs overseas helps U.S.

By Seattle Times wire services

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WASHINGTON — The movement of American factory jobs and white-collar work to other countries is part of a positive transformation that will enrich the U.S. economy over time, even if it causes short-term pain and dislocation, the Bush administration said yesterday.

The embrace of foreign "outsourcing," an accelerating trend that has contributed to U.S. job losses in recent years and has become an issue in the 2004 elections, is contained in the president's annual report to Congress on the U.S. economy.

"Outsourcing is just a new way of doing international trade," said N. Gregory Mankiw, chairman of Bush's Council of Economic Advisors, which prepared the report. "More things are tradable than were tradable in the past. And that's a good thing."

The report, which predicts the nation will reverse a three-year employment slide by creating 2.6 million jobs in 2004, is part of an effort by the administration to highlight signs that the recovery is picking up speed. Bush's economic stewardship has become a central issue in the presidential campaign.

In his message to Congress yesterday, Bush said the economy "is strong and getting stronger," thanks in part to his tax cuts and other economic programs. He said the nation had survived a stock-market meltdown, recession, terrorist attacks, corporate scandals and war in Afghanistan and Iraq, and it was finally beginning to enjoy "a mounting prosperity that will reach every corner of America."

The president repeated that message during an afternoon "conversation" on the economy at SRC Automotive, an engine-rebuilding plant in Springfield, Mo., where he lashed out at lawmakers who oppose making his tax cuts permanent.

"When they say, 'We're going to repeal Bush's tax cuts,' that means they're going to raise your taxes, and that's wrong. And that's bad economics," he said.

Democrats who want Bush's job were quick to challenge his claims.

Campaigning yesterday in Roanoke, Va., Sen. John Kerry of Massachusetts, the front-runner for the Democratic presidential nomination, questioned the credibility of the job-creation forecast.

"I've got a feeling this report was prepared by the same people who brought us the intelligence on Iraq," he said. "I don't think we need a new report about jobs in America. I think we need a new president who's going to create jobs in America."
In an evening appearance at George Mason University in Fairfax, Va., Sen. John Edwards of North Carolina said it would come as a "news bulletin" to the American people that the outsourcing of jobs overseas is good for the country.

"These people," he said of the Bush administration, "what planet do they live on? They are so out of touch."

Last year's Economic Report of the President predicted that 1.7 million jobs would be created in 2003. Instead, the nation lost 53,000 jobs. In Bush's three years in office, 2.2 million jobs have disappeared.

Since the Great Depression, it has never taken this long for the economy to begin creating jobs after emerging from a recession. After the last recession ended in 1991, it took 14 months for employment to begin expanding. Current problems with the economy have gone on nearly twice as long, 26 months.

Most economists said they expect more jobs to be created in 2004 as the recovery gains steam. But many also cautioned that the White House's prediction is aggressive, noting that only 112,000 jobs were created in January.

Economists had expected 150,000 new jobs in Friday's Labor Department report for January. Most have said the economy should be creating 200,000 to 300,000 jobs a month to sustain the recovery.

In a normal year, Bush's hope for 2.6 million new jobs probably could be achieved, said Douglas Porter, senior economist with BMO Nesbitt Burns, an investment firm affiliated with the parent company of Chicago's Harris Bank.

"Unfortunately, this recovery has been marked most notably by persistent weakness in the labor market," Porter said. "I suspect that will continue to be a hallmark of the recovery."

Paul Kasriel, chief economist at Chicago's Northern Trust, was more pessimistic.

"I doubt that we will see that many new jobs created this year," he said of the White House prediction. "I think it will be 1.5 million, which is better than a poke in the eye." But he added, "Even that is iffy."

Much of the report repeats the administration's previous economic prescriptions. For instance, it says the Bush tax cuts must be made permanent to have their full beneficial effect on the economy.

Social Security also must be restructured to let workers put part of their retirement funds in private accounts, the report argues. Doing so could add nearly $5 trillion to the national debt by 2036, the president's advisers note, but the additional borrowing would be repaid 20 years later and the program's long-term health would be more secure.

Compiled from reports by the Los Angeles Times, the Chicago Tribune and Knight Ridder Newspapers.

Copyright © 2004 The Seattle Times Company

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