BUSHONOMICS.

Economics has never been the Bush family's thing. The first President Bush was so bored by financial briefings that he sometimes dozed off during them. The second hasn't been caught napping yet, but it's fair to say that the economy isn't his favorite topic. George W. Bush is well aware, however, of the fate that befell his father after he waged a successful war in the Gulf--"It's the economy, stupid”--so he briefly turned his attention away from foreign policy to defend his controversial tax-cut plan, which is fighting for survival in the Senate.

"With a robust package of at least five hundred and fifty billion dollars in across-the-board tax relief, we will help create more than a million new jobs by the end of 2004,"he declared in his weekly radio address. "Some members of Congress support tax relief but say my proposal is too big. Since they already agree that tax relief creates jobs, it doesn't make sense to provide less tax relief and, therefore, create fewer jobs. I believe we should enact more tax relief so that we can create more jobs, and more Americans can find work and provide for their families.”

There is a pressing need for more jobs--another forty-eight thousand vaporized last month--but the link between tax policy and payrolls is a lot murkier than the President made it out to be. If tax cuts automatically created jobs, businesses would be scouring the streets for workers right now, and nobody's twenty-five-year-old children would still have to live at home. Two years ago, after all, President Bush persuaded Congress to pass the biggest tax cuts in a generation. But since then a million and a half jobs have disappeared. By contrast, between 1993 and 2000, President Clinton raised taxes to reduce the budget deficit, and the economy created more than twenty million jobs. Of course, this doesn't mean that higher taxes create jobs, either. The number of people working is determined by the over-all state of the economy, to which fiscal policy is just one contributor. Other things being equal, tax cuts can help the economy by putting more cash in consumers' pockets, but they are an expensive and unreliable way to raise employment, especially when they are aimed at people who tend to save their windfalls rather than spend them.

More than half the President's tax cuts would come in the form of abolishing the taxation of corporate dividends. The primary recipients would be rich people and senior citizens, since they own most of the dividend-yielding stocks. For example, Sanford Weill, the chairman of Citigroup, would get a tax cut of about six million dollars. Based on 2001 figures, Vice-President Dick Cheney would save about a hundred thousand dollars. The dividend plan might persuade yacht builders and assisted-living communities to hire some extra help, but it won't do much for the rest of the nearly nine million unemployed.

In view of this problem, the White House has put forward a more subtle rationale for the dividend-tax cut: It will cause the stock market to rise, which will make consumers and businesses feel more confident. This, in turn, will boost spending, which will generate more hiring. But if any of these links fail to materialize, so will the new jobs.

Even taking the President at his word, each new job would cost the government five hundred and ...