July 28, 2006
For millions of hard-working middle-class families, life under Republican rule has grown less affordable and less secure. President Bush’s record of fiscal incompetence and mismanagement, and Republicans’ close ties with special interests, have helped lead to both lower wages and skyrocketing costs for basic necessities like gas, health care, and college tuition. Unfortunately, instead of producing solutions to the problems facing the middle class, Bush Republicans are ignoring them and pushing for policies that will make matters even worse. It’s no wonder Americans believe Democrats would do a better job handling the economy than Republicans by a 49 percent to 29 percent margin. (Fox News/Opinion Dynamics poll, 7/13/06)
In addition to tightening the squeeze on families, Republican policies have made our entire nation less secure economically. Republicans have pushed to increase our debt to nearly $9 trillion and have insisted on spending billions of dollars every year on budget-busting tax breaks for special interests and multi-millionaires.
The Bush Administration also continues to compromise our economic security by increasing our reliance on foreign investors in China, Japan, and Dubai. Democrats have fought to reduce America’s dependence on foreign borrowing and foreign sources of oil, but the Republican majority, often at the behest of powerful special interests, repeatedly has blocked those efforts.
It’s time for a new direction. Middle-class families, and our nation, deserve better. Democrats will continue to offer the solutions that will bring back the fiscal responsibility and broad economic opportunity for middle-class families achieved during the 1990’s.
MIDDLE-CLASS FAMILIES SQUEEZED BY SKYROCKETING COSTS
Gas prices have increased 104 percent to over $3 a gallon. Prices at the gas pump have jumped 104 percent from $1.47 per gallon in January 2001 to $3.00. The price for a barrel of oil has more than doubled during the Bush Administration from $30.63 in January 2001 to $73.87. (Energy Information Administration, Household Vehicle Energy Use: Latest Data and Trends; Weekly Retail Gasoline and Diesel Prices, 7/24/06) The average household with children will spend about $3,815 on transportation fuel costs this year, an increase of 100 percent or $1,912 over 2001 costs. (Energy Information Administration, Household Vehicle Energy Use: Latest Data and Trends; Short Term Energy Outlook, 7/11/06) As summer temperatures reach record high levels around the country, the Bush Administration estimates that residential electricity prices will rise by 7.8 percent in 2006. Electricity costs have risen by about 18 percent since 2001. (Energy Information Administration, Short Term Energy Outlook, 7/11/06)
Health care premiums have increased by over 70 percent. The cost of family health insurance has skyrocketed 71 percent since the beginning of the Bush Administration. The typical family health insurance premium is now $10,880 a year compared with $6,348 in 2000. (Kaiser Family Foundation)
College tuition has skyrocketed by as much as 57 percent. Tuition and fees at four-year private universities have increased by almost $1,200 or 5.9 percent in 2005 and 32 percent since the 2000-2001 school year. At four-year public universities, tuition and fees increased by 7.1 percent this past year and 57 percent since President Bush took office. (College Board, 10/05) The cost of a college education is rising faster than family income, but key federal tuition assistance programs such as the Pell Grant program have failed to keep pace with the rising cost of college. While the maximum Pell Grant covered 51 percent of the cost of tuition, fees, room and board at a public four-year college during the 1986-1987 school year, it covered only 35 percent of those costs in 2004-2005. (Analysis of Department of Education data)
Housing affordability has reached a 19-year low. Housing affordability has reached its lowest level since 1987. Median monthly home ownership costs, including mortgage payments, have increased over 49 percent since January 2001. (National Association of Realtors, 7/06) According to the Wall Street Journal, “Soaring house prices and higher mortgage rates have put homeownership out of reach for more people than at any time in more than a decade…Affordability has long been a problem for low-income home buyers. But as home prices have marched steadily higher in recent years, many buyers with healthier incomes also are being squeezed.” (Wall Street Journal, 12/22/05)
MIDDLE-CLASS FAMILIES SQUEEZED BY DECLINING INCOME AND FEWER JOB OPPORTUNITIES
While families work harder, their wages continue to decline. Middle-class families are working harder and earning less today than they were at the start of the Bush Administration. According to the Wall Street Journal, “Since the end of the recession of 2001, a lot of the growth in GDP per person -- that is, productivity -- has gone to profits, not wages.” (Wall Street Journal, 3/27/06) Average household income has declined each year during the Bush presidency and median weekly earnings have fallen 0.9 percent since 2001 compared with 7.3 percent growth in the last five years of the Clinton Administration. At the same time that families have seen their real earnings decline, the productivity of the American worker is up 18.4 percent. Therefore, Americans have worked harder - and more productively - over the past five years and received none of the benefits of their hard work. (U.S. Census Bureau; Bureau of Labor Statistics; Joint Economic Committee Democrats, 6/06)
Earnings for workers with college degrees declining. “Wage stagnation, long the bane of blue-collar workers, is now hitting people with bachelor’s degrees for the first time in 30 years. Earnings for workers with four-year degrees fell 5.2% from 2000 to 2004 when adjusted for inflation, according to White House economists…Not since the 1970s have workers with bachelor's degrees seen a prolonged slump in earnings during a time of economic growth…trends for people with master's and other advanced degrees…have found that their inflation-adjusted wages were essentially flat between 2000 and 2004.” (Los Angeles Times, 7/24/06)
Worst job creation record since Hoover Administration. A growing economy should be good news for those seeking jobs. But over the course of President Bush’s five years in office, his Administration has the worst overall job creation record since Herbert Hoover more than 70 years ago. (U.S. Department of Labor, Bureau of Labor Statistics, 7/7/06) Overall non-farm payroll employment has increased by 2.8 million during the Bush presidency compared with 22.7 million during the Clinton presidency. (Joint Economic Committee Democrats, 7/7/06) Overall employment growth has averaged just 42,000 per month under President Bush—much lower than the approximately 150,000 jobs needed each month to keep up with population growth. It was not uncommon to see monthly job gains of 300,000 and even 400,000 during economic expansions under previous Administrations. (Economic Policy Institute, The Boom That Wasn’t, 12/19/05)
Private sector job creation has been especially poor during the Bush presidency, with an average annual job growth rate of just 0.3 percent per year since 2001. (U.S. Department of Labor, Bureau of Labor Statistics, 7/7/06) Just 1.6 million private sector jobs have been created during the Bush presidency, compared with over 20 million private sector jobs during the Clinton presidency. (Joint Economic Committee Democrats, 7/7/06) The manufacturing sector, often the source of jobs with good pay and benefits, has lost nearly 3 million jobs since the start of the Bush Administration. (U.S. Department of Labor, Bureau of Labor Statistics, 7/7/06) Nearly half of the jobs created since 2001 were part-time and freelance positions without benefits. (Los Angeles Times, 7/24/06) This slow pace of private sector job creation is particularly troubling given that we are so far into the economic recovery.
Unemployment has increased and long-term joblessness has increased by 57 percent. In part because of this failure to create a sufficient number of jobs, the national unemployment rate stands at 4.6 percent which is 10 percent higher than the 4.2 percent rate when President Bush took office. Unfortunately, once unemployed, America’s workers also are staying unemployed longer. In June 2006, nearly one in six of the unemployed had been out of work for more than 26 weeks. The number of long-term unemployed has increased 57 percent since President Bush took office. (U.S. Census Bureau; U.S. Department of Labor, Bureau of Labor Statistics, 7/7/06)
Bush’s deficit-financed tax cuts have widened the income gap between millionaires and middle-class workers. In his latest testimony before Congress, Federal Reserve Chairman Ben Bernanke warned against rising income inequality: “to the extent that incomes and wealth are spreading apart, I think that is not a good trend.” (Testimony of Ben Bernanke before the Senate Committee on Banking, Housing, and Urban Affairs, 7/19/06) The Wall Street Journal has attributed the widening income gap to President Bush’s tax policies: “it appears that the highest-salaried workers -- executives, managers and professionals -- are widening their lead on the typical worker… The Bush tax cuts appear to have widened the income gap, according to many analyses.” (Wall Street Journal, 3/27/06) President Bush’s capital gains and dividends tax cuts will cost $197 billion over ten years, with most of the benefits going to multimillionaires. In an analysis by the New York Times, “Among taxpayers with incomes greater than $10 million, the amount by which their investment tax bill was reduced averaged about $500,000 in 2003, and total tax savings, which included the two Bush tax cuts on compensation, nearly doubled, to slightly more than $1 million… Those making less than $50,000 saved an average of $10 more because of the investment tax cuts…few taxpayers with modest incomes benefited because most of them who own stocks held them in retirement accounts, which are not eligible for the investment income tax cuts.” (New York Times, 4/5/06)
Bush Republicans gave away more special interest tax breaks for Big Oil and multi-millionaire investors at the expense of tax relief for the middle class. The recent Republican tax reconciliation conference report included more expensive tax breaks for Big Oil companies and multi-millionaire investors, but eliminated the college tuition tax deduction, failed to adequately address the Alternative Minimum Tax, and failed to provide middle-class families relief from the rising costs of tuition, gas prices, and health care. “Republican lawmakers, facing the prospect that their power to cut taxes may soon be curbed, plan to extend breaks that mostly benefit the wealthy and Wall Street at the expense of reductions for middle-income households.” (Bloomberg, Republicans Set Aside Middle-Income Tax Cuts to Focus on Rich, 5/8/06)
More American families and children face severe financial problems. The number of Americans who are living in poverty has increased each year of the Bush Administration and is now nearly 17 percent higher today than in 2000. Thirty-seven million Americans were living in poverty at the end of 2004, an increase of 5.4 million over the 2000 level. Poverty has hit America’s children particularly hard. According to a UNICEF report on child poverty rates in 2005, more than one in five children in the United States live in “relative” poverty. (U.S. Census Bureau)
MIDDLE-CLASS FAMILIES SQUEEZED BY RECORD LEVELS OF DEBT
Bush Republicans turned record budget surpluses into record deficits. President Bush inherited a unified budget surplus of $236 billion from President Clinton, the largest surplus in American history. Budget surpluses were expected to continue for another ten years when President Bush took office in January 2001. By 2002, however, the unified federal budget had returned to a deficit of $158 billion and has since reached historic highs. This year, the budget deficit is expected to reach $296 billion—larger than any deficit before President Bush took office. (President Bush's Budget for Fiscal Year 2002, A Blueprint for New Beginnings, 2/28/01; Office of Management and Budget, Mid-Session Review, 7/11/06)
Bush Republicans, addicted to borrowing, increased the national debt by $3 trillion. President Bush is the most fiscally irresponsible American president, having presided over the largest explosion of debt in our nation’s history. For four years in a row, President Bush has asked Congress to increase the statutory debt limit, resulting in a $3 trillion, or 54 percent, increase. At the end of 2006, the federal debt is expected to reach an estimated $8.6 trillion. By 2011, the President’s budget would increase the public debt to $11.5 trillion. (U.S. Treasury Department, Bureau of Public Debt; Congressional Budget Office)
Enormous trade deficit is undermining U.S. competitiveness. Each year since 2001, the U.S. trade deficit has increased at double digit rates and in 2005 set an alarming record high of $725.8 billion—twice the size of the trade deficit in 2001. Even more troubling, our trade in Advanced Technology Products, a strong indicator of U.S. competitiveness, which was in surplus as recently as 2001, experienced a deficit of more than $44 billion in 2005. (U.S. Census Bureau, Bureau of Economic Analysis)
Debt owed to foreigners climbs to record levels. In order to finance record budget deficits, the United States has had to borrow at unprecedented rates from foreigners. In the five years of President Bush’s tenure, the United States has accumulated more debt to foreigners, approximately $1.2 trillion, than this country had accumulated in its first 224 years. By contrast, during the last three years of the Clinton Administration, the United States paid off more than $200 billion in debt to foreigners. (U.S. Treasury Department, Major Foreign Holders of Treasury Securities; Federal Reserve Board)
Record government and personal debt levels threaten economic future. Record federal deficits and debt create record interest costs. In 2006, interest costs on the federal debt will total nearly $400 billion and this figure will grow to nearly $597 billion by 2013. Record levels of personal indebtedness also limit choices and keep many Americans on the financial brink. In the last two quarters of 2005, Americans had the worst ratio of household debt and mortgage debt to disposable income in over 25 years. These record levels of personal debt cast an ominous shadow over the economic outlook for 2006, a cloud made darker as millions of adjustable-rate mortgages will reset over the coming year, forcing consumers to pay significantly higher interest rates. (Congressional Budget Office; Federal Reserve Board)
Average student loan debt soars to more than $19,000. Interest rates for Stafford student loans have risen substantially over the past two years, from 3.4 percent to 7.14 percent for outstanding loans and 6.8 percent on new loans. (Congressional Research Service) As a result, loan payments will be considerably higher for students taking out new loans and for those who did not consolidate loans in recent years. Without adequate federal grants funding, students and their parents must rely more on student loans to finance their college educations. More than 60 percent of undergraduates at four-year colleges have to take out loans, and the average amount of federal student loan debt upon graduation has increased from $8,946 in the 1992-1993 to $17,400 in 2003-2004. When private loans are factored in as well, average student loan debt in 2003-2004 was more than $19,000. (National Postsecondary Student Aid Study 1993 and 2004, National Center for Education Statistics)
Erosion of employer-provided pensions threatens Americans’ retirement security. Workers should be able to count on the retirement promises made by their employers. Increasingly, that is not the case. An analysis by the Pension Benefit Guaranty Corporation (PBGC), the federal entity created by Congress to protect employee pensions, found that nearly 10 percent of pension plans halted benefit accruals in 2003 alone, the latest year for which complete data is available. According to PBGC Executive Director Bradley Belt, anecdotal evidence suggests that this number has been even higher since then. Unfortunately, Bush Administration proposals to expand tax-favored savings accounts that primarily benefit the wealthy risk further pension plan erosion. (PBGC,