[Congressional Record Volume 150, Number 86 (Monday, June 21, 2004)]
[House]
[Pages H4635-H4638]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        THE MIDDLE-CLASS SQUEEZE

  The SPEAKER pro tempore (Mr. Gerlach). Under the Speaker's announced 
policy of January 7, 2003, the gentleman from New Jersey (Mr. Pallone) 
is recognized for 55 minutes, which is half the time that remains from 
now to midnight.
  Mr. PALLONE. Mr. Speaker, I do not intend to use all the time, but I 
did want to spend my time this evening talking about what has been 
referred to in recent weeks as ``the middle-class squeeze,'' basically 
an effort to point out how Republican policies, both at the 
presidential level and the congressional level, have made it more and 
more difficult for the middle class in the United States to get through 
the day or get through the year, despite Republican claims that the 
economy is getting better, that jobs are being created. The reality is 
that more and more people find it difficult to make ends meet.
  Mr. Speaker, when President Bush took office, he inherited a $236 
billion

[[Page H4636]]

budget surplus, an economy that had created 22 million jobs over 8 
years, and lowered poverty levels to their lowest rate in 20 years. 
Four years later, today, 8.2 million Americans are looking for work, 
unemployment is 30 percent higher, 1.9 million private sector jobs and 
2.7 million manufacturing jobs have been lost, and the average 
household income has decreased by almost $1,500.
  However, recent statements by the Bush administration and my 
Republican colleagues in Congress are beginning to paint an 
increasingly cheery picture about our economy. Every day my Republican 
colleagues come to the House floor here touting a number of new jobs 
that are being created each month. They talk about how the stock market 
is on the rise and how our economy is beginning to rebound.
  But despite this sunny economic forecast from the Bush 
administration, it seems that the American people simply do not agree. 
Recent polls show that fewer Americans than at the start of the year 
are willing to say that our economy is improving. In fact, the 
President's economic approval numbers are at the lowest level of his 
presidency.
  So what is it that the American people know that the Republicans do 
not seem to know? And the answer is very simple, and that is that 
rising job numbers tell only part of the economic story. What the 
Republicans are not telling the American people is that about 90 
percent of the new jobs that they are boasting about pay an average 
hourly wage that is less than the national average. What they are not 
telling the American people is that those lower-paying jobs are less 
likely to include health care coverage.
  And what they are not telling the American people is that middle-
class Americans are being squeezed by Republican policies that have 
allowed the price of health care, education, and gas to skyrocket and 
created record deficits. Essentially what they are not telling the 
American people is that they are paying the price, the middle class is 
paying the price, of the Bush administration and Republican policies 
here in the Congress.
  When I talk to people in my district in New Jersey, Mr. Speaker, they 
are not telling me about how great our economy is doing or rejoicing 
about the number of new jobs being created. When I talk to these 
residents of my district, they are more likely to tell me about the 
explosion of health care and education costs. For those who did not 
lose their jobs during the economic slump, they are more likely to tell 
me about how they have watched the wages stagnate over the last few 
years or about how their son or daughter's college tuition keeps going 
up or that they are having to rely more on credit cards to make ends 
meet.
  Let me talk a little bit, Mr. Speaker, about wages, and again refute 
some of the comments that are being made by my Republican colleagues on 
the other side. When Republicans talk about all the new jobs being 
created, notice that they are not mentioning what kinds of jobs they 
are creating or how well those jobs are paying. As I mentioned earlier, 
90 percent of the new jobs created since August of 2003, I guess about 
10 months ago, are in industries that pay an average hourly wage that 
is less than the national average. About 1.3 million of the jobs 
created are in service sector industries with an average wage of $15.42 
an hour, 40 cents less than the national average, and 195,000 of these 
jobs are temporary jobs.
  Approximately 580,000 of these jobs were in low-paying domestic 
industries that could not be outsourced, and I use as examples wait 
staff in restaurants and bars and retail workers, things that cannot be 
outsourced to other countries. Over 235,000 of the new jobs created 
since August of last year pay an average hourly wage that is over 40 
percent less than the national average, and more than 148,000 pay 20 
percent less. And if I could use my home State of New Jersey as an 
example, Mr. Speaker, the new jobs being created pay $21,551 less than 
the jobs recently lost in my home State.
  Let me talk a little bit about rising health costs because that is 
one of the issues that my constituents talk about the most, the cost, 
the rising cost of health care.

                              {time}  2215

  These new jobs that the Republicans talk about not only pay less than 
jobs being lost, they are less likely to have health benefits.
  In my home State, using New Jersey again as an example, there has 
been an 11 percent drop in the number of jobs offering health 
insurance. Nationwide, 43 million Americans have no health insurance, 
including 1.19 million in New Jersey; and millions more are 
underinsured. Underinsured means they may have health care part of the 
year, but not the whole year.
  Mr. Speaker, for those workers that do have health insurance, they 
are watching their health insurance premiums skyrocket. Health care 
costs increased by 13.9 percent nationwide last year, the third year in 
a row of double-digit increases and the largest increase since 1990.
  Let us go back to my home State of New Jersey again. In New Jersey, 
health insurance premiums have increased by 52 percent since the 
beginning of the Bush administration. Nationally, the increase in 
family health insurance premiums over the last 3 years has tripled the 
amount of the tax cut that the Bush administration talks about going to 
middle-income families over 4 years.
  I would like to talk a little bit about rising education costs, 
because after health care, that is the issue that my constituents talk 
about the most. So far, we have covered wages and health insurance, but 
that is only half of it. For those families with a son or daughter in 
college who have to face these rising education costs, the future does 
not look good, and in the last 4 years have not looked good.
  In my home State of New Jersey, the cost of a college education has 
increased by 36 percent since the beginning of the Bush administration. 
Nationwide, tuition has increased 30 percent. Crunched State education 
budgets means that an estimated 250,000 college-qualified students were 
shut out of higher education in the fall of 2003 due to rising tuition 
or cutbacks in admissions and course offerings. These kids were simply 
shut out. They could not even go to school, primarily because of the 
cost.
  Now, Mr. Speaker, as tuition rises, student loan debt continues to 
soar. Between 1997 and 2002, the typical undergraduate's debt rose 66 
percent, to $18,900; and more than one-quarter of today's 14 million 
undergraduate students will incur more than $25,000 in debt to earn a 
degree.
  Yet if you listen to my Republican colleagues on the other side, they 
have introduced legislation blocking student borrowers from locking in 
low fixed interest rates on their loans. That would mean the typical 
student borrower would pay an additional $5,500 for their college 
loans, according to the nonpartisan Congressional Research Service. The 
same Republican bill raises student loan interest rates. As a result, 
student borrowers will pay hundreds, even thousands, of dollars more 
for their loans.
  Meanwhile, President Bush has failed to live up to a campaign promise 
to raise the depressed value of the maximum Pell grant to $5,100. This 
was a promise he made during the campaign. This is the largest student 
grant program for low income students. He promised to raise it; but his 
2005 budget would raise, instead, taxes on students, again, taking out 
college loans, forcing them to pay an additional $3.8 billion over the 
next 10 years. So he is making it more difficult for kids to pay for 
their college education after he promised that he would basically 
increase the value of Pell grants.
  Now let me talk about an issue that everybody is talking about. 
Again, I have to say that I hear more about health care costs and 
education than even gas prices, but obviously rising gas prices are a 
major issue.
  Since the start of the Bush administration, the cost of gas has 
increased 48 percent, a simple statistic. In recent months, gasoline 
prices have increased rapidly in my home State. Just last week, the 
state wide average price of a gallon of regular in New Jersey was $2. 
Compared to the prices at the beginning of the Bush administration, 
this represents an increase of 65 cents per gallon, a 48 percent 
increase.
  Last week, the House Republicans scheduled votes on a series of 
energy proposals they marketed as a response to higher gas prices. But 
why is it that

[[Page H4637]]

none of the Republican bills address the consolidation of oil 
companies, something the U.S. Government Accounting Office has 
identified as one of the most significant factors affecting gas prices?
  You see, the top 10 oil refiners control 78 percent of our oil 
supply. That is 22 percent higher than a decade ago. Coincidentally, 
some of these companies have reported record profits in the first 
quarter of this year. If Republicans were really concerned about doing 
something about gas prices, they would have joined me and 52 of my 
Democratic colleagues in calling last week for an investigation to 
determine whether gas companies are purposefully inflating prices at 
the pump.
  I believe, Mr. Speaker, that the American people deserve to know if 
these record profits are a result of a coordinated effort by the oil 
and gas companies to inflate prices.
  Mr. Speaker, I just wanted to say, I think it all comes down to this: 
Yes, the economy is beginning to create new jobs, but it is creating 
the wrong kinds of jobs. The jobs that are being created are lower 
paying and are less likely to offer health insurance. For those people 
that have health insurance, premiums and health care costs are 
skyrocketing.
  When you combine all that with rising education costs and gas prices, 
and take into account that the Bush administration and Congress have 
passed $1 trillion tax cuts that mostly benefit the wealthy and pursued 
a variety of policies that hurt workers and their families, together, 
all of these factors answer the question of why the American people are 
not feeling very positive about our economy.
  What Republicans cannot seem to realize is that when they talk about 
how the economy is improving, the American people know they are only 
being told half the story.

  Mr. Speaker, I am not going to spend the whole time, but I just 
wanted to go into four issues again, or four areas, where what is 
characterized, I use the term middle-class squeeze, and I know a number 
of my colleagues and some of the media commentators are talking about 
the problem in the same way, the so-called middle-class squeeze. I 
wanted to talk about four issues again in a little more detail where 
you can see this squeeze.
  One is paychecks; second is education; third is prices at the pump; 
and, lastly, is the debt burden, which I think ultimately is going to 
be the biggest problem that we face, not only as a government but also 
individuals and their households.
  I talked a little bit about paychecks and workers feeling the 
squeeze. Declining real wages are putting the squeeze on middle-class 
Americans. Meanwhile, tax policies, Republican tax policies, shower 
huge benefits on the wealthiest 5 percent of taxpayers, and corporate 
profits have soared.
  Middle-class Americans are noticing their paychecks do not stretch as 
far as they used to; and yet some economists in the Bush administration 
insist that the economy is recovering, leaving most Americans to wonder 
what has happened to the better wages that should have come with this 
so-called recovery. The short answer is that these wages have 
essentially, Mr. Speaker, gone to corporate profits, to CEO pay and to 
tax cuts that reward wealth and not work.
  In the last 3 months, average wages in the United States increased at 
an annual rate of just 2.2 percent, and the last two consecutive 
quarters have seen the slowest wage growth for any 6-month period on 
record. Meanwhile, over the last 3 months, the inflation rate was 3.9 
percent. So if you think about it, that essentially means during the 
most recent stage of this so-called economic recovery that the 
Republicans boast about, most American workers actually took a pay cut.
  This pay cut has taken place amid continued gains in worker 
productivity. So the workers are being more productive. The amount that 
the workers produce in an hour, obviously, is productivity. If middle-
class workers are performing so well and if their hard work is paying 
off and making the economy grow, then why are their wages falling?
  Middle-class Americans are getting squeezed by their employers and by 
government policies. Since March of 2001, corporate profits skyrocketed 
by 57.5 percent, while wages and salaries decreased by 1.7 percent. 
American companies raked in an enviable $1 trillion in profit in the 
last 3 months of 2003 alone; but even while profits soared, companies 
froze pay. Now, they were not freezing the pay for the top executives; 
they were freezing it for the little guy, for the middle-class worker.
  Again, these are the Republican policies. We have a Republican 
President; Republicans are in the majority in both Houses of Congress.
  What is essentially happening is the Republican policies are making 
matters worse, shifting the tax burden from wealth to work; taxes on 
wages now average almost 24 percent; taxes on income from investments 
like stocks and bonds average less than 10 percent. That is why the 
stock market is soaring.
  On top of that, President Bush's $1 trillion tax cuts for the 
wealthiest Americans have helped to create a budget-busting record 
deficit of over $500 billion, which adds to the burden on middle-class 
families through future debt repayments, rising interest rates, and a 
scarcity of Federal funds to help alleviate rising college and health 
care costs.
  Now, I know that the debt issue is not one that a lot of people pay 
attention to; but, again, as I said, Mr. Speaker, I think ultimately 
that is going to cause the biggest problem for the middle class and 
this squeeze when this debt has to be paid off.
  I mentioned education before, and I want to talk about that again in 
the context of the so-called middle-class squeeze.
  Families are struggling to pay for the high-quality college education 
necessary to succeed in the 21st century. Between the weak national 
economy and shrinking State budgets, students and their families face 
rising college costs, while the Federal programs to help them are being 
undermined by Republican policies and the Bush policies here in 
Washington.
  The cost of college is skyrocketing, and families are paying the 
price. The U.S. Department of Education tells us that tuition at 4-year 
public colleges has increased by almost 30 percent by 2001. As tuition 
rises, student loan rates continue to soar. Again, the debt issue.
  Between 1997 and 2002, the typical undergraduate's debt rose 66 
percent to $18,900, and more than one-quarter of today's 14 million 
undergraduate students will incur more than $25,000 in debt to earn a 
degree. Meanwhile, President Bush has failed to live up, as I said, to 
his promise to increase the Pell grants, and I talked about how his 
budget would raise taxes on students taking out college loans. I do not 
want to repeat that.

  But clearly, these Republican policies are failing to make college 
more affordable for middle-class families. Just as they pay for Bush's 
$1 trillion tax cut for the wealthiest Americans, middle-class families 
are finding they are being squeezed when it comes to a college 
education too.
  I talked before, Mr. Speaker, about prices at the pump; and now I 
would like to just elaborate a little bit on the middle-class squeeze 
as it relates to prices at the pump. I refer to it as the Bush gas tax.
  After 3 months of record-high gas prices, middle-class families are 
feeling squeezed by prices at the pump. Experts agree that high gas 
prices are the equivalent of a tax on consumers, wiping out any 
benefits of the Bush tax for middle-class families. That is why we call 
it the Bush gas tax.
  After 3 months of record-high gas prices across the country, the 
average cost of a gallon of gasoline is now $2.10, the highest average 
on record in dollar terms. Skyrocketing gas prices are a tax on middle-
class families that are taking money out of their pockets each time 
they fill up at the pump.
  According to Fortune magazine, gas price increases since the 
beginning of the year have cost American consumers $55 billion, much 
more than the $15 billion to $20 billion middle-class consumers got 
from the Bush tax cuts this April. Already families are feeling the 
pinch, the middle-class squeeze.
  The summer driving season began a few weeks ago, but has not gotten 
to its highest pitch; that will be the next week or so over the July 
4th weekend. A recent National Retail Federation survey found that 
nearly 20 percent of

[[Page H4638]]

families with annual incomes below $50,000 reported that they had to 
cut back on grocery spending due to higher gas prices. Among families 
earning over $50,000 a year, more than one-quarter reported that they 
had to cut back on travel, and 15 percent spent less on clothing for 
their families.
  This is real. Gas prices go up, you do not buy as many groceries, you 
do not buy as many clothes, certainly you do not travel as much or go 
on vacation.
  Rising gas prices translated into the higher prices on consumer goods 
and services across the board, further squeezing family budgets by 
ratcheting up the costs of grocery, travel, and countless manufactured 
goods.
  When he was running for office, President Bush, then when he was 
running as a candidate, promised in 2000 to jawbone OPEC if elected 
President to keep oil prices down. But there is no evidence he has 
fought for lower oil prices, and it is clear he has no plan for lower 
gas prices. The Bush Republican energy bill, which is stalled in 
Congress, would only increase gas prices, according to the 
administration's estimates.
  The last thing I want to mention before I conclude, Mr. Speaker, is 
about the debt burden, because I think that ultimately this is the 
biggest problem that the middle-class faces and the biggest example of 
the squeeze.
  The debt burden is not only the debt that they incur themselves for 
their household, but also the debt that Republican policies here in 
Congress are incurring for the Nation, which ultimately have to be 
paid, primarily by the middle class, because they pay most of the 
taxes.
  Again, America is awash in debt. Typical household debt in 2003 
equaled more than 105 percent of disposable income for the average 
family. That is incredible. I am going to repeat it. Typical household 
debt last year equaled more than 105 percent of disposable income for 
the average family.
  The government, as I said, has a debt problem too. President Bush's 
fiscal policies have racked up the largest budget deficit ever, putting 
an added debt tax on middle-class families. Keep in mind, that debt has 
to be paid back; and the average worker is paying it back, not the 
wealthy guy. With interest rates likely to rise, the debt will put an 
added squeeze on the middle class.
  Let me just talk about the various types of debt that we are facing. 
Housing debt, first of all. The ratio of debt to home equity is at a 
record high of 45.4 percent. According to the Center For Economic and 
Policy Research, it has typically been close to 30 percent.
  The ratio of debt payments and other financial obligations, like car 
lease payments and rent, to disposable income is at a record high of 
nearly one-third for renters. Ten years ago it was just under one 
quarter, according to the Center For Economic and Policy Research.

                              {time}  2230

  Education debt, talked about that already, parents and students are 
also taking on an increasing level of debt to pay exploding costs since 
2001.
  Then credit card debt, this is the biggest problem. Every month tens 
of thousands of unemployed workers are exhausting their unemployment 
benefits nationwide. Millions more work in jobs that do not pay enough 
to make ends meet or have not seen their earnings keep pace with 
inflation. Without a decent paycheck or unemployment assistance, many 
of these workers take on debt like credit cards to meet their basic 
needs.
  Today the average credit card debt among American households is 
$8,000. Credit cards help families cover the gap in earnings when a 
family person is out of work, but the slow wage growth and long term 
unemployment makes it difficult to payoff that debt. Essentially that 
credit card debt that the average person is taking on is the same thing 
that the Federal Government is doing when they go into debt.
  Republican policies are sending the Federal Government's own budget 
deficit into the stratosphere. The deficit is now estimated at $5.6 
trillion over 10 years, which works out to $4,392 debt tax per family 
of four this year. That is how much they are paying, the average family 
of four is paying to the Federal Government in income taxes. It ends up 
being used just to pay off the Federal debt.
  In a particularly vicious circle the deficit will put pressure on 
interest rates making it even harder for American families to meet many 
of their debt obligations and, worse yet, future generations must pay 
for today's irresponsible fiscal policies. I know that a lot of people 
do not pay attention to it. But ultimately that is what is going to 
happen.
  Right now short term interest rates are low. Over the long term, 
because of the Federal deficit and the increase in the deficit that has 
been incurred by Republican policies, interest rates, long-term 
interest rates will go up. The majority of this is going to be paid 
back by middle-class households. So over the long term, the burden on 
the middle-class, the middle class squeeze from the Federal deficit 
becomes greater and greater with Republican fiscal policies.
  I am not going to get into it all, but obviously, the Democrats have 
been very critical of this. A few years ago, I remember coming down to 
the floor when I was first elected back in 1988 and most of the people 
that were getting up and talking about the problems of the Federal 
deficit were Republicans.
  I specifically remember that there were a group of Republicans that 
would come down every night in the late 1980s and early 1990s with a 
clock. The pages would bring out this clock on the floor of the House 
of Representatives. It practically ran the whole width of the platform 
here. It would show how the Federal deficit was going up.
  We finally put an end to that on a bipartisan basis frankly in the 
mid 1990s when we passed the Balanced Budget Act. But ever since 
President Bush came into office and the Republicans had the majority 
here, in the House and in the other body, collectively with the 
President, their fiscal policies have simply run up the debt again.
  I wish I could get some of those Republicans now to come down and 
talk about the Federal deficit. And maybe I will bring out that clock 
myself one night just to show how the Federal debt continues to rise. 
But, again, it is not the debt, per se, that bothers me, but the impact 
on the middle-class.
  The average American is going to have to pay back that debt. They are 
already being squeezed enough with the higher gas prices health care 
costs, education costs, without having to worry about the increased 
costs of the debt they are going to have to pay in the future 
generations.
  Mr. Speaker, I yield back the balance of my time.

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