[Congressional Record Volume 152, Number 125 (Friday, September 29, 2006)]
[Senate]
[Pages S10643-S10645]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE STATE OF THE ECONOMY
Mr. REED. Mr. President, most American families have lost ground in
the Bush economy and are working harder than ever to keep up with
rising living expenses.
The administration is trying to paint a rosy picture of the economy,
but the American people know better. They know that the President's
policies are not working for them.
Despite 4 years of economic expansion, job growth has been modest,
wages are failing to keep pace with inflation, real incomes are
falling, household debt is rising, employer-provided health insurance
coverage is declining, and private pensions are in jeopardy.
Slow job growth and stagnant wages during the Bush administration
have depressed families' incomes. Adjusted for inflation, median
household income in 2005 was 2.7 percent lower than it was in 2000 a
loss of nearly $1,300 during President Bush's time in office.
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Strong productivity growth has translated into higher profits for
businesses, but not more take-home pay for average workers. Wages, the
most important source of income for most families, have not kept pace
with skyrocketing costs for many living expenses and many households
are sending more family members to work in order to maintain their
current living standards. This trend is likely to continue, since
workers may find it even harder to get pay raises now that economic
growth and job creation have begun to slow.
Indeed, as a recent Washington Post editorial observed: ``[T]he
recent phenomenon of wages falling even during good times is disturbing
and exceptional.'' Mr. President, I would like to enter the entire
Washington Post editorial from September 4, 2006, into the Record, and
note that the editorial goes on to say: ``So whereas past presidents
could declare that a rising tide lifted all boats, Mr. Bush cannot
honestly do so.''
Higher prices for gasoline, college education, and medical care are
squeezing the take-home pay of workers. College tuition is up 44
percent; health insurance premiums are up 87 percent; and the price of
gasoline was only $1.45 per gallon when the President took office.
A recent survey by Lake Research found that 3 out of 10 workers have
taken on debt for necessities like food, utility costs, and gasoline.
That is shocking on its face, but not surprising when you learn that
household debt hit a record high this year. Average household debt has
increased by more than $26,000 since 2000, from about $75,400 to
$101,700 per household. For the first time since the Great Depression,
the Nation registered a negative personal savings rate last year. Far
too many Americans are forced to spend more than they earn just to get
by.
Sadly, the administration has made no real progress against the
rising tide of poverty in America. Nearly 5\1/2\ and a half million
more Americans have fallen into poverty since President Bush took
office--37 million Americans are now living in poverty, including 13
million children.
We are the richest Nation in the world and yet more than 1 in 6
American children lives in poverty. The number of poor children has
increased by more than 11 percent during the first 5 years of the Bush
administration, but the number of children receiving temporary
assistance for needy families, TANF, has declined by 15.5 percent over
the same time period, according to the Department of Health and Human
Services.
So while the President stumps for more tax cuts for people who don't
need them, the basic needs of millions of children go unmet. Even after
Hurricanes Katrina and Rita put the spotlight on this shameful problem,
Americans are slipping into poverty much more easily than before and
finding it so much harder to escape once they are there.
What must the American people think about this Congress's priorities
when the Republican majority is more interested in finding a way to
repeal the estate tax than in finding a way to reduce poverty? As
Senator Grassley, chairman of the Finance Committee, put it last year
after the hurricanes, ``It's a little unseemly to be talking about
eliminating the estate tax at a time when people are suffering.''
The majority in Congress has thwarted efforts to address the needs of
people living in poverty but twice tried to roll back the estate tax
this year. Ninety-nine percent of estates pay no estate tax at all and
those who do are multimillion-dollar estates. Far from being a ``death
tax,'' the estate tax falls on heirs who seldom had any real role in
earning the wealth built up by the estate holder.
The minimum wage--which hasn't been raised in 9 years is an important
policy tool to lift low-income families out of poverty, but the
majority in Congress won't let us have an up-or-down vote without
poison pills like the estate tax.
No one who works full time should have to live in poverty, but the
current minimum wage isn't enough to bring even a single parent with
one child over the poverty line--even if the parent works 40 hours a
week, 52 weeks a year. The average minimum wage worker brings home more
than half of their family's weekly earnings, and 80 percent of those
who would benefit from an increase in the minimum wage are adult
workers,
The policy priorities of the administration and the majority in
Congress are truly misplaced.
The ranks of those without health insurance have also grown by nearly
7 million on President Bush's watch. The number of uninsured increased
to a record high 46.6 million in 2005--1.3 million more than in 2004.
More Americans are now without health insurance than at any point since
the Census Bureau began collecting comparable data nearly 20 years ago.
Soaring health care costs have contributed to the decline of
employer-sponsored health insurance, which is the largest component of
the U.S. health insurance system. The percentage of Americans with
employment-based health insurance fell to 59.5 percent in 2005, which
is the lowest it has been since 1993.
If you are lucky enough to have health insurance, you are paying a
lot more for it. Health insurance premiums for the average family have
soared by 87 percent--a stunning $5,325 jump, from $6,155 in 2000 to
$11,480 in 2006.
At the same time that earnings are stagnating and costs are rising,
the average worker's retirement prospects are more uncertain than ever.
The number of workers employed by firms that sponsored some type of
retirement plan fell by 3.7 million since President Bush took office--
from 56 million in 2000 to 53 million in 2005. This reversed a trend of
positive growth in employer-sponsored retirement plans in the previous
5 years.
Twenty years ago, most workers with a pension plan could expect to
receive a defined benefit based on years of service and salary. Today,
defined contribution plans--which shift most of the investment risk and
responsibility onto workers--have become the dominant form of pension
coverage. As a result of this increased risk and responsibility,
average workers may end up with inadequate retirement savings.
In fact, the weakness of traditional pensions underscores the
importance of the current Social Security Program. For over 60 years,
Social Security has provided a dependable and predictable stream of
income to retired or disabled workers, their dependents, and their
survivors. Forty-eight million men, women, and children rely on Social
Security benefits each month to help them live with dignity.
Social Security benefits are protected from inflation and you can't
outlive them. Yet the President supports privatizing Social Security,
putting the guaranteed benefits of retirees, survivors, and the
disabled at risk.
We need to strengthen Social Security and improve our pensions system
to ensure that Americans who work their entire lives have the financial
security they deserve and worked so hard for when they retire. And
although we recently enacted a pension bill, this should not be viewed
as mission accomplished.
The President's deficits will only exacerbate the economic problems
of middle- and low-income families.
A $5.6 trillion 10-year projected surplus from 2002 to 2011 has
turned into a deficit of $2.7 trillion, based on actual deficits so far
and on CBO baseline projections for the remaining years. Realistically,
the 10-year deficit is probably much higher than that because this
administration has a history of leaving out big-ticket items such as
war costs or fixing the alternative minimum tax in its projection of
future budget deficits.
Irresponsible budget policies pursued over the past 5 years by the
Bush administration and the Republican Congress have mortgaged our
future to foreign investors and foreign governments and damaged our
international competitiveness. A little over a decade ago, the Clinton
administration stepped in to stabilize the Mexican economy in the midst
of a currency crisis, and today Mexico is the 10th largest holder of
U.S. Treasury debt.
In this year's global competitiveness report from the World Economic
Forum, the United States fell from first place last year to sixth place
as high budget deficits and record trade imbalances have begun to
seriously erode this country's international competitiveness.
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Instead of sound budget policies aimed at preparing for the imminent
retirement of the baby-boom generation, the Bush administration and the
majority in Congress have refused to adopt the kinds of budget
enforcement rules that helped achieve fiscal discipline in the 1990s;
have pursued an open-ended commitment to rebuilding Iraq that relies on
supplemental appropriations rather than the normal budget process; and
have remained committed to extending irresponsible tax cuts that will
add further to the budget deficit. All of this comes at the cost of
destroying greater economic opportunities for most American families.
That, of course, is not what we are hearing from the administration
and its supporters, who keep telling us that the economy is doing well,
that their tax cuts are an important reason why, and that everyone is
benefiting. It should not be surprising that this is not a message that
resonates with the American people because, in fact, the current
economic recovery has been weaker than the typical business-cycle
recovery since the end of World War II, and large numbers of Americans
are still waiting to benefit from any economic growth.
This administration touts its tax cuts, but these cuts haven't made a
dent in the pocket books of most American families.
The nonpartisan Tax Policy Center estimates that this year's tax cut
will only save middle-income families about $55--about what it now
costs to fill the gas tank of their minivan. But taxpayers making over
$1 million will receive a cut of nearly $38,000--enough to buy a new
Mercedes.
Middle and lower income families are paying the price for the
President's tax cuts for the wealthiest, as investments in programs
that promote greater economic prosperity for ordinary Americans have
become candidates for budget cutting.
Regrettably, it is not surprising how under the Republican
leadership, low-income families have been abandoned but what is
surprising is how the administration and Republican majority in
Congress have also squeezed the middle class.
The President has proposed cuts to elementary and secondary
education, student aid and loan assistance for higher education, job
training for displaced workers, childcare assistance so that parents
can go to work, and community development grants aimed at expanding
small businesses. The President is also shortchanging investments in
research and technologies that will create the high-wage jobs of the
future.
Unfortunately, the rising tide is no longer lifting all boats. The
benefits of this economic recovery are simply not going to ordinary
Americans. Most Americans are concerned that this is as good as
economic conditions will get under the Bush economic policies. Our
focus should be on strengthening the safety net for American families--
whether it is raising the minimum wage or preserving Social Security,
pensions, and health insurance coverage.
That is why we need a new direction for America--one that focuses on
creating greater economic opportunities for all families.
I ask unanimous consent to have printed in the Record the Washington
Post editorial dated September 4, 2006.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Mr. Bush and Labor Day--Workers Aren't Benefiting From Growth
Emerging from a meeting with his economic team at Camp
David on Aug. 18, President Bush declared that ``solid
economic growth is creating real benefits for American
workers and families.'' This assertion was false. Mr. Bush
should use this Labor Day to rethink his rhetoric and adjust
his policies.
The latest evidence on what the economy is doing for
workers comes from last week's Census Bureau report. This
showed that the growth cycle that began at the end of 2001
has in fact created remarkably few benefits for most
Americans. Between 2001 and 2005 the income of the typical,
or median, household actually fell by 0.5 percent after
accounting for inflation, even as workers' productivity grew
by 14 percent.
The picture is hardly any better if you consider 2005
alone. Workers' pay usually takes a while to pick up after a
recession: In the first stage of a recovery, unemployment
falls; in the second stage, a tight labor market pushes up
wages. But this second stage is taking an awfully long time
to arrive. In 2005, the fourth year of the expansion, the
median income did rise slightly, but that reflected a gain
for retirees. The typical full-time worker continued to fall
backward.
Since 1980 the wages of the typical worker have tended to
decline during bad times and recoup the losses during good
ones, with the overall result that they've been stagnant.
That stagnation, which contrasted with rapid gains for
workers at the top, was bad enough. But the recent phenomenon
of wages falling even during good times is disturbing and
exceptional. In the first four years of the last expansion,
from 1991 to 1995, median income rose 2.9 percent; in the two
upswings before that, the first four years delivered gains of
more than 8 percent. So whereas past presidents could declare
that a rising tide lifted all boats, Mr. Bush cannot honestly
do so.
The current growth cycle has also failed to dent poverty.
In fact, between 2001 and 2005, the poverty rate rose from
11.7 percent to 12.6 percent. Again, this is exceptional: In
the previous five economic cycles, the poverty rate fell
during the first four years of the recovery. Moreover, 5.4
percent of the population now occupies the ranks of the
extremely poor, with incomes less than half the poverty line.
That's the highest rate of deep poverty since 1997.
In a speech at Columbia University on Aug. 1, Treasury
Secretary Henry M. Paulson, Jr. rightly acknowledged that
``amid this country's strong economic expansion, many
Americans simply aren't feeling the benefits.'' Mr. Paulson
needs to explain this point to Mr. Bush, who appears to see
things differently. But beyond a change of language, the
president needs to understand that his tax and spending
policies must do more than target growth. If policies do not
take inequality into account, the majority of Americans won't
benefit from economic expansion--and popular support for free
trade and other pro-growth ideas will continue to
deteriorate.
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