[Congressional Record (Bound Edition), Volume 152 (2006), Part 16]
[SENA]
[Pages 21524-21526]
[From the U.S. 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.
  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

[[Page 21525]]

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.
  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

[[Page 21526]]

     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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