Ladies and gentlemen, we are living in an undeclared war. The Republicans have allied themselves with the top 10% of income earners, doing everything they can to benefit them while they are still in power. They have created a society for them. Meanwhile, the middle class faces increasing financial pressures. We are already in a class war. And they are winning.
Minimum Wage
Congress last increased the minimum wage to $5.15/hour in 1997. The overall inflation gage for the US was 159.1 in January 1997 and 202.5 in May 2006 for an increase of 27.27%. That means the minimum wage has decreased by that amount since it was raised, making 1997's $5.15 $3.75 in current dollars. The minimum wage amounts to $9,888/year or $824/month.
According to the Bureau of Labor Statistics, there are a total of 1,882,000 minimum wage employees in the US. 879,000 or 46% are over 25, throwing out the "these are only high school kids" argument. 584,000 are women over 25. While I can't find any statistics on how many of these are single mothers, I would bet that it's not a small percentage. 635,000 or 33% work 35 or more hours a week, implying they are trying to live on the minimum wage. Good luck with that.
Tax Policy
Bush likes rich people and corporations.
He gave the top 1% of the US population an average tax cut of $48,300.year. At the same time, he gave middle income American's a tax cut of $659/year. While the 2001 cut was fairly even-handed, 80% the 2003 cut went to the top 10% of income earners. In 2005, 93.6% of the benefits of the 2003 cut went to the top quintile of US incomes.
Then there is the estate tax which the Republicans want to eliminate. 88.5% of the tax is paid by the top quintile of income earners.
Finally comes thecorporate repatriation act:
Under the new law, a U.S. corporation with a stake in certain foreign corporations may make a one-time election this year to deduct 85% of the qualifying cash dividends that it receives from the foreign corporations. Companies can shift foreign earnings to their U.S. headquarters at an effective 5.25% rate, instead of the typical 35% corporate rate.
Is anyone seeing a pattern?
National Debt
Bush's tax cuts have created stagnant revenue from individual taxpayers. According to the Congressional Budget Office, total revenue from individual taxpayers was $994 billion in 2001 and $927 billion in 2005 - a decrease of 6.7%. According to the Center for Tax Justice, Bush's cuts will cost 2.4 trillion in 10 years, including interest payments. At the same time, he has increased discretionary spending 48% creating nothing but budget deficits - despite inheriting a budget surplus. The result? According to the Bureau of Public Debt, Bush started his presidency with 5.6 trillion in total debt outstanding and now has 8.3 trillion - an increase of 48%.
That's a total of 2.7 trillion dollars invested in government bonds instead of the private economy. Aren't the Republicans the party of the private market? Then why are they starving the market for capital? 2.7 trillion is about 20% of current total US GDP. Considering this expansion's compound annual establishment job growth is .7% -- the lowest of any expansion in 40 years - the private economy could use all the investment it could get.
Here's the real problem. Eventually the US will either pay-off or refinance the debt. That will take money. And that means the government will have to raise taxes or cut spending. In addition, interest rates are extremely low right now, which more or less guarantees the US government's interest rate expense will be going up in the future, adding a further drain on the federal government's fiscal problems.
The bottom line is these weren't tax cuts; they were tax deferrals.
Loss of middle class jobs and stagnant pay
According to the Bureau of Labor Statistics, the US has lost 2,875,000 manufacturing jobs and 654,000 information service jobs since January 2001. According to a study by Global Insight for the National Conference of Mayors, jobs that pay $9000/year less on average have replaced them. This is one of the primary reasons why according to the Bureau of Labor Statistics hourly non-supervisory wages after inflation information have decreased .5% for this expansion. The Federal Reserve also noted this situation with wages:
The change in real before-tax family income between 2001-2004 stands in strong contrast to the change for the preceding three-year period. Over the more recent period [2001-2004], median income rose 1.6%, while the mean fell 2.3%. Over the preceding three-year period, the median had increased 9.5% and the mean had increased 17.3%. The change over the 01-04 period was strongly influenced by a 6.2% decline in the overall median amount of wages measures in the survey and a 3.6% decline in the mean; wages represent the largest share of family income. Investment related incomes also declined.
Finally, the Census Bureau documented the stagnation of median national income per person for this expansion's duration in this chart.
Health Care
Against a backdrop of stagnant wages, health care costs have hammered the middle class. According to the Kaisar Foundation, insurance premiums increased at an inflation-adjusted compound annual growth rate of 7% for 2001-2004. At the same time, people are increasing spending on prescriptions at a compound rate of 10.64%.
Basically, only top income earners can afford health care, which explains why:
The bottom 50% of the population had few or no health care expenses - only 3.4% of individuals and 7.8% of families were responsible for total health care spending in 2002.
All of this has led to medical casts being a primary cause of bankruptcy. According to a study by Harvard:
"To investigate medical contributions to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness.
SOOOOOOO, the middle class scrambles for jobs with lower pay, can barely afford health coverage (if they can afford health coverage), and faces a coming time when the government will either increase their taxes to pay for the rich's tax cuts, or see their benefits go away. Meanwhile, the rich get the tax cuts and can afford too live long, healthy lives.
Bush's America - only the rich need apply.