Senate Democrats

Senate Democrats are Committed to Change: Americans Don’t Need More of the Same Failed Bush-McCain Economic Policies

The Bush-McCain record of fiscal and regulatory incompetence, coupled with their ties to special interests, has led to an economic crisis that is crippling the financial markets and threatening the American dream.  From the crisis in the subprime mortgage market to crisis in the credit market, from skyrocketing gas prices to skyrocketing food prices, from crumbling infrastructure to crumbling consumer safety standards, from unaffordable health care to unaffordable education, from declining wages to a declining middle-class, Americans are doing much worse than we were eight years ago when President Bush took office.  Earlier this month, the Bureau of Labor Statistics (BLS) reported the ninth straight month of significant job loss and a continued high unemployment rate of 6.1 percent, the highest in five years.  Democrats believe Americans deserve better.

Unwilling to stand aside while the economy slips into further decline, Congressional Democrats are working to address the financial crisis gripping our nation, while protecting the American taxpayer, strengthening oversight, reducing unnecessary foreclosures, and providing necessary reforms. But in addition to securing the nation’s financial markets, Democrats are also committed to securing the nation’s middle-class, starting by helping the American worker.  

Building upon previously passed measures aimed at boosting the economy, Senate Democrats introduced the Economic Recovery Act of 2008 (S.3604), which would encourage job creation and extend unemployment insurance (UI) benefits to assist those Americans facing long-term unemployment.  Unfortunately, when given the opportunity to pass this legislation, Senate Republicans chose to block it.  In what has become commonplace, the Bush-McCain Republicans prioritized obstructionism over the needs of the American people, especially the nearly 800,000 unemployed workers and their families who will exhaust their UI benefits in October 2008 without a further extension.  Disappointed, but undeterred, Democrats have not given up and are committed to doing what it takes to strengthen the American economy on Main Street and Wall Street.

American Families are Facing Declining Incomes and Fewer Job Opportunities

Under the Bush-McCain economy, American families work harder and earn less. As part of the American dream, most Americans hope to increase their earnings over time, or at the very least, have their earnings keep up with inflation and rising costs. Unfortunately, during the Bush Administration, median household income, adjusted for inflation, has declined $333, from $50,566 in 2000 to $50,233 in 2007.[1] The situation is far worse for working-age households (those headed by someone under 65). For those families, median household income, adjusted for inflation, has decreased by $2,000 since 2000.[2] Approximately 80 percent of all American households have experienced decreased incomes during the last eight years.[3] Moreover, using wages as an indicator, Americans have only seen a 3.4 percent increase in wages in the last year, compared with a 5.4 percent increase in inflation.[4]

Adding insult to injury, even though Americans are earning less, they are working harder and smarter. While the productivity of the American worker (output per hour) rose by 20.7 percent between the fourth quarter of 2000 and the second quarter of 2008, average hourly compensation (wages plus benefits, adjusted for inflation) increased by only 7.7 percent during this period.[5] Just this year, between the first quarter and second quarter of 2008, productivity in the non-farm business sector improved by 4.3 percent, but real hourly compensation decreased by 1.3 percent.[6] Historically, these types of productivity gains would, intuitively, result in increased pay and standard of living for workers. Not so during the Bush Administration: employment compensation has lagged far behind productivity. This phenomenon may be attributed to the fact that the cost of employee benefits, such as health insurance, have increased faster than salaries and wages.[7]

Under the Bush-McCain economy, job creation is at the lowest levels in decades. A growing economy should be good news for those seeking jobs, but over the course of his term in office, President Bush is in a statistical dead heat with his father for the worst overall job creation record since Herbert Hoover more than 70 years ago.

Overall non-farm payroll employment has increased by just five million since President Bush took office in January 2001 compared with 22.4 million at this point during the Clinton presidency.[8] Overall employment growth has averaged just 55,000 jobs per month under President Bush (or 0.5 percent per year)[9] – not even half of the 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 during the Clinton Administration.[10] Private sector job creation has been especially poor during the Bush presidency, with only 3.1 million new non-governmental jobs created since 2001. As a comparison, at this point in the Clinton Administration, the economy had added 20.6 million new non-governmental jobs.[11]

Worse than slowed job creation, however, is job loss. In October, the Bureau of Labor Statistics (BLS) reported that the economy had lost 159,000 jobs in September, marking the eight straight months of job losses and bringing the total number of jobs lost this year to 760,000.[12] Moreover, not only is the country losing jobs, it is losing good, middle-class jobs. Since President Bush took office, the manufacturing sector, often a source of jobs with good pay and benefits, has lost 3.7 million jobs. As a comparison, at this point in the Clinton Administration, the economy had added 435,000 manufacturing jobs.[13]

Under the Bush-McCain economy, the unemployment rate has increased 45 percent and long-term joblessness has nearly doubled. In part because of this failure to create a sufficient number of jobs, the national unemployment rate stands at 6.1 percent, 1.9 percentage points higher than the rate of 4.2 percent when President Bush took office. Far more than numbers, this increase means that 9.5 million Americans are without a job, 3.5 million more than in January 2001. The situation is particularly bad for African American and Hispanic workers, who are experiencing 11.4 and 7.8 percent employment, respectively.[14]

Worse, once they have lost their job, American workers are finding it harder to find another and are exhausting their unemployment insurance (UI) benefits, which, until the recent extension of UI, ended at 26 weeks. As reported, in October, almost one in five (21.1 percent) of unemployed workers have been unemployed for 27 or more weeks, an increase of 9.8 percentage points since President Bush took office (from 676,000 (11.3 percent) in January 2001 to 2 million in September 2008).[15] Moreover, the rise in long-term unemployment is being felt by “a broader swath of workers than before. Once concentrated among manufacturing workers and those with little work history, education or skills, long-term unemployment is growing most rapidly among white-collar and college-educated workers with long work experience.”[16]

Beyond the unemployed, the number of Americans underemployed for economic reasons has also increased during the Bush Administration. In September, 6.1 million Americans were working part-time but looking for a full-time job, up from 4.5 million in September 2007 and up from 3.3 million in January 2001.[17]

Under the Bush-McCain economy, the cost of living has skyrocketed. A recent report by the Joint Economic Committee found that the combined costs of basic household necessities, such as food, home energy, gasoline, health care and housing, have doubled during the Bush Administration.

·        Health care premiums have increased nearly 80 percent since 2001 making it more difficult for employers to provide coverage, especially good coverage, and nearly impossible for individual Americans to purchase it on their own.[18]

·        Gas prices have jumped as much as 180 percent, from $1.47 per gallon the week President Bush took office in January 2001 to an all-time high of $4.11 per gallon in July 2008.[19]

·        The percentage of median home income spent on mortgages payments has risen from 18.6 percent in January 2001 to 21.1 percent in July 2008. Worse, the crash of the mortgage market due to irresponsible subprime mortgage lending and unchecked market speculation — the root cause of our current economic crisis — has resulted in an alarming increase in foreclosures, even amongst credit-worthy borrowers. Foreclosures were up 121 percent in the second quarter of 2008 from the second quarter of 2007.[20] And in April, it was estimated that as many as 1 in 33 homeowners could find themselves facing foreclosure over the next two years.[21]

·        College costs have jumped more than 60 percent in the last eight years, rising faster than family income. Tuition, fees, room and board charges at four-year public colleges rose from $8,439 for the 2000-2001 academic year to $13,589 for the 2007-2008 academic year – an increase of $5,150, or 61percent. Average tuition, fees, room and board costs at four-year private universities increased by $10,067, or 45 percent,from $22,240 in the 2000-2001 academic year to $32,307 in the 2007-2008 academic year.[22]

The bottom line is that American workers are working harder, earning less, and being forced to spend more.

Congressional Democrats are Working to Make the American Dream More Affordable

Democrats passed laws that put money back into the hands of American workers. Congress, under Democratic leadership, passed:

·        A minimum wage increase to raise the wage to $7.25 per hour (up from $5.15 per hour, which is where Republicans had held it stagnant for more than ten years) and indirectly and directly benefit more than 13 million workers and six million of their children (P.L. 110-28);

·        An economic stimulus package to respond quickly to the nation’s economic downturn by issuing a $300 to $600 rebate and a $300 per child tax credit for those Americans who needed it most and were most likely to reinvest the money in the economy (P.L. 110-185);

·        Temporary extension of the Trade Adjustment Assistance (TAA) program to provide federal assistance to hundreds of thousands of individuals, farmers, and firms facing job losses as a consequence of free trade agreements (P.L. 110-89); and

·        An emergency extension of UI benefits to respond to increasing long-term unemployment (27 weeks or more) by providing an additional 13 weeks of UI (P.L. 110-252).

The Democrats passed laws to create jobs in the United States. Congress passed, under Democratic leadership:

·        An economic stimulus package to promote job-creating business investments by providing tax relief for American business, especially small businesses (P.L. 110-252);

·        Highway Trust Fund legislation to replenish the fund and insure the continuation of our nation’s highway and bridge repairs and prevent the cutting of 380,000 jobs across the country (P.L. 110-318);

·        Infrastructure project legislation to also insure the continuation of construction and repairs to our nation’s highway and transit programs by ensuring that previously authorized transportation projects can be implemented as Congress intended while stimulating the economy, creating jobs, and reducing transportation costs. (P.L. 110-244); and

·        Green Jobs promotion by authorizing $125 million in funding to establish national and state job training programs to help address job shortages that are impairing growth in green industries, such as energy efficient buildings and construction, renewable electric power, energy efficient vehicles, and biofuels development. (P.L. 110-140).

Democrats have invested in job training, assistance, and safety. The Consolidated Appropriations Act, 2008 (P.L. 110-161)funded critical workforce development programs that enhance job training and employment assistance services at the local level for economically disadvantaged veterans, dislocated workers, civilian adults, and at-risk youth. This appropriations bill also provided funding to the Mine Safety and Health Administration to meet its legal obligation to conduct 100 percent of mandatory health and safety inspections and required the Social Security Administration to reduce the backlog of disability claims.

Democrats have passed landmark legislation to provide individual and business tax relief and create jobs. After overcoming months of Senate Republican obstructionism, on September 23, 2008, the Senate passed the Jobs, Energy, Families, and Disaster Relief Act of 2008 (H.R. 6049), as amended. If passed by the House, the bill will invest in renewable energy innovation and green jobs; extend the child tax credit to more families; protect unintended American taxpayers from being hit by the Alternative Minimum Tax (AMT); provide tax relief for teachers and students; and extend various other tax credits critical to the financial health and growth of American families and businesses during these uncertain economic times. (For a full summary, please visit the Senate Finance Committee website.)

Democrats Continue to Work for Change for American Families

Democrats are still working to meet the needs of unemployed Americans. As described above, a growing number of Americans are unemployed. Even worse, more and more Americans are finding themselves unemployed for extended periods, often beyond 27 weeks. This is a critical marker because it represents the point at which state unemployment insurance (UI) benefits normally expire. Given that an estimated 77 percent of middle-class Americans do not have enough assets to cover three months of essential expenses, and realizing the impending danger for American families and the already struggling economy, the Democratic-led Congress decided to act.

In June 2008, after unemployment rose to the then-record level of 5.5 percent, Congress extended UI by 13 weeks (P.L. 110-252). While UI is intended to be temporary, previous Congresses have extended benefits during times of high unemployment and recession. Far from a handout, UI benefits are paid for by American workers to act as a safety-net in case of job loss.

While Democrats hoped this first extension would be enough, the bleak BLS Employment Situation Survey for August, followed by September, has made a second extension of UI benefits necessary. In August, national unemployment rose to 6.1 percent, up from 5.7 percent in July, up from 4.7 percent in August 2007, up from 4.2 percent at the start of the Bush Administration. In September, national unemployment remained high at 6.1 percent.[23] In some states the situation is far worse, 18 states plus the District of Columbia reported unemployment rates higher than the national average, with Michigan having the highest rate at 8.9 percent.[24]

Moreover, 21.1 percent of these unemployed workers were unemployed for 27 or more weeks in September, up from 19.5 percent in August, up from 17.6 percent in September 2007, up from 11.3 percent at the start of the Bush Administration.[25] Though BLS does not track unemployment duration after 26 weeks, it is estimated that nearly 800,000 workers will exhaust their already extended UI benefits in October, and 1.1 million will run out of UI by the end of the year.[26] (See footnote for state by state tables.) Given that the economy has lost jobs for the ninth straight month in 2008, at an average of more than 84,000 per month, these numbers are frightening but unsurprising.

In addition to helping unemployed workers and their families, extending unemployment insurance is a critical economic stimulus tool. As American families find themselves struggling to make ends meet, they spend less money, even on necessities like health care.[27] This harms the consumer-driven industries that rely upon their dollars, which only leads to lower salaries for employed workers, more layoffs, and longer periods of unemployment. Further investments in UI would help to boost our declining economy and job market. According to Moody’s economist, Mark Zandi, every dollar invested in UI yields $1.64 in growth — more than any other stimulus program.[28] Congressional Budget Office analyses confirm this general principal.

With these facts in mind, the Senate Republicans’ party-line vote to reject even the consideration of the Economic Recovery Act of 2008 is all the more devastating. Building upon the previous extension, the bill would have extended unemployment insurance by seven weeks for all workers and by an additional 13 weeks on top of that for workers in high unemployment areas (areas with more than six percent unemployment). Although the bill received 52 votes, 60 were needed to break the Republicans’ filibuster, and so, the bill failed. Now hundreds of thousands of Americans will be kicked off unemployment insurance when the previous extensions expire in October, even as it is clear the economy does not have enough jobs to employ them.

Senate Democrats are working to create more jobs. Included in the Economic Recovery Act of 2008, which Senate Republicans blocked,were provisions to fund infrastructure, transportation, and safety efforts to get American moving again, safeguard our communities, and create good-paying jobs. The legislation would have provided:

·        $10.8 billion for building and repairing highways, bridges, mass transit, airports, and AMTRAK, creating 384,000 jobs;

·        $500 million for the COPS program to hire 6,500 police officers;

·        $600 million for clean water systems that would create 24,000 jobs;

·        $2 billion for school construction that would create 32,300 jobs; and

·        $500 million to address some of the construction backlog for the Corps of Engineers, which would immediately create construction jobs around the nation.

The bill also would have included $50 million for the Economic Development Administration’s economic adjustment grants to assist communities to recover from sudden and severe economic dislocation and massive job losses due to corporate restructuring.  This funding will leverage $350 million in private funding and create 9,000 new jobs in communities struggling with substantial job losses.

Given that the nation has lost 760,000 jobs in 2008, it is almost inconceivable that Senate Republicans would vote against legislation that would create jobs and help Americans struggling with unemployment and low wages get back on their feet.

The Economic Recovery Act also included funding for job training. Democrats are committed to comprehensively addressing the nation’s unemployment crisis. Thus, building upon previous appropriations for job training, the Economic Recovery Act would have included $300 million for employment and training activities in the Department of Labor for dislocated workers. These funds would have helped more than 79,000 people receive services, which include job search and career counseling, as well as training.

Democrats are Working for Workers Despite the Efforts of the “Grand Obstructionist Party”

As Democrats worked to advance the priorities of the American people, Bush-McCain Republicans set new records for obstructionism in the 110th Congress. Senate Republicans engaged in more than 90 filibusters, blocked committee hearings, and placed countless numbers of “holds” on bipartisan legislation that would normally pass the Senate expeditiously by unanimous consent. In addition to the second stimulus package, Republicans turned their backs on:

·       Job creation. Republicans blocked legislation that would have created Green Jobs here in America by investing in the renewable energy sources, which are more labor intensive than traditional energy sources. (The Lieberman Warner Climate Security Act of 2008) Moreover, Republicans blocked legislation to invest in the Highway Trust Fund, which would support the creation of tens of thousands of infrastructure jobs. (The Jobs, Energy, Families, and Disaster Relief Act of 2008 (a previous version of the legislation))

·       Pay equity. Republicans blocked legislation to overturn the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc. to ensure that employees who can prove pay discrimination based on race, color, religion, sex, national origin, age or disability will not be forever barred from seeking redress because they did not learn they were victims of pay discrimination within six months after the discriminatory decision was first made. (The Lilly Ledbetter Fair Pay Act of 2007)

·       Workers’ rights. Republicans blocked legislation to restore workers’ freedom to form unions and collectively bargain by giving employees the choice of selecting a union via majority sign-up and strengthening penalties for companies that coerce, intimidate, or retaliate against employees seeking to form a union. (The Employee Free Choice Act of 2008)

·       Worker protections. Republicans blocked reauthorization of the Trade Adjustment Assistance (TAA) Program, allowing it to expire. Unwilling to let the program end, Democrats have continued to provide appropriations.

As we move forward, Senate Democrats will continue to work for change and urge Senate Republicans to defy their reputation as the “Grand Obstructionist Party” and join us in our effort to repair the nation’s economy and make the American Dream affordable again.




Endnotes

[1] Joint Economic Committee analysis of Bureau of Labor Statistics data (September 5, 2008), available here (Talking Points for the Bush Economic Record); U.S. Census Bureau, Income 2000, available here; Income, Poverty, and Health Insurance Coverage in the United States: 2007 (August 2008), Figure 1 (in 2007 dollars), available here.

[2] Center for Budget Policy and Priorities, “Poverty and Share of Americans without Health Insurance were Higher in 2007 — and Median Income for Working-age Households was Lower — than at Bottom of Last Recess,” (August 26, 2008), available here.

[3] Joint Economic Committee analysis of Bureau of Labor Statistics data (September 5, 2008), available here (Talking Points for the Bush Economic Record). Median usual weekly earnings of full-time wage and salary workers by selected characteristics, quarterly averages, not seasonally adjusted, available here.

[4] Joint Economic Committee, “Employment Situation: September 2008,” Statement of Senator Charles Schumer, available here (October 3, 2008).

[5] Joint Economic Committee analysis of Bureau of Labor Statistics data (September 5, 2008), available here (Talking Points for the Bush Economic Record).

[6] U.S. Department of Labor, Bureau of Labor Statistics, Productivity and Costs, available here.

[7] Joint Economic Committee analysis of Bureau of Labor Statistics data (September 5, 2008), available here (Talking Points for the Bush Economic Record); Edward Teach, “A Productive Debate,” CFO Magazine (December 31, 2006), available here.

[8] U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Access to Historical Data of the Employment Situation News Release, Table B-1, Employees on nonfarm payrolls by industry sector and selected industry detail, available here (October 3, 2008).

[9] Joint Economic Committee analysis of Bureau of Labor Statistics data (September 5, 2008), available here (Talking Points for the Bush Economic Record).

[10] See e.g., Speech of Gary H. Stern,President, Federal Reserve Bank of Minneapolis, Perspectives on the Economy (March 29, 2007), available here.

[11] U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Access to Historical Data of the Employment Situation News Release, Table B-1, Employees on nonfarm payrolls by industry sector and selected industry detail, available here (October 3, 2008).

[12] U.S. Department of Labor, Bureau of Labor Statistics, Employment Situation Survey for September, October 3, 2008, available here.

[13] U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Table B-1, Employees on nonfarm payrolls by industry sector and selected industry detail, available here (October 3, 2008).

[14] U.S. Department of Labor, Bureau of Labor Statistics, Employment Situation Survey for September, October 3, 2008, available here; U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Access to Historical Data of the Employment Situation News Release, Table A-1, Employment status of the civilian population by sex and age, available here (October 3, 2008).

[15] U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Access to Historical Data of the Employment Situation News Release, Table A-9, Unemployed persons by duration of unemployment, available here (October 3, 2008).

[16] Michael A. Fletcher, “Highly Skilled and Out of Work: Long-Term Joblessness Spreads in Middle Class,” Washington Post at A01 (January 21, 2008).

[17] U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, Access to Historical Data of the Employment Situation News Release, A-5, Employed persons by class of worker and part-time status, available here.

[18] The average annual premium cost for family health coverage in 2008 is $12,680, compared with $7,063 in 2000. Kaiser Family Foundation, 2001 Employer Health Benefits Survey Report, available here; The Henry J. Kaiser Family Foundation and Health Research and Educational Trust, September 2008, available here.

[19] Energy Information Administration, Weekly Retail Gasoline and Diesel Prices (updated September 28, 2008), available here (see historical data for 2001 numbers).

[20] RealtyTrac, “Foreclosure Activity up 14 Percent in Second Quarter,” (July 25, 2008), available here.

[21] Pew Charitable Trusts, Defaulting on the Dream (April 16, 2008), available here.

[22]  The College Board, Trends in College Pricing 2007, available here.

[23] U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Access to Historical Data of the Employment Situation News Release, Table A-1, Employment status of the civilian population by sex and age, available here (October 3, 2008).

[24] U.S. Department of Labor, Bureau of Labor Statistics, Regional and State Employment and Unemployment Summary, available here (September 19, 2008).

[25] U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Access to Historical Data of the Employment Situation News Release, Table A-9, Unemployed persons by duration of unemployment, available here (October 3, 2008).

[26] National Employment Law Project, “States Hard Hit by Rising Unemployment and End of Federal Jobless Benefits: Nearly 800,000 Workers Left Without Assistance Soon After Congress Recesses,” September 19, 2008, available here (state by state tables are included).

[27] Wall Street Journal, “Consumers Cut Health Spending, As Economic Downturn Takes Toll,” September 22, 2008, available here.

[28] Mark Zandi, “Accessing the Macro Economic Impact of Fiscal Stimulus 2008,” January 2008, available here.

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