I listened intently to President Bush's State of the Union speech. Frankly, I had a hard time understanding what country he was talking about, what reality he was talking about. Certainly, if the "state of the union" refers to what is happening to the shrinking middle class of this country, and how we as a people are doing, the president had almost nothing to say that rang true. In fact, the speech just reminds us once again how far removed from the reality of ordinary life this president is, and how little he and his administration know about what is going on with the vast majority of Americans.
The president said that "in the long run, Americans can be confident about our economic growth." I wish that was true. Unfortunately, Since President Bush has been in office it is important to understand that:
-Nearly five million Americans have slipped out of the middle class and into poverty. Amazingly, the poverty rate is higher today than it was during the last recession in 2001.
-Median household income for working-age Americans has declined by almost $2,500; and overall median household income has gone down by nearly $1,000.
-8.6 million Americans have lost their health insurance.
-Over three million manufacturing jobs have been lost, including more than 10,000 in my State of Vermont.
-Three million workers have lost their pensions, and about half of American workers in the private sector have no pension coverage whatsoever.
-The annual trade deficit has more than doubled, and the national debt has gone up by $3 trillion.
-Health care premiums have increased 78 percent; the prices of gas and heating oil have more than doubled; and college education costs have increased by over 60 percent.
In addition, to those statistics, let me just mention a few more:
-Last November, the personal savings rate was below zero, something that up until 2005 hasn't happened since the Great Depression.
-According to the U.S. Department of Agriculture, 35.5 million Americans struggled to put food on the table last year and the number of the hungriest Americans keeps going up.
-The average college student has racked up nearly $20,000 in debt upon graduation and some 400,000 qualified high school students don't go to college in the first place because they can't afford it.
-Home foreclosures are the highest on record turning the American dream of homeownership into an American nightmare for millions of Americans.
-The number of working families paying more than half of their incomes on housing has increased by 72 percent over the past decade.
-The United States has the highest rate of childhood poverty, the highest infant mortality rate, the highest overall poverty rate, the largest gap between the rich and the poor the largest incarceration rate and is the only country not to have a national health care program of any major developed country on earth.
-And, the number of college graduates earning poverty level wages has more than doubled over the past 15 years.
In other words, not only is the middle class being squeezed by skyrocketing prices; the middle class is actually shrinking and poverty is increasing.
Meanwhile, the wealthiest people in our society have not had it so good since the 1920s.
Income inequality is on the rise. According to the latest figures from the IRS, the top 1 percent earned more income in 2005 than the bottom 50 percent, and the national share of income going to the wealthiest Americans is higher than at any time since 1929.
Perhaps even more disturbing is the unequal distribution of wealth.
According to Forbes magazine, the collective net worth of the wealthiest 400 Americans increased by $290 billion last year to $1.54 trillion. In addition, the top one percent now owns more wealth than the bottom 90 percent.
What are the super-wealthy doing with their money?
As Robert Frank of The Wall Street Journal has pointed out in his book Richistan, the super wealthy, those worth between $100 million to $1 billion, spent an average of $182,000 on wrist watches; $311,000 on automobiles; $397,000 on jewelry; and $169,000 on spa services last year alone.
The middle class is shrinking, poverty is increasing, and the wealthiest Americans have not had it so good since the 1920s. That is the state of our economy.
I order to protect the interests of the sinking middle class the federal government needs a change in direction in almost every area of public policy.
We must start by passing an economic stimulus package as soon as possible.
Now, I am pleased that the leadership in the House was able to negotiate an economic stimulus package with the White House. I am also pleased that the Senate Finance Committee will be marking-up a different economic stimulus bill that improves the House version by including unemployment insurance; tax rebates to senior citizens; and equal rebates for Americans paying payroll taxes.
These are all good and important steps to be taking. I commend Majority Leader Reid, Finance Chairman Baucus and Speaker Pelosi for their outstanding work on this issue.
But, this package could and should be improved even more.
In my opinion, for an economic stimulus package to be most successful, we must do three things:
1) We must provide help to those most in need, particularly senior citizens on fixed incomes, low-income families with children and persons with disabilities;
2) We must strengthen the middle class; and
3) We must put Americans back to work at good paying jobs rebuilding our crumbling infrastructure: our roads, bridges, schools, homes, health centers, sewers, and other important needs.
If we fail to pass an economic stimulus package that does not accomplish all three of these goals, we will have missed out on an important opportunity to strengthen our economy.
Here is what I believe we should do.
First, I would increase the economic stimulus package from $150 billion to $175 billion.
The next thing we should do is to reduce the business tax breaks on equipment purchases by 50 percent or roughly $25 billion. These tax breaks are referred to as bonus depreciation. It has been argued that businesses need these tax breaks to buy more equipment, but the experts tell us that businesses will be buying this equipment regardless of whether these tax breaks are signed into law or not. According to Mark Zandi with Moody's, for every $1 the government provides for bonus depreciation, it would only add 27 cents to GDP. In other words, it would provide very little stimulus.
If we did these two things: increase the overall economic stimulus package by $25 billion; and cut the bonus depreciation tax break by 50 percent, that would leave us with about $50 billion.
What could we do with this $50 billion? We could complete the picture. We could put Americans to work at decent paying jobs; we could help those most in need; and we could strengthen the middle class. Those are the three pillars I believe should be included in any economic stimulus package.
Specifically, I believe we should provide $5 billion for an expansion of the Food Stamp program. The Congressional Budget Office and other experts have indicated that such an increase would be one of the most effective ways to stimulate the economy. For every $1.00 invested in the Food Stamp Program, we would add $1.73 to GDP. More importantly, these benefits would go to the Americans who have been hit the hardest in our economy.
What else could we do?
We could provide $3.62 billion in home heating assistance for senior citizens on fixed incomes, low-income families with children and persons with disabilities through the Low Income Home Energy Assistance Program (LIHEAP). The price of energy is skyrocketing. People in my State of Vermont and all over this country are paying record prices to heat their homes this winter. In the richest country on the face of the earth, we must ensure that no-one goes cold this winter.
Including Food Stamps, LIHEAP and unemployment benefits in the economic stimulus package is not only the right thing to do in terms of stimulating the economy, it is the moral thing to do. We cannot turn a blind eye to those most in need.
In addition, with unemployment rising and our infrastructure crumbling, we could address both of these concerns by providing $16 billion to repair our schools, bridges, roads, sewers, rails, ports and airports. We could also put people to work weatherizing nearly 100,000 homes; expand our health delivery system by increasing funding for Community Health Centers, and help veterans with disabilities retrofit their cars and refurbish their homes.
States, localities, economists and other experts have identified thousands of projects throughout the country that could not only use this money, but spend it quickly.
Last year, about 200,000 construction workers lost their jobs. We could and should put many of these Americans back to work through this economic stimulus package.
In addition, let me give you two examples of investments we could be making that would have a tremendous economic impact on the lives of Americans.
If we just provided $148 million for an expansion of Community Health Centers, that would be enough to create 227 new health centers throughout the country; provide health care services to an additional 1.4 million previously unserved Americans; lead to the creation of 15,000 new jobs, and provide a total economic benefit of $1.25 billion.
For those that question the appropriateness of including an expansion of community health centers into an economic stimulus package, I would say to my colleagues that this is exactly what we did during the 1980s under President Ronald Reagan. It worked. If it worked in the 1980s under President Ronald Reagan, it will work today.
Another important investment that we should make is to provide at least $200 million for the Low-Income Weatherization Assistance Program. Not only could the program easily absorb this level of funding and create additional construction and retrofitting jobs, but it also would save millions of dollars for low-income people who are struggling with higher energy costs by weatherizing an additional 75,000 homes.
In 2001, I was an early backer of tax rebates. I support tax rebates for the middle class, for low-income families with children, and for persons with disabilities. I also believe that senior citizens who don't pay income taxes should be receiving this assistance as well through a bonus in their Social Security checks.
But giving someone $300 or $600 or $1,200 alone will not fix the economic situations facing millions of Americans. Putting Americans to work at decent paying jobs and helping those most in need would do much more to strengthen the middle class and reduce the poverty rate than simply sending rebate checks and bonus depreciation tax breaks.
Let's pass an economic stimulus package quickly, but let's make sure we get it right. Let's help those most in need. Let's put Americans to work at good paying jobs. And, let's repair our crumbling infrastructure.
I am tired of economic decisions in Congress that mostly benefit Corporations and Banks making bad mortgage and investment decisions.
It's not meant to fix anything for Americans. We're simply conduits for that money as it flows from us to the government, from the government to us, then on to its real destination, utilities and credit card corporations.
It's midwinter: Utilities companies want consumers to pay their heat bills.
It's after-Christmas: CC companies want the monthly spend-and-repay cycle to continue.
This is a classic Republican pseudo giveaway, so there's some noise and flim-flam in the middle of the dollar-flow, with a lot of news stories concerning stimulus and that other American classic, the check that's in the mail.
However I believe that senator Sanders forgot one thing. Namely, the rich have bought the Senata and the House, and that's why none of the very do able and rational things people suggested to change things around will be done.
Simply because our country is no longer a Democracy, instead it's a Plutocracy.
I would like to point out that in the event that nothing is done, life in the Unites States could become a sort of civil war in slow motion, and that ultimately that will be the end of America, Land of the Free Home of the Brave.
Recently I have begun to suggest to all the young people that I know that they should immigrate to another country, because they have no future in this country anymore.
* Re-negotiate NAFTA, CAFTA and any other crappy trade agreements (China, India). Whats the good of a stimulus plan if half the money goes overseas? We broke the chain in a cycle that worked to make us the greatest nation on earth by outsourcing labor and environmental concerns.
* American comanies that offshore billions in profits to not pay taxes should be warned that if they do not voluntarily close this loophole then their ability to do business in the US will be eliminated.
*Health insurance companies should not be publicly held companies. Their first commitment should not be to stock holders, then the bottom line and then the people they're supposed to be insuring. Plus, where these companies invest their money should be regulated so the insured aren't made to pay for bad investment decisions.
1. Immediately release 10% of the S.P.R. (Strategic Petroleum Reserve) at $45. per barrel to domestic refiners only. This will lower the price of gas at the pump by at least $1.00 per gallon. It will reduce the price of all heating and electricity costs nationwide as well as force the entire crude market to come down to earth. Every product we touch travels to market, every increase, or decrease in the price of crude has a direct impact on all costs of goods. (Accounting 101)This single act will immediately free funds already in the hands of the American consumer and make them available to spend on consumer goods. Demand fuels economies, not supply. A supply side economy, is and always will be a false economy.
2. Immediately offer a $5,000 to $10,000 Government paid direct rebate to all persons and companies purchasing domestically manufactured vehicles getting over 50 miles per gallon minimum. The low end of the direct rebate would be for gas and or hybrid vehicles and the high end $10,000 will be for fully electric and fully non carbon emitting alternative fuel vehicles only.This action alone will bring more investment into the automotive manufacturing sector than has ever been seen before. Demand will increase at historical rates, and manufacturing jobs returned.
3. Immediately offer a $5,000 to $10,000 direct rebate to all persons and companies purchasing and installing domestically manufactured or privately manufactured Alternative energy systems in homes and buildings that reduce the unit consumption of total energy use buy 50% or more. The low end would be for 50% percent energy reductions and the high rate would be for systems achieving over 75% reductions in overall unit energy consumption. This action will immediately create enormous investment into the alternative energy sector and create manufacturing jobs at historical levels.
These are three simple yet Earth changing steps. It's time to move towards a vibrant Green economy.
Unfortunately they happen to be the values of the Bush family and the Saudi Royal Family.
If you really wanted to help people on Social Security, make their cost of living increases up closer to the actual inflation rate of around 10%, instead of the 2% their getting today. Oh, but that would require you to admit that we actually have 10% inflation, caused by the Federal Reserve, and we can't acknowledge what everyone knows.
And please, anyone who was paying attention knew we had a housing bubble. House prices do not double in 5-10 years like they have been. It's utter madness. The market is finally readjusting down to where it should have been if we didn't have the Federal Reserve mucking up interest rates and thereby artificially creating demand.
Why not defund Iraq? How much have we spent there that could have been at home? How much money has the Fed created out of thin air to fund Iraq? Why do we spend more money on "defense" than the rest of the world combined? Why are we borrowing money from China to turn around and give it to Saudi Arabia or Pakistan? It's, again, utter madness.
If I haven't insulted you too much, then please please read Henry Hazlitt's "Economics in One Lesson" (available online in html and pdf with a little Googling). We need politicians who understand not only the directly seen effects of their policies, but we also need politicians with the imagination to see the unseen effects of their policies.
Right. Who owns that $9 trillion + of U.S. debt? [Hint: it ain't Americans!]
Easy credit created this mess, same as from 1920 leading to the Great Depression. And from that, came =subsidies= like The Farm Bill, still alive and proving what? 55% of that subsidy to a dozen factory farm corporations and 66% of American farmers get =nothing= ???
Oil companies get subsidies? Corn-for-ethanol gets a subsidy? Crony corporations get no-bid, cost-plus contracts and sometimes produce =nothing=?
Not to mention empire wars that achieve no more safety for the American people.
I see cries for protectionist tariffs, oh yeah. Well, devil in details, when the dollar slid and the Canadian loonie hit parity and then some, the upshot was small Canadian sawmills went bankrupt, partly because of the downturn in the housing industry -- but ALSO from the 15% tariff on inported lumber.
Don't forget Smoot-Hawley made things worse in the Great Depression -- ending up with 34 countries against the U.S. in a tariff war, none of whom had ever played that game.
All well and good to say, create jobs for people to work on infrastructure, or whatever. Good intentions. Where does that road lead? Who pays those workers -- your grandchildren? Bottom line on life: you cannot spend what you do not earn!