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.