Still not Getting by in Bush's America

August 24, 2004
By Joel Wendland

According to recent statistics provided by the U.S. Census Bureau, the gap between the rich and poor since 1967 has grown by 75 percent. While the average total household income for families in the bottom 20 percent has grown by $2,500 since 1967, the top 20 percent have seen their incomes soar by about $62,000.

According to the same report, the share of national income held by the bottom 20 percent fell to only 3.5 percent. In other words, approximately 26 million households combined to earn only 3.5 percent of the total income earned by people in the US.

While income has sunk for the poor, the middle strata have seen their wages stagnate over the same period. Meanwhile healthcare costs, housing, education, gas and oil, and food have soared.

This growing disparity is of special concern as the jobs picture has looked bleak in the last three years. In the first two years of the Bush presidency, 2.6 million jobs were lost, nearly doubling the unemployment rate. While the Bush administration points to recent jobs creation to build a case for its reelection bid, over 1.5 million jobs remain unaccounted for.

The jobs that have been created, says economist Art Perlo, may not even cover the number of people who entered the work force for the first time in the same period. This is certainly the case in recent months with only 112,000 jobs in June and 32,000 new jobs in July. At least 140,000 new jobs need to be added "each month just to absorb new workers," Perlo says.

Further, according to economists, 60 percent of the jobs that have been created pay less than the national average in wages, the vast majority are in the low-paying service sector, few provide benefits such as health care coverage, and as many as 1/5 are temp jobs. Currently, the national average of weekly wages is at its lowest point since the official end of the Bush recession in late 2001.

Many observers attribute this economic picture to job losses generated by outsourcing of work offshore. This is partially true, argues economist Doug Henwood of Left Business Observer in an interview with Political Affairs, but outsourcing, while a major problem for working people, accounts for only a relative handful of job losses in the last three years.

The number of jobs that have been outsourced is in "the low six figures" in this period, but a normal economy in recovery should have created about 8 million jobs, says Henwood. The Bush economy has failed to do so.

In the wake of the long term trend of economic polarization, recent unemployment, and what the Bureau of Labor Statistics describes as underutilization (underemployment or having more than one job to earn a living wage), the Bush administration has followed a narrow, ideologically driven economic stimulus policy of tax cuts on top of tax cuts.

In addition to the obvious problem of eliminating hundreds of billions of dollars from the treasury in the face of needed resources for the Iraq and Afghanistan misadventures and the transformation of large budget surpluses into enormous deficits, Bush tax policies have compounded economic problems for workers, suggests the findings of a recent Congressional Budget Office (CBO) report.

The budget crisis has first allowed the Bush administration to adopt its ideological imperative to cut government services. Among those have been important programs like veterans benefits, funding for public education, environmental protection and cleanup, child poverty programs, agricultural subsidy programs, medical research funding, and so on.

In addition to this, Bush has eliminated hundreds of millions of dollars from worker training and relocation assistance funding for unemployed and displaced workers.

If that isn't enough, the direct result of the tax policies has been to intensify the polarization of wealth and poverty. According to the CBO, the top one percent of income earners, who average about $1.2 million each year, received 1/3 of the benefits from the tax cuts Bush pushed through Congress since 2001. Households in this income bracket received an average of $78,000 annually from the tax cut. The top 20 percent, averaging over $200,000, took in 2/3 of the total windfall from the tax cuts.

The bottom 20 percent of wage earners averaged only about $250 in returns in the last three years. The tax benefit to the top 1 percent alone - the very richest of Americans - equals what it would cost for two wars in Iraq or what experts believe it would cost for two years to provide every American with health care coverage.

While Republicans claim that these statistics prove that the tax cuts benefited everyone, it is clear that Bush's tax policies have shifted the burden of financing federal spending to the working class. It is we who will have to pay for these tax policies: we will pay disproportionately to make up for the growing deficit with higher interest rates, higher tax rates, and more cuts in social services we all rely on.

Joel Wendland is managing editor of Political Affairs, blogs at ClassWarNotes, and can be reached at jwendland@politicalaffairs.net.