Pro vs Con

Here are the facts:

• Between March 2001 and March 2008 the nation lost almost 3.3 million manufacturing jobs, and only gained 5.3 million jobs overall—just slightly more than half the number of jobs needed to keep pace with the 9.8 million people added to the labor force during that period. That's why the unemployment rate is 15.7 percent higher in March 2008 than it was in March 2001. (Bureau of Labor Statistics)
• The share of the population with jobs declined from 64.3 percent of the population in March 2001 to 62.6 percent of the population in March 2008. It's the first time on record that a period of "economic recovery" has been marched by an actual decline in the employment rate. (Bureau of Labor Statistics, Economic Policy Institute)
• Hourly wages rose 3.6 percent over the past year, the slowest growth rate in two years, and well behind recent inflationary readings, which have been around 4 percent. What's worse, employees on average have been keeping their workers on the job for fewer hours in the past year, so weekly earnings are up only 3.3 percent over the past year. (Economic Policy Institute).
• Since the late 1990's, average incomes fell by 2.5 percent for those in the bottom fifth of the income scale and rose by just 1.3 percent for those in the middle fifth. Meanwhile, incomes climbed 9 percent for those in the top fifth, not counting income from capital gains. (Economic Policy Institute)
• At the same time, the consumer price index from March 2001 to March 2008 has increased 17.5 percent. (Inflation Data.com)
• People in the top 1 percent of the income bracket captured about half of the overall economic growth between 1993 and 2006. (Emmanuel Saez, University of California, Berkeley)

Doing away with federal gasoline taxes for even a short period of time will do serious damage to the economy as we head into a recession and as high gas prices affect our commuting patterns. Federal gasoline tax dollars go into a trust fund that helps pay for roads, bridges and mass transit. According to the federal government's own calculations, every $1 billion spent of the gasoline tax revenues creates nearly 35,000 jobs. A summertime "gas tax holiday" could cost the nation almost 350,000 jobs and would halt work on vital improvements to roads and bridges, as well as mass transit systems stressed by new riders leaving their cars at home. According to the Congressional Budget Office, we're already falling behind in our ability to pay for our transportation needs. The bigger issue is this: An economy that depends on the efficient interstate movement of goods and services can't afford to continue starving the maintenance and growth of our transportation network. But that's what we've done under the Bush administration, which opposed moves even from within its own party to increase transportation spending enough to match actual needs. Dumping the burden on already-strapped and unevenly equipped states won't solve the problem. A transportation system that allows the economy to operate efficiently and save precious fuel is a national priority; we should all share in the costs and the benefits.

"...growing trade deficits with Mexico and Canada have displaced production that supported roughly 660,000 (manufacturing only) and 1.0 million (total) U.S. jobs since the agreement took effect in 1994." -- Revisiting NAFTA, Economic Policy Institute, 9/28/06

Most middle class Americans aren't doing "fine" in this economy. Household incomes are stuck in 1999, while American families pay 2008's prices for the basic necessities. As a result, more of them are going deeper into debt. That's why more than 79% say that it's more difficult to maintain their standard of living now than just five years ago. That's because the economy isn't working for them, and they know it. A majority, 58% say the Republican Party favors the rich. For middle class Americans, it's not a question of whether the economy is working. It's a question of who it's working for, and why it's not working for them.

Conservatives have no legitimacy when they complain on one hand about pork-barrel spending while squandering money on “bridges to nowhere,” on crony corporations like Halliburton and on subsidies for their political contributors. Meanwhile, the American Society of Civil Engineers estimates we need to spend $1.6 trillion over the next five years to fix our roads, bridges, water lines and other essential public resources. These are real needs, not "pork." Plus, it's a matter of global competitiveness: Countries like China and India are making massive investments in public transportation, schools and broadband, while too many of our children study in crumbling schools, workers lose productivity on crowded roads, and Internet commerce suffers under some of the slowest and most overpriced broadband connections in the industrialized world. The more-than-$100 billion a year spent on the war in Iraq would go a long way to funding these investments, which would enhance our economic security..

"Some people mistakenly believe that funding for domestic discretionary programs has exploded since 2001," says a February 2008 report by the Center for Budget and Policy Priorities. The reality is that funding for domestic discretionary programs outside homeland security is lower as a share of the economy in 2008 than it was in 2001. And, between 2002 and 2008, the overall funding level for domestic discretionary programs outside homeland security declined 2.6 percent in real per capita terms. In other words, spending on dozens of important and widely supported programs has not kept pace with inflation the past few years.

The real threat to our fiscal health is continued government disinvestment in vital education, health, safety net and infrastructure programs, as well as the continuation of the disastrous war in Iraq.

Conservatives keep repeating this mantra from Wall Street analysts as if it is fact, but there is no evidence to back this up. As economics writer Jeff Madrick recently pointed out, objective economics research shows there is no evidence that low-tax nations grow faster than high-tax nations, or that the United States economy has fared better under low corporate tax rates than it has under high ones. In fact, the nation has prospered most when the government was able to adequately fund programs for health, education, infrastructure and other public needs, thus providing an environment for corporate well-being. As Madrick puts it, "the talk should be about how to make government work as well as possible to support prosperity and the fair distribution of its bounty."

That’s not the whole story. If you instead compare effective marginal tax rates—which would include depreciation allowances and other credits and exemptions, U.S. businesses pay taxes at a rate that is among the lowest in the industrialized world—lower than marginal rates in Germany, Canada and the United Kingdom. The problem that conservatives rarely talk about is a tax code written by powerful K Street lobbyists and rubber-stamped by politicians beholden to corporate political contributions. A corporate tax structure that closes loopholes and requires all companies to pay their fair share would both enhance America's global competitiveness and allow government to pay for the public programs that benefit all Americans and, in doing so, foster a healthier business climate.

So-called "broad-based tax relief" earlier in President Bush's term helped widen the economic gap between low- and middle-income Americans and the rich, and—combined with runaway spending on the Iraq war—makes it almost impossible to pay for the government programs that could cushion the blow of a recession for those most vulnerable. What's really needed is a more targeted tax policy for working-class people; a spending program that helps rebuild the nation's public assets, like roads, bridges and schools; and aid to state governments, whose tax bases are shrinking dramatically because of the mortgage crisis. Groups like the Economic Policy Institute have a plan that would be about the size of the stimulus package that President Bush is proposing, but would be much more effective in helping the economy truly recover.

Tax credits are part of the answer, but they aren't enough. Let's stop talking about family values and start actually valuing families. People need higher wages and more generous leave; companies will find that their employees are more, not less, productive and committed.