economy

The Argument

We’re in a recession, and Washington is doing nothing about it. Our economy doesn’t work for working Americans, and the conservative program of cutting taxes for the rich won’t fix anything. In the short term, we need to stimulate the economy to get us out of this recession. In the long term, we need to build a society where hard-working Americans can earn a decent living, obtain high-quality health care, access world-class education for their children, and retire in security.

An economic growth package should target Americans who are struggling the most. The conservative idea that cutting corporate taxes will trickle down to benefit average Americans is just absurd. We should stimulate the economy by directing funds where they’re needed—to families who are squeezed by high gas prices, to state governments which are struggling to pay for safety net services, and to projects that create jobs repairing America’s bridges, roads, and schools.

Progressive Solution

Barack Obama has proposed a sensible, cost-efficient plan to stimulate the American economy and help families cope with economic challenges.

Provide families with a $1,000 stimulus check ($500 for individuals). This is designed to help offset the recent rise in gas prices.

Provide $25 billion to state governments to fight the affects of recession, and another $25 billion to repair crumbling bridges, roads, and schools. This will help offset the states’ cumulative budget gap of over $40 billion and allow them to continue providing vital services to Americans hurt by the economic downturn. [National Council of State Legislatures] It will also make our economy more competitive by fixing our national infrastructure. The $50 billion investment will save more than one million jobs.

Fund most of the economic growth package with a windfall profits tax on big oil companies. There is nothing fair, or earned, about the record-breaking profits being taken by big oil companies. They did not become more efficient; they did not deliver a better product. What’s fair is to return those ill-gotten gains to the consumers who are being overcharged at the gas pump.

Fast Facts

America is rapidly losing jobs. The U.S. Labor Department reported that employers cut 159,000 jobs in September, the ninth straight month in which more jobs were lost than created. Our country has lost 760,000 payroll jobs so far this year. The unemployment rate remains at 6.1 percent, the worst jobless rate in five years. 9.5 million Americans are now unemployed; 2.2 million lost their jobs in the last 12 months. [Bureau of Labor Statistics]

For those who remain employed, real wages are declining. Companies are cutting workers’ hours. In July, average weekly hours worked slipped to the lowest level since November 2004 and weekly earnings grew at the lowest rate since September 2005. [Economic Policy Institute] At the same time, costs are rising much faster than wages—inflation hit a 27-year high in June. Inflation is eating up the small economic gains made by any increases in demand. [Market Watch]

While Americans struggle to make ends meet, big oil companies are raking in windfall profits. The six biggest oil companies reported over $50 billion in combined profits for the 2nd quarter of 2008. Called “gargantuan, record-breaking earnings” by the Associated Press, this is their largest combined profit in history. Exxon Mobil’s $11.6 billion quarterly profit was the largest in the history of any American company. [Associated Press]

The McCain-conservative economic plan will help big corporations, not families. The McCain-conservative proposal to “create jobs” is simple—cut taxes for big corporations. McCain would cut the corporate tax rate from 35 to 25 percent and give corporations larger tax deductions. [McCain campaign] Big oil companies would receive an additional $3.8 billion every year under his plan—$1.2 billion a year for Exxon Mobil alone. [Center for American Progress Action Fund]

Resources

EPI Policy Center's The Bush Legacy: Stagnant Wages, Rising Inequality

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The Challenge

WE KNOW that “free market” fundamentalism, deregulation, and irresponsible tax cuts have wrecked our economy. Yet, Americans generally favor free markets, lower taxes, and smaller government. So don’t start by attacking these ideas. Frame the issue by agreeing with Americans that the current economic system is broken.

WE SHOULD SAY: Our economy is broken, we’re in a recession, and the conservatives in Washington don't get it. We need change. Let’s make certain the economy works for Main Street, not Wall Street. Let’s build a society where hard-working Americans can earn a decent living, afford high-quality health care, access world-class education for their children, and retire with security.

The Argument

Since taking control of Washington in 2001, Bush and his conservative allies have ruined our economy.

Bush and the conservatives neglected to invest in America. We could have created millions of jobs by investing in our nation’s infrastructure. We could have made America energy independent. We could have guaranteed health care for all and driven down medical costs. We could have invested in education and made college more affordable. Instead, conservatives cut taxes for the rich.

Bush and the conservatives wasted our money on corporate cronies. They gave away billions of dollars in unneeded subsidies to Big Oil. They created a prescription drug program that was designed to overpay pharmaceutical companies. They kept a tax loophole that encourages multinational corporations to ship American jobs overseas. At every turn, conservatives rewarded special interests at the expense of the public interest.

Bush and the conservatives threw away more than $656 billion on an unnecessary war in Iraq. So far, actual appropriations for the Iraq war have totaled $656 billion, according to the Congressional Research Service. But that’s just the direct, short-term cost. Including indirect costs such as caring for wounded veterans, refurbishing military equipment worn out in the war, and interest on the debt we’re running up, the total price tag for the Iraq war will exceed $3 trillion, according to Nobel Prize-winning economist Joseph Stiglitz.

Progressive Solution

Short-term stimulus. For heaven's sake, let's stop squandering $340 million dollars per day on the war in Iraq; let's put that money to work here in the U.S. instead. For example, to soften the blow of the current recession, state and local governments need federal aid so they can continue providing critical community services.

Long-term investment. To restore America’s economy, we need to invest in ourselves. That means fixing our nation’s bridges and roads, expanding mass transit and broadband access, becoming energy independent, and developing new “green” technologies. It means major efforts to provide every child with a high quality education, and every worker with the opportunity for advanced training.

Root out loopholes and subsidies. To redirect spending to where it’s needed, we need to eliminate tax breaks for wealthy corporations, especially those that reward companies for sending jobs overseas. We need to end subsidies to big oil, pharmaceutical, and insurance companies that do nothing for our health and energy security.

Fast Facts

America is losing jobs. The private sector has lost more than 400,000 jobs in the last six months [EPI]. Over the past seven years, 3.4 million manufacturing jobs—one out of every five—has been shipped overseas [Bureau of Labor Statistics]. Today, a smaller percentage of Americans have jobs than at the beginning of the Bush administration [Bureau of Labor Statistics].

Basic costs are skyrocketing. The price of gasoline has increased by more than $2.50 per gallon since George W. Bush took office and the average household will spend $2,300 more on gas this year than in 2001 [CAF]. The cost of health insurance has nearly doubled during the Bush Administration [Kaiser Family Foundation]. Tuition and fees at public four-year colleges are up 46 percent since 2001 [College Board]. And now food prices have begun to rise [U.S. Department of Agriculture].

American incomes are stagnant. Adjusting for inflation, American workers haven’t made any salary gains since Bush took office. In fact, real median household income dropped nearly $1,000 from 2000 to 2006. [U.S. Census Bureau] The number of Americans in poverty increased from 31.5 million to 36.5 million from 2000 to 2006. Now, one out of every eight Americans is considered poor. [U.S. Census Bureau]

We’re mired in debt. Sixteen percent of mortgaged homes are now “underwater”; that is, the mortgage owed equals or exceeds the value of the house. It is estimated that by June 2009, nearly one in four homes will be underwater [Chicago Tribune]. At least two-thirds of college students graduate with some debt and the average debt among graduates exceeds $19,000 [U.S. Department of Education]. More than 850,000 families filed for bankruptcy last year, a 38 percent increase over 2006 [American Bankruptcy Institute].

Resources

For more information, see EPI Policy Center's The Bush Legacy: Poverty

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