Article

Economy: A Smaller Slice of the Pie

Despite President Bush's continued determination to paint a rosy picture of the economy over the past year, real Americans are feeling the pain of an economic downturn.

SEPTEMBER 14, 2007 by Faiz Shakir, Amanda Terkel, Satyam Khanna,
Matt Corley, Ali Frick, and Jeremy Richmond
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ECONOMY

A Smaller Slice of the Pie

In August, the American economy suffered a loss of 4,000 jobs, the first employment decline since 2003. Despite President Bush’s continued determination to paint a rosy picture of the economy over the past year, real Americans are feeling the pain of an economic downturn. The employed share of the population as a whole is now at 68.2 percent, the lowest employment figure since Dec. 2005. The August jolt shows that the summer’s economic downturn may have increased the chances of sliding into a recession sometime next year. Whatever small economic gains have been seen over the last few years remain elusive to the average American worker. The job market is poor, wages remain low, and the costs of housing and health care continue to put a strain on the middle and working classes. Conservatives have tried to spin the census data, arguing that weak employment proves the need for even more tax cuts. The majority of Americans, however, know they are “baking a bigger, better pie” — working more hours at a more productive rate — “but ending up with smaller slices.” 

STAGNANT INCOME FROM FEWER JOBS: June and July witnessed a stagnant job market, and August saw the first job decline since 2003, “bringing average monthly job growth for the past three months to less than a third of what’s needed simply to absorb new people entering the job market.” Manufacturing employment suffered the largest monthly loss since 2003, shedding 46,000 jobs, and construction employment fell by 22,000 jobs. Even those Americans who are employed have suffered meager wages, with middle-class incomes barely rising over the last 30 years. During the same period, however, “households in the top income quintile gained 84 percent and those in the top 1 percent gained 450 percent.” As one economist noted, “This is a recipe for an unjust economy. It’s the reason why many of us remain unconvinced when policy elites offer us their cheerleading routine about how great the economy is doing.” The inequality extends over racial lines as well. The median household income for white families was nearly 64 percent higher than that for black families in 2006, the most recent year for which data is available.

AMERICANS HIT IN THE HOUSING CRUNCH: The housing market is one of the most direct ways average Americans have felt the repercussions of the U.S. economy downturn. The summer’s subprime mortgage crisis left many poorer homeowners, minorities in particular, facing foreclosure. According to the Mortgage Bankers Association, foreclosure rates on subprime loans rose to 5.52 percent in the quarter ending in June, a four-year high. At the end of August, Bush finally agreed to adopt measures Congressional leaders had been advocating to ease the housing crisis, including raising the ceiling on the amount of mortgage insurance available to those refinancing their homes. Though Democrats have pressed for much more aggressive measures to combat predatory lending schemes, such as eliminating prepayment penalties, Bush has kept his distance. “The government has a role to play, but it is limited,” he said. “It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.” Minorities have been particularly hard-hit by the home loan collapse. Blacks consistently receive high-cost loans when they refinance their homes and are about twice as likely as whites to be denied credit.

‘OUTRAGEOUS AND OFFENSIVE’: The cost of employer-provided health insurance jumped 6.1 percent this year, well above the increase in wages and consumer prices. Premiums have risen 78 percent since 2001, more than four times the 19 percent increase in employee pay over the same period, and the number of Americans covered by employer-provided health insurance dropped almost 5 percent from 2000 to 2006. As Drew Altman, the president of the Kaiser Family Foundation, said, “Every year health insurance becomes less affordable for families and businesses.” As the number of uninsured adults jumped to 47 million in 2006, the number of uninsured children rose to 8.7 million, over one in 10. Despite this sobering fact, Bush has threatened to veto the proposed renewal of the State Children’s Health Insurance Program (SCHIP), which would cover five million children in addition to the seven million already in the program. The expansion would be paid for by an increase in the tobacco tax, a proposal Bush’s own Cancer Panel recommends. Even conservatives are frustrated by Bush’s stance on the SCHIP renewal, arguing that his actions “will reverse longstanding agreements with the states and reduce the number of children who receive health care.” As Sen. Hillary Clinton (D-NY) put it, “I just think it’s outrageous and offensive that this President would threaten to veto this legislation.” It is hardly surprising that 64 percent of Americans disapprove of the way Bush is handling the economy.

UNDER THE RADAR

IRAQ — BUSH’S IRAQ SPEECH CONTRADICTED BY FACTS ON THE GROUND: “In his speech last night, President Bush made a case for progress in Iraq by citing facts and statistics that at times contradicted recent government reports or his own words,” reports the Washington Post today. In one example, Bush claimed that “Iraq’s national leaders are getting some things done,” such as “sharing oil revenues with the provinces.” But, the Post points out, “his statement ignored the fact that U.S. officials have been frustrated that none of those actions have been enshrined into law” and that their compromise on the oil law “appears to have collapsed.” In his address, Bush also thanked “the 36 nations who have troops on the ground in Iraq.” But “the State Department’s most recent weekly report on Iraq said there are 25 countries supplying 11,685 troops — about 7 percent of the size of the U.S. forces.” In his post-speech commentary, MSNBC’s Chris Matthews called Bush’s claim of 36 nations fighting on the ground “ludicrous,” adding that it “must be news to the soldiers over there.” Bush also said that “one year ago, much of Baghdad was under siege” but now, “sectarian killings are down, and ordinary life is beginning to return.” The President’s description ignored the report by retired Gen. James Jones that found that where there have been decreases, they have been due largely to the fact that “mixed Muslim” areas are being overrun by either Shia or Sunni enclaves. Baghdad, which once used to be 65 percent Sunni, is now 75 percent Shia.

IRAQ — COST OF BUSH’S LONG-TERM WAR PLAN TO EXCEED $1 TRILLION: The Center for American Progress has released a new report outlining the cost of implementing the new long-term war plan proposed by President Bush in his speech last night. Bush endorsed Gen. David Petraeus’s plan for an “enduring relationship,” which will mean staying in Iraq for at least nine to 10 years in Iraq, while also extending the escalation until next year. American Progress experts put the cost of this plan between $659 billion and $1.1 trillion. This total does not include the $450 billion already spent on the war, or the human costs, which the report estimates at “between 8,220 and 11,167 additional deaths” and potentially 59-80,000 wounded over the next 10 years. Additionally, if significant numbers of troops remain in Iraq until FY2017, the total cost of the war would exceed $1 trillion. While Bush alleged a reduction in force levels last night, House Speaker Nancy Pelosi (D-CA) clarified the President’s rhetoric: “The Bush-Petraeus plan of 130,000 Americans in Iraq for 10 more years is not a reduction in our footprint; it is an insult to the intelligence of the American people to call that a new direction.”

ENVIRONMENT — BUSH SCIENCE ADVISER ADMITS GLOBAL WARMING IS MAN-MADE: John Marburger, President Bush’s science adviser, has told the BBC that “climate change is now a fact” and that mankind is “more than 90% likely to blame,” the “starkest warning from the White House so far about the dangers ahead.” Marburger’s statements come as Hurricane Humberto hit Texas this week, accelerating from tropical depression to full-scale hurricane in record time. “To put this development in perspective, no tropical cyclone in the historical record has ever reached this intensity at a faster rate near landfall. It would be nice to know, someday, why this happened,” said hurricane specialist James Franklin. As the Center for American Progress has noted, “Scientists have determined that warmer water can boost hurricanes’ ferocity, and may even increase their frequency.” If industrial pollution and global warming are left unchecked, the “forecast is for severe storm warnings ahead.”

THINK FAST

The mother of Sgt. Omar Mora, the soldier who co-authored a New York Times op-ed critical of the Bush administration’s policies in Iraq, is calling on the Army to explain her son’s death. “I want to know all the details of how he died. I want to know the truth,” said Olga Capetillo.

Attorney General Alberto Gonzales is “leaving office quietly today with a low-key farewell address to Justice Department employees in Washington.” One former senior official said that Gonzales had been “just sort of drifting off” and “minimizing his activity” for some time.

A new survey by a British polling agency suggests that the Iraqi civilian death toll from the war could be more than 1.2 million. The agency said it drew its conclusion from responses to the question about those living under one roof: “How many members of your household, if any, have died as a result of the conflict in Iraq since 2003?”

Bill Allen, the former head of Alaskan oil company VECO Corp., “admitted yesterday in court that he bribed three Alaska legislators,” including Ben Stevens, the son of Sen. Ted Stevens (R-AK). The elder Stevens is currently the target of a federal investigation also involving VECO.

Former Federal Reserve Chairman Alan Greenspan said that, while he was aware of “subprime” lending practices, he failed to see early on that “an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.” “I didn’t get it” until later on, said Greenspan.

Consumer confidence dropped from 89.3 in August to 71.1 in September, its “lowest point in nearly 1 1/2 years as a deep housing slump and a credit crunch made people more worried about the country’s economic health as well as their own.”

Members of the Senate Judiciary Committee announced Thursday that they will meet on Sept. 20 to consider “a bill to provide for limitations in certain communications between the Department of Justice and the White House.”

The cost of health insurance in the United States climbed nearly twice as fast as wages in the first half of 2007. Kaiser vice-president Gary Claxton said, “In 2007, the increase in health insurance premiums was about twice the rate of inflation and not quite twice the increase in workers’ pay.”

Last week, California conservative activists’ “bid to change the state’s method for meting out its electoral votes was endorsed by the state GOP and cleared by the California secretary of state, moving it closer to a place on the June 2008 ballot.” But Community Rights Counsel Doug Kendall writes that this referendum would be “patently unconstitutional.”

And finally: At the White House remembrance ceremony for 9/11 victims on Monday, Secretary of State Condoleezza Rice’s outfit was “almost perfect — except for that pesky leaf stuck in her hair. Fortunately, Environmental Protection Agency Administrator Steve Johnson was there to clean up Condi’s hair. After all, any EPA employee is supposed to be good at cleaning things up.” See picture HERE.

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GOOD NEWS

“New data from the UN Children’s Fund suggests that life-saving measures like vitamin A supplementation, insect nets and vaccines are reaching more children than ever in poor countries.”

STATE WATCH

CALIFORNIA: San Francisco to be part of “the first effort by a locality to guarantee care to all of its uninsured.”

NEW JERSEY
: Gov. Jon Corzine (D) informs President Bush that New Jersey “will not obey federal rules that would make it harder to enroll middle-income kids” in SCHIP.

WISCONSIN: Environmental advocates set new goals on eco-friendly tourism.

BLOG WATCH

THINK PROGRESS: Brookings Institution’s Michael O’Hanlon: “I could easily see myself changing camps” on Iraq “in the next six to nine months.”

MEDIA MATTERS: On radio show, Bill O’Reilly claims Middle Easterners just want to eat, “smoke,” “go to the mosques,” and “sit around.”

EAT THE PRESS: NBC’s Brian Williams calls out Gen. David Petraeus on al Qaeda fearmongering.

DAILY GRILL

“[F]ew if any members of Congress are shifting their position [on Iraq].”
–Washington Times, 9/13/07

VERSUS

“Before I went, I was not prepared to say it’s time to start bringing our troops home,” Walsh said. “I am prepared to say that now. It’s time.”
— Rep. Jim Walsh (R-NY), 9/11/07