Columns » Ernest Dumas

The war debate


Things have gotten bad when President Bush can't find sanctuary in an Episcopal church near the family compound from reminders of what he has done to the economy and the social fabric. His own government statisticians and business and research groups keep producing reports about the worsening plight of working families and the accelerating concentration of wealth among the very rich, mocking his administration's claims of presiding over "the best economy in 20 years" and of robust job growth. Three rounds of tax cuts for the rich and corporations are supposed to have produced these amazing results. Then the president who boasts of his piety more than any in history leads the family clan from Kennebunkport to the old church of his grandparents Sunday morning and gets a lecture on what it should mean to be rich. A summer minister from Louisiana takes as his text Jesus' admonitions about wealth. It wasn't reported whether Rev. Martin Luther Agnew Jr. cited Jesus' warning that the rich had virtually no chance of getting to heaven, but he reminded the communicants of their biblical obligations to sell their possessions and give to the poor, which was Jesus' condition for a rich man to find salvation. He had a word, too, about gated compounds. "They tend to keep out God's people." "I am convinced that what we keep owns us, and what we give away sets us free," the minister said. Bush has had a contrary notion about stewardship and wealth. Sharply lowering or eliminating taxes on investment income, inherited riches and corporate profits, he figured, would cause the beneficiaries to use their enhanced wealth to create millions of good-paying jobs. After three rounds of such cuts, the country has 1.1 million fewer jobs than when he took office and he now seems likely to be the first president since Herbert Hoover to end a term with fewer jobs than when he began. The job deficit would be 1.8 million if Bush hadn't grown government by 700,000 jobs. The jobs that have been created have tended to be marginal ones - fast-food restaurants, temporary help services and such - that average $9,000 less in salary than the jobs that have been lost. CIBC World Markets reported the other day that the average wage in sectors gaining jobs over the past three years was 30 percent below that in sectors losing jobs. The devastation for families is worse than the pay decline. The consequences of the hiring slump has curtailed pay raises for employed workers. The average weekly pay of working Americans runs well below the increase in costs of goods and services. The median income of American families has declined during his three years. In nearly every instance the new jobs don't carry health insurance. The Center for Studying National Health System Change, a nonpartisan research group, reported last week that 9 million people lost their employer-paid health insurance in Bush's first two years in office. States like Arkansas have kept the number of uninsured from soaring past 45 million by expanding their Medicaid and children's health programs. Working families are stretched thin trying to pay for medical attention, skyrocketing gasoline and higher food prices. The Wall Street Journal reported last week that personal bankruptcy filings were at an all-time high and that they are swelled by a new group, middle-aged people. But Bush's mantra about a soaring economy that is getting even better every week is true for some. Morgan Stanley reported this summer that U.S. corporations are sitting on the biggest cash hoard as a share of their balance sheets since the 1950s. When the Federal Reserve drove interest rates down to nothing to gin up the weak economy in 2001, people borrowed like mad to buy SUVs and other consumer goods and the country bounced out of Bush's first recession by the month after 9/11. But companies sat on the money and didn't expand or create jobs. Microsoft as of March 31 had $56 billion in cash reserves, about $5 a share for the company's shareholders. This year's tax returns show the magnitude of what happened as a result of the 2001, 2002 and 2003 tax cuts that Bush pushed through the Republican Congress. Citizens for Tax Justice's analysis of 186,000 tax returns showed that taxes on investment continued to fall in relation to taxes on earnings from work. Federal taxes on wages and other earnings from work in 2003 averaged 23.4 percent while taxes on income from stocks and other investments averaged only 9.6 percent, celebrating Bush's theory that only income from work should be taxed. The 9.6 percent levy on investment income would be lower if Bush had his way, but Congress moderated his plan. He wanted to eliminate taxes on capital gains and stock dividends. The Wall Street Journal last week reported how upper-income families had benefited from Bush's tax cut while lower- and middle-income households were squeezed by higher prices and declining real incomes. There really are two Americas, and for only one of them the president's declaration that the economy has turned the corner and is soaring rings true

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