The Real Bush Economy (DNC Press Release)

Today, President Bush will make remarks on the economy while visiting the Urban Trust Bank in Washington, DC. The President continues to deceive Americans when he says that the economy is growing stronger, as he fails to mention that the Bush Economy continues to benefit only the wealthiest Americans. By citing growth in the stock market, he ignores the fact that 10 percent of Americans own 80 percent of all stocks. [Economic Policy Institute, 10/11/06]

Under President Bush’s misguided leadership, median household income for American workers has decreased by $1,300, with full-time workers suffering the most from these failed policies. Millions more Americans have also joined the ranks of the uninsured during the Bush Presidency. In 2000, 39.8 million Americans were uninsured, while that number rose to 46.6 million in 2005. [U.S. Census; Kaiser Family Foundation] Bush and his Republican allies have also refused to raise the minimum wage while voting to increase their own salaries. President Bush’s handling of America’s finances is not any better, having turned record surpluses into record deficits.

“The Bush Economy continues to help only those at the top of the economic ladder while ignoring the millions of hard-working Americans who are holding the ladder steady,” said Democratic National Committee Press Secretary Stacie Paxton. “From declining incomes and record deficits, to the millions of Americans who have become uninsured, the Republican economic record is one of deficits, deceit and divisiveness. Democrats remain committed to middle class tax fairness and pro-growth policies that create good jobs here in America. America’s working families cannot afford more failed Republican leadership on the economy.”

Household Income Declined By Nearly $1,300 Under Bush; Wage And Salary Increases Don't Cover Inflation. Although median household income increased by $509 last year, median household income has declined by $1,273 under the Bush Administration. And the failure of wage and salary increases to cover inflation has meant a real reduction of median income between 2000 and 2005 of 2.7 percent for households. [U.S. Census Bureau, 8/29/06; Table A-1; Center for American Progress, 8/29/06]

* Full-Time Workers Suffer The Most. The decline in workers' real income was especially pronounced for full-time, year-round workers. For men, median incomes fell by $774 from 2004-2005, and they have seen their incomes drop by $842 during the Bush Administration. For women, median incomes fell by $427 in the last year alone. Incomes in this group fell to their lowest levels since 1997 for men, and lowest level since 2000 for women. [U.S. Census Bureau, 8/30/05; Table A-2; Center for American Progress, 8/29/06]

The Bush Record: Record Surpluses To Record Deficits. Republicans have turned President Clinton's projected 10-year $5.6 trillion surplus into a nearly $3 trillion deficit. When this Administration took office, it inherited a projected ten-year surplus (2002-2011) of $5.6 trillion. Based on a realistic estimate of the President's policies, that surplus has now become a $3.3 trillion deficit over the same period of time, a dramatic fiscal reversal of $8.9 trillion. [House Budget Committee, 2/06]

Senate GOP Blocked Minimum Wage Vote For 9th Time; Congressional Pay Up $30,000 During Same Period. "The Republican-controlled Senate smothered a proposed election-year increase in the minimum wage Wednesday, rejecting Democratic claims it was past time to boost the $5.15 hourly pay floor that has been in effect for nearly a decade. ... The Senate vote marked the ninth time since 1997 that Democrats there have proposed -- and Republicans have blocked -- an increase in the minimum wage. ... Kennedy also said lawmakers' annual pay has risen by roughly $30,000 since the last increase in the minimum wage." [AP, 6/22/06]

BS Repellant:

Private Sector, Public Sector – One America ~ Dick McDonald

If there ever was a need for fiscal understanding, it is now. Over 60% of Americans have bought into the notion that the economy is headed in the wrong direction; that Republicans and the Administration are incompetent. This notion is fed by late night talk show comics, academe, Democrat politicians, most newspapers and the electronic media. It got me to thinking are we really that bad off.

As an old accountant, I go to the source of all sources; the Constitution of the United States. The Preamble states:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

I immediately go to the phrases “We the people” and discern that the private and public sectors of America are one. They are not two separate entities. The next phrase that instructs me is “promote the general welfare”. To me that means has the public and private sectors done a good job. And I come to a startling conclusion. “We the people” are doing such a fantastic job it is almost indescribable.

Accountants have this penchant for asking what assets do you own and what liabilities do you owe. When we subtract the second from the first we announce the result as the “net worth”. Therefore this morning I woke trying to determine what America’s net worth is; not that of the private sector or the public sector but the combination of both.

I first thought of the Federal Reserve’s estimate of the net worth of American Households and Non-Profits. In September, their report said that their combined net worth was $52 Trillion. There was only one problem. The $52 Trillion had been reduced by $10 Trillion of “consumer debt”. I thought to whom was that debt owed and realized that it was basically owed to Americans, not to foreign entities. Therefore on the Great American Balance Sheet (GABS) the $10 Trillion was both an asset and a liability; meaning they are a wash and mean nothing to America’s net worth.

Then I thought of the great concern of 2007 when President Bush wants to reform entitlements. In some estimates the unfunded entitlement liabilities will mushroom to $65 Trillion in the not too distant future. Then I realized that the entitlements are being paid to Americans not some foreign entity or group. If Americans have to pay for these entitlements and are entitled to receive these entitlements then the assets (amounts to be received) completely offset the liabilities (amounts to be paid) and there is no effect on America’s net worth.

I then thought about America’s “national debt” which stood at $8.5 trillion on 10/19/06. Of that amount $3.7 Trillion is “intragovermental debt”. Intragovernmental debt is nothing more than the debt one agency of the American government owes another agency of the American government. Therefore, the receivable of one agency completely offsets the payable of the other agency and has no effect on the GABS.

I turned my thoughts to the $4.8 Trillion of “external debt” remaining and asked the question how much of that debt is owed Americans. It turns out that $2.6 Trillion of that amount is owed to Americans so in the GABS we find that our sole liability is $2.2 trillion owed to Japan (31%), China (12%) and other foreigners. Let’s repeat that: American liabilities total only $2.2 Trillion not some fiction passed off as fact simply because politicians don’t have a clue how to run the public sector.

So the question I then asked is what are American assets worth. We know that the Household and Non-Profit analysis values those assets at $62 Trillion. That leaves the question of what is the value of all other assets in America. What is the worth of America’s military. What is its replacement cost? If any country could pay for it, what would it bring on the open market? What is the value of the infrastructure of America; the airports, the roads, the bridges, the parks, the ports, the government? What is the value of American business and know how? What are the costs to replace them? The real answer is they are irreplaceable but in terms of replacement costs, the costs would run to hundreds of trillions.

However, to be brutally conservative let’s just say that all things included American assets are worth only $120 Trillion. Now how much of those assets are owned by foreigners? Current account analysis says at least $6 Trillion. However, America is owed that much and more by foreigners and their countries so that is at a minimum a wash.

So how are we doing so far? The great concern of Americans seems tragically overblown by our own myopia, media ignorance (or device) and an academe more interested in teaching feelings than facts.

In conclusion, it appears we have an asset to debt ratio of 120 to 2 (60 to 1). As financial measurements go, that is spectacular. Every American should be proud. However, heading into the election of 2006 we can now conclude we have the least informed citizenry on the planet. I hope it stays that way. It starts our engine every morning and since it works, why fix it? On the other hand my dear reader; I hope you don’t fall for the negative nonsense trumpeted as fact and vote to retain the adults now running the country. http://www.dickmcdonald.blogspot.com

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