Two Americas

January 22, 2004

HAVING HEARD President Bush's State of the Union speech and observed Iowa's kickoff of the Democrats' primaries, it's now appropriate to ponder the latest version of an age-old political question: Are you better off than you were three years ago when Mr. Bush took office?

The answer is yes if you won the recession lottery - by managing to keep your job, reasonably improve your salary, maintain your health insurance, benefit from the housing-price bubble, see your investments recover, and not add to your consumer debt.

Those were the Americans the president addressed in his annual speech this week when he proclaimed: "The American economy is growing stronger. The tax relief you passed is working." But there's a lot of hard evidence indicating these relatively fortunate Americans aren't as numerous as Mr. Bush portrays. Consider:

Jobs: Under Mr. Bush, America has lost 2.4 million jobs, the worst record since the Depression. His last tax cut and an economic recovery were supposed to add 300,000 jobs a month from mid-2003 to the end of 2004. So far, total job growth has been just 221,000 - with only 1,000 in December.

Wages: Household income grew for all segments of society from 1992 to 2000, but fell for all but the top fifth from 2000 to 2002. Wage growth trails rock-bottom inflation.

Health insurance: More than 40 million Americans ineligible for public aid aren't covered. As workers are pushed from manufacturing to lower-paying service jobs, affordable insurance is less and less available.

Housing: Price inflation threatens a bursting bubble if interest rates rise. If not, the median income by 2007 likely won't qualify for the median mortgage. Meanwhile, with homeowners cashing out via refinancings, home equity has been sinking.

Stocks: Even with a 26.4 percent rise last year, the Standard & Poor's 500 index yesterday was down 14.5 percent from three years ago.

Consumer debt: As a share of disposable income, such debts have grown to a record level - about $19,000 per household.

Taxes: About 43 percent of Mr. Bush's tax cuts went to the top 5 percent of taxpayers, those making more than $145,000 a year. Just 31 percent of the cuts went to the bottom 60 percent, those making less than $73,000, says a Citizens for Tax Justice study.

Sure, record tax cuts, wanton federal spending and sustained low interest rates may be dragging America into a recovery. But the price has been record deficits that added per-capita debt in excess of any tax-cut gains for all but the top income levels.

It's more than sad: Democrats' rhetoric about two Americas - Main Street and Wall Street - is far too real. Did Mr. Bush this week propose a big, badly needed jobs program? No, but he wants to make permanent his tax breaks for the well-off.

The president, of course, was speaking to Wall Street, based on Americans risking a few bucks in the market. But without Americans working on Main Street, Wall Street - and the nation - cannot thrive.

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