Economy -- American Dream Unraveling

June 10, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Ali Frick, Benjamin Armbruster, and Sarah Dale

ECONOMY

American Dream Unraveling

Today's America is no longer the land of economic optimism it was before the turn of the century. Most Americans feel that the American Dream has unraveled, and "their once steady march toward affluence has derailed." A new USA Today poll finds that 54 percent of those surveyed say "their standard of living is no better today than five years ago," while a recent CNN/Opinion Research poll showed that 78 percent of respondents believe the current state of the nation's economy is poor or very poor. Nineteen percent think the economy is somewhat good, a mere 3 percent say it is very good, and only 46 percent of respondents expect conditions to be somewhat good at this time next year. The Bush administration's economic stimulus package, meant to bolster consumer spending and kick start growth, has instead thus far been used by many Americans to pay off bills and debt, while small businesses and Wall Street are continuing to feel the strain from the weak dollar and inflationary trends.

CONSERVATIVE RESPONSE: President Bush and his key advisers appear to be living in a different America than the rest of us -- an America that is not plagued by stagnant wages, a credit crunch, and crises in both the housing market and the grocery store. Bush's view is that our economy is still "continuing to grow in the face of unprecedented challenges" because it is "large and it's open and flexible." Treasury Secretary Henry Paulson argued that "we are on the right path to resolving market disruptions." But it is the administration's assertion that the economy is improving, even as gas prices skyrocket and consumer spending plummets, remains the most out of touch. White House Press Secretary Dana Perino offered that America's economy has time to sit around waiting for things improve: "We would ask the Congress to act on the things we think would have an impact -- not necessarily an immediate impact, but an impact, nonetheless, so that the future of our economy can continue to grow."

MAIN STREET'S PAIN: The White House seems blind to the realities of Main Street. Middle-class America is experiencing the faltering health of the American economy as costs of health care, housing, transportation, and childcare have been steadily rising above the rate of inflation. From a long-term perspective, public and private investment have remained at consistently low levels, yielding deflated confidence about the future of economic growth. With gas topping $4.00 per gallon, some Americans are spending more than 16 percent of their income on fuel. Soaring costs of food are pushing up grocery bills, prepared meals, school lunches, and even pet food. Over the past year, food prices have increased by 5 percent nationally, the highest annual increase in 20 years. The Labor Department reports that egg prices are up more than 30 percent, dairy prices have jumped 12 percent, and the price of baked goods has risen 9 percent. "The question now is the rate of the increase," says the USDA's Economic Research Service. The housing market is faring no better. With one out of 11 homes facing loan payment problems, "the economy is treading water, and the housing market is one of the undercurrents trying to pull it down," noted Stuart Hoffman, chief economist at PNC Financial Services Group. In the job market, "[t]he economy is now literally at stall speed." Over three million Americans are currently receiving unemployment benefits, and some who have managed to keep their jobs have taken paycuts on average of 10-15 percent. "I believe that we are already in a recession," said billionaire Warren Buffett. "Perhaps not in the sense as defined by economists. ... But people are already feeling the effects of a recession."

WALL STREET'S WORRIES: The Federal Reserve has voiced concern that problems on Wall Street may be getting deeper. Boston Federal Reserve President Eric Rosengren said yesterday that "there was no sign that wage costs were rising to meet higher food and gasoline prices." Dallas Federal Reserve President Richard Fisher worried that the weak U.S. dollar might create a "negative feedback loop" by cutting into growth and raising prices. "I think the inflationary impulses we have are beginning to dampen economic activity," he said. Donald Koln, the Federal Reserve Vice Chair, spelled out the problem's complexity: "Over the coming months, we expect banking institutions to continue to face deteriorating loan quality. House prices are still declining sharply in many localities and losses related to residential real estate -- including loans to builders and developers -- are bound to increase further. In addition, weak economic conditions could well extend problems to other segments of lending portfolios including consumer installment or credit card loans, as well as corporate loan portfolios."

MILITARY -- MEDAL OF HONOR RECIPIENT'S FATHER URGES BUSH TO SUPPORT GI BILL: Last week, Tom and Romayne McGinnis accepted the Medal of Honor from President Bush on behalf of their son, Ross, who was killed in Iraq in 2004 after diving in front of a grenade to save four of his fellow soldiers. Tom McGinnis used the opportunity to push Bush to support the 21st Century GI Bill, which passed both houses of Congress with substantial majorities and which Bush has threatened to veto. Speaking at the Pentagon, McGinnis emphasized that the troops "need our support," and said that the GI bill "only needs the signature of the president." "I think it's time that George Bush can sign this bill and make it law to show his appreciation for the support these loyal youth have given him," he said. Bush is growing increasingly isolated in his opposition to the bill, which is supported by Iraq and Afghanistan Veterans of America, the Veterans of Foreign Wars, and the American Legion. The Military Officers Association of America has also announced that it "strongly supports" the bill. The group disputed concerns about how it would affect retention rates, arguing that "the GI bill has always been a veterans' benefit, not a military retention benefit."

JUSTICE -- SUPREME COURT TILTS RIGHT IN O'CONNOR'S ABSENCE: Since retired Supreme Court Justice Sandra Day O'Connor stepped down in January 2006, "much of her legal signature already is fading from the court." In her absence, the court "has undercut several of her most important rulings on issues such as abortion rights, campaign finance law and government policies intended to help racial minorities." Under chief justice John Roberts, the court has "upheld a federal ban on the procedure opponents call 'partial birth abortion' and backed away from a 2000 O'Connor opinion that required an exception in such laws to protect the health of the mother." In 2003, O'Connor "cast the swing vote to allow affirmative action in higher education and stressed the importance of racial diversity" in schools. But in her absence, "the court made it harder for public school districts to assign students to schools outside their neighborhoods to achieve racial diversity." In a move away from the standard O'Connor crafted to regulate campaign financing, "[t]he court opened the door to corporate and union financing of broadcast ads right before an election." Richard Hasen, an election-law specialist at Loyola Law School in Los Angeles, said that as a former legislator, O'Connor "understood the role that money can play in politics" and "took a realistic view of the need for money in the system but also saw some of the problems associated with it."

ETHICS -- WHITE HOUSE DID NOT FULLY DISCLOSE ABRAMOFF INFLUENCE: Yesterday, the House Oversight and Government Reform Committee, chaired by Rep. Henry Waxman (D-CA), released a draft report confirming the influence that disgraced lobbyist Jack Abramoff had within the Bush White House. "The White House failed to conduct even the most basic internal investigation of the White House relationship with Mr. Abramoff before making public statements characterizing the connection," the report said. In fact, "as White House officials were telling the public they were thoroughly reviewing contacts with Abramoff, they failed to question five former officials who were key points of contact for the Abramoff lobbying team." Abramoff, who is already serving a prison term for fraud and faces up to eleven more years, gave gifts of sports tickets and meals to White House officials, including Karl Rove. The report claims that Abramoff influenced the firing of State Department official Alan Stayman and that the White House sought Abramoff's input on appointees to the Office of Insular Affairs. Though the report did not find evidence of Abramoff directly lobbying the President, the report includes six photographs of Abramoff appearing with President Bush, even though the White House previously acknowledged only two prior meetings.

Iraqi lawmakers say that the Bush administration is "demanding 58 bases as part of a proposed 'status of forces' agreement that will allow U.S. troops to remain in the country indefinitely." Jalal al Din al Saghir, a leading lawmaker from the Islamic Supreme Council of Iraq, called the deal "more abominable than the occupation."

The Campaign for a New American Policy on Iran, which bills itself as "transpartisan," is launching a drive today to head off an American military attack on Iran by pushing for high-level negotiations with Tehran. Carah Ong, a campaign organizer, said the goal is to "raise the fact that a military attack is likely and it needs to be prevented."

In a 6-3 decision, the "Supreme Court on Monday limited the rights of public employees, ruling that a state worker who said she was fired by a supervisor who was out to 'get rid of' her could not sue the government for denying her equal protection of the laws."

A new Human Rights Watch report found that "[o]ver two-thirds of the detainees in the Guantanamo Bay prison are suffering from or at risk of mental problems because they are kept isolated in small cells with little light or fresh air." The report said that "[d]etainees held in this manner include many that have not been charged with crimes and have already been cleared for release or transfer."

Senate Republicans "are hungry" for the advice of former House Speaker Newt Gingrich, hoping he can be an election guru in "the harshest climate for their party in over a decade." The Hill reports that Gingrich "is quietly expanding his influence in the upper chamber, where he is selling ideas on refurbishing the GOP's image."

Lobbyists may be one of the only groups that doesn't mind high oil prices. Since gas prices have been on the rise, lobbyists have found steady employment fending off "a variety of legislation that would do everything from opening OPEC up to antitrust lawsuits" to taxing windfall profits the industry now receives and redirecting the money to promote renewable energy.

The Senate is expected to vote today "on whether to consider a windfall profits tax against the five largest U.S. oil companies and rescind $17 billion in tax breaks the companies expect to enjoy over the next decade."

The BBC reports that the "final withdrawal of British troops from Iraq could be announced by the end of the year." The U.K. still has approximately 4,000 troops in the country, down from a peak of 26,000 in 2003.

And finally: During rough weather last week, Capitol police instructed everyone "to get away from the windows because of an approaching tornado." But the Hill reports that Rep. Nick Rahall (D-WV) refused to comply, using the chance to break the building's no-smoking rules. Rahall stood just "inside the balcony door to the Speaker's Lobby, puffing away on his stogie. ... At one point he stood outside and jumped at a startling crack of thunder. Still, he never once put out the cigar." Rahall said he was never afraid of the tornado, "just nervous about finishing my cigar."

"About 3 million people infected with the AIDS virus in the developing world received life-prolonging antiretroviral drugs last year, a 42 percent increase over 2006 in the number with access to the medicines, a U.N. report said Monday."

ARIZONA: "More than 20 percent of the energy needs of Arizona State University's main campus eventually could be met by one of the largest rooftop solar-power plants in the United States."

ALASKA: Twenty-five percent of Anchorage ninth graders won't graduate with their class.

CALIFORNIA: Same-sex weddings could swell the wedding industry's coffers by $684 million, according to a UCLA study.

THINK PROGRESS: Rep. Dana Rohrabacher (R-CA) jokes about "buffalo farts" on House floor, says anyone who believed him that "dinosaur flatulence"causes global warming is a "fool."

WONK ROOM: Pain at the pump retrospective: how gas prices soared during the Bush administration.

HUFFINGTON POST: PBS's Bill Moyers argues with Fox News producer, demands Rupert Murdoch account for pre-Iraq war claims.

DEMOCRACY ARSENAL: The Washington Post's Fred Hiatt attempts to defend President Bush against the Senate Intelligence Committee report on the administration's pre-war statements.

"The Secret Service has electronically scanned the records of disgraced lobbyist Jack Abramoff’s visits to the Bush White House and found only two. Bush has insisted that he doesn't even know Abramoff."
-- Chicago Tribune, 5/10/06

VERSUS

"President Bush met Abramoff on at least four occasions the White House has yet to acknowledge, according to the draft report by the House Oversight and Government Reform Committee."
-- ABC News, 6/9/08

Think Progress

American Dream Unraveling

Blogroll