**Number range CHAPTERBush Administration's Claims on the Economy:**

**Out of Touch with the Facts**

Today, the Bureau of Labor Statistics put out the state-by-state
employment numbers for the month of July. Last month, the battered U.S.
economy created only 32,000 jobs and total nonfarm employment decreased
in 22 states. The largest employment decreases were reported in Missouri
(-51,800), Michigan (-25,000), California (-17,300), and New York
(-16,900). Contrary to many of the Administration claims, this new
report once again points out that America can and must do better on jobs
and the economy. With no plan, Republicans have relied on a series of
misleading statements:

**THE ECONOMY IS STRONG? WRONG**

**Administration Claim: President Bush has said, "When it comes to
creating jobs for American workers, we are turning the corner and we\'re
not going back."** \[President Bush, August 4, 2004, Davenport, Iowa\]
**President Bush has also said, \"The economy is strong and it\'s
getting better.\"** \[*AP*, 8/9/04\] and **"When it comes to improving
our economy and creating jobs, we\'re getting the job done."**
\[President Bush in Remarks Hedgesville, WV, 8/17/04\]

**Fact:** Ask any family in America and they will tell you that we have
not turned the corner on jobs and the economy. U.S. economic growth is
anemic and we have lost an astonishing 1.8 million private-sector jobs
since President Bush took office. We have a record trade deficit and
record crude oil prices that are squeezing U.S. businesses and
threatening U.S. jobs. Our historic jobs deficit is keeping employees'
wages stagnant, in the face of skyrocketing health care costs, sky-high
gas prices that will worsen with record crude oil prices, and the rising
cost of college. The reality is middle-class families are being squeezed
with no real relief in sight.

Economists have noted the disappointing economic performance. With the
average annual real GDP growth of only 2.5 percent over the last three
and one-half years, economist Mark Zandi of Economy.com has commented,
"[This is one of the weakest performances during any Presidential term
since World War II.]{.underline}"\[Zandi, 7/04\] Stephen Roach, chief
economist for Morgan Stanley commented after the July job report,
\"[This recovery now looks more mythical than ever]{.underline}.\"
\[*Pittsburgh Post-Gazette*, 8/10/04\] And for the first time in a year,
the index of leading indicators, a closely watched measure of future
economic activity, fell in July. Ken Goldstein, economist for the
Conference Board, said, "The latest decline in the Leading Index
reflects a [loss of forward momentum]{.underline}. There are growing
concerns about the high cost of gasoline and milk, as well as worries
about where economic growth will come from now that tax refunds have
been spent and short-term interest rates are rising." \[AP, 8/19/04\]

Paychecks are flat with household income down. Average weekly earnings
since President Bush took office are stagnant, and the typical American
family is making nearly \$1,500 less per year. \[Census 9/03\] Real
hourly earnings fell in June for the steepest decline since 1991, with
[real hourly and weekly earnings down for six out of the last seven
months]{.underline}, and at the lowest point in two years. \[Bureau of
Labor Statistics, 7/04; Economic Policy Institute, 7/16/04\] This is
despite the fact that worker productivity continues to improve.
Corporate profits have risen seven times the rate of wages and salary,
since the last recession. \[Wall Street Journal, 7/20/04\]

Families are paying much more for \"kitchen table costs\" and that is
likely to get worse. Under President Bush, health care costs for
families have skyrocketed almost 50 percent and college tuition has gone
up 28 percent, even taking inflation into account. \[KFF, 2004; College
Board, 2003\] Further, gas prices are 22 percent higher than in 2001,
and could increase further with crude oil prices at record levels. And
spiraling federal deficits have led the Federal Reserve to raise
interest rates, further increasing the cost of mortgages, cars, and
other family expenses by an estimated \$4.5 billion. \[New York Times,
6/28/04\]

The middle-class squeeze is slowing consumer spending, which further
threatens economic growth. Consumer spending accounts for two-thirds of
economic activity and it dropped to its lowest level since September
11th in the second quarter this year. The closing of consumers\'
pocketbooks slowed the annual growth rate to a paltry 3 percent \-- down
45 percent from the year ending in March -- increasing concerns about
long-term job and wage growth.

[The fact is we have not turned the corner and the President has no real
plan to create jobs, improve the economy, or end the middle-class
squeeze]{.underline}. The only plan he has is more tax cuts, which have
failed to efficiently and effectively bring back our economy. In fact,
the Bush Administration plans will make the middle-class squeeze even
worse -- cutting overtime pay for millions of middle-income families and
refusing to end tax breaks that encourage the outsourcing of U.S. jobs,
for example.

**TAX CUTS HAVE STRENGTHENED THE ECONOMY? WRONG.**

**Administration Claim: "\[I\]n order to get this economy moving\...
we\'ve given tax relief to every person who pays federal income
taxes."** \[President Bush, August 4, 2004, Davenport, Iowa\]
**"\...[one of the reasons we\'ve come through this tough period is
because of well-timed tax cuts]{.underline}. We didn\'t try to pick
winners or losers. We did it the fair way \-- if you paid taxes you got
relief."** \[President Bush, 8/10/04, Pensacola, Florida\]

**Fact:** Two new reports have demonstrated that the Bush tax cuts
focused on the elite few, and as a consequence [did little to improve
economic growth]{.underline}. According to the non-partisan
Congressional Budget Office, the Bush tax cuts are skewed to the rich,
and have [shifted a higher tax burden onto the middle
class]{.underline}. Their new study demonstrates that one-third of the
tax breaks passed in 2001 and 2003 are going to the top 1 percent of
Americans, with an average income of \$1.2 million. And while the total
tax burden shouldered by middle class Americans has increased under the
GOP tax cuts, the most privileged Americans have already seen their
effective tax rate drop by 20 percent.

And now, a new report from Mark Zandi of Economy.com documents that the
Administration\'s tax cuts were an inefficient fiscal policy that
produced only a small \"bang for the buck" and "the result is a record
budget deficit that is still growing." \[Assessing President Bush's
Fiscal Policies, 7/2004\]

The Bush tax cuts did not work well as they were lavished on the people
least likely to spend them. The reduction in the tax rates, the largest
of Mr. Bush\'s tax boons, [provided only 59 cents of economic stimulus
for every dollar of lost tax revenue]{.underline}. The tax cut for
dividends and capital gains produced just 9 cents of stimulus for every
forgone taxpayer dollar. The fact is increased government spending
(particularly on defense) and tax cuts for middle- and lower-income
people accounted for the bulk of U.S. economic growth from government
policy, even as tax cuts for high-income householdscost taxpayers twice
as much as the middle-income tax cuts. The Economy.com analysis showed
that an economic plan focused more on middle-income tax cuts would have
improved the economy more quickly and more effectively -- generating 2.6
percent higher GDP in 2003, two million more jobs in 2004, and a budget
deficit less than one-half than is currently expected.

As the *New York Times* summed it up: "[The president\'s fiscal
policies, mainly high-end tax cuts, have resulted in a record federal
budget deficit without spurring hiring or income growth]{.underline}."
Or as the *Des Moines Register* put it, "The Bush Administration has
repeatedly pushed the theory that cutting taxes would result in more
jobs and better pay for average Americans. The opposite has happened.
The jobs aren't there. American workers are making fewer dollars on
average." \[*Des Moines Register* editorial, 8/10/04\]

And that could get even worse. "If Mr. Bush continues on the tax-cut
path, continuing high deficits will further threaten job creation and
living standards." \[*New York Times* editorial, 8/12/04\] In fact,
Zandi notes that given the current lack of budget discipline "\...the
nation will eventually struggle with the Hobson's choice of future tax
increases and/or painful cuts to government programs."

[In any case, the Bush tax cuts have not worked for the American
people]{.underline}. They have mortgaged our children's future, without
bringing any real boost to our economy or job creation. It is time for a
new direction of a responsible economic plan that puts middle-income
families first.

**JOBS ARE THERE FOR THOSE WHO WANT THEM? WRONG.**

**Bush: In Ohio, the President said, \"Some people are nervous. Of
course, they\'re nervous, but there are jobs out there.\"** \[Charlotte
Observer (North Carolina) August 6, 2004\]

**Fact:** Apparently, President Bush has not been checking out the want
ads lately. Employers placed fewer help-wanted ads in the nation\'s
newspapers in June and that number has been flat for the last four
months, according to the Conference Board. There are 2.2 million more
unemployed people since the beginning of the Bush Administration. The
unemployment rate is now 30 percent higher than it was when President
Bush took office -- not even taking into account the more than 500,000
people gave up on a job search in July, and 4.5 million people are
working part-time for economic reasons. Taking into account those people
available for work but who are not counted or who are forced to accept
part-time jobs, the underemployment rate climbs to 9.5 percent.

**WE'VE TURNED THE CORNER ON JOB CREATION? WRONG.**

**Administration Claim: "Because we acted, America has added more than
1.5 million new jobs since last August. \... When it comes to creating
jobs for American workers, we are turning the corner and we\'re not
going back."** \[President Bush, August 4, 2004, Davenport, Iowa\]

**Fact:** Since the beginning of the Bush Administration, 1.8 million
private-sector jobs have been lost. The economy created only 32,000 jobs
in July, 80 percent less than is needed just to keep up with population
growth, and the Labor Department cut its tally of job growth in May and
June by 61,000. The President is on track to have the worst jobs record
of any President since Herbert Hoover during the Great Depression. More
than 2.7 million manufacturing jobs have been lost over the past three
years.

To the extent there has been some job creation, more than 1.3 million of
the jobs created since August 2003 are in the service sector with an
average wage of \$15.30 an hour- 40 cents less than the national
average - and 183,000 of these jobs are temporary jobs. Approximately
350,000 of these jobs were in low-paying domestic industries, such as
wait staff in restaurants and bars and retail workers. Economists,
including those at both Morgan Stanley and Economy.com, have noted that
any job growth has focused in lower wage industries and occupations.
\[Morgan Stanley, 7/9/04; Economy.com, July 2004\]

The job losses during the President's term have resulted in pay cuts for
a majority of displaced Americans once back at work. During the first
three years of the Bush Administration, job layoffs occurred at the
second-fastest rate on record. In fact, 11.4 million workers lost their
jobs, even though 5.3 million of these employees had held their jobs for
more than three years. More than one-third of these 5.3 million
displaced, experienced workers are not back at work. Of those who have
been rehired full-time, 57 percent were earning less than what they
earned in their old jobs, the worst result in 10 years. \[BLS, 7/30/04\]

**REPUBLICAN POLICIES HAVE IMPROVED THE DEFICIT? WRONG.**

**Administration Claim: "\... Estimates of government** **deficits are
shrinking. My administration now forecasts that the combined**
**deficits in 2004 and 2005 will be about \$100 billion less than
previously expected, and because of my policy of strengthening the
economy while enforcing spending discipline in Washington, we remain on
pace to reduce the deficit by half in the next five years.**"
\[President Bush Radio Address, July 31, 2004\]

**Fact:** Republicans have created a major fiscal crisis that will
threaten economic growth for years to come. Recently, the Office of
Management and Budget estimated a \$445 billion budget deficit for
fiscal year 2004 - which the Administration touts as an improvement even
though it is \$70 billion more than in 2003, and \$700 billion worse
than projected when President Bush took office. Projected deficits of
about \$3 trillion over the next 10 years will almost certainly drag
down economic growth, reduce job and wage opportunities, and force
spending cuts in critical programs important to helping middle-class
Americans.

In fact, the non-partisan Concord Coalition recently commented, "The
President's budget claims to cut the deficit in half over five years but
omits the likely cost of ongoing military operations in Iraq and
Afghanistan, assumes a freeze on non-security appropriations and
pretends that relief from the growing alternative minimum tax will be
temporary. Moreover, its 5-year window ignores the 10-year revenue loss
of making the President's tax cuts permanent."\[Concord Coalition,
7/2004\] It is clear this claim is just window dressing for an economic
program that will lead us to deficits as far as the eye can see.

**REPUBLICAN TAX CUTS HAVE HELPED SMALL BUSINESS, AND DEMOCRATS ARE
SEEKING TO INCREASE TAXES ON SMALL BUSINESS? WRONG**

**ADMINISTRATION CLAIM: "We Helped Our Small Businesses."** \[President
Bush, 8/18/04\]

**FACT:** While Republicans continue to claim that their tax cuts for
the wealthy help America\'s small businesses, that\'s just not true. The
fact is that under the Republican tax cut, a majority of small business
owners receive \$500 or less, and almost 25 percent get no tax cut at
all. \[CBPP, 1/21/03\] That\'s because more than two-thirds of all tax
returns with small business income are in the 15 percent or lower tax
bracket, and Republican tax cuts go disproportionately to wealthier
Americans. \[Tax Policy Center, 4/26/04\]

Nor would efforts to limit future tax cuts for the very wealthy hurt
small business owners. Only about 1/2 of one percent of all returns with
small business income have income of more than \$1 million. And 97
percent of small businesses would not be affected at all by changes in
the top two tax rates because small business owners are simply not that
wealthy. \[Tax Policy Center, 4/26/04\] As the Wall Street Journal
recently concluded, \"most small businesses don\'t make nearly enough
money to be touched by Mr. Kerry\'s tax plan\" because according to the
latest IRS data available, \"less than 4 percent of taxpayers reporting
any small business income on their tax returns had total income above
\$200,000.\" \[WSJ, 4/1/04\]

The fact is that Democratic efforts to limit future tax cuts for the
wealthiest Americans and fund key priorities would help America\'s small
businesses - by reducing the deficit, making capital more available,
investing in affordable health care, and fully funding the Small
Business Administration.

If Republicans really wanted to help small businesses, they would have
provided the \$79 million necessary to fund SBA\'s 7(a) loan program, so
that small firms can access the capital they need to succeed. They would
have passed a manufacturing tax bill that helped small manufacturers as
well as large multinationals. They would open the \$285 billion federal
marketplace to small businesses and create a fair and open federal
contracting system. And they would direct federal agencies to make their
regulations friendlier to small businesses. But they haven\'t done that.
Instead Republicans have proposed to eliminate the Microloan program and
to eliminate all funding for small business 7(a) loans. They\'ve imposed
new regulations for small businesses. And a closed federal marketplace
has cost small firms \$13.8 billion in lost opportunity. Democrats are
fighting to do better.

**REPUBLICAN CLAIM: A bill offered by Rep. Obey would have significantly
increased taxes on \"job creating small businesses and entrepreneurs\"
because 75 percent of the 200,000 tax returns affected reported small
business income.** \[National Republican Campaign Committee\]

**FACT:** No. Again, let\'s remember that only about 1/2 of one percent
of all returns with small business income have income of more than \$1
million and would be affected by the Obey proposal. And just because a
wealthy taxpayer reports small business income, that doesn\'t make her a
\"job creating small business.\"

As the *Washington Post* noted recently, under Treasury\'s definition,
both President Bush and Vice President Cheney qualify as small business
owners. In his 2002 tax return, the president reported \$1,549 from
rental real estate, royalties, partnerships, S corporations and trusts,
including income from GWB Rangers Corp., a remnant of his days as
co-owner of the Texas Rangers. Of the Cheney household\'s \$1.2 million
income, \$238,682 was from business ventures within the White House\'s
definition of small business. \[WP, 2/24/04\]

As the *Wall Street Journal* analysis points out, \"Checks that members
of corporate boards of directors receive, royalties that authors get,
and consulting fees that professors charge show up as small business
income too, and those folks are hardly the job creators of the modern
economy.\" \[WSJ, 4/01/04\]