The Working Family Blues
Robert L. Borosage
October 16, 2006
Robert L. Borosage is co-director of the Campaign For America's Future.
Popular music changes dramatically. The crowd moves from folk to rock ‘n’ roll, or from rock ‘n’ roll to hip-hop, and the old songs lose their power to get people moving. So it is with politics. Times change, opinions change and the old tunes lose their attraction.
In this campaign, struggling with congressional scandals at home and catastrophic fiascos abroad, Republicans have sensibly rolled out the old standard—“Democrats will raise your taxes.” The great bulk of their ad buys echo this theme. The president has made it his campaign mantra: “They will raise your taxes and figure out new ways to spend your money."
Powerful stuff. Tried and tested. Voters, struggling with stagnant incomes and rising costs, are surely worried about more taxes. But as the old tune plays, it is clear it doesn’t have its old power to get people on their feet. The ad buys go up, but voters don’t seem to be listening any more.
Perhaps that’s because they’ve been mugged by reality. Most Americans didn’t do all that well from the much-hyped tax cuts. For middle-income families, the average value of the tax break this year is $746. Some, particularly those with children, do better; many do much worse. For low-income families—specifically, those at the lowest 20 percent of the income scale—the tax breaks will bring in, on average, a negligible $23 a year. (Millionaires, of course, have every reason to be worried: They pocket on average over $111,000 a year in tax cuts.)
At the same time, Americans are getting hit with soaring costs. Even after their recent decline, gas prices are up about 50 percent from last year. The Department of Energy expects this year’s home heating oil will cost more than 47 percent more than it did last winter. That will cost the average family over 400 bucks. Half of low-income households—many of them elderly—couldn’t afford last year’s heating bills. One third reported that they sacrificed on medicine to pay for heat. One-fifth gave up food for a day or more. And now it gets worse. Meanwhile, Congress just blocked efforts to limit price gouging, and voted billions more in subsidies to oil companies wallowing in record profits.
At the same time, Americans are getting hit with rising health-care premiums—up over 87 percent since 2000, according to the Kaiser Family Foundation. This last year, they continued to rise at double the rate of inflation and of wages. Companies are passing more and more of those costs onto workers—if they provide health benefits at all. We’re paying the highest drug prices in the world, and Congress just handed the drug companies a multibillion-dollar boondoggle, prohibiting Medicare from negotiating a better price for prescription drugs.
Families with college-age children are confronted with tuition costs at public colleges that the Department of Education says are up 42 percent since 2000. Interest rates on student and parent loans just got hiked, even as Congress cut $12 billion out of the student loan funds. For middle-income families with children in college, the tax breaks won’t even cover the rise in tuitions.
Americans have responded to these pressures by working longer—we now work longer hours than any other industrial country, including the Japanese—and by working harder and smarter– productivity is up. But while this has generated obscene CEO bonuses and record corporate profits, it hasn’t been reflected in rising paychecks.
So Americans have taken on record levels of debt. They’ve re-mortgaged homes and added to credit card balances. Now interest rates are rising and families are hitting the wall. Family bankruptcies are at record highs. So Congress made it more difficult for hard-hit families to write off their debts in bankruptcy—while doing nothing about credit card companies that are hiking fees and late payment penalties, and charging interest rates that make Shylock seem like a philanthropist.
No wonder the old tax cut hymns can’t be heard over the working family blues. The tax cuts don’t begin to pay for the stagnant wages and rising costs—even as they rack up deficits that our kids will have to pay. With costs rising for basics, Congress has made things worse. Conservatives may find out this fall that it is time to update the hymnal.