AN ECONOMY FOR THE WEALTHY

George W. Bush entered office at a time when CEO salaries were rocketing to record levels.

CONTENTS

15. AMERICA’S WEALTHIEST

1. THE GULF WIDENS BETWEEN THE WEALTHY AND THE POOR

During the 2000 campaign, George W. Bush promised the American people that, if elected president, he would never revert to deficit spending and elevate the nation’s $5 trillion debt. After the September 11 terrorist attacks, he claimed he would have a balanced budget – unless the nation went into war or into an economic tailspin. Journalists waded through his campaign speeches of 2000. Bush had never made such comments. He had lied.

If Bush were to send the budget into the red, he knew well that he would be branded the president who returned the country to Reagan-era budget deficits when the national debt tripled from $1 trillion to $3 trillion. During his tenure, Bush warned about deficits, and then he himself teetered on the verge of returning the country into deficit spending. This came after President Clinton was able to boast of surplus budgets in the last couple years of his administration.

Bush also boasted that he would be fiscally sound and frequently blamed the growing bureaucracy in Washington on Democrats. Yet, in his first three years, Bush increased federal spending 21 percent. (Time, September 15, 2003)

In November 2002, Bush proposed to turn 850,000 of the 1.7 million federal government employee jobs over to the private non-union sector. The administration’s goal was to changeover 15 percent of federal jobs by September 30, 2003.

The White House mandated that by May 29, 2003, all federal agencies “justify, in writing, any designation of government personnel performing inherently government activities. On June 19, the National Treasury Employees Union, which represented 150,000 federal workers, filed suit against the Bush administration. (The Progressive, August 2003)

Under President Clinton, poverty fell by 25.2 percent since 1992. According to the United States Census Bureau, poverty rose by 7.1 percent under Bush in his first two years. For the first time in 13 years, the poverty rate grew two years in a row, jumping nearly a percentage point from 2000 to 2002 (from 11.3 percent to 12.1 percent). The number of poor grew to 34.6 million people in 2002, including 12.1 million children.

During Bush’s first three years, the lowest unemployment rate was 5.6 percent. When Clinton left office, it was 4.0 percent. Clinton created 22.7 million jobs. Under Bush, 1.1 million jobs disappeared. (Economic Policy Institute, Job Watch, July 20, 2004)

Wage growth fell dramatically under Bush in his first three years. In 2000, median weekly wages grew by 4.9 percent. This fell to a mere 2.0 percent in 2003. Being adjusted for inflation, wages fell slightly in real terms in 2003 for the first time since 1996. (Economic Policy Institute, February 5, 2004)

From 1992 to 2001, the top five executives of the largest 1,500 American corporations made $67 billion in stock-option profits.

From 1993 to 2000, the cash portion of CEO salaries at 350 companies increased 53 percent to $1.8 million in real money.

CEO salaries of 350 companies tripled from $2 million in 1993 to $6 million in 2002. During the same time span, workers wages rose only 33 percent. The figures were adjusted for inflation. (Newsweek, May 5, 2003)

CEO salaries rose 12 percent in 2004 compared with average raises of 3.6 percent for rank-and-file workers, further widening the world’s largest gaps between executive and labor pay. The average CEO of a major corporation received $9.84 million in total compensation in 2004. Workers’ wages rose only 2.9 percent, to $33,176 per year. (www.OneWorld.net, April 12, 2005)

A study by the Economic Policy Institute (EPI) found that after-inflation wages were flat or down in 2003 and 2004 for the bottom 95 percent of workers. However, for the top 5 percent, wages rose by an average of 1 percent, with some gaining much more. (Economic Policy Institute, April 4-11, 2005)

Nearly 40 of the nation’s chief executives received more than $20 million, excluding windfalls from option exercises. A Wall Street Journal study showed that the median salary and bonus for chief executives in office at least two years soared 14.5 percent in 2004 to $2,470,600. (Wall Street Journal, April 11, 2005)

CEOs of oil companies were the highest paid executives in 2004, raking in a median compensation package -- not including gains from stock options -- of $16.6 million. That was a gain of 109 percent over 2003. (Reuters, April 11, 2005)

Real wages in the United States dropped at their fastest rate in 14 years, according to the Economic Policy Institute. In the final three months of 2004, real wages fell by 0.9 per cent. (Financial Times, May 11, 2005)

Inflation rose 3.1 per cent in the first three months of March, but salaries climbed just 2.4 per cent, according to the Employment Cost Index. (Financial Times, May 11, 2005)

While Bush boasted that he was a fiscally conservative president, he actually increased spending each year. He extended spending by 33 percent during his first term alone. (Time, May 16, 2005)

2. BUSH’S $1.3 TRILLION 10-YEAR TAX CUT IN 2001

While campaigning in 2000, Bush said “the vast majority of my tax cuts go to the bottom end of the spectrum.” He knew very well that this was untrue.

Bush’s first economic package called for an 10-year, $1.35 trillion tax cut which actually totaled $1.9 trillion, when interest costs were factored into the estimate. Under his proposal, the top one percent would receive $39,000 each and approximately 40 percent of the overall tax cut. According to a Treasury Department study, the top one percent of the population under existing law paid 20 percent of all federal taxes.

According to Citizens for Tax Justice, after the tax cuts would all kick in after 10 years, the richest one percent would net $774 billion. Citizens for Tax Justice also concluded that the poorest 20 percent of taxpayers would receive on average a $15 tax cut the first year and $37 by 2004. The 20 percent of taxpayers in the middle of the income distribution scale would get an average of $170 in tax cuts, rising to $409 in 2004. The average cut to the top 1 percent of taxpayers would be $13,469 in 2002 and $31,201 in 2004. The Bush plan gave 43 percent of all the tax relief to the richest one percent of the people.

Alan Auerbach and William Gale of the Brookings Institution calculated that even if one kept real spending constant, the White House and CBO’s surplus projection would drop by $700 billion -- from $5.6 trillion to $4.9 trillion. And if one figured in a more realistic budget -- keeping the share of spending in GDP unchanged -- that projection would drop to $4.3 trillion. Krugman proposed that Auerbach and Gale’s estimates were too optimistic. Krugman argued that a reasonable surplus projection under was actually below $4 trillion. (Washington Post, May 15, 2001)

Statistics released by the Congressional Budget Office (CBO) revealed that middle-class America would not benefit as much as Bush had suggested. The richest one percent of taxpayers saw their after-tax incomes increase by 24.1 percent between 1989 and 1997. On average, their incomes went up from $417,000 a year to $518,000. If it was wise to slash taxes, then the fairest and most effective means of lowering them would be to reduce the size of the tax that punishes most working people -- the payroll tax.

According to The Wall Street Journal reporters Jacob Schlesinger and Laura Heinauer, Bush’s heirs would save between $6 million and $12 million if his estate remained the same until he died. And Cheney’s heirs would net between an additional $10 million to $45 million. Bush claimed that estate and gift taxes discouraged savings and investment. By repealing the tax, he claimed that economic growth would rise.

Paul Krugman, in Fuzzy Math Krugman, wrote that Bush’s plan was not only irresponsible but that the president used dishonest tactics during his sales pitch. “They (the Bush administration) have radically understated the cost of their plan, while overstating the money available to pay that cost. They have pretended that a plan that mainly cuts the taxes of the extremely well-off is basically a middle-class tax cut, and have misrepresented the size of the tax cut that middle-income families will actually receive.”

According to Klugman, projections on which the administration’s numbers were based were misleading. The White House underestimated the size of the surplus considering Social Security and Medicare obligations. Finally, the administration used low estimates regarding the budgetary impact of the tax cut. Krugman contended that a conservative estimate of the ten-year budget cost of the Bush tax cut (instead of $1.6 trillion) would be $2.5 trillion.

The centrist Democratic Leadership Council (DLC) claimed that Bush’s proposal was based on overly optimistic projections. The New Democratic Daily (February 9, 2001) reported that the administration’s plan was heavily tilted in favor of the wealthy and reflected the trickle-down philosophy of the Reagan-Bush years when the gap between the classes widened. (Los Angeles Times, February 13, 2001)

Bush’s fiscal 2003 budget called for a deficit of over $160 billion. Once again, he denied that he had promised never to run the country into the red. Attempting to soften the blow, the White House projected a $1 trillion total budget surplus over the following ten years. However, the administration remained silent on claims that all of the surplus would be due to Social Security and that the budget outside Social Security would run a $1.5 trillion deficit over this period.

After Treasury secretary Paul O’Neill was forced out in late 2002, he explained from the outset that Bush rarely asked questions or issued orders, unlike Nixon and Ford, for whom O’Neill also worked. O’Neill said, “I wondered from the first, if the President didn’t know the questions to ask or if he did know and just not want to know the answers. Or did his strategy somehow involve never showing what he thought? But you can ask questions, gather information and not necessarily show your hand. It was strange.” (Time, January 19, 2004)

O’Neill said he tried to warn Vice President Cheney that growing budget deficits posed a threat to the economy. But Cheney cut him off, O’Neill said. “You know, Paul, Reagan proved deficits don’t matter. We won the midterms (congressional elections). This is our due.” A month later, in December 2002, Cheney told the Treasury secretary he was fired.

O’Neill described his first Cabinet meeting with Bush: “I went in with a long list of things to talk about and, I thought, to engage (him) on. And as the book said, I was surprised that it turned out to be me talking and the president just listening. … As I recall it was mostly a monologue.” (60 Minutes, January 11, 2004)

O’Neill described Bush as “a blind man in a roomful of deaf people.” O’Neill also said “ideology and electoral politics so dominated the domestic-policy process (in the White House) that it was often impossible to have a rational exchange of ideas.” (Time, January 19, 2004)

Bush repeatedly said that his tax cuts were fairly distributed to all socio-economic classes. But according to Paul O’Neill, behind closed doors Bush admitted the opposite. When advisers presented the President with a package that disproportionately benefited the wealthy, Bush said, “Haven’t we already given money to rich people? This second tax cut’s gonna do it again.” Bush added, “Shouldn’t we be giving money to the middle?” (Time, January 19, 2004)

When Bush presented the tax cut proposal on January 7, 2003, he presented it as a relief to the middle class. He said we “know that middle-income families need additional relief” from taxes in order to help them deal with “living paycheck-to-paycheck and never getting a chance to save for their children’s education or their own retirement.” (Time, January 19, 2004; (http://www.whitehouse.gov/news/releases/2003/01/20030107-5.html)

After Bush’s first term, Alan Greenspan commented on Bush’s tax cuts. The Federal Reserve Board chair conceded, “It turns out that we were all wrong” about the 2001 Bush tax cuts. (Time, March 28, 2005)

3. FIRING HIS ECONOMIC TEAM

During Bush’s first two years in the White House, the economy continued to falter. Finally in December 2002 -- on the day that unemployment hit a nine-year high of six percent -- Bush undertook his first major housecleaning of his economic team. Treasury Secretary Paul O’Neill and Lawrence Lindsey, the director of the White House National Economic Council, were asked to resign. Neither one offered any concrete explanation for his decision, but both officials had been weak links in Bush’s economic team.

During his tenure, O’Neill, a former chief executive at Alcoa, rattled international markets on several occasions with off-the-cuff remarks about the value of the dollar or assistance for Brazil. And Lindsey, a former member of the Federal Reserve Board and professor of economics at Harvard, created problems when he publicly predicted that costs of a war in Iraq could reach $200 billion -- significantly higher than other estimates circulating at the time. Both appeared to be embarrassments to the administration.

To compound his problems, for weeks Bush was also embarrassed by SEC chair Harvey Pitt. As head of the SEC, Pitt had picked William Webster to run the board. Webster came before the SEC and was confirmed by just 3-2. But Pitt never divulged that Webster had served as head of the audit committee of U.S. Technologies, a small public company that had been engaged in bringing paid work into prisons. UST accounting record had been questioned.

Webster joined UST, because of his interest in helping prisoners learn a trade. In early February 2000, its stock was selling for just 15 cents a share. Then it darted up. Webster and several other new directors agreed to join the board on February 21, receiving options for 250,000 shares at 90 cents. The very next day, UST announced the acquisition of E2Enet, an “incubator” that planned to invest in new Internet companies. Instantly, the stock leaped to $1.70 a share and then to $5.75. In April, Webster put about $160,000 cash in the common stock. Then bubble burst in March, and the stock declined. UST’s directors were granted more options, to no avail. The stock flat-lined at zero. (Newsweek, November 11, 2002)

4. BUSH’S $725 BILLION TAX PACKAGE IN 2003

In the spring of 2003, Bush announced another economic stimulus proposal that called for A $725 billion 10-year tax cut. He proposed giving stock investors $364 billion in tax breaks and boosting the size of the 2001 tax cuts by nearly $300 billion.

Bush proclaimed that a report by leading economists concluded that the economy would grow by 3.3 percent in 2003 if his tax cut proposals were adopted. No such report existed. (Baltimore Sun, June 2, 2003)

Bush boasted that under his proposal, 92 million Americans would receive an average tax reduction of $1,083, and 1.4 million new jobs would be created by the end of 2004. However, he failed to say was that half of all income-tax payers would have their taxes cut by less than $100; 78 percent would get reductions of less than $1,000. Furthermore, the White House used figures from by Macroeconomic Advisers, of St. Louis, which also predicted that his plan could hurt the economy over the long run. (New York Times, February 25, 2003)

As Bush lobbied to slash taxes, he was compelled to raise taxes on some Americans. This would net the federal government approximately $32 billion. Taxes were hiked on Americans working overseas. Bush’s proposal terminated a long-standing tax break that allowed individuals to exclude up to $80,000 and couples up to $160,000 in annual income. In addition, the IRS was permitted to hire private collection agencies to recover debts -- estimated at nearly $1 billion -- over a span of 10 years. Finally, owners of patents or other “intellectual property” had tax deductible donations limited. (USA Today, May 8, 2003)

*Bush boasted that under his proposal, 92 million Americans would receive an average tax reduction of $1,083, and 1.4 million new jobs would be created by the end of 2004. However, he failed to say was that half of all income-tax payers would have their taxes cut by less than $100; 78 percent would get reductions of less than $1,000. Furthermore, the White House used figures from by Macroeconomic Advisers, of St. Louis, which also predicted that his plan could hurt the economy over the long run. (New York Times, February 25, 2003)

*Three days after Bush announced his economic plan, Canadian Finance Minister John Manley assembled a report that said Bush’s proposal would have done little to boost the sluggish economy in the short-term. The report also said that long-term social programs would be threatened by the economic package. The document stated: “It should be noted that the U.S. federal government is already in a fiscally unsustainable position, facing large and growing deficits just beyond the 10-year budget window as the population ages. The proposed stimulus plan would worsen the long-term outlook and make future reforms of these major retirement and health care programs all the more difficult.” (The Globe and Mail, Toronto, Canada, June 16, 2003)

More than two-thirds of the benefits in the economic package would be funneled to the richest one percent of United States taxpayers. Then Congress appropriated $74.7 billion to pay for Bush’s war. This increased the nation’s deficit to approximately $400 billion. (www.gomemphis.com, March 27, 2003)

**Three days after Bush announced his economic plan, Canadian Finance Minister John Manley assembled a report that said Bush’s proposal would have done little to boost the sluggish economy in the short-term. The report also said that long-term social programs would be threatened by the economic package. The document stated: “It should be noted that the U.S. federal government is already in a fiscally unsustainable position, facing large and growing deficits just beyond the 10-year budget window as the population ages. The proposed stimulus plan would worsen the long-term outlook and make future reforms of these major retirement and health care programs all the more difficult.” (The Globe and Mail, Toronto, Canada, June 16, 2003)

**The Urban Institute and the Tax Policy Center at the Brookings Institution concluded that Bush’s proposal would overwhelmingly benefit the wealthy. Brookings reported that Americans earning more than $1 million would see their after-tax income increase by $88,873 on average, or 3.9 percent. Those earning below $40,000 would have average after-tax increases in income of 0.1 percent to 1.0 percent. The analysis also found that the top one percent of earners would get 28 percent of the benefit of Bush's proposal, while the top 10 percent would get 59 percent of the breaks and the bottom 60 percent would get 8 percent of the total. Calculations by Brookings and the Tax Policy Center showed that about 64 percent of the benefits would go to the wealthiest 5 percent of taxpayers. The tax cut from the dividend exclusion would be $29 for those with incomes of $30,000 to $40,000 and $51 for taxpayers with incomes of $40,000 to $50,000. On the other hand, two-tenths of 1 percent of tax filers with incomes over $1 million -- who had 13 percent of all income -- received 21 percent of all dividends. For taxpayers with incomes of $200,000 to $500,000, the typical tax cut from the exclusion was calculated at $1,766. ((Washington Post, January 7, 2003; New York Times, February 25, 2003)

The centers also concluded that the average tax cut from the dividend exclusion would be $29 for those with incomes of $30,000 to $40,000 and $51 for taxpayers with incomes of $40,000 to $50,000. On the other hand, two-tenths of 1 percent of tax filers with incomes over $1 million -- who had 13 percent of all income -- received 21 percent of all dividends. The Tax Policy Center concluded that the average tax reduction from the dividend exclusion would be $27,701. For taxpayers with incomes of $200,000 to $500,000, the typical tax cut from the exclusion was calculated at $1,766. (New York Times, February 25, 2003)

Based on 2001 tax returns, the president would have saved about $17,000 on the $43,805 in dividends he received for the year, had they been tax-free. With accelerated income-tax cuts, the president would have saved another $27,500, based on his $711,453 in taxable income. Bush’s combined tax cut savings of $44,000 would be higher than the average yearly wage of the American worker.

**In his State of the Union address, Bush emphasized that “This tax relief is for everyone who pays income taxes.” He emphasized the tax benefits for people with modest incomes, not the more extensive tax relief he wanted for the wealthy. In attempting to sell his package, he frequently referred to a couple with two children and an income of $40,000 or $50,000 whose taxes would be cut by more than $1,000, mostly because of the increase in the child tax credit.

**However, a study by Citizens for Tax Justice found that half of all taxpayers would get a cut of less than $100 a year this year and that by 2005, three-quarters would get less than $100. On the other hand, almost two-thirds of all the tax savings will go to the wealthiest 10 percent of taxpayers, and the richest 1 percent will get an average tax reduction of nearly $100,000 a year. (New York Times, June 22, 2003)

**According to Citizens for Tax Justice, roughly half the money would go to people earning over $350,000 a year, to the top one percent of Americans. The 80 percent of households earning less than $73,000 a year would get less than 10 percent of this stimulant. Citing calculations by the Tax Policy Center, Senate Minority Leader Daschle said that a person making more than $1 million a year would save $24,000 in taxes under Bush’s plan, while a person earning from $40,000 to $50,000 a year would save only $76. (New York Times, January 4, 2002)

**The Center on Budget and Policy Priorities called Bush’s statement, that the tax cuts would benefit all Americans, as “not accurate.” In addition, the Tax Policy Center, a research arm of the conservative Brookings Institution and the Urban Institute, concluded that 8.1 million people who owe taxes would have received no tax cut from the Bush proposal. The two think tanks also said that these Americans would not receive a break from the economic package. Almost all of these were either single people with no children and no dividends or capital gains who were already in the 10 percent tax bracket, or else those with “head of household” filing status whose dependent was not a child under 17. (New York Times, June 22, 2003)

**Robert Greenstein of the Center on Budget and Policy Priorities, predicted that struggling state governments would be particularly hurt by the plan. He warned that states would lose between $4 billion and $5 billion annually in dividend receipts if dividends were no longer reported to the federal government. (Washington Post, January 7, 2002)

**Beyond 2007, the tax package would actually do more harm than good, warned Joel Prakken of Macroeconomic Advisers LLC, which developed the computer model the White House used. In the longer run, the firm concluded that surging budget deficits would raise interest rates and lower savings rates, while higher investment income would actually discourage job creation. (Washington Post, April 29, 2003)

**With wealthy Americans investing far more than others, they would be the main beneficiaries of tax cuts on capital gains and dividends. But they had a larger proportion of total capital gains than they did of dividends. So they benefit even more when the capital gains rate is reduced than they do from eliminating the tax on dividends.

** The Council of Economic Advisers objected to Bush’s claim that 1.4 million jobs would be created. The council projected that the original Bush plan would create 510,000 new jobs over the last eight months of 2003. The employment level would only be 192,000 jobs higher than it would be without the proposal. This came when Americans were losing jobs at a rate of 92,000 a month. Treasury Secretary John Snow boasted that Bush’s tax package would create 450,000 jobs by the end of 2003 – and another 2 million jobs by the end of 2004. (New York Times, May 12, 2003)

*On February 24, 2003, Bush cited a survey by Blue-Chip Economic Forecast that concluded that the economy would grow 3.3 percent in 2003 as a result of the tax cut. However, Randell Moore, the magazine’s editor, said, “I was a little upset. It sounded like the Blue Chip Economic Forecast had endorsed the president’s plan. That’s simply not the case.”

At the heart of Bush’s proposal was the elimination of dividend taxation that would save approximately $364 billion over 10 years. The administration offered a variety of incomplete statistics to bolster their proposal to eliminate the taxes on most stock dividends. The White House claimed more than half of all taxable dividends were paid to people 65 and older; that their average saving from eliminating the tax on dividends would be $936; that 60 percent of people receiving dividends had incomes of $75,000 or less; and that up to 60 percent of corporate profits were lost to income taxes paid by either the companies or the stockholders. (New York Times, February 25, 2003)

However, only slightly more than one-quarter of Americans 65 and older received dividends. Two-thirds of the dividends the elderly received were paid to the 9 percent of all elderly who had incomes over $100,000. Sixty-four percent of those who received dividends would go to the top 5 percent of Americans, and 42 percent would go to the top 1 percent. (New York Times, February 25, 2003)

Based on 2001 tax returns, the president would have saved about $17,000 on the $43,805 in dividends he received for the year, had they been tax-free. With accelerated income-tax cuts, the president would have saved another $27,500, based on his $711,453 in taxable income. Bush’s combined tax cut savings of $44,000 would be higher than the average yearly wage of the American worker.

* The wealthiest one percent of all taxpayers -- whose earnings averaged $1.2 million -- received an average tax cut of $78,420 in 2004. This amounted to a relatively high seven percent savings.

* The middle 20 percent of taxpayers -- whose earnings averaged $51,000 -- received only a $1,090 cut. This savings was only two percent.

* Those in the bottom 20 percent -- averaging earnings of $16,620 -- received just a $250 cut. This was only a 1.4 percent savings. (New York Times, August 13, 2004)

Vice President Cheney, who reported $278,103 in dividends on his 2001 return, would have saved about $107,000 in federal taxes that year. Cheney, the former chief executive officer of Halliburton Co., the world's second-largest oilfield-services company, would have saved about $220,000 on $4.3 million in reported income that year. (Bloomberg News, January 8, 2003)

Bush and Cheney were not the only ones to benefit from the tax cut. Within two months after the Bush tax cut that benefited the wealthy, more than 200 firms have raised their payouts to shareholders. But it was upper management -- not the quintessential stockholder -- that landed a windfall.

Corus Bankshares voted to triple its annual payout that benefited CEO Robert Glickman. He owned half the company, and his 25 percent stake in the bank generated $5.8 million in annual after-tax income. That was up from $1.3 million. (Time, August 18, 2003)

In August, Citigroup raised its annual dividend 75 percent to $1.40. CEO Sandy Weill, whose net worth was estimated at $1 billion, was the main benefactor of Bush’s economic package. Weill owned 22 million Citigroup shares. He netted $27 million a year in after-tax income. That was up from $11 million. (Time, August 18, 2003)

Executives and directors at Goldman Sachs owned 25 million company shares. Thanks to Bush, they doubled its annual payout to $1 a share. After tax, CEO Henry Paulson’s 4 million shares landed him $3.4 million in dividends,. That was up from $1.2 million. (Time, August 18, 2003)

Microsoft’s Bill Gates received an after-tax windfall of $82 million a year as a result of the company’s newly created 8¢-a-share dividend. Viacom increased its dividends to 24¢ a share annually, giving CEO Sumner Redstone an annual after-tax windfall of $41 million.(Time, August 18, 2003)

Meanwhile, in 2003, the median pay for CEOs at the largest corporations rose 14 percent from the year before. The average executive’s income was 400 times larger than that of the same company’s employee. (Jim Hightower, Lowdown, June 2003)

5. CONGRESS PASSES A $350 BILLION PACKAGE

THE HOUSE. On May 10, 2003, the House approved its version of an economic stimulus plan of $350 billion over 10 years. That was less than half the amount for which Bush had lobbied. By a 222- to-203 vote, it called for an immediate cut in income tax rates, additional relief for married couples and families with children, a big reduction in taxes on dividends, and capital gains, and incentives for businesses to invest and expand.

The provisions of the bill included:

*Taxes on dividends and capital gains would be 15 percent for most people and 5 percent for lower-income people. It exempted only the first $500 of dividend income.

*Income tax rates, scheduled to take effect in 2004 and 2006, were reduced. The rates were made retroactive to January 1, 2003. The current rates of 27 percent, 30 percent, 35 percent, and 38.6 percent were dropped to 25 percent, 28 percent, 33 percent, and 35 percent.

*Tax credits families could take for each child were reduced from $600 to $1,000 in 2003, 2004, and 2005.

*It eased the tax burden on married couples from 2003-05 by increasing the standard deduction for joint filers and allowed more of their income to be taxed at the 15 percent rate rather than a higher rate.

*It increased the lowest tax bracket of 10 percent from 2003 to 2005.

*The bill increased from $25,000 to $100,000 the amount of expenses small businesses could write off their taxes, and expanded the number of enterprises that qualified as small businesses.

*It extended and expanded a temporary provision that allowed larger businesses to write off 30 percent of investments in the first year. It increased that write-off to 50 percent. (Los Angeles Times, May 10, 2003)

*Part of Bush’s package included tax cuts for owners of $50,000-plus SUVs that were used in business.

THE SENATE In sharp contrast with the House, the Senate in a 51-to-49 vote passed its version of a tax package. Vice President Cheney cast the tie-breaking vote.

*Tax cuts totaled $550 billion over 10 years. This undermined Bush’s request for $725 billion.

*The dividend tax was eliminated for three years, from 2004 through 2006.

*Scheduled reductions in income tax rates were expedited. Under the 2001 tax cut law, those reductions would not take full effect until 2006.

*Tax credits were increased from $600 to $1,000 for each child in a family.

*The bill provided tax relief for couples who were hit by the so-called marriage penalty.

*Incentives were expanded for small businesses to invest in new equipment. (New York Times, May 16, 2003)

* In order to placate Nebraska Democratic Senator Ben Nelson, who had leaned against the tax cut, Bush consented to allotting $20 billion in grants to states.

Bush’s tax cut reflected his hostility towards America’s poor and working classes. The Senate bill included provisions to crack down on abusive corporate tax shelters, combat some accounting scams such as those pursued by Enron, prevent American companies from moving their headquarters to post office boxes in offshore tax havens such as Bermuda, and limit grossly inflated deferred compensation plans for corporate executives. In the end, these provisions were discarded. They would have saved about $25 billion. (New York Times, June 2, 2003)

Arkansas Democratic Senator Blanche Lincoln added a provision to the tax bill that would have extended the tax credit to more low-income families. The full Senate approved the provision, but the negotiators rejected it at the last minute.

Republicans dropped a provision that would have extended benefits from the child tax credit to families with incomes between $10,500 and $26,625. According to the Center on Budget and Policy Priorities, the families that would have benefited include about 12 million children -- one of every six kids in the United States under the age of 17.

As a result, families with a total of 16 million children at the low end of the income scale did not get their fair share from this tax bill. About half of all Black and Latino children received no benefits -- or only a partial benefit -- from the child tax credit, according to the Children's Defense Fund and the Children’s Research and Education Institute. (New York Times, June 2, 2003)

The losers were low-income working families eligible to receive money under the Earned Income Tax Credit. The bill accelerated an increase in the child tax credit and relief from the so-called marriage penalty. However, this failed to benefit those who qualified for the Earned Income Tax Credit. A “sunset” provision ended rate reductions, child tax credits, and marriage penalty provisions after a mere three years. The bill pretended that these tax breaks would expire in three years, so the official long-term cost of the bill, $550 billion, was far lower than the likely true impact. (Washington Post, May 16, 2003)

CONFERENCE COMMITTEE. In a conference committee, Senate and House Republicans leaders agreed to a tax-and-spending package that would total $350 billion over 10 years. That was nearly $400 billion of what Bush had asked. However, Bush would ultimately attain his goal. Since many parts of the legislation would sunset within three or four years, Republicans indicated they would return to extend most of the act’s provisions.

6. STATISTICS SHOW BUSH’S TAX CUTS BENEFITED THE WEALTHY

The first data to document the effect of Bush’s tax cuts were released in the spring of 2006. The analysis of Internal Revenue Service data was conducted by the New York Times. The study showed that the tax burden on the nation’s most wealthy was significantly lowered. Taxes on the privileged class were reduced by more than $10 million -- by $500,000 on average. (San Francisco Chronicle, April 5, 2006)

The analysis found:

Bush’s tax cuts on investments in 2003 benefited the very wealthiest Americans than did his two previous tax cuts -- on wages and other non-investment income.

Among taxpayers with incomes greater than $10 million, the amount by which their investment tax bill was reduced averaged about $500,000 in 2003. Total tax savings, which included the two Bush tax cuts on compensation, nearly doubled to slightly more than $1 million.

These taxpayers, whose average income was $26 million, paid about the same share of their income in income taxes as those making $200,000 to $500,000 because of the lowered rates on investment income.

Americans with annual incomes of $1 million or more -- about one-tenth of 1 percent of all taxpayers -- reaped 43 percent of all the savings on investment taxes in 2003. The savings for these taxpayers averaged about $41,400 each. By comparison, these same Americans received less than 10 percent of the savings from the other Bush tax cuts, which applied primarily to wages, though that share is expected to grow in coming years. The savings from the investment tax cuts are expected to be larger in subsequent years because of gains in the stock market.

By contrast, few taxpayers with modest incomes benefited because most of them who own stocks held them in retirement accounts, which are not eligible for the investment income tax cuts. Money in these accounts is not taxed until withdrawal, when the higher rates on wages apply.

Those making less than $50,000 saved an average of $10 more because of the investment tax cuts, for a total of $435 in total income tax cuts, according to the computer model. (San Francisco Chronicle, April 5, 2006)

7. BUSH’S RECORD DEFICIT SPENDING AND A $7.4 TRILLION DEBT

“We cannot go down the path of soaring deficits. … I challenge Congress to respect the taxpayers and show restraint with their money. It is very important they do so in order for our economy to continue to grow.” George W. Bush, August 2002

In his 2002 State of the Union address, Bush promised that “our budget will run a deficit that will be small and short-term.” In 2003, Vice President Cheney stated, “I am a deficit hawk. So is the president.” Nevertheless, the 2005 budget deficit was $319 billion – the third largest in American history. (Fox News, January 15, 2005)

Bush and Cheney repeatedly promised Americans that they would get their record-deficits under control. In 2003, Bush said “My administration firmly believes in controlling the deficit and reducing it.” (New York Times, February 4, 2003)

Cheney said, “I am a deficit hawk. So is the president.” (Meet the Press, September 14, 2003)

Non-partisan organizations estimated that Bush’s tax cuts would cost taxpayers $2.2 trillion over 10 years.

*********************

Under President Clinton, the United States government had its first budget surpluses since 1969, and its largest surpluses on record. Not only was there a total budget surplus of $176 billion, the Clinton Treasury actually paid off $362.5 billion of debt held by the public. Bush reversed this trend, racking up a record $422 billion deficit. Instead of paying down the debt, the Bush Treasury needed four debt ceiling increases over four years. The nonpartisan Congressional Budget Office estimated that -- with the extension of his tax cuts -- there would be $6.2 trillion in additional debt between 2004 and 2014, nearly doubling the national debt ($7.38 trillion) for a total of $14.5 trillion.

The national deficit and debt were not the only areas to spiral out of control. The United States trade deficit also hit a record-shattering high -- $600 billion.

Bush’s tax cut as calculated over 10 years would lead to a loss of $800 billion for the Treasury, according to the Center on Budget and Policy Priority. The Congressional tax staff estimated that the package would lead to a tax cut of $61 billion in the 2003 fiscal year, whereas the CBO reported that it would have lowered taxes by $35 billion in 2003 and $117 billion in 2004. (Center on Budget and Policy Priority, May 23, 2003)

If the act’s provisions (except the one providing relief through the Alternative Minimum Tax) ultimately were extended, the cost through 2013 would be $807 billion to $1.06 trillion, depending on how one measures the cost of extending the bill’s business depreciation tax cut. House Speaker Hastert agreed with this estimate when he said on May 22: “The $350 (billion) number takes us through the next two years, basically. But also it could end up being a trillion-dollar bill, because this stuff is extendable.” (Center on Budget and Policy Priority, May 23, 2003)

The fiscal 2003 budget called for a deficit of over $160 billion. Once again, he denied that he had promised never to run the country into the red. Attempting to soften the blow, the White House projected a $1 trillion total budget surplus over the following ten years. However, the administration remained silent on claims that all of the surplus would be due to Social Security and that the budget outside Social Security would run a $1.5 trillion deficit over this period.

Additionally, Bush tax cut for the wealthy increased the deficit for the $2.25 trillion fiscal 2004 budget. Approximately one-third of the deficit, or $114-billion, and about $33-billion of the 2003 deficit was a result of Bush’s tax package. The nation’s deficit topped $300 billion, despite campaign promises never to operate in the red. The CBO estimated that the deficit would total over $1 trillion over the following five years.

The loss of revenue from the tax package drove up the nation’s debt to a record $7.4 trillion. Additionally, Bush did not include the enormous cost of his war in Iraq in the budget. That could cost as much as $400 billion as well as the cost to rebuild Iraq that could top $1 trillion.

On May 30, the House Budget Committee predicted that the budget deficit would jump to $500 billion in 2004, as a result of Bush’s tax cut coupled with American occupation of Iraq. The committee also predicted that the federal debt would rise by $3.6 trillion through 2011. Between 2002 and 2011, the government forecast an accumulation of $3.6 trillion in new debt. That was a swing of more than $9 trillion from the $5.6 trillion surplus predicted for that time period in 2001, when Bush pushed through a 10-year, $1.35 trillion tax cut. (Washington Post, May 31, 2003)

As the House Budget Committee released these dismal economic forecasts, Bush quietly signed a bill raising the national debt ceiling to a record-shattering $7.4 trillion. Yet, a day later, Bush appeared before cameras as he told a national television audience that his tax cut would bolster the economy. (New York Times, May 28, 2003)

The tax cut raised the after-tax income of most people by less than 1 percent -- not nearly enough to compensate them for the loss of benefits. But people with incomes over $1 million per year will, on average, saw their after-tax income rise 4.4 percent. (New York Times, May 27, 2003) According to a calculation by Bloomberg News, (May 27, 2003) Bush himself would save $26,739 in taxes under the new law.

Bush’s $455-billion deficit was actually worse than the figures suggested. It did not include the costs of the United States occupation of Iraq that was running at $4 billion a month. (Los Angeles Times, July 17, 2003)

In less than two years, the Office of Management and Budget went from predicting a surplus of $334 billion to anticipating a deficit of $455 billion in 2003.

In August, the CBO predicted federal budget deficits could total $5 trillion over 10 years, if discretionary spending grew in line with the economy and if Congress enacted programs strongly supported by Bush. This estimate put the 2004 deficit at $480 billion, making the shortfall equal to about 4.2 percent of the nation’s gross domestic product. (New York Times, August 26, 2003)

On December 12, the White House announced that the deficit “will shrink the deficit in half in a five-year period.” However, an analysis by the CBO showed that Bush’s estimates left out big expenses, like the 2003 Medicare legislation. Furthermore, Bush did not take into account the extension of tax benefits. In reality, the deficit would remain over $300 billion a year for the next ten years. (Center for American Progress, December 16, 2003)

A bipartisan group of prominent budget analysis organizations, former senior government officials, and business leaders warned of a “growing mismatch between what Americans are scheduled to pay to government and what they expect government to deliver in return.” (The Concord Coalition, September 29, 2003)

In 2003, the group released an analysis of the expanding federal budget deficit, projecting $5 trillion in total deficits over the next ten years. The group also released a joint statement calling on Congress and Bush to develop “a realistic plan for putting the nation’s fiscal house in order.” (The Concord Coalition, September 29, 2003)

Even with a full economic recovery and a decade of economic growth, the recovery of Bush’s astronomical deficits would entail such radical steps as:

1. Raising individual and corporate income taxes by 27 percent; or eliminating Medicare entirely; or cutting Social Security benefits by 60 percent; or shutting down three-fourths of the Defense Department; or cutting all expenditures other than Social Security, Medicare, defense, homeland security, and interest payments on the debt by 40 percent. (The Concord Coalition, September 29, 2003)

More than a third of this $9 trillion decline was attributed to tax cuts, with this share rising over time. Nearly one-third is attributable to new expenditures, most of which were for defense and homeland security. (The Concord Coalition, September 29, 2003)

In the summer of 2003, the Bush administration, estimated the deficit at $380-billion, perhaps to indicate his promise of halving the deficit over time. But in February, the White House changed its estimate to $521-billion.

Yet, that $521 billion did not include the war in Iraq and Afghanistan ($50 billion annually), the Medicare bill ($540 billion over 10 years), and the tax cuts ($1.24 trillion over 10 years). If included in the deficit, this would be another $116.4 billion added to the $521 billion. (New York Times, February 2, 2004)

The CBO said that, if Bush made his 2001 and 2003 tax cuts permanent, the deficit could reach nearly $3.5 trillion over 10 years, with the tax cuts alone costing the Treasury $295 billion a year by 2014. (New York Times, January 26, 2004)

The largest components of Bush’s $445 billion 2004 deficit were $290 billion for tax cuts for the wealthy and $216 billion for Bush’s war in Iraq. Bush had promised he “would never overspend your money.” In 2003, the administration projected the 2004 deficit to be $307 billion. The White House claimed the $445 billion deficit was positive news because the figure was below the its deficit projections released earlier. (New York Times, August 1, 2004)

Bush also insisted that he would reduce the deficit by half over the following five years. But the administration’s 2009 budget projections were not credible because they omitted the cost of a number of the administration’s own policies. For example, revising the Alternative Minimum Tax (AMT) -- a proposal favored by the administration and bipartisan majorities in Congress to prevent a massive tax hike on the middle class -- was projected to cost $57 billion in 2009. (White House Briefing, August 1, 2004)

Bush also failed to include the cost of the multi-year defense blueprint and the cost of the continued fight against terrorism. He also excluded expenditures in Iraq and Afghanistan as well as over $70 billion in defense costs for 2009.

Bush faced complaints from a European ally about the weakening dollar. In December, he responded by claiming he favored a strong dollar and would work with Congress to cut the massive federal budget deficit that put downward pressure on the United States currency. (Los Angeles Times, December 16, 2004)

The same day, Cheney reiterated to a White House economic conference that the administration supported more tax cuts, which presumably would deepen the budget deficit and threaten the dollar’s value. (Los Angeles Times, December 16, 2004)

With no television cameras present on the morning of November 19, 2004, Bush quietly signed a bill that raised the ceiling on the national debt from $7.4 trillion to another record high of $8.2 trillion.

8. THE 2005 ECONOMY

BUSH’S BUDGET. Bush’s $2.24 trillion budget for Fiscal 2005 included cuts for housing assistance for the elderly, vocational education, local law enforcement grants, child care, and lead-hazard reduction

Thirty-eight of the 65 government programs eliminated were related to education. Funds for No Child Left Behind were cut by more than $9 billion. Other cuts were made for alcohol abuse, dropout prevention, school counselors, smaller learning communities, school reform, and school leadership. $247 million was eliminated for the Even Start family literacy program. Funds were slashed for the Eisenhower regional math and science consortiums and the Eisenhower National Clearinghouse for Math and Science Education.

In the State of the Union, Bush claimed he wanted “larger Pell Grants for students who prepare for college with demanding courses in high school.” But most of that was eliminated. In 1976, the Pell Grants covered about half of the cost of tuition, room, and board at a public college. By 2004, the grants covered only about 20 percent of average public-college costs, and even less of private-college expenses.

Bush administration tried to eliminate 84,000 students from the Pell program by using a controversial new formula to calculate eligibility. While Bush proposed an additional $1,000-a-year grant to low-income students, he asked for only $33 million, which was enough for just 33,000 of the nation’s 15.8 million college students.(The Enquirer, October 10, 2003; Wall Street Journal, February 2, 2004)

Instead of alleviating the burden on our over-stretched military and the under-protected soldiers, Bush proposed spending money on untested, expensive missile programs. He increased the budget for missile defense by $1.2 billion to a total of $10.2 billion. (Washington Post, February 2, 2004)

Bush increased funding for veterans by only $500 million for medical funding. That fell $2.6 billion short of what the Independent Budget recommended was needed to fully meet the demands for quality veterans’ health care. No funds were allocated to alleviate the thousands of veterans who would wait six months or more for basic health care appointments with VA. Instead, it drove veterans from the system by realigning funding, charging enrollment fees for access, and more than doubling the prescription drug co-payment. (Center on Budget and Policy Priorities, February 2, 2004)

According to the Center on Budget and Policy Priorities, funding for the housing voucher program, the nation’s principal low-income housing assistance program, fell more than $1.6 billion short of the amount needed to continue support for the vouchers in use. This meant at least 250,000 fewer low-income families and elderly and disabled households would be served. (Center on Budget and Policy Priorities, February 2, 2004)

The budget for the Community Oriented Policing Services (COPS) was cut from $481.9 million to $97 million, despite a recent report by former GOP Senator Warren Rudman who said the Bush Administration was leaving first responders drastically underfunded and dangerously unprepared. (Kansas City Star, February 2, 2004)

Bush proposed to extend the child tax credit to $1,000 and to make it permanent. However, in doing so, he fails to provide any additional child credit assistance to the 12,000,000 children in working families, including approximately 200,000 children in military families. (New York Times, February 2, 2004)

The budget cut $239 million from rural business and industry loans, $269 from a rural broadband loan program, and $199 million from rural water and wastewater grants. (Kansas City Star, February 2, 2004)

The Center on Budget and Policy Priorities estimated funding for discretionary grant programs to state and local governments would decline 1.1 percent in 2005. States also would lose state tax revenue as a result of the federal tax cuts in the budget -- due to linkages between federal and state tax codes. States already faced about $40 billion in deficits in state fiscal year 2005. The reduction in aid to states would result in a loss of roughly $6 billion in buying power, which would force many states to institute deeper budget cuts or tax increases. (Center on Budget and Policy Priorities, February 2, 2004)

Yet, Treasury Secretary John Snow claimed the record federal deficit “is entirely manageable.” That same day, the International Monetary Fund issued a scathing report, saying the United States was running up deficits of “such record-breaking proportions that it threatens the financial stability of the global economy.” (New York Times, February 2, 2004)

9. THE 2005 ECONOMY

During 2005, the number of uninsured Americans increased by 800,000, reaching a high of 46 million people. (CBS News, August 30, 2005)

In 2004, Bush promised to “help more and more Americans … join in the growing prosperity of the country.” But the poverty rate has risen each year since 2001, with 12.7 percent of the population living in poverty. (CNN, January 21, 2005)

By the end of 2005, the federal minimum wage has remained stuck at $5.15 an hour for nearly 10 years, leaving about 7.3 million American workers (5.8 percent of the workforce) unable to keep up with rising costs. That affected 61 percent of women, 15.3 percent are African-Americans, and 19.7 percent are Hispanics. (Economic Policy Institute, January 2006)

MAKING TAX CUTS A PRIORITY IN 2005. Days after Bush was reelected in November 2004, he announced that tax revision would be one of his domestic priorities. This came at a time when he created the largest deficit during his first four years.

To lower the nation’s deficit, either taxes would have to be increased or popular government programs -- that people depended on -- would have to be sliced.

1. Lowering taxes on investment income would lead to higher taxes on wages and salaries, because all income was either investment income or income earned from wages and salaries. This shift would disproportionately affect workers of modest means who needed to spend almost all they earned.

2. Lowering the higher rates so that the wealthy would have the incentive to do additional work would lead to an increase in the rates for taxpayers who were not prosperous.

The alternative minimum tax was a measure originally meant to keep the wealthy from avoiding taxes. By repealing the AMT, the government would lose as much as $700 billion over 10 years. Consequently, the national debt would continue to spiral upwards. (New York Times, November 15, 2004)

RUN-AWAY SPENDING IN 2005. The GOP-controlled Congress allocated over $300 billion in new spending and tax breaks in July 2005. Congress approved transportation and energy bills that superceded Bush’s cost limits.

According to the nonpartisan Committee for a Responsible Federal Budget, spending escalated through 2010 by roughly $2.2 billion above Congress’ limits. That increased the federal deficit by $115 billion through 2110. It was an additional $33 billion in 2006 alone.

THE 2005 HIGHWAY BILL. In 2004, Bush demanded that no highway bill exceed $256 billion. Then he increased his limit to $284 billion in 2005. (Washington Post, August 4, 2005)

Congress responded in July 2005 with a five-year, $286.5 billion measure. That was deceptive, since the bill actually authorized expenditures of $295 billion, since on the last day of the bill’s life, Congress would rescind $8.5 billion in unused funds. (Washington Post, August 4, 2005)

The pork contained in the highway bill included:

1. $25 million for a “bridge to nowhere.” The bridge connected two South Carolina towns with a combined population of 2,000.

2. $95 million to widen a highway in Sheboygan and Fond du Lac counties in Wisconsin. The State Department of Transportation said it was unnecessary for 15 to 20 years and that legislators approved after bypassing the DOT and a commission charged with developing major road projects.

3. $200 million for a one-mile span linking Ketchikan, Alaska, with Gravina Island. Fifty people lived on Gravina Island. They reached Ketchikan by taking a seven-minute ferry ride. The highway bill also included$1.5 million for a single bus stop in Anchorage, Alaska.

THE 2005 ENERGY BILL. Bush promised a firm cost limit of $6.7 billion for tax breaks in the energy bill. In July 2005, Congress then approved breaks worth $11.5 billion over 10 years. That would cost $12.3 billion overall. In late June, the Bush administration requested an additional $975 million to finance unanticipated veterans’ health care costs for 2005. The Senate responded with $1.5 billion. (Washington Post, August 4, 2005)

Oil and utility companies spent $367 million over two years lobbying Congress in order to obtain a favorable bill. It included:

1. The electricity, coal, nuclear, natural gas, and oil industries received $8.5 billion in tax breaks and billions more in loan guarantees and other subsidies.

2. House Majority Leader Tom DeLay was able to slip in a provision that gave away $1.5 billion to the oil industry. That sum was designated for oil and natural gas drilling research. The $1.5 billion giveaway was added to the bill after Democratic negotiators went home on July 27 at 4:00 a.m. believing a deal had been finalized and the provision would not be in the bill.

3. $515 million were allocated in new subsidies that included $125 million to reimburse oil and gas producers for 115 percent of the costs of remediating, reclaiming, and closing orphaned wells.

4. $88.9 billion in subsidies was earmarked to the energy industry over 10 years.

5. Congress failed to address the issue of driving down high gasoline and other energy prices or significantly reducing America's growing reliance on foreign oil. A 2004 analysis by the administration’s Energy Information Administration found that the Bush-backed energy bill would actually raise gas prices and increase oil demand nearly 14 percent by 2010. A Senate provision, that was rejected, would have required reduction of oil consumption by one million barrels per day by 2015.

6. Legislators dropped a provision that would have required utilities to generate at least 10 percent of their electricity through renewable fuels by 2020.

7. The bill provided $250,000 for a study of “irradiated fuel,” although many legislators acknowledged they had no idea what that was.

8. The bill contained a series of anti-environmental provisions. A loophole in the Safe Drinking Water Act allowed oil and natural gas drilling companies to inject fluids laced with toxic chemicals and contaminants into oil and gas wells that penetrated underground aquifers. That risked contamination of drinking water sources.

9. The bill created a loophole in the Clean Water Act for oil and gas companies that allowed the industry to ignore regulations designed to limit erosion and runoff into rivers and streams at construction sites.

10. Funding was provided for an inventory of oil and natural gas resources in sensitive coastal areas. This was the first step toward reopening these areas to drilling.

11. The bill contained no substantive provisions to reduce the greenhouse gas emissions that are causing global warming -- such as a carbon tax or cap. A Senate provision, that was rejected, would have acknowledged the threat of climate change.

12. The bill did not include provisions that would open the Arctic National Wildlife Reserve to drilling. There were no provisions that would have shielded companies that contaminated groundwater with the toxic chemical MTBE from legal liability.

THE DEATH TAX. In April 2005, the GOP-controlled House passed legislation to repeal the death tax that was imposed on individuals who inherit over $1.5 million of all estates. The proposal permanently repealed the estate tax beginning in 2011. (Los Angeles Times, April 14, 2005)

The death tax was paid in 2004 by less than one percent -- only 30,627 -- of the wealthiest Americans. The estate tax repeal cost more than $1 trillion over ten years. (Los Angeles Times, April 14, 2005)

16. THE BANKRUPTCY BILL. In March 2005, the Senate approved the bankruptcy bill by a 74-to-25 vote. This provided for the most sweeping changes in bankruptcy law in more than 25 years. The measure forced more people file under Chapter 13 of the bankruptcy code, which required consumers to pay back most debts over five years.

Previously, most debtors filed under Chapter 7, which allowed many to keep some protected assets while discharging some debts and walking away from most unsecured debts such as credit card bills. Those, who could pay 25 percent of what they owed or $6,000 in monthly payments, were barred from writing off their unsecured debts. Credit card companies estimated that about 20 percent of all bankruptcy filers had some assets or means to pay off their debts. (Washington Post, March 11, 2005; www.oneworld.net, March 12, 2005)

Six million Americans filed for personal bankruptcy protection -- more than five times as many as in 1980. The process allowed them to come up with a creditor-reviewed and court-approved plan to write off some of their debts, pay off others, and reorganize their personal finances so they can make a fresh start.

Over 50 percent of individuals filing for Chapter 7 bankruptcy did so because they could not pay for major health bills. According to a study commissioned by the nonpartisan American Bankruptcy Institute, 96.4 percent of people who filed Chapter 7 could not afford to pay anything more. (House Judiciary Subcommittee, March 19, 1999)

Democrats and more than 100 bankruptcy law professors said that the legislation’s supporters significantly exaggerated the problem with the current bankruptcy laws. The bill was a major blow to the overwhelming majority of those forced to declare personal bankruptcy: moderate- and low-income families, many of them black or migrant or with only one parent; and individuals of modest means hit with large divorce losses or medical expenses. (Washington Post, March 11, 2005; www.oneworld.net, March 12, 2005)

The credit card companies made $30 billion in profits in 2004. In order to qualify for Chapter 7, Americans would be forced to complete a costly and bureaucratic means test. This red tape was almost completely unnecessary. Credit card issuers said they needed the new law because well-off consumers took advantage of loopholes in the old rules to take care of unpaid loans. The credit card industry absorbed losses of $3-4 billion per year. Credit card issuers including MBNA Corp., JPMorgan Chase & Comapany and the finance units of General Motors Corporation, and Ford Motor Company, lobbied extensively for the bill. They said unpaid loans ended up costing every non-defaulting cardholder, for example through higher late payment fees, higher interest rates, and stiffer repayment conditions on car loans. (Washington Post, March 11, 2005; www.oneworld.net, March 12, 2005)

BUSH’S BUDGET. The administration projected that one-third of the budget would grow from the $821 billion that Bush requested for 2005 to $843 billion in 2006 -- or about 2.7 percent. The figures did not include defense and foreign aid spending for which Bush proposed increasing spending. It was projected that the remaining amount -- for domestic spending -- would drop from $368.7 billion in 2005 to $366.3 billion in 2006. Though that reduction would be just 0.7 percent, it did not take into account inflation or the political consequences of curbing spending for popular programs. (USA Today, May 28, 2004)

While the Bush administration was spending well over $100 billion for the first year of the occupation of Iraq, the White House proposed massive cuts for the Fiscal 2006 budget of approximately $2.4 trillion. Rolling back massive tax cuts for millionaires is off the table, but the Bush administration raised taxes on average Americans. The Bush budget imposed $5.3 billion in new, regressive taxes. (New York Times, February 5, 2005)

The budget cut funds for education, public health and environmental protection and included $1.4 trillion in new tax cuts for the wealthy. The budget included over a billion dollars in revenue from drilling in the Arctic National Wildlife Refuge (ANWR), even though Congress never authorized such drilling and had rejected Bush’s proposal to open ANWR to oil exploration for the last four years. (New York Times, February 5, 2005)

Bush proposed cutting federal spending on job training by a half-billion dollars; federal job training programs, including dislocated-worker training, by $200 million; and federal aid to states for job training, including funding to train veterans, by $300 million. (New York Times, February 5, 2005)

On February 2, 2002, Bush appeared at the New York Police Department Command Center and said, “Police and firefighters of New York, you have this nation’s respect, and you’ll have this nation’s support.” Three years later Bush sought to decimate vital funding for police officers and firefighters. The administration’s budget reduced federal grants to local police forces from $600 million to $60 million. Grants to local firefighters would be cut by $215 million dollars. (New York Times, February 5, 2005)

On June 12, 2002, Bush told the American people, “Bioterrorism is a real threat to our country. … It’s important that we confront these real threats to our country and prepare for future emergencies. Protecting our citizens against bioterrorism is an urgent duty of...American governments.” Bush proposed cutting a wide range of public health programs, including several to protect the nation against bioterrorist attacks and to respond to medical emergencies. Funding for the Centers for Disease Control and Prevention (CDC) would be reduced by 9 percent under Bush’s plan. Specifically, the public health emergency fund of the (CDC), which helps state and local agencies prepare for bioterror attacks, would be cut 12.6 percent. (New York Times, February 5, 2005)

Bush’s budget proposed cutting the Low-Income Home Energy Assistance program (LIHEAP), which helped people pay their heating bills, by 8.4 percent. At 2004 funding levels, only one-sixth of low-income families who qualified for the program were able to receive assistance. Funding in 2004 for LIHEAP was 23 percent lower than in 2001. (New York Times, February 5, 2005)

The cuts included:

1. Domestic security at the Homeland Security Department and other agencies would go from $30.6 billion in 2005 to $29.6 billion in 2006 -- a 3 percent decrease.

2. The Education Department would go from $57.3 billion in 2005 to $55.9 billion in 2006 -- 2.4 percent less.

3. The Veterans Affairs Department would decrease 3.4 percent from $29.7 billion in 2005 to $28.7 billion.

4. The Environmental Protection Agency would drop from $7.8 billion in 2005 to $7.6 billion -- or 2.6 percent.

5. The National Institutes of Health, which finances biomedical research and had its budget doubled over a recent five-year period, would fall from $28.6 billion to $28 billion -- or 2.1% percent.

6. The Interior Department would drop 1.9 percent from $10.8 billion in 2005 to $10.6 billion.

7. The Defense Department would grow 5.2 percent to $422.7 billion in 2006.

8. The Justice Department would increase 4.3 percent to $19.5 billion in 2006. (USA Today, May 28, 2004)

In April 2005, Congress passed a five-year, $14 trillion budget. The House approved the bill by a vote of 214 to 211, and the Senate voted 52 to 47. Congress reduced $35 billion off the growth of entitlement programs through 2010, the first such savings since the 1997 balanced budget agreement. Nearly a third of that total came from Medicaid. At the same time, the budget made room for $106 billion of tax cuts over five years, $70 billion of which would be protected from a Senate filibuster.

The GOP budget included:

1. The federal deficit, which reached a record $412 billion in 2004, would fall to $383 billion in 2006 and $211 billion by 2010.

2. $5.3 billion was added in new, regressive taxes that would hit middle- and lower-income Americans hardest. Bush’s budget cut scores of programs that middle- and low-income families rely on.

3. Medicaid was slashed by $10 billion over the next five years.

4. Funding for education, health care, and job training were cut.

5. $106 billion was approved for new tax cuts over five years. $70 billion was shielded from a Senate filibuster, including extensions of Wall Street specials like the 2003 cuts to capital gains and dividend tax rates. As the Washington Post notes, " the cost of those tax-cut extensions would more than nullify the savings from the spending cuts. (Washington Post, April 28, 2005)

According to Center of Budget and Policy Priorities, the budget would increase deficits over five years by $168 billion, compared with the deficits the Congressional Budget Office estimated would occur if there were no changes in policies. (Center of Budget and Policy Priorities, April 28, 2005)

10. THE 2006 ECONOMY

Bush’s Fiscal 2007 budget called for a record-shattering $2.77 trillion. Bush made his values crystal clear in his budget. His budget put the interests of the wealthy and the well-connected over the interests of Americans who most needed the government’s help. These were the poor, the middle-class, the elderly, the disabled, students, and minorities.

Bush sharply reduced or entirely eliminated 141 government programs. Almost one-third of the targeted programs were in education including ones that provided money to support the arts, vocational education, parent resource centers, and drug-free schools. (New York Times, February 6, 2006)

Tax cuts and the deficit. Once again, Bush claimed the 2006 deficit of $423 billion would fall to $183 billion by 2010. But it would rise again to $205 billion in 2011, reflecting the cost of the extensions in Bush’s tax cuts that benefited the wealthy. Bush’s budget called for tax cuts to be made permanent at a cost of $1.4 trillion over 10 years. (New York Times, February 6, 2006)

In the spring of 2006, Congress passed another $70 billion tax cut package that almost entirely benefited the wealthy. The bill extended the low 15 percent rates on capital gains and dividends from 2008 through 2010. (New York Times, May 11, 2006)

The average tax cut for the 20 percent of households in the middle income spectrum was just $20. But for those with incomes above $1 million, the average tax cut was $42,000. Overall, the three-quarters of households with incomes below $75,000 received just 5 percent of the benefits and no more than $110 each. (The Center of Budget and Policy Priorities, May 11, 2006)

Health care. During Bush’s first five years, the number of uninsured Americans increased by 6.2 million. By the end of 2005, a record 46 million Americans were uninsured. (Center for American Progress, January 25, 2006)

Bush’s budget created a new cap on total Medicare spending that forced arbitrary, across-the-board cuts in future Medicare payments. Bush drained $36 billion from Medicare through 2012 and at least $13.8 billion in cuts to Medicaid. (Center for American Progress, January 25, 2006)

Education. In the 2006 State of the Union, Bush promised to “ensure that America’s children (will) succeed in life.” Yet his budget cut Department of Education funds by $2.1 billion. That came after standing by his promise to fund No Child Left Behind, vocational education, arts in education, school counseling, civic education, and other programs. Bush also backed away from his promise in 2005 to increase the maximum Pell Grant amount, which provided funding for low-income students to meet the skyrocketing costs of higher education. (Center for American Progress, January 25, 2006)

Bush’s budget also earmarked $8 billion in subsidies to private student lenders through the government guaranteed program. About $6 billion was saved if loans were made exclusively through the direct loan program. These were billions that could then be reallocated to provide more assistance to students. (Center for American Progress, February 7, 2006)

Science and technology. Bush cut their programs by $594 billion. The National Institutes of Health (NIT) -- the nation’s lead agency in the hunt for the causes of diseases, the treatments, and preventative measures -- received no new funding.

Homeland Security. Bush cut state and local funding for first responders by 12 percent despite the tragedy of Hurricane Katrina. He proposed no new funding for critical infrastructure despite the London subway bombings. This came at a time when the federal government’s funding was insufficient to protect the nation’s ports, freight rail lines, and passenger transit systems.

Bush requested no new aid to Katrina’s victims. The highly-successful Community Oriented Policing Services (COPS), which put police on the streets of America, was cut by 79 percent. (Center for American Progress, February 6, 2006)

Energy. At the 2006 State of the Union, Bush announced “the nation is addicted to oil.” Yet his budget cut spending for the Department of Energy. That meant all funding for geothermal technology would be cut. That program helped low-income families buy storm windows and insulation to make their homes more energy-efficient. (Center for American Progress, February 6, 2006)

Housing. 2006 was the year the housing bubble popped. Nationwide, home prices were down between four and from their levels in 2005. The figures were adjusted for inflation, and price declines in some of the most over-valued areas, like Washington, DC, and parts of Florida and California, were considerably sharper.(Center for Economic and Policy, December 5, 2006)

Legislation enacted between 2000 and 2006 increased the national debt by #2.3 trillion, including $633 billion in interest payments alone. Foreign investors financed 77.9 percent of thee federal budget deficit since March 2001. Interest payments by the federal government to foreign lenders grew to $37.3 billion in the third quarter of 2006, up from $36.4 billion in the second quarter, and $32.8 billion in the first quarter. Moreover, the president’s bloated budgets reflected skewed priorities and did not stimulate economic growth. (Center for Budget and Policy Priorities (CBPP), December 13, 2006),

Bush did little to address record trade deficits. It was estimated that in 2007 the United States would import over $750 billion more goods and services than it exported in 2006 -a record. By the third quarter of 2006, the difference between imports and exports grew again to over six percent of Gross Domestic product. That was the largest disparity since the Great Depression. (International Economic Accounts, January 10, 2007)

11. BUSH FAILS TO CREATE JOBS

Wage growth fell dramatically in Bush’s first term. In 2000, median weekly wages grew by 4.9 percent. This fell to a mere 2.0 percent in 2003, meaning that adjusted for inflation. Wages fell slightly in real terms in 2003 for the first time since 1996. (Center for American Progress, May 28, 2004)

More people were unable to find work in 2004 than in 2000. In 2000, the unemployment rate was 4 percent. During his terms, President Clinton created 22.7 million jobs. This was the most number of jobs created under any single president since the 1920s. Under Bush, 490,000 jobs were lost, making him the first president since Herbert Hoover to have fewer available jobs at the end of his term than at the beginning.

During the Clinton years, poverty fell by 25.2 percent. But then poverty climbed steadily under Bush. According to the Census Bureau, the number of Americans living in poverty increased ten percent. That meant nearly 36 million Americans -- one in eight -- lived in poverty and tens of millions were considered working poor.

When Bush took office, unemployment was at 4.1 percent and was steadily rising. Unemployment figures for July 1, 2001 -- 4.6 percent. January 2002 -- 5.6 percent. July 1, 2002 -- 5.8 percent. January 1, 2003 -- 5.8 percent. May 1, 2003 -- 6.0 percent.

In 2002, the Bush administration forecast that there would be 3.4 million more jobs in 2003 than there were in 2000. And it predicted a budget deficit for fiscal 2004 of $14 billion. (Washington Post, February 24, 2004)

The economy ended up losing 1.7 million jobs over that period, and the budget deficit for fiscal 2004 was $521 billion. (Washington Post, February 24, 2004) The Bush administration used job-creation predictions to justify its 2001 and 2002 tax cuts, as well. In 2002, the economic advisers argued that failure to enact Bush’s stimulus package would cost the economy “about 300,000 jobs.” Yet, Bush’s economists said that his 2001 tax cuts would create an additional 800,000 jobs by the end of 2002. (Washington Post, February 24, 2004)

As it played out, the United States went from an average of 131.9 million jobs in 2001 to 130.4 million in 2002, and to an estimated 130.1 million in 2003. (Washington Post, February 24, 2004)

Bush proclaimed in March 2001, “We can proceed with tax relief without fear of budget deficits, even if the economy softens.” About that same time, the administration projected a budget surplus of $281 billion for 2001, $231 billion for 2002, $246 billion for 2003, $268 billion for 2004 and $273 billion for 2005. (Washington Post, February 24, 2004)

Bush blamed the shortfalls on the recession, national emergency, and war. But in February 2002 -- after the recession was declared, the terrorist attacks had occurred and war had begun in Afghanistan -- the administration continued to have upbeat predictions. (Washington Post, February 24, 2004)

Although it forecast a $106 billion deficit in 2002, it saw the deficit shrinking to $80 billion in 2003, $14 billion in 2004, and becoming a surplus of $61 billion in 2005. Those figures, too, quickly became seen as overly optimistic, as tax receipts continued to come in lower than expected. A year later, in 2003, the administration predicted a deficit of $304 billion for 2003 and $307 billion for 2004. In reality, the 2003 deficit was $375 billion, and the White House expected a deficit of $521 billion for 2004. (Washington Post, February 24, 2004)

In February 2004, the Council of Economic Advisors predicted 320,000 jobs would be created in March. (http://a257.g.akamaitech.net/7/257/2422/09feb20040900/www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf)

The Economic Policy Institute stated that over 2002 and 2003, the Department of Labor’s Trade Adjustment Assistance (TAA) program used less than 60 percent of the funds it was allocated to help workers. This was due to inadequate outreach and program administration by the Department of Labor. Eventually, a federal court reprimanded the TAA for “ ‘flaws and dysfunctions’ in its administration of TAA and noted that the (Department of Labor's) 'dereliction of duty’ is depriving workers of the aid they need.”

But instead of trying to improve the administration of the TAA, Bush’s budget proposed significant cuts to the TAA benefits program. The proposed funding level was 11 percent lower in actual dollars than it was in the 2002 budget.

In 2003, average hourly wages for all workers fell slightly once adjusted for inflation. But among workers that had been displaced, 57 percent of those who had found work were earning less than they did in their old jobs. (New York Times, August 9, 2004)

Bush bragged that many of the jobs created over the past year had been “in high-growth, high-paying industries.” However, jobs in lower-wage industries and regions grew at a faster pace than higher-wage jobs. (USA Today, June 29, 2004)

Layoffs occurred at the second-fastest rate on record during the first three years of the Bush administration. During Bush’s presidency, the layoff rate reached 8.7 percent of all adult jobholders, or 11.4 million men and women age 20 or older. Also, 56.9 percent of those who said they were re-employed also said they were earning less in their new jobs than in the jobs they had lost. (New York Times, August 1, 2004)

The average dislocated worker program expenditure was $274 in 2001 but just $167 today. When long-term unemployment was at its highest level, fewer people could obtain the training they needed to reenter the workforce. The budget cuts came on top of the White House’s efforts to slash more than $1 billion out of job training over the last three years. (http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=22536)

Of the 8.8 million unemployed in mid-2003, almost 2 million have been without work for 27 weeks or more. The average length of unemployment was almost 20 weeks, the highest since 1984. An additional 4.4 million Americans dropped out of the labor force because they had not found work -- and therefore were not counted among the unemployed. And 4.8 million were employed part time -- not by choice -- but because they could not find full-time work. The number of jobs was at its lowest point in 41 months.(Washington Post, May 6, 2003)

In April, the Bush administration insisted that, as a result of his tax cut, 1.8 million jobs would be created by the end of the year. But when 2003 came to a close, the White House failed drastically only 221,000 people found jobs. During Bush’s first three years, 2 million jobs were lost.

From May until December 2003, the unemployment rate dipped slowly from 6.1 percent to 5.7 percent. The 6.1 percent was the highest in nine years. Bush never was close to his promise in April that 1.8 million jobs would be created by the end of 2003. Just 221,000 jobs were created.

In February 2004, Bush again promised that more jobs would be created in 2004. According to the “Economic Report of the President,” 2.6 million jobs would be produced by the end of the year. The report also predicted that the economy would grow by 4 percent in 2004. (Washington Post, February 8, 2004)

But on February 17, the Bush administration backed away from its own prediction that the economy will add 2.6 million new jobs by the end of this year, saying the forecast was the work of number-crunchers and that Bush was not a statistician.

White House spokesman Scott McClellan was asked about why Bush would personally sign the report that promised to create 2.6 million new jobs, and then refute that same report. McClellan said, “This President is focused on what we are doing to create as robust an environment as possible for job creation -- not in crunching numbers.” (Washington Post, February 19, 2004)

Mankiw also tried to downplay his prediction, saying that the job figure was made December 2 and was never subsequently updated. (Washington Post, February 19, 2004)

In January 2004, the unemployment rate still remained high: 5.6 percent and remained at that level through the summer of 2004. By mid-summer, Bush has lost a net of 1.25 million jobs on his watch as president. Over 8 years, President Clinton had created 20 million jobs.

The slight increase in employment in 2004 was tilted toward lower-paying jobs. Industries ranked in the bottom fifth for wages and salaries added 477,000 jobs since January 2004, while industries in the top fifth for wages had no increase at all. (New York Times, August 9, 2004)

In his first term, Bush created only 19,000 total new jobs in four years. Only Herbert Hoover was notorious for losing jobs. Every president since World War II created many more jobs than did Bush.

Truman: 60,000 jobs gained per month

Eisenhower: 58,000 jobs gained per month

Kennedy: 122,000 jobs gained per month, then they murdered him

Johnson: 206,000 jobs gained per month

Nixon: 129,000 jobs gained per month

Nixon/Ford: 105,000 jobs gained per month

Carter: 218,000 jobs gained per month

Reagan: 109,000 jobs gained per month

George Herbert Bush: 52,000 jobs gained per month

Clinton: 242,000 jobs gained per month

George W. Bush: 69,000 jobs LOST per month

During Bush’s first six years, overall non-farm payroll employment increased by just 5.2 million compared with 22.7 million during the Clinton presidency. Overall employment growth averaged just 70,000 per month under Bush. That was much lower than the 150,000 jobs needed each month to keep up with population growth.

Private sector job creation was especially poor during the Bush presidency, with an average annual job growth rate of only 0.5 percent per year since 2001. Just 3.8 million private sector jobs were created during the Bush presidency, compared with over 20 million private sector jobs during the Clinton presidency.

The manufacturing sector, often the source of jobs with good pay and benefits, lost three million jobs in Bush’s first six years. Nearly half of the jobs created since 2001 were part-time and freelance positions without benefits.

12. THE OUTSOURCING OF AMERICAN JOBS

On February 10, 2004, the Bush administration said the outsourcing of United States service jobs to workers overseas was good for the nation’s economy. The White House said the transfer of American factory jobs and white-collar work to other countries was part of a positive transformation that would enrich the United States economy over time, even if it caused short-term pain and dislocation.

The annual Economic Report of the President, released in February praised the “outsourcing” of United States service jobs to such low-wage countries as India. N. Gregory Mankiw, chairman of the Council of Economic Advisers. Mankiw, claimed that “outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past, and that’s a good thing.” (Washington Post, February 10, 2004; Orlando Sentinel, February 10, 2004; Seattle Times, February 10, 2004; Pittsburgh Post-Gazette, February 10, 2004; Los Angeles Times, February 10, 2004)

It soon became apparent that the American public realized a connection between “outsourcing” and the loss of American jobs. Consequently, the secretaries of Commerce and the Treasury, and then Bush, quickly backed off those projections. (Washington Post, March 13, 2004)

More embarrassments hit the Bush administration. In a major photo op appearance, Bush appointed Anthony Raimondo as assistant commerce secretary for manufacturing and services in March. But days later, Bush had to scrap Raimono’s appointment, when it was discovered that he had opened a major plant in Beijing in 2003. As a result, his firm -- Behlen Manufacturing Company of Columbus, Nebraska -- laid off 1,180 workers from its five United States plants since 2000 while opening a plant in Beijing.

The shipment of American jobs to cheap foreign labor markets threatened not only millions of workers and their families, but also the American way of life. With the pay of corporate CEOs at historical highs and job creation at the lowest level since the Depression, corporate raiders looked overseas in search of the lowest-price labor available. (Lou Dobbs, Exporting America)

For the first time in history, corporations began laying off Americans from well-paying jobs and replacing them with low-paid foreign workers. A 2004 study revealed that 14 million American jobs were at risk of being outsourced overseas. (Lou Dobbs, Exporting America)

Foreign imports hit a record high in January 2005, reaching $159.1 billion and contributing to a monthly trade deficit that was the second highest on record. The trade deficit increased from $55.7 billion in December 2004 to $58.3 billion in January 2005. (New York Times, March 11, 2005)

The trade figures included a 75 percent surge in Chinese textile and apparel shipments. China was exporting close to controlling 70 percent of the United States textile and apparel market. The American textile industry took a tremendous beating in 2004 and 2005 as a result of Bush’s weak dollar policy. (New York Times, March 11, 2005)

In January 2005, all quotas on Chinese textiles were abrogated. As a result, China exceeded all predictions on textile exports to the United States since the lifting of global quotas in January. In the month of January alone, 12,200 jobs were lost in the United States apparel and textile industries, according to the United States Bureau of Labor Statistics. (International Herald Tribune, March 10, 2005)

China's sales to the United States in January surged 65 percent, to $1.4 billion, compared with January 2004. (China National Textile and Apparel Council) In January, China shipped more apparel in certain categories, like cotton knit shirts and trousers, than it had in the previous year and a half. China shipped nearly 27 million cotton trousers, up from 1.9 million a year earlier. China shipped 18 million cotton knit shirts in January, up from 941,000. (Los Angeles Times, March 11, 2005)

13. THE GROWING TRADE DEFICIT

The United States’ trade deficit for 2003 ended with a record-shattering $489.9 billion. With the start of 2004, the deficit hit a record monthly high in January, ballooning to $43.1 billion. That was a 0.9 percent increase from December 2003. (New York Times, March 10, 2004)

China expanded the United States’ trade deficit to $11.5 billion in January, up from $9.9 billion in December 2003. The trade gap with Canada widened in January to $5.2 billion, up from $4.4 billion in December. Similarly, the trade deficit with oil-producing nations, including Saudi Arabia and Venezuela, grew to $4.7 billion in January. (New York Times, March 10, 2004)

On March 1, 2004, numerous American industries began paying trade sanctions to Europe, because Congress and the White House never replaced illegal export subsidies with new aid for ailing manufacturers.

By August 2005, the nation’s trade deficit increased to $686 billion -- 11 percent higher than in 2004. (Washington Post, August 10, 2005)

14. THE DISPARITY BETWEEN MANAGEMENT AND LABOR – AND THE RICH AND THE POOR

In Bush’s first three and one-half years, the Economic Policy Institute reported an increasing disparity between corporate profits and workers’ wages during the largest tax breaks for the wealthy in the history of the country. While corporate profits increased by more than 62 percent, workers’ take home pay has dropped by 0.6 percent during the Bush administration. (Economic Policy Institute, May 27, 2004)

Salaries for CEOs exploded by 27 percent in 2003, while Bush dished out more than $1 trillion in new tax breaks to the richest 1 percent of the population. In 2003, the average worker took home $517 a week and received about $400 in tax breaks from Bush. At the same time, the average CEO brought home $155,769 one week and in 2004 alone received well over $50,000 in new tax breaks from the Bush White House. (Reuters, May 12, 2004; United for a Fair Economy, April 14, 2004; Citizens for Tax Justice, Fall 2003)

After six years in the White House, Bush saw the number of Americans living in severe poverty expand dramatically. By 2007, nearly 16 million people lived on an individual income of less than $5,000 a year or a family income of less than $10,000. (Britain’s The Independent, February 27, 2007)

The number of people living in extreme poverty grew by 26 per cent since 2000. Poverty as a whole worsened, too, but the number of severe poor is growing 56 per cent faster than the overall segment of the population characterized as poor -- about 37 million people in all. That represented more than 10 per cent of the United States population, which surpassed the 300 million mark in early 2007. (Britain’s The Independent, February 27, 2007)

The income gap between haves and have-nots also increased under Bush. The richest fifth of United States households enjoyed more than 50 per cent of the national income, while the poorest fifth got by on an estimated 3.5 per cent. (Britain’s The Independent, February 27, 2007)

The average after-tax income of the top one per cent was 63 times larger than the average for the bottom 20 per cent -- both because the rich grew richer and also because the poor grew poorer; about 19 per cent poorer since the late 1970s. The middle class, too, was squeezed ever tighter. Every income group except for the top 20 per cent lost ground since the 1970s, regardless of whether the economy improved or got worse. (Britain’s The Independent, February 27, 2007)

15. AMERICA’S WEALTHIEST – AND THE POOREST

America’s wealthiest prospered the most under Bush’s tax cuts. They pulled far ahead of the rest of the population. An analysis of tax records and other government data by The New York Times showed that affluent Americans left behind middle- and low-income Americans. (New York Times, June 4, 2005)

The wealthiest Americans, about 145,000 taxpayers – earned at least $1.6 million in income and often much more. The average income for the top 0.1 percent was $3 million in 2002. That number was two and a half times the $1.2 million, adjusted for inflation, that group reported in 1980. No other income group in American history rose nearly as fast.

The share of the nation's income earned by those in this uppermost category more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell.

American households -- with homes, investments, and other assets worth more than $10 million -- comprised 338,400 households in 2001. This number climbed more than 400 percent since 1980 -- after adjusting for inflation -- while the total number of households grew only 27 percent.

Bush said during the third election debate in October 2004 that most of the tax cuts went to low- and middle-income Americans. In fact, most - 53 percent - went go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001. More than 15 percent went to just the top 0.1 percent, those 145,000 taxpayers. (New York Times, June 4, 2005)

Under the Bush tax cuts:

1. The 400 taxpayers with the highest incomes -- a minimum of $87 million in 2000 – paid income, Medicare, and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.

2. Those earning more than $10 million a year paid a lesser share of their income in these taxes than those making $100,000 to $200,000.

3. The alternative minimum tax, created in 1969, was meant to make sure the very richest paid taxes took back a growing share of the tax cuts from the majority of families earning $75,000 to $1 million. The far majority of affluent American were never affected.

From 1950 to 1970, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162.

From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.

President Reagan. Reagan signed tax bills that benefited the wealthiest Americans and also gave tax breaks to the working poor.

President Clinton. Clinton raised income taxes for the wealthiest, cut taxes on investment gains, and expanded breaks for the working poor.

President Bush. Bush eliminated income taxes for families making under $40,000, but his tax cuts only benefited the wealthiest Americans far more than his predecessors’ did. By 2015, Bush’s tax cuts would shift the burden further from the richest Americans. With incomes of more than $1 million, they would get the biggest share of the breaks, in total amounts and in the drop in their share of federal taxes paid.

One reason the wealthy fared the best was the alternative minimum tax. This tax was never adjusted for inflation. As a result, the tax hit Americans whose incomes increased to above $75,000. By 2010, the AMT will affect more than four-fifths of Americans making $100,000 to $500,000. It will take away from them nearly one-half to more than two-thirds of Bush’s tax cuts. For example, the group making $200,000 to $500,000 a year will lose 70 percent of their tax cut to the AMT in 2010, an average of $9,177 for those affected.

The AMT affects far fewer of the very riches. It helps one-third of the taxpayers reporting more than $1 million in income.

Dividends and investment gains -- which go mostly to the richest -- are not subject to the tax.

Tax under Bush sharply lowered rates on income from investments. (New York Times, June 4, 2005)

In 2004, 37 million Americans -- 12.7 percent of the population -- lived in poverty. That was the fourth straight year that the report found an increase in the United States poverty rate.

In 2000, there were 5.5 million fewer people below the poverty line. Nevertheless, the Bush administration spun the poverty rates as “good news,” noting that there were other times in American history when the poverty rate was higher. (New York Times, August 31, 2005)

The number of uninsured Americans stood at 45.8 million in 2004, an increase of 800,000 people over the number uninsured in 2003. It was the fourth straight year the ranks of the uninsured swelled. Overall, six million more people lacked health insurance in 2004 than in 2000. (United States Census Bureau)

350,000 single adults lost health insurance between 2003 and 2004 -- and these individuals generally did not qualify for Medicaid coverage, no matter how small their income.

As millions of Americans struggled, corporate CEOs enjoyed another banner year. In 2004, the average CEO made 430 times as much as the average worker, up from a ratio of 301-to-1 in 2003. If the minimum wage had grown at the same rate as CEO pay since 1990, the lowest paid workers in the United States would be earning $23.03 an hour today.