Congressman Mike Michaud

FEATURES

A New Direction is Needed

The Dow Jones industrial average, which is one of the most watched indicators of stock market performance, recently hit an all time record.  This is good news, but a new report released by the House Budget Committee and the Joint Economic Committee illustrates that many are being left behind despite the positive stock market news.

The report finds that employment growth during the last six years has averaged just 45,000 jobs per month – the lowest monthly rate since the Eisenhower Administration, when the labor force was actually much smaller. Typically, about 140,000 to 150,000 total new jobs are needed each month to absorb new workers coming into the labor force.

While employment growth is comparatively low, the report also finds that wages are not increasing at a healthy rate either.  This wage stagnation comes at a time when productivity has grown at a healthy 3.0 percent annual rate since the end of 2000.  The problem is that these productivity gains have not translated into healthy wage increases as has been historically the case.

In fact, the report points out that when hourly wages are adjusted for inflation, they have actually decreased by 1.6 percent since August 2003, when the economy stopped losing jobs.  The report also found that after accounting for inflation, that the typical American family’s income has decreased by about $1,300 over the last six years. The economic growth that our country has experienced has clearly not “trickled down” to most American families.  Simply put, corporate profits are at record levels while the wages of our nation’s workers are standing still or declining.

After further exploring the wage data, the House Budget Committee and the Joint Economic Committee report illustrates how hard it can be to see how our nation’s families are fairing economically by simply looking at record Dow Jones industrial averages and statistics on productivity gains.

While any positive economic news is certainly welcome, the success of economic policy must be judged in part on how it is working for the average American family. And from the looks of it, our current policies need serious readjusting.

One major issue that directly affects us, but is a bit removed from our everyday concerns, is our country’s budget deficit.  While maybe not something that we think about on a daily basis, the economic effects of the deficit truly have an impact on our lives and the lives of our children. 

When this Administration took office, it inherited a $5.6 trillion ten-year projected surplus.  Since then, that surplus has been converted into a $3.0 trillion projected deficit over the same time period – a swing in the wrong direction of nearly $8.6 trillion. Unfortunately, none of the Administration’s budgets have included a plan to return the budget to balance. 

This budget disaster is simply wrong.  Our current national debt is just over $8.5 trillion, a number that is really incomprehensible to most people.  As you read these words, a baby is being born somewhere in America, and that baby already owes over $28,000 that is due to our national debt.  Placing such a birth tax on the next generation is unconscionable.

But what’s also unconscionable is what these economic policies do to limit our ability to provide for our children.  During 2007, interest on the national debt will be the fourth largest item in the President’s budget, exceeded only by Social Security, Defense, and Medicare. Over the next five years, debt service will be the fastest growing item in the federal budget.  Because of that, our ability to adequately fund national priorities is drastically diminished.

Just as an example, a recent funding bill being pushed by congressional leaders provides a staggering $16.4 billion less for education than was promised by the No Child Left Behind (NCLB) Act.  And the affect of this underfunding is drastic.  In Maine alone, 13,387 low-income children will be denied extra reading and math help; 10,070 children will be denied after-school learning opportunities; 621 teachers will be denied the training they were promised; and our school systems will receive $4.8 million less for educational technology grants than originally promised by NCLB. 

In the end, we all end up paying for the irresponsible budget and economic policies that come out of Washington.  A new direction is needed – this type of irresponsible budgeting needs to stop.  Congressional leaders need to reconsider their priorities and do what is best for American families.

10/5/2006 4:29:57 PM