DNC - John McCain: Fundamentally Wrong On the Economy

Washington, DC - Today, new economic indicators revealed the jobless claims reached a 22 year high, and that the American economy has lost jobs every month this year.  It was the latest in a string of reports showing that too many Americans are losing their jobs, paying more for basic goods and services, earning less and struggling to keep their homes.  Yet, in the face of months of worsening economic indicators, John McCain continues to echo President Bush's claim that the fundamentals of the American economy are strong in just about every public event. As recently as April, McCain even claimed that the American people are better off than they were eight years ago. 

"John McCain continues to show how out of touch he is with the challenges facing America's working families by relentlessly echoing President Bush's rosy rhetoric no matter how troubling each new economic indicator is," said Democratic National Committee spokesman Damien LaVera.  "John McCain may not understand the economy, but the working families who bear the brunt of President Bush's failed policies understand that John McCain's promise of four more years is the wrong choice for America's future."

The following is a fact sheet on the gulf between the Bush-McCain rhetoric on the economy and the economic challenges facing working families:

Bush-McCain Rhetoric...

April 2008: McCain Says "The Fundamentals of America's Economy are Strong," Americans Better Off Than They Were Eight Years Ago.  "MR. COOK: I'm going to ask you a version of the Ronald Reagan question. You think if Americans were asked, are you better off today than you were before George Bush took office more than seven years ago, what answer would they give? SEN. MCCAIN: …I think if you look at the overall record and millions of jobs have been created, et cetera, et cetera, you could make an argument that there's been great progress economically over that period of time. But that's no comfort. That's no comfort to families now that are facing these tremendous economic challenges.  But let me just add, Peter, the fundamentals of America's economy are strong. We're the greatest exporter, the greatest importer, the greatest innovator, the greatest producer, still the greatest economic engine in the world. And, by the way, exports and free trade are a key element in economic recovery." [Bloomberg Money & Politics, 4/17/08: http://www.realclearpolitics.com/articles/2008/04/john_mccain_on_bloomberg_tv.html]

President Bush: Fundamentals Of Our Nation's Economy Are Strong."  "I say that the fundamentals of our nation's economy are strong. Inflation is down. Job markets are steady and strong. After all, the national unemployment rate is 4.6 percent. Corporate profits appear to be strong. Exports are up. There is no question that there is some unsettling times in the housing market, and credits associated with the housing market. And that's why I look forward to working with Congress to modernize the FHA loans so that people can refinance their homes, and to change the tax code so that if somebody renegotiates a loan they don't have to pay a penalty, a tax penalty, in so doing." [White House News Conference, 9/20/07: http://www.whitehouse.gov/news/releases/2007/09/20070920-2.html]

...Meets the Real World.

Unemployment at 22-Year High. "The U.S. unemployment rate posted its sharpest one-month increase in 22 years last month, suggesting U.S. consumers already facing a housing slump and soaring gasoline prices now confront even more pressure from a weakening jobs market. The data, which included a fifth-straight drop in nonfarm employment, should take financial-market expectations of Federal Reserve rate increases as soon as this autumn off the table. Nonfarm payrolls, which are calculated by a survey of establishments, declined 49,000 in May, the Labor Department said. The decline was broad-based, including manufacturing, construction, retail trade and business services. Payrolls fell 28,000 in April and 88,000 in March. Both were revised to show slightly larger drops." [Wall Street Journal, 6/6/08: http://online.wsj.com/article/SB121275530706251713.html?mod=hps_us_whats_news]

Unemployment Insurance Claims Spike.  Between January and June 2008, nearly 1.5 million workers will exhaust their unemployment insurance benefits.  In the first quarter of 2008, 732,710 people exhausted their benefits. This represents 36.4 percent of unemployment insurance recipients.  [Joint Economic Committee Report, 6/6/08]

Inflation Hits 17-Year High. "Consumer prices rose in 2007 at the fastest pace in 17 years as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills… Workers' wages failed to keep up with the higher inflation. Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the fourth decline in the past five years. The lagging wage gains are cited as a chief reason many workers have growing anxiety about their economic futures.  Core inflation, which excludes both energy and food, rose 2.4 percent last year, slightly lower than the 2.6 percent increase of 2006. It is the performance of core inflation that the Fed closely monitors." [Associated Press, 1/16/08: http://www.cbsnews.com/stories/2008/01/16/national/main3720221.shtml?source=related_story]

Inflation Outpaced Consumer Spending; Consumers Facing "Bad News on All Fronts." "Nominal spending and income edged higher in April, but not enough to outpace inflation…Real disposable income was flat in April for the second month in a row. Consumers are facing bad news on all fronts. Food and energy prices are climbing ever higher, the labor market is slowing, credit is become tighter, and household wealth is declining as house prices drop." Also, "confidence among U.S. consumers fell in May to the lowest level in 28 years," Bloomberg News reported. [Bloomberg, 5/30/08, bloomberg.com; Wall Street Journal, http://blogs.wsj.com/economics/, (Nigel, Gault, Global Insight), 5/30/08]

Foreclosures Surge in Military Towns Spiking. Will McCain "Support the Troops" in The Other "Surge"?  "In the midst of the worst surge in mortgage defaults in seven decades, foreclosures in U.S. towns where soldiers live are increasing at a pace almost four times the national average, according to data compiled by research firm RealtyTrac Inc. in Irvine, California… Foreclosure filings in 10 towns and cities within 10 miles of military facilities, including Norfolk, Virginia, home of the Navy's largest base, rose by an average 217 percent from January through April from a year earlier." Many military families, signed up for the teaser rates offered by subprime mortgage companies instead of taking out Veterans Administration loans. [Bloomberg News, 5/27/08, www.bloomberg.com]

Demand for Food Stamps Spikes by 6.1%. The mortgage crisis, the "sputtering economy, and rising unemployment has contributed to an increase in the number of applicants for food stamps.   "The number of Americans relying on food stamps has climbed 6.1 percent in the past year, from 26.1 million in February 2007 to 27.7 million in February this year." The demand for food stamps is rising at a faster pace than normal, with the number of U.S. food stamp participants growing "by 482,000 between October and February; in the same time period a year earlier, the figure dropped by 135,000." Individual food stamp allocations have remained stagnant, however, further exacerbating rising fuel and food costs for those living below the poverty line. [The Associated Press, 5/18/08]

5% Increase in Consumer Price Index is Highest in Decades; Impoverished Americans in "Dire Straits."  The Consumer Price Index rose 5 percent last year, the highest increase "in two decades."  The price of a gallon of milk rose 27% since March of 2007 and the price of a dozen eggs has risen 38% in the same period. "Meanwhile, everything from white bread to chicken to tomatoes is more expensive than it was last year."  Boston University's Professor Cook, an expert on food stamp programs, said that the poor "are in dire straits," because food stamp payments are inadequate, while the executive director of the Illinois Hunger Coalition said that "the level of desperation is just frightening." [The Associated Press, 5/18/08]