Household incomes flat during Bush era

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The income of the typical American household has barely budged since 1999, while the U.S. poverty rate of 12.5 percent has stubbornly stayed above the recession level of 2001 and the number of Americans without health insurance has increased by 7.2 million since 2000, a U.S. Census Bureau report showed Tuesday.

Median household income increased 1.3 percent last year but remained essentially unchanged from its 1999 peak level, the Census Bureau reported. Half of households have incomes above the median, while half fall below.

Sen. Barack Obama’s campaign was quick to seize on the report to question the economic legacy of the Bush administration.

“We have now lived through the first so-called economic ‘expansion’ on record where typical families saw their incomes fall, and working-age households lost more than $2,000 from their paychecks,” said Mr. Obama, referring to inflation-adjusted figures compiled by the Census Bureau.

Mr. Obama decried the fact that “816,000 Americans fell into poverty in 2007 — including nearly 500,000 children — bringing the total increase in American poverty under President Bush to 5.7 million.”

The number of Americans without health insurance fell by 1.3 million last year. However, for the seventh consecutive year, the percentage of Americans who receive their health insurance through their employers declined. In 2007, the percentage of the population who received health care through the government’s Medicaid program for the poor increased to its highest level in more than 20 years.

“The bottom line is that this is the best news the Republicans could expect in this environment,” said Douglas Besharov, the director of the American Enterprise Institute’s Social and Individual Responsibility Project.

Household median income reached a critical threshold last year, he noted, and Democrats will no longer be able to say that it remains below the level it reached during the 2001 recession, at least not by a statistically significant amount.

“It’s still not something Republicans would necessarily want to write home about,” Mr. Besharov acknowledged.

Last year may represent a cyclical peak in household earnings and a cyclical low in the poverty rate, said Robert Greenstein, executive director of the Center on Budget and Policy Priorities. “The numbers in 2008 will almost certainly be worse than 2007 because unemployment is up, jobs are down and [inflation-adjusted] wages have fallen this year,” he said.

The Census Bureau’s report arrived as a pronounced economic slowdown has made the economy the primary issue in the minds of voters.

Over the past three quarters, the U.S. economy has been growing at an average annual rate of less than 1 percent. During each of the first seven months of 2008, the U.S. economy lost jobs. Home prices have plunged for two years and mortgage rates have inched up in recent months.

Gasoline prices have retreated from record levels above $4 per gallon, but consumer prices jumped 5.6 percent over the past 12 months - the fastest pace in 17 years. The Labor Department reported earlier this month that average weekly earnings for rank-and-file workers were less in July than they were in January 2001.

“This is the failed record of George Bush’s economic policies that Senator [John] McCain has called ‘great progress,’” Mr. Obama charged Tuesday.

The income report arrived two days before former President Bill Clinton will address the Democratic National Convention. He might be tempted to make some comparisons.

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