The State of the Union is Not as Rosy as the President Would Have Us Believe.
Real Bipartisanship is Needed to Help Working Families Build Wealth and Attain True Financial Security.
Last night, President Trump delivered his first State of the Union address. While the speech did not feature new policy ideas—a deviation from past State of the Union addresses—it did provide ample opportunity for the President to speak on a range of developments that have occurred since he came into office that, as he put it last night, have made the country “safe, strong and proud.” While the second half of his speech focused narrowly on immigration and world affairs, the first half offered no new ideas. Instead, it focused on what the administration views as some of its biggest accomplishments during its first year in office when it comes to the economy and jobs.
The part of the speech that did focus on the economy highlighted the 2.4 million new jobs created since President Trump took office, as well as the historically low levels of unemployment among African American and Hispanic workers. Unfortunately, while both metrics are noteworthy, the optimism instilled by each fade once you dig into the numbers a bit more deeply.
For starters, while millions of new jobs have been created since the President took office, the reality is that many of those jobs are in low-wage sectors. Today, one in four workers (24.2%) holds a low-wage job. In turn, many households often end up turning to credit and debt to make ends meet, resulting in a level of median debt that stands at a staggering $26,035.
When it comes to the low levels of unemployment among African American and Hispanic workers, the truth of the matter is that unemployment among both groups is still much higher than White unemployment—an unfortunate fact that has persisted for more than 40 years.
Additionally, despite the progress made toward lowering the persistently high unemployment rate among African American and Hispanic workers, each community continues to find themselves trapped by a massive racial wealth divide.
While Republicans touted the speech as a unifying call for bipartisanship, the President’s rhetoric so far has not matched his policies. Although it may be true that his time in office has driven the stock market to historic highs, most Americans have not benefited from the positions his administration has taken over the past year that have helped the market reach those peaks, such as the recently enacted Tax Cuts and Jobs Act of 2017. Undoubtedly, the Tax Cuts and Jobs Act helped add to the trillions in gains already made by the stock markets since the President assumed office. And unfortunately, those gains have overwhelmingly benefitted the top 10% of Americans, who collectively more than 80% of all stocks, leaving the bottom 90% to divvy up the gains from the 20% they own.
Beyond the effect the Tax Cuts and Jobs Act has had on the stock market, a recent nonpartisan analysis of the law shows that most of the legislation’s $1.5 trillion greatly benefit wealthy individuals and big businesses, leaving those in the middle class and the poorest Americans completely behind. For example, not only did the bill fail to expand the Earned Income Tax Credit—the most effective federal anti-poverty program ever enacted—most of these communities are excluded from benefiting from the expansion of the Child Tax Credit found in the bill. Even worse, any marginal benefits provided by the Tax Cuts and Jobs Act would not only be paid through cuts to important safety net programs that help people get out of poverty, they would also eventually expire at the end of 2025—effectively turning into tax increases for those in the middle class and our most vulnerable families.
Given the willingness and speed with which the President and leaders in Congress passed multi-trillion-dollar tax reform that is tilted heavily toward big business and the wealthiest households among us, we know both have what it takes to swiftly address serious problems facing everyday Americans. Whether it’s helping families save from emergencies, or providing access to automatic-enrollment retirement accounts, or better homeownership and higher education tax incentives, or even progressively funding savings accounts at birth for all children, there’s no shortage of bipartisan solutions available to help low- and moderate-income families.
While we acknowledge that enacting any of these solutions will not be easy, we hope that the President continues to keep his own words in mind: that “we can lift our citizens...from poverty to prosperity.” Our nation can intentionally help low- and moderate-income families build long-term economic security, but only if the President heeds his own calls.
Want to learn more about how families across all 50 states are faring financially and what state governments can do to help? Join us on Tuesday, February 6, at noon EST for the national launch of the 2018 Prosperity Now Scorecard. The Prosperity Now Scorecard assesses all 50 states and DC on 115 measures of how families are faring and what states are doing to help. The issues covered range from savings to debt and credit, housing costs to self-employment, and more.