At the close of 2005, the Bush Administration was trumpeting a strong national economy. Productivity was growing. Consumer spending was healthy. Corporate profits were rising. But the public remained skeptical; as just one illustration, a Gallup poll near the end of the year revealed that three out of five Americans viewed the economy as only fair or poor, and a majority saw economic conditions as getting worse.

The American people aren’t stupid. The official optimism did nothing to obscure the increasingly harsh economic climate in which ordinary Americans found it harder than ever to hold onto a middle class standard of living, with a well-paying job, health insurance, the chance to own or keep a home, the opportunity to provide a good education to their children and the security of looking forward to a dignified retirement.
Congress played no small part in driving the American Dream further out of reach for ordinary citizens in 2005. Congress at the Midterm: Their 2005 Middle-Class Record takes a closer look at the decisions made by Congress, from creating new obstacles for families overcome with debt to declare bankruptcy to a disastrous budget that aimed to pay for tax cuts benefiting the rich with dramatic cuts to student loans and health programs for the poor. In vote after vote, Congress disdained the concerns of middle-class Americans and opted instead to favor the already wealthy and powerful: a surefire recipe for a shrinking middle class.

Congress championed the wish lists of oil companies, the insurance industry, and credit card issuers over the concerns of middle-class consumers and small businesses, while making it harder for ordinary citizens to hold corporate wrong-doers accountable. 2005 was the year of the energy bill that ignored the skyrocketing fuel prices burdening the middle class while providing massive tax breaks for profitable energy corporations. It was the year that credit card issuers finally won bankruptcy legislation, squeezing more money from families so overwhelmed by job loss, medical bills and family break-ups that they could not cope with the debt. It was another year when the House passed a bill raising health care premiums for small businesses while allowing insurers to offer health plans with fewer benefits. And to top it off, it was a year when Congress put new obstacles in the path of ordinary citizens trying to hold corporations accountable for defective products, deceptive marketing or unfair employment practices through class action lawsuits.

In 2005, the Senate refused a raise for the nation’s lowest paid workers, even as the House insisted that those lucky enough to inherit money without working for it should get a tax-free windfall. Real wages were stagnant for most workers in 2005, as soaring energy prices and expensive medical costs ate into middle-class paychecks. The lowest paid workers saw the largest wage drop, a decline exacerbated by the deteriorating value of the minimum wage, frozen at $5.15 an hour since 1997. Yet the Senate refused to facilitate the middle-class aspirations of 15.5 million Americans by raising the minimum wage. Meanwhile, the House bestowed government largesse on the fortunate one percent of wealthy estates that must currently pay taxes if assets exceed $1.5 million by passing a bill to permanently abolish the estate tax.

Given the opportunity to strengthen some of the nation’s most successful and cherished public programs—Medicare and Social Security—Congress rejected common-sense solutions. The Senate refused to rule out a Social Security overhaul that would entail deep benefit cuts or a massive increase in public indebtedness, even though neither was necessary to ensure the solvency of the system. A plan to lower Medicare prescription drug prices by enabling the government to negotiate in bulk with pharmaceutical companies also failed. By the end of the year, the funding shortfall in Social Security went unfixed, while both seniors and the taxpayers funding Medicare continue to pay more for prescriptions drugs than they need to.

Congress made it easier for capital and goods to flow across international borders, but the House criminalized immigrants following the same tide of economic opportunity. In passing the Central America Free Trade Agreement, Congress embraced the failed NAFTA model, which has lowered wages in the United States and diminished living standards in Mexico, providing one more push for displaced Mexican workers to risk their lives to work in the United States. Yet rather than scrutinize a trade model that subordinates workers’ rights to multinational profits, the House instead blamed the immigrants our economy has come to depend on, passing a bill that would make immigrant workers more vulnerable to the exploitation that undermines the wages of middle-class Americans.

Congress at the Midterm: Their 2005 Middle-Class Record issues each member of Congress, as well as the House and Senate as a whole and each party, a letter grade based on his or her 2005 votes on selected pieces of legislation. We chose bills that, if passed, would have an impact on the squeezed middle class, as well as on the aspirations of low-income Americans who want to work their way into the middle class.
The following legislation was considered:


SUPPORTIVE OF THE MIDDLE CLASS:

• Amendment on Negotiating Medicare Drug Prices (S.Amdt. 214 to S.Con.Res. 18) would give government the authority to negotiate with pharmaceutical manufacturers for the best prices on drugs purchased under the Medicare prescription plan, saving money for both taxpayers and Medicare beneficiaries. The amendment failed in the Senate.

• Fair Minimum Wage Act of 2005 (S.Amdt. 44 to S 256) would raise the federal minimum wage to $7.25 an hour over two years, enabling more low-income workers to work their way into the middle class. The amendment failed in the Senate.

• Sense of the Senate in Support of Social Security (S.Amdt. 145 to S.Con.Res. 18) was a non-binding resolution stating that Congress should reject any Social Security plan that requires deep benefit cuts or a massive increase in debt, either of which would burden the middle class. The amendment failed in the Senate.


HARMFUL TO THE MIDDLE CLASS:

• Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S 256), which passed both the House and the Senate and was signed into law, made it much more difficult for Americans crippled by debt, resulting primarily from job loss or medical catastrophe, to get back on their feet by the tightening of restrictions on declaring bankruptcy.

• Border Protection, Antiterrorism, and Illegal Immigration Control Act (HR 4437), passed in the House only, would make unlawful presence in the U.S. a criminal offense for the first time, undermining the middle class by driving undocumented workers with whom they share a labor market into more desperate circumstances and reducing the economic contributions immigrants make to national prosperity.

• Class Action Fairness Act (S 5) blocked class action lawsuits by forcing them out of state courts and into federal courts, making it more difficult for people injured by defective products, fraud or discrimination to get access to justice. It was passed in both chambers and signed into law.

• Death Tax Repeal Permanency Act of 2005 (HR 8) passed in the House only, would permanently repeal the estate tax, which currently affects the heirs of estates worth more than $1.5 million, shifting the responsibility for paying for public services from heirs onto the middle class.

• Deficit Reduction Act of 2005 (S 1932) slashed funding and squeezed new revenue out of Medicaid and student loan programs in an effort to pay for more tax cuts for the wealthiest Americans. Slightly different versions passed in each chamber and were signed into law.

• Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (HR 3045) While trade can stimulate economic growth, CAFTA’s failure to protect workers’ rights undermines the ability of middle-class and aspiring middle-class families to share in the benefits of growth. Passed in both chambers and signed into law.

• Energy Policy Act of 2005 (HR 6) heavily subsidized the nuclear and oil industries, shifting more of the tax burden onto the middle class, while doing little to improve environmental standards or reduce dependence on foreign oil. It passed both chambers and was signed into law.

• Small Business Health Fairness Act of 2005 (HR 525), passed in the House only, would make health insurance more expensive by exempting small business associations formed to buy health insurance from state laws.

On an unusual number of these bills, including CAFTA in the House and the Deficit Reduction Act, Amendment on Negotiating Prescription Drug Prices and Sense of the Senate in Support of Social Security in the Senate, the votes were extremely close but were ultimately decided in opposition to the middle class in every instance. In these cases, if just a handful of legislators—sometimes just a single Senator—had changed their votes, it would have been sufficient to change the outcome for millions of middle-class and aspiring middle-class Americans.

The close votes reveal the impact of both powerful special interests calling for more advantages and of middle-class voters demanding accountability from their elected officials. Another sign of this tension turned up in the votes of House and Senate Democrats. While Democrats supported the middle class more consistently than Republicans, especially on issues like raising the minimum wage or resisting harmful budget cuts, they wavered when powerful industries—from credit card issuers on the bankruptcy bill to insurance companies on the class action bill—lobbied for legislation that would profit them at the expense of middle-class families.
As middle-class voters strive to hold their elected representatives accountable for these decisions, we hope Congress at the Midterm: Their 2005 Middle-Class Record will be a useful tool both for evaluating Congress and for pointing those concerned about the American middle class in the right direction on key pieces of legislation. While many organizations issue scorecards based on a single issue, the Drum Major Institute is distinctive in its focus on an overall agenda of expanding opportunity for middle-class and aspiring middle-class Americans.

We believe better policy can be created when ordinary citizens—not just political insiders—know how their legislators on the issues that matter most to them, and when legislators know that their constituents are watching.