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The Shameful State of the Union


Here’s one thing everyone should be able to agree upon from George Bush’s State of the Union address: “We have unfinished business before us.”

Apart from that, it’s a little difficult to credit much of what he said.

“So long as we continue to trust the people, our nation will prosper, our liberty will be secure, and the state of our Union will remain strong,” he concluded.

But the state of our Union is anything but strong. Consider these snapshots:

1. The United States is spending more than $700 billion a year on the military.

The 2008 appropriations bills include $506.9 billion for the Department of Defense and the nuclear weapons activities of the Department of Energy, plus an additional $189.4 billion for military operations in Iraq and Afghanistan. [1]

Other military funding is located in the Department of Homeland Security and other agencies.

Congress has approved nearly $700 billion to fight the wars in Afghanistan and Iraq. This is the appropriated amount. It doesn’t include costs to society — loss of life, injuries, etc. The amount spent on war-fighting in Afghanistan and Iraq now exceeds the inflation-adjusted amount spent on the Vietnam War. [2]

The United States accounts for roughly half of the world’s military expenditures. [3]

Depending on how you count, more than half of all discretionary federal spending is now directed to the military. [4]

2. Wealth is concentrating in the United States at a startling rate.

So startling, in fact, it is very hard to get your head around the statistics. Notes Sam Pizzigati of the invaluable online newsletter Too Much: In 2004, the richest 1 percent in the United States held over $2.5 trillion more in net worth than the entire bottom 90 percent.

The concentration of wealth and income reflects a major shift over the last three decades in how the United States shares its earnings. In 1976, the top 1 percent of the population received 8.83 percent of national income. In 2005, they grabbed 21.93 percent. [5]

3. Compensation for CEOs and Wall Street financiers is out of control

The average CEO from a Fortune 500 company now makes 364 times an average worker’s pay, reports the Institute of Policy Studies. This is up from a 40-to-1 ratio in 1980. [6]

But the managers of businesses that make things and deliver non-financial services aren’t making the truly big money these days. In the hyper-financialized economy, it’s the finance guys who are getting truly rich.

And they’re getting rich despite the huge losses being wracked up on Wall Street. Bonuses for those toiling on Wall Street totaled $33.2 billion in 2007, down just 2 percent, according to New York state comptroller’s office. Overall compensation and benefits at seven of the Street’s biggest firms totaled $122 billion, up 10 percent since 2006 — even though net overall revenue for these firms fell 6 percent. [7]

But even the traditional investment banks can’t match the outrageous compensation captured by private equity and hedge fund managers, a few of whom manage to pull in more than $1 billion in a single year. Thanks to a tax loophole, these characters pay income tax at a rate less than half of what a dentist making $200,000 a year pays.

4. Corporations are capturing more of the nation’s wealth.

Corporate profits amounted to 8 percent of GDP over the last decade, Business Week reports, up from 6.5 percent in the early 1990s. [8]

5. The housing bubble and the subprime mortgage meltdown are driving millions of families from their homes.

The Center for Responsible Lending estimates that 2.2 million subprime home loans made in recent years have already failed or will end in foreclosure. Homeowners will lose $164 billion from these foreclosures, the Center projects. [9] Overall losses from deflated housing values may top $2 trillion. One in five subprime mortgages originated during the past two years is likely to end in foreclosure.

6. The racial wealth divide remains a chasm with little prospect of being bridged — and is likely growing worse.

At the rate the wealth divide closed between 1982 and 2004, it would take 594 more years for African Americans to achieve parity with whites, according to United for a Fair Economy. But the subprime debacle is hitting minority communities disproportionately hard, causing what United for a Fair Economy believes may be the worst deprivation of people of color’s wealth in modern U.S. history. [10]

7. Women continue to be paid far less than men.

The ratio of the annual averages of women’s and men’s median weekly earnings was 80.8 for full-time workers in 2006, according to the Institute for Women’s Policy Research. Progress in closing the gender wage gap has slowed considerably since 1990. The gender wage ratio for annual earnings increased by 11.4 percentage points from 1980 to 1990, but added only 5.4 percentage points over the next 15 years. [11]

8. More than one in six children live in poverty.

Is there a worse indictment of the richest society in history? The official U.S. poverty rate was 12.3 percent for 2006. The rate for children was 17.4 percent. The official poverty line is absurdly low. As defined by the Office of Management and Budget the average poverty threshold for a family of four in 2006 was $20,614. For an individual, it was $10,294. [12]

9. More than 45 million people in the United States do not have health insurance.

According to the Census Bureau, 47 million were uninsured in 2006, 15.8 percent of the population. [13]

10. The U.S. trade deficit is more than 5 percent of the gross domestic product.

The 2006 U.S. trade deficit totaled $763.6 billion. [14] The trade deficit will eventually have to be balanced — sooner than later, it now seems. As the dollar continues to swoon, expect to see inflation and higher interest rates over the medium term. The real standard of living, in economic terms, will decline as a result.

11. U.S. fuel efficiency is worse now than it was two decades ago.

The average fuel economy of today’s U.S. car and truck fleet is 25.3 miles per gallon, reports the Union of Concerned Scientists, lower than the 25.9 mpg fleet average in 1987. Regulatory standards have not changed (though a modest increase is mandated by the energy bill passed in 2007), and more SUVs and light truck are on the road. [15]

12. The nation’s infrastructure is crumbling.

The American Society of Civil Engineers estimates that $1.6 trillion is needed over a five-year period to bring the nation’s infrastructure to good condition. [16]

13. More than two million people in the United States are locked in prison.

What a colossal waste of human talent. 2,258,983 prisoners were held in Federal or State prisons or in local jails, at the end of 2006, an increase of 2.9 percent from 2005. The prison population has grown 3.4 percent annually since 1995. African-American males are imprisoned at a rate 6.5 times higher than white males, Latino males almost 3 times higher than whites. [17]

Most of these conditions are worse now than at the start of the Bush administration, many dramatically worse. But they have their roots in a bipartisan policy approach over the last three decades, favoring deregulation, handover of government assets to corporations (privatization), corporate globalization, hyper-financialization, lunatic military expenditures, tax cuts for the rich and a slashed social safety net.

If the United States is to see “real change” — and actually strengthen the state of the Union — there will have to be a reversal of these policies.

ROBERT WEISSMAN is editor of the Washington, D.C.-based Multinational Monitor and director of Essential Action.


[1] Center for Arms Control and Non-Proliferation,

[2] Center for Arms Control and Non-Proliferation,

[3] SIPRI Yearbook 2007, Stockholm International Peace Research Institute,

[4] War Resisters League,

[5] Too Much,

[6] Executive Excess 2007, Institute for Policy Studies,

[7] Tomoeh Murakami Tse and Renae Merle, The Bonuses Keep Coming, The Washington Post, January 29, 2008,

[8] Michael Mandel, How Real Was the Prosperity, Business Week, January 23 2008,

[9] Center for Responsible Lending, Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners,

[10] Foreclosed: State of the Dream 2008, United for a Fair Economy,

[11] Institute for Women’s Policy Research, The Gender Wage Ratio: Women’s And Men’s Earnings,




[15] Union of Concerned Scientists, Fuel Economy Basics

[16] American Society of Civil Engineers, Report Card for America’s Infrastructure,

[17] US DOJ, Office of Justice Statistics, Bureau of Justice Statistics





ROBERT WEISSMAN is president of Public Citizen.

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