Alaska Economy Not So Good in Recent Years
22 December 2007It is not light reading, but it is important and it has just been released: The 2007 Joint Economic Report of the Joint Economic Committee Congress of the United States on the 2007 Economic Report of the President Together With Minority Views. Before we launch into a summary of critical findings about Alaska, here is a bit more about the study as a whole:
The President says his policies are working to make the economy strong and that all Americans are benefiting, but the facts show an economic record that has left the vast majority of American families behind. During the last six years, the economy has performed in a lackluster fashion, without strong growth in output, investment, or employment. America’s working families have seen little or no improvement in their standard of living during this time. The recovery from the recession in 2001 has been very weak, and household income is still substantially below its pre-recession peak of the 1990s. Further, the number of households with employer-provided health insurance has declined. In short, the economic indicators that matter most to the typical family are moving in the wrong direction.
By almost every measure, the Bush Administration’s economic policies have produced a recovery that has been remarkably weak. The President’s ill-designed tax policy has added to the deficit and exacerbated income inequality. At the same time, programs that benefit middle- and lower-income families have been cut back. Dramatic increases in defense spending for the war in Iraq have increased the budget deficit, which will have an impact on future generations. Instead of focusing spending increases on areas that would help economic growth in the long term, such as repairing and modernizing America’s transportation and urban infrastructure, the administration financed a war that has already produced total economic costs exceeding a trillion dollars.
The subprime mortgage crisis, which may lead to millions of Americans losing their homes, and the subsequent credit crunch have weakened an already soft housing market. The deteriorating housing market threatens to have pronounced negative impacts on growth. The vast majority of American families have not benefited from the economic gains we have seen so far and now there are strong indications that a downturn may be just around the corner. So far, the Administration has been slow to change course and are satisfied with the status quo. The country needs a change in direction to get our economy back on the right track and to ensure that all American families share in our nation’s growing prosperity.
In this context, how are Alaskan working families doing? Not very well, according to Alaska Economic Snapshot, a two-page summary document produced by the Joint Economic Committee. Some of the more significant points include:
- Alaska’s Median Household Income Decreased By 8 Percent Since 2000. In Alaska, real median household income averaged $57,071 over the 2005-2006 period, compared with $62,019 over the 1999-2000 period. Despite strong gains in productivity, workers’ wages are only marginally higher than they were 25 years ago.
- Child Care Costs For Two-Child Families Averaged $1,252 Per Month in Alaska. Child care continues to be a hefty burden on the budgets of Alaska parents, with inflation-adjusted monthly care for an infant averaging $676, and monthly care for two children averaging $1,252.
- The Subprime Mortgage Crisis Is Impacting All Alaska Homeowners. Under the Bush administration’s watch, unregulated mortgage originators were given financial incentives to sell risky, unaffordable subprime mortgages to vulnerable borrowers. As these adjustable rate mortgages reset to higher rates, the number of families unable to afford their payments and threatened with foreclosure is skyrocketing. In Alaska, mortgages in delinquency have increased from 2,800 in the third quarter of 2005 to 4,200 in the third quarter of 2007.
- The Iraq War Will Cost $36,900 Per Alaska Household. According to the JEC’s recent report, the direct and indirect costs of the Iraq War will be massive, especially if the Bush administration continues to keep large numbers of troops there. Even assuming significant force reductions, the cost of the Iraq War will total $7 billion for Alaska taxpayers by 2017.
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