Not easy to restore American dream

INCOMING House of Representatives Speaker Nancy Pelosi has an agenda for the first 100 hours after her Democrat Party takes control of the House of Representatives in January.

It is underscored by ambitious economic objectives: to raise the minimum wage, make health care and college more affordable, cut taxes on the middle class and achieve energy independence.

However, the Democrat promise to “restore the American dream for everyone” and to “put middle-class families first” might just be too ambitious.

Beyond achieving a minimum wage increase, the economic effects of a Democrat majority in the House and Senate are less clear. If anything, they will find their plans constrained by the veto of the executive branch, fiscal reality and the looming presidential election in 2008.

“It is going to be hard for the Democrats to achieve their economic objectives,” said Mr James Glassman of the American Enterprise Institute, a conservative Washington-based think-tank.

“There will be some changes, but nothing of great substance because of political gridlock.”

One of the key electoral pledges of the Democrats was to help ordinary Americans improve their living standards, and raising the minimum wage was a key promise.

Mrs Pelosi has indicated that she plans to introduce legislation to raise the federal minimum wage from US$5.15 (S$8) to US$7.25 – a move that observers said would gain backing in both chambers of Congress and even from the Bush administration.

The move gained further traction last week after six states took matters into their own hand and raised wages to levels which exceeded the federal minimum.

Prospects for other Democratic measures, however, do not look as bright.

On health care, the Democrat Party has disclosed plans to introduce legislation targeted mainly at lowering drug costs for older Americans and providing more money.

The Democrats want the federal government to negotiate directly with pharmaceutical firms to obtain lower prices for beneficiaries of Medicare, a federal health insurance programme for those 65 and older. The law, however, prohibits such negotiations.

Mrs Pelosi has made it clear that the Democrats would repeal the ban in the first 100 hours the House convenes.

But any move towards federal negotiation on drug prices is likely to hit a brick wall. It would be opposed by an array of forces: the White House, most congressional Republicans and drug companies.

Energy independence is also high on the Democrat list but could also run into obstacles.

High petrol prices was one of the hottest pocketbook issues on the campaign trail in the recent mid-term polls.

The Democrats are critical of the oil industry and its role in the administration. They might try to find money to boost alternative energy projects and try to get the Bush administration to re-examine its policy towards climate change.

But they might face internal division on expanding oil exploration and building more nuclear power plants, as well as signing up for the Kyoto targets. Another pressing issue is tax cuts.

During the elections, some Democrats talked about repealing Mr Bush’s tax cuts. But Democrat Charles Rangel, who is poised to become the head of the influential Ways and Means Committee in the House, has indicated that he would not take any immediate action on taxes.

Republicans have often painted their opponents as “tax-and-spend liberals”, but Democrats appear to be doing the reverse now by pushing for tax breaks for businesses and college tuition.

The Democrats also know that it will be political suicide to roll back Mr Bush’s tax cuts, most of which expire at the end of 2010.

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