For many Americans, the State of the Union means the state of the economy. President Bush described an economy that is "healthy, and vigorous, and growing faster than other major industrialized nations." Despite hurricanes and high energy prices last year, the economy did grow at a healthy annual rate of 3.5 percent. Growth slowed sharply in the fourth quarter, however, to just over 1 percent. That's the slowest pace in three years.
President Bush noted that America has added 4.6 million new jobs in the last two-and-a-half years. Despite the improving job market, however, real wages have not kept pace with inflation. According to the Bureau of Labor Statistics, real wages fell 0.9 percent last year, while workers' overall compensation (including benefits) was essentially flat.
President Bush says tax cuts helped spur the nation's economic growth during the last four years, because "Americans have more of their own money to spend, save and invest." He again urged lawmakers to make tax cuts permanent. Critics warn that would widen the federal deficit, unless the tax cuts are accompanied by corresponding spending cuts.
President Bush renewed his promise (from 2004) to cut the budget deficit in half by the end of his term. He boasts of consistently cutting "non-security discretionary spending," a record that excludes such big-ticket items as homeland security, entitlement programs and the Iraq war.
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