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WASHINGTON

Bob Woodward's new book, "State of Denial," is about President Bush's unwillingness to face the facts about his failed policies in Iraq, but there could easily be a second volume about the economy.

Bush said recently that he hopes the coming election will be decided on economic performance. Well, so do Demo-crats, because the reality of the economy that most American families face is very different from the rosy situation that the president tries to portray.

Administration aides can't quite figure out why they aren't getting any traction with voters on the economy. The answer is simple: For five straight years from 2001 through 2005 the real income of the typical working-age household fell by a total of $3,000. Meanwhile, the costs of energy, health care and a college education have skyrocketed. So, Americans can't buy as much as they could before even if they are lucky enough to be getting paid a little bit more.

The president says his policies are working to make the economy strong and that all Americans are benefiting, but the facts say otherwise.

For most families, what they earn from their jobs is far and away the most important source of income, and people are not seeing increases in their real earnings. Wages are lagging behind productivity growth, so that American workers are working harder and producing more but their paychecks are not reflecting the fruits of their labor.

Since Bush took office, real median household income is almost $1,300 lower compared with a gain of more than $5,800 under President Clinton. Real median earnings fell almost 1 percent between the end of 2000 and the end of 2005, there are 5.4 million more people living in poverty, 6.8 million more people without health insurance and 3.7 million fewer Americans have retirement plans.

President Bush and the Republican majority have also created a legacy of deficits and debt that will hurt standards of living in the future.

Record surpluses have been turned into record deficits — including the four worst deficits in the history of America. The national debt has exploded to the point where every newborn child inherits $28,500 of federal debt. And the nation's debt ceiling has been raised four times on Bush's watch to more than $8.9 trillion.

Bush is in a state of denial about these facts.

Too many Americans are being squeezed by stagnant incomes and rising living expenses, and somehow the president's tax cuts are supposed to ease the pain. The nonpartisan Tax Policy Center estimates that this year the dividends and capital gains tax cut will save middle-income families only about $55 — about the price of one tank of gas for most minivan drivers. But millionaires will receive a cut of nearly $38,000 — enough to buy a new luxury sedan.

The policies of Bush and the Republican majority simply do not address the problems of families trying to maintain a middle-class way of life, and they certainly do not address the problems of working families trying to make it into the middle class.

A recent CNN poll found that 54 percent of Americans believe it is impossible for most people to achieve the American dream. But if you work hard and play by the rules, you should share in the growing economy.

Democrats want to create an economic environment that produces better jobs with better pay, raises the minimum wage, makes health care and college more affordable, cuts middle-income taxes, guarantees a dignified retirement for our seniors, moves the nation toward energy independence, and restores fiscal responsibility.

To restore the American dream and to provide economic security and opportunity for all, we need a new direction in policy that addresses the real problems of real people and creates an economy that works for all Americans.