We need a Democratic Congress to fight the war on terror -- and to end the war on America's families. Republican policies of the last five years have damaged our economy and failed Americans. Democrats believe strengthening the middle class is essential for a thriving economy that rewards work, provides economic opportunity to all and makes it easier for parents to devote time to their families. An economy that favors the top 1% at the expense of everyone else might be good for President Bush's politics, but a shrinking middle class is bad for capitalism, democracy and America. We need a new direction.

The Republican record on managing the federal budget is dismal. Republicans have turned surplus into debt, hope into lost opportunity; they have become the party of borrow-and-spend. The Joint Committee on Taxation estimates that the total cost this year of the president's tax cuts is $258 billion. This means that even with spending for wars in Iraq and Afghanistan and the response to Hurricane Katrina, the federal budget would essentially be in balance if the tax cuts had not been enacted, or if they had been offset as required under the pay-as-you-go rules that Republicans allowed to expire. These economic policies amount to a war on American families:

• Under Mr. Bush and the Republican Congress, incomes today are $1,000 less for the typical household than during Bill Clinton's final year in office; incomes for the typical working-age household have declined every year since the president took office. Black and Hispanic households have fared worse over the same period: Black household income has fallen every year, after rising every year (except for a one-year $60 dip) under Mr. Clinton. Incomes for Hispanic households are down $1,000, after rising more than $7,000 under Mr. Clinton.
  
  
• Incomes have fallen because wages -- which provide 75% of income for typical families -- are stagnant for most workers. Under Mr. Bush, wages for college-educated workers increased only 1.3% between 2000 and 2005, as compared to 11.3% during Mr. Clinton's last five years. For the nation's lowest-paid workers, the situation is even worse, as the minimum wage is worth less now than at any time in at least 50 years.
  
  
• Health and retirement coverage have declined for most workers and their families, and workers' costs have increased. The share of Americans with job-based health coverage fell over the last five years from 62.6% in 2000 to only 59.5% in 2005, virtually erasing gains in such coverage under Mr. Clinton, when coverage rose from 57.1% in 1993 to 63.6 % in 2000. Workers are also paying more for their coverage. Between 2001 and 2005, the amount workers paid for family premiums grew more than 50%. These factors have fueled increases in the number of uninsured every year under Mr. Bush, to almost 47 million last year -- roughly one in six Americans.
  
  
• Retirement coverage has also declined. Only 19% of workers have guaranteed pensions today, compared with 39% in 1980. And under Mr. Bush, retirement coverage, including both guaranteed pensions and 401(k)s, fell almost three percentage points, to just less than 46% in 2004.
  
  
• Americans are taking on more debt just to keep up in the Republican economy. Last year, household debt was a record 132% of disposable income. Not surprisingly, home mortgage foreclosures are also up; in March of this year, the foreclosure rate was 63% higher than last year.
  
  
• While wages and incomes have slowed, health costs increased, debt increased and retirement coverage declined, the cost of sending kids to college has exploded. Between 1995 and '96 and 2005 and '06, the average costs for a four-year private college rose 32% and for a four-year public college, 42%.
  
  
• These dwindling economic fortunes have resulted partly from a decline in unionization, which has been exacerbated by the all-out assault of the Bush Republicans on workers' rights to organize and bargain. From stripping away union protections for whole classes of workers to intervening in labor-management disputes in various industries, Mr. Bush, backed by a Republican Congress, has done more to undermine workers' rights than any president in more than 70 years.

These bleak statistics explain why the overwhelming majority of Americans know our country is moving in the wrong direction -- despite the economic cheerleading of the Republicans. Americans know who has benefited in this economy -- and, for most, it isn't them.

The president's failures in Iraq are also hurting our economy, our country and our ability to fight the war on terror. We are spending $8 billion a month in Iraq -- that's $267 million a day. Consider that for what we spend in three weeks in Iraq, we could make needed improvements to secure our public transportation system; for what we spend in five days we could double the COPS program, and put more police on the streets to keep our neighborhoods safe, or we could put radiation detectors at all our ports.

Democrats offer America a new direction in fiscal policy, for the middle class, and in the war in Iraq. We believe that America should work for everyone:

We will restore honesty in government, starting with the pay-as-you-go discipline in Congress that served Mr. Clinton so well. Balancing the Federal budget will be a high priority with concurrent limitation of spending. We will ease the burdens on middle class Americans and reverse Republican cuts in college tuition aid and health care. We will ensure that a retirement with dignity is the right and expectation of every single American, including pension reform, and preventing the privatization of social security.

We will dramatically expand support of energy independence in order to generate large numbers of new American jobs and reduce our dependence on foreign oil. We will have a jobs agenda that includes good jobs that stay in America, a higher minimum wage and trade policies that benefit the global labor force, not just multinational corporations.

We will have a defense policy that is tough and smart, starting with phased redeployment of our troops in Iraq, and shore up our efforts to attack al Qaeda and fight the war on terror. We also will close the gaps in our security here at home by implementing the 9/11 Commission recommendations.

We are ready to lead with a thoughtful, fiscally responsible long-term vision. We will reach out to all Americans who value hope over fear and begin moving the country forward again.

Mr. Dean is chairman of the Democratic National Committee.

Originally published in The Wall Street Journal.