How Will the New Congress Affect Your Wallet?

Nov. 10, 2006 — -- On pocketbook issues there's no question that the new Democratic-led Congress is going to be less corporation-friendly and more consumer-friendly.

Democrats say they like growth and prosperity as much as Republicans do, but they're also going to hammer the fairness issue and say it's time to share the prosperity.

But how? Here's a look at some of the issues on the Democratic agenda that are likely to affect the wallets of millions of Americans:

If you're an hourly wage worker, item No. 1 on the Democratic agenda -- raising the minimum wage -- will likely change things for you. After nine years with no increases, Democrats want to raise the minimum wage from $5.15 to $7.25 an hour, and President Bush has signaled he's willing to make a deal.

"That's going to be an early test of bipartisanship in Washington," said Tom Gallagher, a political economist with ISI Group.

If you're a student or parent trying to pay for college, you'll be interested to know that cutting student loan interest rates -- possibly in half -- is also high on the agenda. Under the Republican Congress, federal student loans recently moved to a fixed rate of 6.8 percent. Democrats hope to roll them back to 3.4 percent.

"People say to middle class and working class people, 'you know, if you want to get a good job, you better have a good education,' but we're increasingly pricing education beyond their reach," said Rep. Barney Frank, D-Mass, who is expected to become the new chairman of the House Financial Services Committee.

For seniors -- and possibly anyone who takes prescription drugs -- lower drug costs are another high priority. Democrats want to rewrite the Medicare reform bill to let the government negotiate lower prescription drug prices.

"If there's one sector of the stock market that really has to worry, it's the big drug stocks," said Greg Valliere, chief strategist at Stanford Washington Research Group. "There's a very good chance that the House and the Senate will pass a bill allowing the government to negotiate for very competitive drug prices. The president may or may not sign it, but in the meantime it's a cloud over drug stocks."

And the drug makers aren't the only ones looking over their shoulders. Big business and CEOs may also have to worry. The new Congress will mean more oversight over corporate pay and profits, especially if gains are made at the expense of consumers.