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“ECONOMIC STEWARDSHIP? ARE YOU BETTER OFF?” mentioning the U.S. Dept. of Commerce was published in the Extensions of Remarks section on pages E1955-E1957 on Oct. 24, 2002.
The publication is reproduced in full below:
ECONOMIC STEWARDSHIP? ARE YOU BETTER OFF?
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HON. JAMES L. OBERSTAR
of minnesota
in the house of representatives
Thursday, October 24, 2002
Mr. OBERSTAR. Mr. Speaker, as we return home to our Congressional Districts, I believe that each of us should ask our constituents a slightly modified version of the question made famous by former President Ronald Reagan: ``Are you better off than you were two years ago?'' Clearly, we are not. The economy, under the stewardship of the House Republican Leadership and the Bush Administration, is faltering. In just two short years, we've gone from creating millions of new jobs to losing our many gains; from enjoying a budget surplus to projecting mounting deficits; from addressing the backlog of infrastructure needs to losing more ground.
And we should expect our constituents to ask us: What are your plans to revitalize our economy and solve the most pressing domestic problems facing our Nation? The response of the House Republican Leadership and the Bush Administration can be summed up simply: tax breaks for the rich. And when that doesn't work, more tax breaks for the rich.
House Democrats have a different economic plan, one that takes proactive measures to protect existing jobs and create new family-wage jobs. Today, I would like to talk about the state of the economy and a Democratic economic renewal plan. In particular, how one element of the Democratic plan, infrastructure investment, could undo much of the damage that the House Republicans and the Bush Administration have done to the economy and how the House Republican Leadership has prevented action on legislation to make new investments in our Nation's infrastructure and create family-wage, construction jobs.
Current State of the Economy
Increasing Unemployment
While most of today's headlines focus on the stock market collapse, the market's performance is only symptomatic of the more fundamental decline in our Nation's economic well being during the past two years. For many Americans the macroeconomic problems of stock markets, budget deficits, and Social Security funding issues can be beyond comprehension because the numbers are simply too big to seem real. Also, the consequences, while scary, are uncertain and perhaps not immediate. But one measure of economic performance that virtually all Americans can relate to, arguably the most important measure, is the loss of a job.
In January 2001, when President Bush took office, there were fewer than 5.7 million Americans unemployed. Less than two years later in the summer of 2002, after adjusting for seasonal variations, roughly 7 million Americans were looking for jobs--a 23-percent increase in the number of Americans unemployed. During the eight years of the Clinton Administration, our economy created more than 22 million new jobs. During just one year of the Bush Administration, our economy lost 2.4 million jobs. And as new jobs become more difficult to find, the periods of unemployment are getting longer, resulting in dire consequences for many American families. Roughly 1.5 million Americans have exhausted their state unemployment compensation benefits. Mortgage foreclosures are at an all-time high, as both middle class and working class Americans watch the dream of home ownership slip away.
Economic dislocations are never evenly distributed around the Nation. Some regions and some groups are always more severely affected than others, and it is usually the working class that suffers most. The current situation is no exception. I want to focus on one area of economic activity where many Americans have been particularly hard hit--nonresidential construction. The Commerce Department recently reported that spending for new construction fell 0.4 percent in August as nonresidential construction activity hit a six-year low. Unemployment in this construction sector has swollen by more than 50 percent from roughly 540,000 unemployed construction workers in January 2001, to 824,000 in July 2002.
Stock Market Collapse
The most widely reported element of the current economic malady is, of course, the collapse of the stock market. The loss in value is unprecedented--40 percent of the market's value, $4.5 trillion, has been wiped out. Many people who were planning to retire based on savings in their 401(k) accounts and other investments made in the eight years of prosperity under the Clinton Administration have now had to abandon those plans.
Perhaps most disturbingly, despite the stock market collapse, the House Republican Leadership and the Bush Administration continue to tout privatization of Social Security and a greater reliance on individual investments in the stock market as the key to reforming the Social Security System. The folly of placing the social safety net that millions of older Americans rely on in the stock market should now be evident even to the most ardent supporter of privatization. Yet the Republicans persist.
The Republicans have several plans for privatizing Social Security. However, to make their plans work they must either cut benefits or divert trillions of dollars from other programs--other programs that, in all likelihood, are targeted to benefit poor and working class Americans. According to one study, senior citizens, surviving spouses, and people with disabilities would see benefit cuts of between 30 and 46 percent annually under the Republican proposals.
Republican Leadership and Bush Administration Response: Tax Breaks for the Wealthy
The Administration's response to the declining economy has been the usual Republican panacea of cutting taxes for the wealthiest Americans and hoping it trickles down to the rest of the population. While many Americans got a check for $300 last year, the true beneficiaries of the Republican tax cut are those households making more than $370,000 per year, who will get an average benefit of more than $50,000 per year.
These are not modest tax breaks. The long-term size of the Republican tax break package is more than double the entire long-term Social Security shortfall. The present value of the Social Security shortfall over the next 75 years is $3.7 trillion--less than one-half of the $8.7 trillion that the Republican tax breaks will cost the Treasury.
A recent Brookings Institution assessment of the Republican tax break package concluded that it would reduce the size of the future economy, raise interest rates, and make taxes more regressive. The assessment concluded that the Bush tax package was fiscally unsound and unsustainable even before the economic downturn and the September 11 terrorist attacks--so much for Republican fiscal discipline.
At the same time, President Bush, in his fiscal year 2003 Budget Request, proposed an $8.6 billion, or 27 percent, cut in our Nation's highway infrastructure investment, which would cost the economy more than 360,000 good-paying jobs.
Impact on the Federal Budget: Eliminating the Surplus
Instead of surpluses, the Republican Leadership and the Bush Administration are running ever-larger Federal deficits as far as the eye can see. Under the Bush Administration, the projected Federal budget for the next decade (2002-2011) is in the midst of a $5.3 trillion swing in the wrong direction. A projected $5.6 trillion surplus has dwindled so that the Congressional Budget Office (CBO) now forecasts only a $336 billion surplus--all of which is in the Social Security Trust Fund. Excluding Social Security surpluses, CBO projects a $2 trillion budget deficit over the decade compared to the $3.1 trillion surplus projected just last year--and that is before the long-
term consequences of President Bush's tax breaks or increased defense spending are factored into the equation. If we add these additional expenses to current budget estimates, the Federal budget will show a cumulative deficit of $3.2 trillion for the coming decade.
The Republicans pledged that they would protect Social Security--but they have violated that pledge. The Republican Leadership has passed an economic plan that diverts $2 trillion from Social Security into other non-Social Security initiatives. If Congress continues these Republican policies, over the next decade, we will consume the entire Social Security Surplus, all of the Medicare surplus, and add at least a trillion dollars to the national debt.
A Democratic Economic Plan: Infrastructure Investment
Instead of passing tax breaks for the wealthy, the Republican Leadership and the Bush Administration could have developed a bipartisan plan to use the surplus to invest in our Nation's infrastructure, shore up the Social Security Trust Fund, and pay down the national debt. In less than two years, the Republican Leadership and the Bush Administration have squandered each of those opportunities.
Unlike the Republicans and their ``trickle down'' approach to the economy, the Democrats have proposed a program to stimulate the economy by creating jobs--especially jobs in nonresidential construction--and rebuilding our Nation's infrastructure. One year ago today, the Democrats on the Committee on Transportation and Infrastructure introduced H.R. 3166, the Rebuild America: Financing Infrastructure Renewal and Security for Transportation Act (``Rebuild America FIRST Act''). The Rebuild America: FIRST Act would have provided $50 billion to enhance the security of our Nation's infrastructure, including improvements to rail, highway, transit, aviation, maritime, water resources, environmental, and public building infrastructure. Moreover, by leveraging Federal infrastructure investments, the 10-year cost to the Federal Treasury would be less than $32 billion.
According to the U.S. Department of Transportation, each $1 billion in new highway infrastructure investment creates 47,500 jobs and $4.5 billion in economic activity. The Democratic infrastructure investment and security bill would have created more than two million jobs--
virtually eliminating the job losses that have occurred since this Administration came into office--and restored more than $200 billion to our economy. Moreover, in the wake of the September 11, 2001 terrorist attacks, the bill provided that priority would be given to infrastructure investments that focus on enhanced security for our Nation's transportation and environmental infrastructure systems.
Our infrastructure investment package called for investments in ready-to-go projects in each of the critical areas of our Nation's transportation and environmental infrastructure: $23 billion for rail including high-speed rail, freight rail, and Amtrak; $10.4 billion for highways and transit; $9.2 billion for environmental infrastructure including wastewater, drinking water, wet weather, and Corps of Engineers projects; $3 billion for airports; $2.5 billion for marine transportation; and $2 billion for economic development and public buildings.
This package of infrastructure, transportation, and environmental investment and security enhancement made economic sense. It provided funds where they were most needed. It directly addressed unemployment problems. It directly addressed the Nation's security interests.
The Republicans defeated it. On October 24, 2001, the House considered H.R. 3090, the Republican Economic Stimulus bill, and Mr. Rangel, Ranking Democratic Member of the Committee on Ways and Means, offered a Democratic Substitute amendment to the bill that included H.R. 3166. The Republicans defeated it, on a largely party-line vote, to accelerate their tax breaks for the rich.
Even in those cases where Democrats and Republicans have worked together to design legislative proposals to invest in America, the House Republican Leadership has thwarted those bipartisan efforts. For example, on June 12, 2001, the House Committee on Transportation and Infrastructure unanimously reported H.R. 1020, the Railroad Track Modernization Act of 2001, by voice vote. The bill authorized $1 billion of grants to short-line and regional railroads to help them upgrade their railroad tracks and bridges to be able to carry safely the 286,000-pound railcars that are becoming the standard in the railroad industry. One study found that the Nation's smaller railroads need $7 billion in new capital to make their necessary upgrades. Our failure to help keep these smaller railroads viable could have dire consequences for those in the industry and much of rural America. Despite these facts, for the past year and a half, the House Republican Leadership has refused to schedule the short-line railroad infrastructure bill for consideration by the House.
Another, even more dramatic case in point, was the proposed legislation to provide funding for the development of high-speed rail. Republicans and Democrats spent more than a year working together to craft bipartisan, compromise legislation that effectively blended the best elements of two high-speed rail bills, one bill originally advanced by Mr. Young, the Chairman of the Committee on the Transportation and Infrastructure, and another bill advanced by a bipartisan group of 190 Members and me, the Committee's Ranking Democratic Member. The proposed compromise legislation, H.R. 2950
(``RIDE 21''), as favorably reported by the Subcommittee on Railroads, would have provided $79 billion over 10 years to finance the construction of high-speed rail in America. By using a combination of tax credit bonds, tax-exempt bonds, loans, and loan guarantees, the bill's cost to the Federal Treasury would have been significantly less than $79 billion. However, the Republican Leadership made clear that, like the short-line railroad bill, it would not let the House consider the bill and it died in Committee.
Similarly, on March 20, 2002, the House Transportation and Infrastructure Committee unanimously ordered reported H.R. 3930, the Water Quality Financing Act of 2002. The bipartisan legislation authorizes $20 billion to invest in our Nation's wastewater infrastructure and helps ensure the protection of our Nation's steams, lakes, and coastal areas for generations to come. H.R. 3930 increases wastewater infrastructure investment and provides increased flexibility for local communities to tailor their programs to meet local water quality needs. Such investment is necessary if our communities are ever going to meet many of the goals of the Clear Water Act. However, the House Republican Leadership made clear that the House would not be allowed to consider this legislation, placing at risk this Nation's 30 years of effort to ``restore and maintain the chemical, physical, and biological integrity of the Nation's waters.''
What has frustrated these efforts to invest in our Nation's infrastructure, stimulate the economy, and create family-wage jobs? Why has the Republican Leadership opposed virtually every attempt to invest in America? The answer is simple. The Republican Leadership opposes Davis-Bacon. Specifically, it opposes Davis-Bacon provisions in these infrastructure investment bills and refuses to schedule any bill containing these provisions for consideration by the House, despite the fact that these bills would create good-paying jobs for American workers and would stimulate the economy.
Davis-Bacon ensures that construction projects financed by Federal tax dollars pay those who work on such projects the prevailing wage in the area where the construction takes place. Davis-Bacon provisions have been a part of infrastructure bills since the 1930's, but they are anathema to the House Republican Leadership and reflect a fundamental, philosophical difference between the Republican Leadership and, I believe, the majority of this House. The Republican leadership wants to roll back the clock. Prior to the 1930's, Federal contracting practice required that ``the lowest reasonable bill'' be accepted. While this may sound like an innocuous money-saving measure, in practice this meant that projects would be undertaken without any regard for the wages paid to workers or the conditions under which the work would be performed. In effect, this made the Federal government a collaborator with unscrupulous firms that sought to gain government contracts by exploiting workers. In 1931, Republican President Hoover signed the Davis-Bacon Act, so-named for its two Republican sponsors, to help stabilize the construction industry and secure fair wages for construction workers.
Today, the Davis-Bacon Act prevents cutthroat competition from ``fly-
by-night'' firms that undercut local wages and working conditions and compete unfairly with local contractors. Davis-Bacon also helps stabilize the industry to the advantage of both employers and employees alike. In addition, Davis-Bacon assures the contracting agency of higher quality work as the employers are likely to hire the most competent and productive workers if they are required to pay the prevailing wage. As a result of Davis-Bacon, contracting agencies get better craftsmanship, less waste, more timely completion, reduced need for supervision, and fewer mistakes requiring corrective action. Thus, Davis-Bacon has the potential for actually saving the taxpayers' money on public construction projects.
It is irresponsible for the House Republican Leadership to refuse consideration of these infrastructure investment bills simply because they include Davis-Bacon provisions. Members of Congress deserve the opportunity to vote for or against these bills on the merits of the legislation. Moreover, I encourage the House Leadership to schedule these bills under an open rule that allows all Members an opportunity to offer amendments to the bill. If the Republican Leadership or any other Member wants to offer an amendment to strike the Davis-Bacon provisions from these bills, so be it--let the votes be counted. That is our democratic system.
Our Nation needs an economic stimulus program that creates jobs in hard hit sectors of our economy, rehabilitates our basic infrastructure to allow us to remain competitive in world markets, addresses the infrastructure security needs of our transportation and environmental systems, and helps to revise our stagnant economy. In response to these immediate needs, the Republican Leadership and the Bush Administration have provided tax breaks for the rich and renewed threats to the Social Security Trust Fund and have prevented Congress from even considering real economic stimulus legislation.
The American people deserve better. As the people's representatives, we must do better. I call on the House Republican Leadership to give this House the opportunity to consider these bills to reinvest in American and its infrastructure.
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