I thank the Congressional Progressive Caucus for holding this hearing. I am honored by the invitation to participate. I want to the salute the CPC, and its co-chairs Rep. Keith Ellison and Rep. Raul Grijalva, for being a voice of reason in a Congress and a Capitol that has lost its way. Your leadership – from the People’s Budget, to this summer remarkable Jobs Tour, to the “Rebuild the American Dream” Jobs Framework that you have championed – has provided Americans with a clear way out of the mess that we are in. And now, as we head towards what is a foolish debate about the potential recommendations of the Super Committee, that misbegotten offspring of the calamitous debt ceiling deal this summer, your leadership and your voice are more important than ever.
Today, I want to speak candidly about the situation this nation faces. Tomorrow, tens of thousands of Americans across this country will demonstrate to demand jobs, not cuts, from the Congress. They demand action on jobs, and opposition to cuts in Social Security, Medicare, Medicaid and services vital to Americans. These demonstrators represent the 99%. As poll after poll has shown, they give voice to the priorities of the vast majorities of Americans. Authorities can remove Occupy Wall Street from Liberty Park, but they cannot silence an idea whose time has come. And this Congress should take heed.
Let me lay out the case clearly and make three points. 1. For this nation to succeed, the Super Committee must fail. 2. It is time to put people to work. 3. Shared Sacrifice is for suckers.
1. The Super Committee Must Fail
If a drunken bus driver were careening down the wrong road that leads directly off a steep cliff, we would want him to fail to get where he is going. That is exactly the case with the Super Committee. They are headed down the wrong road and it will be ruinous if they succeed in getting where they are going.
This is a nation with 26 million people in need of full-time work. Wages are not keeping up with prices. Poverty, now at record levels, is spreading. One in five homes with a mortgage is underwater. Companies are sitting on trillions in profits waiting for customers. Over the past eleven years, we have added 30 million more people and lost 1.8 million private sector jobs.
And next year, an economy that is barely growing will be hit with severe shocks. The boost provided by recovery act spending will come to an end. If unemployment insurance and the payroll tax cut are also not renewed, JPMorgan Chase analysts project that will cut growth by 1.5 to 2%. More and more mortgages in arrears will face foreclosure, with ruinous effect on their neighbors. Even if the Euro somehow survives, Europe is headed back into recession, with knock-off effects on our exposed banks and investment houses and on export markets.
We should be having a fierce argument about how to put people to work and get this economy going. Republicans should be demanding tax cuts, Democrats public investment and jobs programs. Instead the Super Committee is peddling austerity, pushing Republicans to accept tax hikes (or at least pretend to accept them) and Democrats to embrace cuts in Social Security and Medicare. This is grand folly.
The best deficit reduction plan is to put people back to work. In fact, America does not have a short-term debt problem. If we have a recovery, then our deficits will come down to manageable levels by the end of the decade. If we don’t have a recovery, then austerity will simply make things worse – forcing more workers onto food stamps and unemployment insurance, and lowering revenues.
We see the effects of austerity in Europe. The European Commission now predicts that Europe’s economy will “stagnate well into 2012” and threatens a “deep and prolonged recession.” In Greece, severe budget cuts have combined with economic recession to constrict GDP by 5.5% this year, with unemployment soaring. In Portugal, austerity cuts led the government to project the economy will shrink there by 5%. And, as Sprach Analyst and other global economic firms note, “the slower the growth, the harder the European debt crisis will be to resolve. Government austerity is actually making matters worse.”
We need a sizable, sustained and serious jobs program now. And we cannot turn to austerity, to getting our books in order, until we put people back to work. If the Super Committee were to be useful, it would report out – with its expedited voting powers – a bold and sustained jobs proposal, combining increases in spending – on infrastructure, on direct public jobs programs, on aid to states and localities, on mortgage relief for homeowners – with cuts in taxes to enlist Republicans. It would then make the trigger for any turn to austerity not an arbitrary date, but when Americans are going back to work, and unemployment is down to 4 or 5%.
Instead what we have is Washington’s version of an old Steve Martin routine. “I can tell you,” he used to say, “how to make a million dollars and not pay taxes. First, assume a million dollars, then don’t pay taxes.” The Super Committee says it can tell us how to recover and reduce deficits without paying much in taxes. First, assume a recovery.
But we can’t assume a recovery that is not taking place. First, stop going down a road that leads over a cliff. And start putting people to work.
2. Put People To Work
We know how to put people to work in a recession. The CPC “Rebuild the American Dream” Jobs Framework details the basic elements. The People’s Budget shows that the country can afford to do it – indeed can’t afford not to do it. Let me focus on a couple of elements of this agenda.
First, it is bizarre that those who claim we should let markets rule then choose to ignore what markets are saying. We will never have a better opportunity to rebuild America than we have right now. The need to renovate America’s decrepit and outmoded infrastructure is apparent. It is now dangerous to our lives and costly to our economy. Across the country, the construction industry is idle, with millions of skilled and unskilled workers ready to work. Work to be done and people to do it. And at this moment, investors across the world are, in essence, paying the US to allow them to store their money in our bonds. They are paying us to borrow money from them. Anyone with any business sense would jump at this alternative. We should be borrowing money, essentially for free, in large amounts to rebuild this country and put people to work.
Second, youth unemployment in this country for those aged 16-19 is at the same level it was in Egypt when the Arab Spring erupted. For the first time in half century, a majority of young people from 16-24 is not working. We have a generation of veterans returning from wars, students graduating from high school that can’t find jobs. This crushes hopes and destroys self-confidence. We’re witnessing 18 suicide attempts among veterans a day. No nation can afford to write off a generation. We should make government the employer of last resort for every person under 25. Create urban and green corps; subsidize small businesses and non-profits to put people to work. Let’s have this debate across the country.
Third, the other elements of the CPC Jobs Framework – a manufacturing strategy based on making it America, transforming our trade and industrial policies, a commitment to taking a lead in the green industrial revolution that is sweeping the world, an investment agenda in education and training to insure that our people are the best trained in the world – are vital to building a new foundation for growth and shared prosperity. The stark reality is that we can’t go back to the old economy and should not want to. That economy was not working for most Americans. The top 1% captured all of the rewards of growth over the last decade, while the typical household lost ground. It was built on bubbles and debt and unsustainable trade imbalances. I salute the CPC for demanding a new strategy for growth, not simply a short-term stimulus that cannot work
3. Shared Sacrifice is for Suckers
Once the economy recovers and people go back to work, it will then be time to face our long-term debt challenge, and get our accounts in order. Here too, however, the Super Committee is headed down the wrong road.
Republicans have argued that we should balance our budget with spending cuts only – calling for dismantling Medicare, cutting Medicaid and Social Security, and exacting deep cuts in everything from education to child nutrition. Democrats have called for “shared sacrifice,” offering to trade cuts in Medicare and Social Security for tax increases on the rich.
But, when the rewards of growth are not shared, shared sacrifice is for suckers. The reality is that we face a huge mess because Wall Street went on a wilding that blew up the economy. Most Americans weren’t even invited to the party. Now under the banner of shared sacrifice, they are being asked to clean up the mess. Bull. Send the bill to those who had the party. And in fact, seniors and savers and homeowners are already paying a steep price for Wall Street’s excesses, as the policies of the Treasury Department and the Federal Reserve -- focusing on propping up otherwise insolvent banks – has resulted in seniors getting low returns on their savings, homeowners getting no relief on their mortgages, and taxpayers paying the price of the economic ruin left by the banks.
To then suggest that the most vulnerable in the society “share in the sacrifice” or pay more to clean up the mess is an insult.
Worse, it gets our long-term debt problem wrong. We need to hike taxes on the wealthy and on Wall Street to help pay for the mess they created and to provide the funds, once people are back to work, to continue investing in America.
But our long-term debt problem is not a spending problem or a tax problem. It is the product of a broken health care system. We pay nearly twice per capita what the rest of the industrial world pays on health care, with worse results. If we paid simply the average per capita of the industrial world, we would project surpluses in our long-term projections.
Cutting Medicare -- raising the eligibility age as some Democrats have proposed, dismantling it and turning into a voucher as Republicans have suggested -- does nothing for the soaring costs of our health care system. It simply pushes more of those costs on to those least able to afford them -- the elderly, the poor, the disabled.
The cure to our long-term budget problem is to get health care costs under control. That requires taking on the drug companies, the insurance companies and the private hospital complexes that drive prices. Obama’s health care plan is a first step down that road. A public option and negotiating bulk savings on prescription drugs would save even more. The Veteran’s Administration has modeled other savings, in electronic records and more. Medicare for all is where we will eventually end up.
But whatever the solution, no one should be confused about the problem. It isn’t out of control spending. It isn’t greedy seniors, generational warfare, or an “entitlements crisis.” It is a broken health care system, a service that every other industrial country has handled better than we have. Don’t ask the vulnerable to pay more of the out of control costs. Get the costs under control.
You can’t get the right answer if you aren’t asking the right question. At this point, the Super Committee is asking all the wrong questions, and coming up with all the wrong answers. I urge the Progressive Caucus members to do whatever they can to insure that it fails in its effort to drive this economy back over a cliff.