[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                              STATE OF THE
                           AMERICAN WORKFORCE

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

            HEARING HELD IN WASHINGTON, DC, JANUARY 26, 2011

                               __________

                            Serial No. 112-1

                               __________

  Printed for the use of the Committee on Education and the Workforce


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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Duncan Hunter, California            Lynn C. Woolsey, California
David P. Roe, Tennessee              Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania         Carolyn McCarthy, New York
Tim Walberg, Michigan                John F. Tierney, Massachusetts
Scott DesJarlais, Tennessee          Dennis J. Kucinich, Ohio
Richard L. Hanna, New York           David Wu, Oregon
Todd Rokita, Indiana                 Rush D. Holt, New Jersey
Larry Bucshon, Indiana               Susan A. Davis, California
Trey Gowdy, South Carolina           Raul M. Grijalva, Arizona
Lou Barletta, Pennsylvania           Timothy H. Bishop, New York
Kristi L. Noem, South Dakota         David Loebsack, Iowa
Martha Roby, Alabama                 Mazie K. Hirono, Hawaii
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
[Vacant]

                      Barrett Karr, Staff Director
                Mark Zuckerman, Minority Staff Director













                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on January 26, 2011.................................     1

Statement of Members:
    Andrews, Hon. Robert E., a Representative in Congress from 
      the State of New Jersey, letter, dated January 26, 2011, 
      from 250 economists in support of the Patient Protection 
      and Affordable Care Act of 2010............................    66
    Kline, Hon. John, Chairman, Committee on Education and the 
      Workforce..................................................     1
        Prepared statement of....................................     3
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement and questions 
      submitted..................................................    58
    Miller, Hon. George, senior Democratic member, Committee on 
      Education and the Workforce................................     4
        Prepared statement of....................................     6
    Roby, Hon. Martha, a Representative in Congress from the 
      State of Alabama, prepared statement of....................     7

Statement of Witnesses:
    Boushey, Heather, senior economist, Center for American 
      Progress Action Fund.......................................    17
        Prepared statement of....................................    18
        Responses to questions submitted by Mr. Kucinich.........    84
    Holtz-Eakin, Douglas, president, American Action Forum.......    29
        Prepared statement of....................................    32
    McDonnell, Hon. Bob, Governor, Commonwealth of Virginia......     9
        Prepared statement of....................................    11
    Messinger, Dyke, president and CEO, Power Curbers, Inc., on 
      behalf of the National Association of Manufacturers........    12
        Prepared statement of....................................    14
        Additional submission: ``Manufacturing Strategy for Jobs 
          and a Competitive America,'' dated January 2011........    74

 
                    STATE OF THE AMERICAN WORKFORCE

                              ----------                              


                      Wednesday, January 26, 2011

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 2:10 p.m., in room 
2175, Rayburn House Office Building, Hon. John Kline [chairman 
of the committee] presiding.
    Present: Representatives Kline, Petri, Biggert, Platts, 
Wilson, Foxx, Hunter, Roe, Thompson, Walberg, DesJarlais, 
Hanna, Rokita, Bucshon, Gowdy, Barletta, Noem, Roby, Heck, 
Kelly, Miller, Payne, Andrews, Scott, Woolsey, McCarthy, 
Kucinich, Davis, and Hirono.
    Staff Present: James Bergeron, Director of Education and 
Human Services Policy; Kirk Boyle, General Counsel; Casey 
Buboltz, Coalitions and Member Services Coordinator; Ed Gilroy, 
Director of Workforce Policy, Marvin Kaplan, Professional Staff 
Member; Barrett Karr, Staff Director; Ryan Kearney, Legislative 
Assistant; Brian Melnyk, Staff Assistant; Brian Newell, Press 
Secretary; Molly McLaughlin Salmi, Deputy Director of Workforce 
Policy; Mandy Schaumburg, Education Policy Counsel; Ken 
Serafin, Workforce Policy Counsel; Linda Stevens, Chief Clerk/
Assistant to the General Counsel; Joseph Wheeler, Professional 
Staff Member; Aaron Albright, Minority Press Secretary; Tylease 
Alli, Minority Hearing Clerk; Jody Calemine, Minority General 
Counsel; Jose Garza, Minority Deputy General Counsel; Brian 
Levin, Minority New Media Press Assistant; Jerrica Mathis, 
Minority Legislative Fellow, Labor; Celine McNicholas, Minority 
Associate Labor Counsel; Richard Miller, Minority Senior Labor 
Policy Advisor; Megan O'Reilly, Minority Labor Counsel; Julie 
Peller, Minority Deputy Director of Policy and Planning; 
Meredith Regine, Minority Policy Associate, Labor; Melissa 
Salmanowitz, Minority Press Secretary; Michele Varnhagen, 
Minority Labor Policy Director; and Mark Zuckerman, Minority 
Staff Director.
    Chairman Kline. A quorum being present, the committee will 
come to order. I want to make a couple of administrative 
announcements to our guests and to our panel and to my 
colleagues here on the committee. The weather, as all here 
know, has turned a little tough out there. Planes are being 
canceled, flights are being canceled and rescheduled and moved, 
and the roads are slippery, and I am advised that the Office of 
Personnel Management is encouraging Federal employees to leave 
at 4:00. While that doesn't directly apply to us, the 
conditions that will create out there does. So I am going to 
announce to all that we will have a hard stop at 4:00 out of 
respect to all.
    I think, I want to, I am going to make an opening statement 
briefly and turn to Mr. Miller in a minute. But I want to thank 
members for coming and I know that Members of Congress will be 
leaving as the flight schedules direct. So when you need to go, 
when the plane is ready to roll, we understand you will be 
departing. All right.
    Well, good afternoon and welcome to our first hearing of 
the 112th Congress. I appreciate the time our witnesses have 
spared to be with us today. Whether you are a Governor, a small 
manufacturer, an economist, your time is valuable and we are 
grateful for your participation today, all of us.
    It is no secret the American workforce faces significant 
challenges. Over 20 consecutive months' unemployment has 
remained at 9 percent or higher. During that same period of 
time, more than 14 million Americans have been unemployed and 
searching for work. Roughly 1.3 million unemployed workers have 
become so discouraged by searching and coming up empty that 
they have given up hope and abandoned the labor force entirely.
    Despite some unprecedented attempts, perhaps best reflected 
in the failed $814 billion stimulus bill passed in the early 
hours of the last Congress, the Federal Government cannot 
legislate or regulate its way to job creation in our country. 
It can, however, provide some sense of certainty that will give 
the young entrepreneur and small business owner the confidence 
he or she needs to go forward and invest in their new idea or 
company.
    Unfortunately, over the last 2 years we have seen the 
Federal Government move in a disturbingly different direction, 
one that creates economic uncertainty felt by businesses both 
large and small. A number of policies and proposals have caused 
many business owners to think twice before expanding their 
operations or hiring additional workers.
    At the center of this uncertainty is the recent health care 
law. We have all heard the story of a small business owner 
already struggling to make payroll, who now faces a penalty for 
failing to provide government-approved health care. Despite 
promises health care reform would lower costs, the chief 
actuary at the Centers for Medicare and Medicaid Services 
reports national health care spending will increase by some 
$311 billion over the next 10 years. This health care law has 
forced business owners to choose between higher health care 
costs or government penalties. To suggest this doesn't 
discourage job creation in this country is to ignore, I 
believe, reality.
    The President has suggested a willingness to fix what is 
broken in the law. I would suggest the employer mandate is the 
place to start. While one arm of the Federal bureaucracy 
transforms our health care economy, another is considering 
sweeping changes to the law governing the relationship between 
employers and labor unions.
    The National Labor Relations Board is supposed to safeguard 
the rights of workers against the illegal actions of both 
employers and unions. Today there are conversations taking 
place at the NLRB that will have profound consequences for 
America's workers. Many of the discussions going on behind 
closed doors should be debated here in this committee, on the 
floor of this Congress and in the public, in full view of the 
American people. No Federal agency or board should rewrite the 
rules of the game to favor any special interest over the 
interest of all Americans.
    Despite these challenges, I am happy to see the 
administration reconsider various proposals that would have 
made it more difficult for businesses to plan and invest in the 
future. Recently the administration withdrew its proposal to 
re-interpret the noise feasibility standards, a proposal that 
would have imposed significant costs on businesses without any 
real justification. And yesterday the administration announced 
it is reconsidering proposed changes to employer injury and 
illness laws that would have created a significant paperwork 
burden for employers. While I welcome these actions by the 
President, more needs to be done.
    Well, that is why we are here today. We want to learn about 
the policies that may be standing in the way of job creation 
and find better solutions to protect the rights, safety and 
prosperity of the country's workers.
    And I am now pleased to yield to our senior Democratic 
member, the ranking member, Mr. Miller, for an opening 
statement.
    [The statement of Chairman Kline follows:]

            Prepared Statement of Hon. John Kline, Chairman,
                Committee on Education and the Workforce

    Good afternoon and welcome to our first hearing of the 112th 
Congress. I appreciate the time our witnesses have spared to be with us 
today. Whether you are a governor, a small manufacturer, or an 
economist, your time is valuable and we are grateful for your 
participation today.
    It is no secret the American workforce faces significant 
challenges. For 20 consecutive months unemployment has remained at 9 
percent or higher. During that same period of time, more than 14 
million Americans have been unemployed and searching for work. Roughly 
1.3 million unemployed workers have become so discouraged by searching 
and coming up empty that they have given up hope and abandoned the 
labor force entirely.
    Despite some unprecedented attempts, perhaps best reflected in a 
failed $814 billion stimulus bill passed in the early hours of the last 
Congress, the federal government cannot legislate or regulate its way 
to job creation in our country. It can, however, provide some sense of 
certainty that will give the young entrepreneur or small business owner 
the confidence he or she needs to go forward and invest in their new 
idea or company.
    Unfortunately, over the last two years, we have seen the federal 
government move in a disturbingly different direction--one that creates 
economic uncertainty felt by businesses both large and small. A number 
of policies and proposals have caused many business owners to think 
twice before expanding their operations or hiring additional workers.
    At the center of this uncertainty is the recent health care law. We 
have all heard the story of a small business owner already struggling 
to make payroll who now faces a penalty for failing to provide 
government-approved health care. Despite promises health care reform 
would lower costs, the chief actuary at the Centers for Medicare and 
Medicaid Services reports national health care spending will increase 
by $311 billion over the next 10 years. ObamaCare has forced business 
owners to choose between higher health care costs or government 
penalties. To suggest this doesn't discourage job creation in this 
country is to ignore reality.
    The president has suggested a willingness to fix what's broken in 
the law. I would suggest the employer mandate is the place to start.
    While one arm of the federal bureaucracy transforms our health care 
economy, another is considering sweeping changes to the law governing 
the relationship between employers and labor unions. The NLRB is 
supposed to safeguard the rights of workers against the illegal actions 
of both employers and unions. Today there are conversations taking 
place at the NLRB that will have profound consequences for America's 
workers. Many of the discussions going on behind closed doors should be 
debated here in this committee, on the floor of this Congress, and in 
the public--in full view of the American people. No federal agency or 
board should rewrite the rules of the game to favor special interests 
over the interest of all Americans.
    Despite these challenges, I am happy to see the administration 
reconsider various proposals that would have made it more difficult for 
businesses to plan and invest in the future. Recently, the 
administration withdrew its proposal to reinterpret the noise 
feasibility standards, a proposal that would have imposed significant 
costs on businesses without any real justification. And yesterday, the 
administration announced it is reconsidering proposed changes to 
employer injury and illness logs that would have created a significant 
paperwork burden for employers. While I welcome these actions by the 
President, more needs to be done.
    As we look to these recent decisions by the administration, we will 
be guided by President Reagan's aged wisdom--trust but verify. We will 
trust the president when he says he wants to review the regulatory 
structure's affect on jobs, but we will verify that promise against the 
actions his administration takes over the next two years.
    That is why we are here today. We want to learn about the policies 
that may be standing in the way of job creation, and find better 
solutions to protect the rights, safety, and prosperity of the 
country's workers.
    I am pleased to yield now to our senior Democratic member,
    Mr. Miller, for an opening statement.
                                 ______
                                 
    Mr. Miller. Thank you very much, Mr. Chairman. And I want 
to also thank our witnesses for joining us this afternoon.
    Today's hearing on where our Nation's workers stand is a 
timely and an important topic to explore. For most of the 20th 
century, America's working families and middle class made our 
democracy strong. The promise was that if you worked hard, 
played by the rules, you could save something for your kids' 
education, have enough left over to save for a comfortable 
retirement.
    Unfortunately this promise is being broken for working 
families. For 30 years workers have been hit by stagnant pay, 
skyrocketing health costs, rising tuition and a loss of 
retirement security. In lieu of fair pay increases, Americans 
turned to credit to maintain their middle-class standards. With 
certain Federal policies making income inequality worse, wealth 
chased after the next bubble, leading to the Wall Street 
scandals. The economy became over-leveraged, and debt exploded 
to levels not seen since just before the Great Depression.
    The bill came due in the fall of 2007. Since then more than 
8 million Americans lost their jobs, further fueling the 
foreclosure and the debt crisis. Swift and decisive action was 
needed to avoid the total economic catastrophe. Congress and 
the Obama administration came together and made immediate 
investments to save the economy. The Recovery Act was the first 
step, and we see the result today: Over 4.7 million jobs have 
been created or saved, according to the CBO, as a direct result 
of the Recovery Act.
    The broad range of experts disagree, including private 
economists across the political spectrum and the nonprofit 
Congressional Budget Office. In official government statistics, 
our actions saved the economy from slipping into deeper crisis.
    While there is much more work to be done to dig our country 
out of this mess, the private sector job growth has increased 
by 1.34 million jobs last year. That means that the Obama 
policies created more jobs in less than 2 years, than the 
entire 8 years under the Bush administration.
    Even the manufacturing sector is seeing growth for the 
first time since 1997. Private economists are predicting a gain 
this year of 330,000 manufacturing jobs, a dramatic change from 
every year in recent memory. Ford announced its plan to add 
7,000 jobs over the next 2 years. Whirlpool, Dow Chemical and 
Caterpillar have all cannoned that they are going to keep jobs 
in America and even expand operations.
    Also, corporate profits are back to their highest point 
since before the recession began, and the stock market is also 
up.
    The non-farm, non-financial business sector is holding more 
than $1.9 trillion in cash, the highest level since 1959.
    Policies to stimulate the economy are not, by themselves, 
enough. We must also begin to rebuild the foundations of a 
strong middle class. By doing, so we ensure that the recovery 
is fair and that it is sustainable.
    On that front, Democrats in Congress, working with the 
Obama administration, took critical action to grow and 
strengthen our Nation's middle class. Today, all Americans will 
have access to quality, affordable health coverage, no matter 
if their employer provides it or if they change jobs or they 
lose their job.
    Today, college students have access to critical financial 
assistance they need to go to college and to stay in college 
and to earn the critical skills to keep America competitive. 
Today, businesses have powerful new tax incentives for 
businesses to hire the unemployed Americans and expand their 
businesses. Today, workers have the Department of Labor that 
puts worker safety first, all of which has helped reduce 
workplace injuries and makes businesses more efficient. Today, 
workers have a fair minimum wage, a rate that was increased by 
Democrats after Republicans blocked an increase for a decade, 
shamefully allowing the value of the rate to drop to a 50-year 
low. Today, small businesses have more access to credit 
necessary to start and continue or expand their businesses. And 
today, we have a revitalized supervision of our Nation's 
financial institutions to avoid another meltdown in our 
financial system.
    There is more to be done to heal our economy. We need to 
move forward on key investments to help unleash our Nation's 
competitiveness and innovation. One area that this committee 
can work on is the rewrite of the Elementary Secondary 
Education Act so that our Nation's school children can be 
successful in the classroom and beyond.
    Every initiative that goes through this committee must be 
judged by whether or not it will grow and strengthen the middle 
class. We cannot double down on go-go bubble economics and 
trickle-down tax policy. All across the Nation, communities are 
confronting the lack of high-skilled workers, even as 
unemployment is high. In my own communities, business, labor, 
and community colleges have come together with a new urgency to 
tackle this problem.
    We must support these local efforts to create jobs, to stay 
competitive, to act decisively, nationally, to build and to 
maintain a higher skilled workforce. Falling behind is not in 
America's DNA. It never has been and it never will be. We have 
the hardest-working people in the world, and as the President 
pointed out last night, the most productive workers in the 
world, and I hope that we can look forward to solutions that 
help grow and strengthen America's middle class.
    And I thank you very much for having this most timely 
hearing. And I just want to apologize to the witnesses. I am 
one of those who is trying to catch the last flight tonight out 
of Dulles. So I love your testimony. I am not flying with you.
    [The statement of Mr. Miller follows:]

  Prepared Statement of Hon. George Miller, Senior Democratic Member, 
                Committee on Education and the Workforce

    Good afternoon, Mr. Chairman.
    Today's hearing on where our nation's workers stand is a timely and 
important t topic to explore.
    For most of the 20th century, America's working families and middle 
class made e our democracy strong. The promise was that if y you work 
hard, play by the rules, you could save e something for your kids' 
education and have enough left over to save for a comfortable 
retirement.
    Unfortunately, this promise is being broken for working families. 
For thirty years, workers have been hit by stagnant pay, skyrocketing 
health costs, rising tuition and loss of retirement security. In lieu 
of fair pay increases, Americans turned to credit to maintain their 
middle class standard of living.
    With certain federal policies making income inequality worse, 
wealth chased after the next bubble, leading to the Wall Street 
scandals. The economy became over-leverage ed. Debt exploded to levels 
not seen since e just before the Great Depression.
    The bill came due in the fall of 2 2007. Since then, more than 8 
million Americans s lost their jobs, further fueling the foreclosure 
and debt crisis. Swift and decisive action was needed to avoid total 
economic catastrophe.
    Congress and the Obama administration came together and made 
immediate investments to save the economy. The Recovery Act t was the 
first step and we see the results today.
    Over 4.7 million jobs have been created and saved according to the 
CBO as the direct result of the Recovery Act.
    A broad range of experts agree--including private economists across 
the political spectrum, the nonpartisan Congressional Budget Office, 
and official government statistics--our actions saved the economy from 
slipping into a deeper crisis.
    While there is much more work to be done to dig our country out of 
this mess, private sector job growth has increased by 1.3 million jobs 
last year. That means that the Obama policies created more jobs in less 
than two years then the entire eight years of the Bush administration.
    Even the manufacturing sector has seen growth for the first time 
since 1997. Private economists are predicting a gain this year of 
330,000 manufacturing jobs--a dramatic change from every year in recent 
memory.
    Ford announced that it planned to add 7,000 jobs over the next two 
years. Whirlpool, Dow Chemicals and Caterpillar all have announced that 
they are going to keep jobs in America and even expand operations.
    Also, corporate profits are back to their highest point since 
before the recession began, and the stock market is up. The nonfarm, 
nonfinancial business sector is holding more than $1.9 trillion in 
cash, the highest level since 1959.
    Policies to stimulate the economy are not, by themselves, enough. 
We must also begin to rebuild the foundations of a strong middle class. 
By doing so, we ensure that the recovery is fair and sustainable.
    On that front, Democrats in Congress working with the Obama 
Administration took critical actions to grow and strengthen our 
nation's middle class.
     Today, all Americans will have access to quality, 
affordable health coverage no matter if their employer provides it, or 
if they change jobs
     Today, college students have access to critical financial 
assistance they need to go to college, and stay in college--and earn 
the critical skills to keep America competitive.
     Today, businesses have powerful new tax incentives for 
businesses to hire unemployed Americans and expand their businesses
     Today, workers have a Department of Labor that puts worker 
safety first--all which helps reduce workplace injuries and makes 
business more efficient.
     Today, workers have a fairer minimum wage rate--a rate 
that was increased by Democrats after Republicans blocked an increase 
for a decade--shamefully allowing the value of the rate to drop to a 50 
year low.
     Today, small businesses have more access to credit 
necessary to start, continue, or expand their business.
     And today, we have a revitalized supervision of our 
nation's financial institutions to avoid another meltdown of our 
financial system.
    There is more to be done to heal our economy. We need to move 
forward on key investments to help unleash our nation's competitiveness 
and innovation.
    One area this committee can work on is to rewrite the Elementary 
and Secondary Education Act so that nation's schoolchildren can be 
successful in the classroom and beyond.
    Every initiative that goes through this committee must be judged on 
whether it will help to grow and strengthen the middle class. We cannot 
double-down on go-go bubble economics and trickle down tax policy.
    All across the nation, communities are confronting a lack of highly 
skilled workers, even as unemployment is high. In my own communities, 
business, labor, and community colleges have come together with a new 
urgency to tackle this problem.
    We must support these local efforts to create jobs, stay 
competitive, and act decisively nationally to build and maintain a 
highly skilled workforce. Falling behind is not in America's DNA--it 
never has, and never will be.
    We have the hardest working people in the world and I hope we can 
look forward to solutions to help grow and strengthen America's middle 
class.
    I yield back.
                                 ______
                                 
    Chairman Kline. I thank the gentleman. And we all 
understand. There will be a Le Mans start for the airport here 
pretty quick, I am sure. I thank the gentleman for his 
statement and for the cooperation that he has shown over the 
years when he was the chair of this committee.
    Pursuant to committee rule 7(c), all members will be 
permitted to submit written statements to be included in the 
permanent hearing record.
    [The statement of Mrs. Roby follows:]

 Prepared Statement of Hon. Martha Roby, a Representative in Congress 
                       From the State of Alabama

    Thank you Mr. Chairman. This being my first hearing of the 
Education and Workforce, I want to take a moment to express know how 
much I look forward to working with you over the next two years. I look 
forward to an open debate on reforming health care, ensuring our 
children have the resources to reach their full potential, and 
innovative ways for job creation. The hearing today is the first step 
toward this in regards to the state of our workforce. I want to thank 
the witnesses for appearing today at our first full committee hearing.
    The Administration administered an $814 billion ``stimulus'' 
package in 2009 that has done nothing to stimulate the economy--
instead--resulting in a loss of 2.1 million jobs. During the Great 
Depression of the 1930s, the New Deal was designed to address the ``3 
Rs''--relief, recovery and reform. Out of the New Deal, this country 
became stronger with improved infrastructures like the Hoover Dam, 
improved national transportation system and a more secured financial 
system. Unfortunately, the Obama's Stimulus Package did not provide 
similar results. This nation is still left with an aging 
infrastructure, high unemployment, high levels of uncertainty in 
business, and an out-of-control federal debt.
    During my travels around the district, I hear from so many 
constituents on about the negative impact that the recent efforts by 
the federal government are having on their businesses and jobs. I 
specifically hear about the opposition to the Patient Protection and 
Affordable Care Act signed into law last year. Last week, the House 
voted to repeal the law that created significant uncertainty for 
businesses-particularly for small business where job growth is so 
critical in turning around this recession. I recently spoke with one of 
my constituents from Headland, Alabama, who owns a Pizza Hut. He told 
me that he will most likely have to shut down his business due to the 
added cost from Obama Health Care. I heard from another constituent, 
who owns several pharmacies in the southeast, that he had the ability 
to create four new jobs bust has not due to the uncertainty of what the 
federal government will place on him next.
    I look forward to the testimony today from our witnesses on their 
observations of these and other factors that have been roadblocks to 
America's recovery. Only last month it was reported that December was 
the 20th month that unemployment was still above 9 percent nationally. 
In my home state of Alabama, unemployment rose slightly to 9.1 percent, 
which represents 195,000 unemployed workers in the state. This 
Committee must move forward in legislation that will take away the 
obstacles to growth for small businesses to help turn around this 
recession. The answer to economic growth is not a national answer, but 
one on every Main Street and farm of this nation-for small business to 
operate and build upon innovation. Once again thank you Mr. Chairman 
for holding this hearing.
                                 ______
                                 
    Chairman Kline. It is now my pleasure to introduce our 
distinguished panel of witnesses. Governor Bob McDonnell is the 
71st Governor of Virginia. Prior to assuming office, the 
Governor served as the 44th Attorney General of Virginia from 
2005 to 2009, and was a member of the Virginia House of 
Delegates from 1992 to 2006. Governor McDonnell also served in 
the U.S. Army, both Active Duty and Reserve, retiring as a 
lieutenant colonel in 1997. In addition to his long and 
distinguished public and military service, the Governor also 
has experience in the private sector, having worked for 
American Hospital Supply Corporation, a Fortune 500 company, 
for a number of years. He holds master's degrees in business 
administration and public policy, as well as a law degree. 
Welcome, Governor.
    Our next witness, Mr. Dyke Messinger, is the President and 
CEO of Power Curbers, Incorporated in Salisbury, North 
Carolina. Power Curbers is a 55-year old family-owned company 
in Salisbury, North Carolina, that manufacturers paving 
equipment to form concrete curbs and gutters, highway safety 
barriers and other special applications. In 2007 Mr. Messinger 
was awarded the Manufacturing Champion Award by the Charlotte 
Chamber of Commerce, as well as the Sam Walton Business Leader 
Award by the Salisbury, Rowan County Chamber of Commerce. In 
addition to his service with Power Curbers, Mr. Messinger 
serves on the Board of Directors of the National Association of 
Manufacturers.
    Dr. Heather Boushey is a senior economist at the Center for 
American Progress. Her research focuses on employment, social 
policy, and family economic well-being. Prior to her work at 
the Center for American Progress. Dr. Boushey was an economist 
with the Joint Economic Committee of the U.S. Congress, the 
Center for Economic and Policy Research, and the Economic 
Policy Institute. Welcome.
    And Dr. Douglas Holtz-Eakin is currently the President of 
the American Action Forum. Since 2001 he has served in a 
variety of policy positions which include his service as the 
chief economist of the President's Council of Economic Advisors 
and as the Director of the Congressional Budget Office from 
2003 to 2005.
    Welcome to you all. There are little boxes in fronts of 
you. Those lights will illuminate. The system here is you get a 
green light at the start of your remarks and some 4 minutes or 
so into it, you get a little yellow light, and at the end of 5 
minutes you get a red light. We would ask you somewhere in 
there to try to wrap up. I am not prepared at this, my first 
hearing, to gavel anybody down when the light turns red. But 
please try to wrap up your comments. And we would like to hear 
from all of you. And then as time allows, we would move into 
questions. So, at this time, we will start here and go that 
way, Governor.

 STATEMENT OF HON. ROBERT F. McDONNELL, GOVERNOR, COMMONWEALTH 
                          OF VIRGINIA

    Governor McDonnell. Mr. Chairman. Thank you very much for 
your kind invitation to come and talk to you about this 
critically important topic of job creation and economic 
development. I am delighted to come from across the Potomac to 
your south to be with you. It is good to be with my friend, 
Congressman Scott, as well. I don't think there is any more 
important issue facing the American public than that issue, as 
well as spending control, and so it is very timely that you 
make this your first topic.
    I was particularly gratified with the President's speech 
last night and his focus on job creation and workforce 
development and access to the American dream. I think that is 
something that crosses all party lines, and the question is how 
do we best get there; what actually works at the state and 
Federal level to promote that?
    I will share just a couple of thoughts with you in three or 
four categories about some experiences I have from Virginia 
that are working and then some things we would like to ask you 
to consider up here.
    I would say that over the last year we have taken a very 
strong set of steps in Virginia to cut spending and focus on 
economic development. As a result of that, we have turned a 
deficit into a $400 million surplus and we have been ranked 
this year either number one or number two as far as the most 
business-friendly State in the country. We are ranked fourth in 
total job creation, ninth lowest unemployment rate. So we have 
learned a little bit about some of the things that work that I 
wanted to share with you.
    First is what is the overall climate; what can you do in 
the States? It starts to keeping our environment where taxes 
and regulation and litigation are all kept to a minimum. Strong 
right to work laws. We are 1 of 22 states that have that. That 
is a magnet for business, great higher education system.
    And then thirdly, some of the intangibles: tone, saying you 
are open for business and welcoming business, not attacking 
business, which I think is critically important and I was 
delighted to see some of that last night as well in the 
President's remarks.
    We have also set some big aspirational goals, I think, that 
are helpful, making Virginia the best State in America for 
small business, making it the energy capital of the east coast. 
Businesses have now come and are gravitating around those 
goals.
    The second topic that I would say is there are some things 
in the short run that both Congress and the States can do to 
really attract business. Some of the things we have done in 
Virginia would be creating new economic development incentives 
for businesses to come here. I look at me not competing just 
against Carolina, but against China, India, Singapore, Taiwan, 
and other countries and a global economy.
    So we have been much more aggressive in funding things like 
a Governors Opportunity Fund to provide incentives to business 
to relocate; investments in mega sites, opening up trade 
offices in India, and China; focusing on some of the core 
competencies that our State has in things like aerospace and 
agriculture, tourism, film, wine, things we are good at; and 
then putting more incentives to attract new businesses as well. 
And then major tax credits and things that would create jobs 
and produce manufacturing jobs to return back to our 
Commonwealth.
    The third thing I would say is the long-term approach. The 
President touched on this a little bit last night, and that is 
the importance of higher education. We have a major new 
initiative that I proposed to our general assembly just a 
couple of weeks ago to create 100,000 new degrees in Virginia 
over the next 15 years. I am very concerned, as you are, about 
the future of American competitiveness if we continue to lag 
behind in science, technology, engineering, math and health 
care, and the number of degrees that we are producing there 
compared to some of the Pacific Rim countries.
    So we have got to invest and create more opportunities for 
our young people to be able to go to institutions of higher 
education. But we have got to run colleges, I think, a little 
bit more like a business so that we can keep the college 
tuitions low. They have doubled in the last 10 years in 
Virginia, and you price a lot of middle-class kids out if we 
don't find ways collectively to increase access, reduce cost, 
and focus on these areas of STEM.
    The final area, Mr. Chairman, I would like to discuss with 
you are some of the things that you all here in the Federal 
Government can do to help us or to hurt us. And I want to tell 
you about a couple of those that I think can be impediments. 
And again, most Governors would say we really believe, not only 
under the tenth amendment, but the fact that we are closer to 
the people and therefore govern a little better, as Mr. 
Jefferson said, that we ought to have a little more latitude to 
be able to do these free-market things that we believe will 
work.
    Let me tell you a couple that I think don't help. Major new 
regulations. I think Heritage has estimated there were 43 major 
new rules promulgated in 2010, the largest number in 30 years, 
at a cost of $26 billion to business nationally.
    The President talked last night about introducing an 
executive order to say we are going to cut down on regulations, 
find things that don't work, inhibit entrepreneurship and small 
business development and free enterprise. I applaud that. I 
urge you to hold his feet to the fire and make sure you really 
do that to cut down on regulation.
    Secondly is bills like card check and cap-and-trade that 
you have proposed and considered in the past that, for me as a 
coal-producing State, that dramatically hike up energy costs, 
undermine our Right to Work laws. That is not good for me as 
the chief executive officer of a State.
    There are some rules that EPA has promulgated that are 
noble; for instance, in cleaning up the Chesapeake Bay. But the 
TMDLs will cost Virginia about $700 million in unfunded 
mandates in our State and our businesses over the next 15 
years.
    Mr. Chairman, you mentioned health care. We estimate about 
$2 billion in unfunded mandates on the businesses and the State 
of Virginia over the next 2 years as a result of the health 
care bill.
    So what I would say to you is that the things that we can 
do in the short and the long term involve more opportunity, 
more education--not more guarantees, keeping a lid on 
regulations, on taxes, inhibiting States like mine that have a 
Right to Work law with things like card check that get in the 
way. We would ask you to restrain from doing those things so 
that we can continue to be the laboratories of innovation that 
I think our Constitution contemplates.
    So thank you, Mr. Chairman, I look forward to your 
questions.
    Chairman Kline. Thank you, Governor.
    [The statement of Governor McDonnell follows:]

          Prepared Statement of Hon. Bob McDonnell, Governor,
                        Commonwealth of Virginia

    Good afternoon, Mr. Chairman. Thank you for the kind invitation to 
join you all this morning to talk about the state of the American 
Workforce.
    Over 400 years ago, the Commonwealth of Virginia began as an 
international business venture--and we have a strong and proven track 
record of success. While over the past few years the economy 
unfortunately slowed down in Virginia, as it did nationally, the fervor 
and passion of the entrepreneurial spirit continues to remain strong in 
the people across the Commonwealth from Chincoteague on the Eastern 
Shore to the Cumberland Gap in the far southwest.
    When I took office just over a year ago, we set out to create a 
Commonwealth of Opportunity.
    We are the northernmost ``Right to Work'' state, we have a pro-
business environment that fosters economic growth with low taxes and 
reduce regulations. We have a strong, diverse workforce prepared to 
meet the needs of businesses today. We have been recognized nationally 
as one of the best states in which to do business. While still 
unacceptably high with an unemployment rate of 6.7 percent, and over 
280,000 Virginians out of work, we do have the 9th lowest unemployment 
rate in the nation.
    We have put forth bold initiatives to get our economy moving again. 
I firmly believe it is the entrepreneur who makes businesses grow and 
prosper--not the government. Because of our trust in the men and women 
to determine the course of their business destiny--we have announced 
128 new projects, over $2.2 billion in new investment and over 11,673 
new jobs.
    Since last February 55,400 net new jobs have been created in the 
Commonwealth, the fourth highest number in the nation--trailing only 
Texas, Pennsylvania and California.
    Our accomplishments include the announcement that Northrop Grumman 
will move their headquarters from California to Virginia and 
Microsoft's announcement that they would make the largest investment in 
Southern Virginia history, opening a $500 million state of the art data 
center in Mecklenburg County.
    We are committed to simultaneously attracting new employers while 
also strengthening our workforce--and I have recently announced my 
``Top Jobs for the 21st Century'' initiative that will enable our 
higher education institutions to issue an additional 100,000 degrees 
over the next 15 years, making Virginia one of the most highly educated 
states in the nation. Our initiative also places a greater emphasis on 
the high demand science, technology, engineering and math subjects 
through the formation of a public-private partnership that will engage 
the business and professional community in leveraging best practices 
for K-12 and higher education.
    We are encouraged by the growth we have seen--slow and steady as it 
may be--and the steps we are taking to ramp up that growth are working, 
but there still remains a lot of work to do.
    However, no matter what pro-free market and job-creation steps we 
take in Virginia, we cannot avoid the fact that what happens here in 
Washington can cancel much of it out and make our work that much more 
difficult.
    As you know, our small businesses are the backbone of our economy. 
Our small businesses continue to struggle--and when they are able to 
rebound we will all be on a more prosperous path. According to a study 
just released by the by the National Federation of Independent 
Businesses, the largest problem currently confronting small businesses 
nationwide is weak sales, followed by taxes and government regulations.
    A recent Heritage Foundation analysis reported federal agencies 
issued 43 new major rules increasing regulatory burdens in Fiscal Year 
2010. The total costs of these rules--as estimated by the regulators--
exceeded $26.5 billion. That's the highest single-year cost recorded 
since 1981, the first year for which records are available. These 
increased burdens will stunt operations--especially for small 
businesses.
    We can see the negative impact of excessive federal regulations 
throughout our Commonwealth.
    For example, the total cost of implementation of the Environmental 
Protection Agency's mandated Chesapeake Bay Total Maximum Daily Load 
and the associated Watershed Implementation Plan for Virginia 
agriculture will be up to $2.5 billion. The Health Care Reform passed 
last year will increase the number of Medicaid enrollees in Virginia 
from 270,000 to 425,000, at a cost of $2 billion by the year 2022. Our 
business owners are concerned about how they are going to comply with 
the increased costs to provide insurance to their employees.
    I am concerned--especially as the Governor of a Right to Work 
state--about the December announcement of the National Labor Relations 
Board announcing its intention to publish in the Federal Register a 
proposed rule requiring almost all private sector employers to post in 
the workplace a notice to employees outlining their rights under the 
National Labor Relations Act. The poster entitled, ``Employee Rights'' 
lists seven bullet points that state employees have the right to 
organize, form or join a labor union and repetitively state they have 
the right to negotiate their wages, benefits and working conditions 
with their employer. This is counterproductive and detrimental to the 
message we are trying to send in Virginia.
    Just last week President Obama announced what he called ``A 21st 
Century regulatory system,'' in which his Executive Branch agencies 
would seek ``affordable, less intrusive means to achieve the same ends-
giving careful consideration to benefits and costs.'' He issued an 
executive order ``Improving Regulation and Regulatory Review''--
instructing agencies to begin a retrospective analysis of their 
existing regulations--and we hope to see burdensome regulations 
actually repealed as a result.
    Mr. Chairman, members of the Committee, I applaud you for bringing 
this panel together today to talk about this paramount issue: ``The 
State of the American Workforce.'' In Virginia we are working to keep 
taxes low, and regulation and litigation to a minimum in order to free 
our entrepreneurs and job creators to grow their businesses and create 
the private sector jobs our citizens need. We hope this Committee and 
this Congress will move aggressively and quickly to remove the 
obstacles that hinder job growth in our great Commonwealth and nation.
    Thank you and I look forward to your questions.
                                 ______
                                 
    Chairman Kline. Mr. Messinger.

STATEMENT OF DYKE MESSINGER, PRESIDENT, POWER CURBERS, INC., ON 
      BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

    Mr. Messinger. Good morning, Chairman Kline and 
distinguished members of the committee. I am Dyke Messinger, 
President and CEO of Power Curbers, Incorporated, headquartered 
in Salisbury, North Carolina. We employ 105 people in the 
United States. We were established in 1953, and manufactured 
the first automatic curb-building machine in the world. And I 
have been leading a manufacturing company for 35 years.
    On behalf of manufacturers in the United States, I 
appreciate the opportunity to discuss impediments to job 
creation because, as we all know, manufacturing does mean jobs. 
Manufacturing supports an estimated 18.6 million jobs in the 
United States, about one in six private sector jobs. To put 
this in context, this is about the equivalent of the entire 
populations of the five largest cities in the United States: 
New York, Los Angeles, Chicago, Houston and Phoenix combined.
    Manufacturing also means opportunity, innovation, security 
and economic growth. In my prepared testimony, I lay out a 
lengthy and, frankly, troubling list of these impediments in 
such areas as taxation, labor policy, trade, regulation, and 
innovation. Fundamentally, this should be understood not just 
as a list of impediments to job creation, but also to U.S. 
competitiveness.
    We live in and operate in a global economy. Every time the 
Federal Government enacts a new law, tax, or regulation that 
makes it harder for a U.S. manufacturer to compete with foreign 
companies, that is also an impediment to us hiring people.
    Change, inconsistency, uncertainty are also impediments. 
Employers who have no sense of what tax or regulatory policy 
will look like next year or 5 years from now are going to be 
cautious about hiring new workers.
    The NAM last year developed our manufacturing strategy for 
jobs, and to make a competitive America, proposing policies 
that would lift these impediments. I would respectfully ask 
that this document be included in my submission to the 
committee.
    The strategy sets three broad goals that, if completed, 
would mean that we achieve the kind of pro-manufacturing 
policies that encourage the hiring that is so important. We 
start with the goal that the U.S. will be the best country in 
the world to headquarter a company. It is critical that our 
national tax climate does not place manufacturers in the United 
States at a competitive disadvantage in the global marketplace. 
A pro-manufacturing tax policy must first acknowledge that when 
Congress raises taxes, it makes manufacturers in the U.S. less 
competitive. It is essential that Congress lower the corporate 
tax rate to 25 percent or lower, without imposing offsetting 
tax increases, as well as instituting permanent lower taxes for 
the over 70 percent of manufacturers that are S corporations 
and file as individuals.
    We must also recognize that one of America's great 
competitive advantages is our dynamic labor market. Employers 
face growing uncertainty with NLRB efforts to enact the goals 
of the dangerous card-check legislation through executive 
action.
    Additionally, manufacturers face further regulations from 
OSHA.
    Health care is a pressing concern for all, of course. Above 
all, health care solutions must contain costs by building upon 
the existing employer-sponsored health care system without 
jeopardizing or mandating plan design.
    Our second goal is one that President Obama recognized last 
night in his State of the Union address; that the United States 
should be the best country in the world to innovate, performing 
the bulk of a company's global research and development. The 
R&D tax credit is important to achieve this goal. It has passed 
and expired more than a dozen times.
    This point reinforces my earlier comments about certainty. 
Business, investors, employers, we all crave predictability and 
permanence. A little more permanence in all tax policy would be 
a good thing.
    And finally, our last goal is that the United States be a 
great place to manufacture, both to meet the needs of the 
American market, and serve as an export platform for the world. 
Manufacturers rely on overseas markets because the bulk of all 
U.S. goods and services are manufactured goods. Exports of 
manufactured goods have driven the 2009 and 2010 economic 
recovery. I know this well, as my company exports 75 percent of 
what we manufacture.
    Rising energy costs continue to be an impediment to growth 
and job creation. We need a comprehensive, all-of-the-above 
energy policy that allows access to affordable sources of 
energy and promotes reliable generation of baseload power that 
meets the demands of a growing economy.
    Mr. Chairman, members of the committee, I appreciate the 
opportunity to testify today to provide an overview of some of 
the many challenges currently facing manufacturers. Thank you 
very much.
    Chairman Kline. Thank you, sir.
    [The statement of Mr. Messinger follows:]

Prepared Statement of Dyke Messinger, President and CEO, Power Curbers, 
      Inc., on Behalf of the National Association of Manufacturers

    Good morning Chairman Kline, Ranking Member Miller and 
distinguished members of the Committee. I appreciate the opportunity to 
speak with you today about the state of the American workforce, 
impediments to job creation and manufacturing strategies for jobs and a 
competitive America.
    I am Dyke Messinger, president and CEO of Power Curbers, Inc. Power 
Curbers is based in Salisbury, North Carolina and employs 105 people in 
the United States. Power Curbers was established in 1953 and 
manufactured the first automatic curb machine in the world. I have been 
leading a manufacturing company for 35 years.
    On behalf of manufacturers in the United States, I appreciate the 
opportunity to discuss impediments to job creation because 
manufacturing means jobs. Manufacturing also means opportunity, 
innovation, security and economic growth. Our nation's manufacturing 
employees are ready to preserve and build upon the greatness built by 
generations past and by those in manufacturing today.
    The United States is the world's largest manufacturing economy, 
producing 21 percent of global manufactured products. U.S. 
manufacturing alone makes up 11.2 percent of our nation's GDP. More 
importantly, manufacturing supports an estimated 18.6 million jobs in 
the U.S.--about one in six private-sector jobs. To put this in context, 
this is about the equivalent of the entire populations of the five 
largest cities in the U.S.: New York City, Los Angeles, Chicago, 
Houston and Phoenix combined. Nearly 12 million Americans (or 9 percent 
of the workforce) are employed directly in manufacturing. Manufacturing 
jobs are high paying jobs, too. In 2009, the average U.S. manufacturing 
worker earned $74,447 annually, including pay and benefits--22 percent 
more than the rest of the workforce.
    But today's manufacturers face many challenges to our global 
competitiveness and job creation efforts. Proposals that increase taxes 
and impose new regulations will make business in the United States less 
competitive. These proposals will stifle the already weak recovery and 
destroy manufacturers' ability to create jobs.
    Manufacturers need policymakers in Washington to embrace policies 
and solutions that will ensure that the United States is the greatest 
place in the world to be a manufacturer and to be a manufacturing 
employee, because manufacturing means jobs. We must focus on 
manufacturing strategies that have three key goals:
     to be the best country in the world to headquarter a 
company;
     to be the best country in the world to do the bulk of a 
company's research and development; and
     to be a great place to manufacture goods and export 
products.
The U.S. Must Be the Best Country in the World to Headquarter a Company
    Manufacturing today is global and mobile. Companies often enjoy an 
array of attractive choices when deciding where to locate their 
headquarters, do their research or build new facilities. While the use 
of government incentives is commonplace today, a country's or state's 
business climate itself ultimately determines where a company will be 
located.
    As a springboard for future economic growth, investment and jobs, 
manufacturers believe the United States must seek to be the best 
country in the world in which to locate a manufacturing company's 
headquarters.
    To do this, we need a national tax climate that does not place 
manufacturers in the United States at a competitive disadvantage in the 
global marketplace. A pro-manufacturing tax policy must first 
acknowledge that when Congress raises taxes, it makes manufacturers in 
the U.S. less competitive. Our tax system must promote fair rules for 
taxing active foreign income of U.S. based businesses. Congress must 
reduce the corporate tax rate to 25 percent or lower without imposing 
offsetting tax increases. Over 70 percent of American manufacturers are 
S-corporations that file taxes at the individual rate. We must 
institute permanent lower tax rates for individuals and small 
businesses.
    We must also recognize that one of America's great competitive 
advantages is our dynamic labor market. Companies must move quickly to 
meet the demands of a rapidly changing marketplace, and the continuing 
expansion of federal mandates and labor regulations undermines employer 
flexibility. In addition, increasing costs discourage the hiring of new 
employees.
    To encourage competitiveness, the United States should reject new 
federal regulations that dictate rigid work rules, wages and benefits 
and that introduce conflict into employer-employee relations. We must 
also support initiatives at the Occupational Safety and Health 
Administration (OSHA) and other oversight agencies that encourage 
employers and employees to join in cooperative efforts for safer 
working environments. Employers' voluntary efforts to meet the needs of 
individual employees through flexible work schedules and benefit 
arrangements need to be recognized and promoted.
    It is important that manufacturers are able to engage in positive 
and fair employee-employer relations. As employers, manufacturers face 
growing uncertainty in the area of labor law--especially from case 
decisions and regulations from the National Labor Relations Board 
(NLRB). While manufacturers greatly appreciate that Congress has 
rightfully recognized the dangers of ``card check'' legislation, any 
effort to implement the goals of that misguided legislation would be a 
threat to job creation. We continue to urge policymakers to uphold the 
principles of fairness and balance on which our labor laws have been 
developed for over seven decades.
    Congress must also support health care reform that drives down 
costs. Above all, health care solutions must contain costs by building 
upon the existing employer-sponsored health care system without 
jeopardizing or mandating plan design. The health care law passed by 
Congress in 2010 must be continually assessed for its effectiveness, 
cost and unintended consequences. Regulations to implement this law 
must be fully transparent and must not add new employer mandates and 
costs.
The U.S. Must Be the Best Country in the World to Innovate
    Innovation has long helped manufacturing in the United States 
maintain its global leadership. Between 2000 and 2006, manufacturing 
productivity increased annually by an average of 3.8 percent, primarily 
due to innovation and technological advances spurred by research and 
development (R&D). U.S. manufacturers perform half of all R&D in the 
nation, which drives more innovation than any other sector. To maintain 
this competitive advantage, tax provisions must be enacted that will 
stimulate investment and recovery, including strengthening the R&D tax 
credit and making it permanent. Manufacturers in the United States need 
the certainty and incentives provided by a permanent and robust R&D tax 
credit.
    The federal government must continue its focus on basic R&D that 
expands the knowledge base, spurring private-sector R&D as well as 
commercial development. Innovation is served by robust funding for 
federal research agencies as well as financial support for public- and 
private-sector research.
    To ensure that we have the skilled workforce necessary to ensure 
our economic competitiveness, manufacturers must be able to attract the 
best talent from here in the United States and from the entire world. 
Between 1995 and 2005, immigrants founded or co-founded 25 percent of 
all U.S. high-tech firms. Our nation's immigration rules must allow 
substantial increases in the number of employer-sponsored visas.
The United States Will Be a Great Place to Manufacture
    An effective manufacturing strategy promotes domestic manufacturing 
that serves the U.S. and the increasingly integrated North American 
markets. It also supports companies that export and expand abroad to 
serve foreign markets. Manufacturing shipped a record $5.8 trillion in 
2008 ($1.6 trillion in value added) and provided 11 percent of the 
nation's GDP. Manufacturers rely on overseas markets because the bulk 
(57 percent) of all U.S. exports of goods and services are manufactured 
goods. Exports of manufactured goods have driven the 2009-2010 economic 
recovery which is demonstrated by the fact that 75 percent of Power 
Curbers product is shipped overseas.
    Manufacturers need a level playing field. In today's global 
marketplace, we are no longer competing only against businesses in our 
state or region or even the country. We face competition from around 
the world. Foreign manufacturers often must comply with fewer 
regulations and have governments that use every tool at their disposal 
to give those companies a competitive edge, frequently at the expense 
of manufacturers in the United States.
    The solution is to increase access to foreign markets through trade 
agreements and ensure the regulatory environment in the U.S does not 
put manufacturers at a disadvantage.
    To do this, manufacturers need a progressive international trade 
policy that opens global markets, reduces regulatory and tariff 
barriers and reduces distortions due to currency exchange rates, 
ownership restrictions and various ``national champion strategies.'' 
Congress must enact pending trade agreements and the Administration 
must negotiate additional agreements in the Pacific area and elsewhere. 
Trade agreements reduce the barriers to U.S. exports and create jobs.
    In addition to leveling the playing field on trade, policies must 
help small and medium-sized manufacturers through expanded programs to 
help drive U.S. exports.
    Manufacturers also need a comprehensive energy strategy that 
embraces an ``all of the above'' approach to energy independence that 
will allow access to affordable energy. Such a policy should encourage 
production of baseload electricity--the dependable power that is 
critical to manufacturing processes--including traditional coal, 
hydropower and natural gas, nuclear and renewable and alternative 
fuels. Reducing our dependence on foreign energy by increasing domestic 
supply will help achieve this goal. Congress should allow expanded 
production of oil and natural gas by lifting the moratorium on Outer 
Continental Shelf development, and encourage development of shale gas.
Regulatory Environment
    Employers across the U.S., especially manufacturers, face 
considerable uncertainty that stifles economic growth and prevents job 
creation. Burdensome regulations and government mandates do little to 
address this uncertainty. A regulatory environment needs to allow 
economic growth. For laws that affect manufacturers, there are often 
scores of regulations that impose substantial compliance costs--burdens 
often never anticipated by the lawmakers who passed the legislation.
    The Small Business Administration recently estimated that the 
annual cost of federal regulations in the United States increased to 
more than $1.75 trillion in 2008. The portion of these regulatory costs 
that falls initially on businesses was $8,086 per employee in 2008. 
This study represents the best research available to identify the 
disproportionate burden placed on small business by regulation, and it 
is 36 percent higher than larger firms. Manufacturers bear the heaviest 
burden from environmental regulation, while facing similar or more 
stringent regulations in workplace safety, health, transportation, 
financial, trade, tax administration, homeland security and export 
controls.
    This Administration is in the midst of proposing or implementing 
numerous regulations. If they are not substantially changed from their 
present form, they could cost millions of jobs and weaken an economy in 
a still fragile recovery.
    Based on data from the Government Accountability Office, 43 major 
new regulations were imposed over the previous two years. Collectively, 
the cost of these rules topped $26.5 billion. Manufacturers appreciate 
President Obama's recent executive order to review federal regulations 
harming economic growth. Growing overregulation from Washington harms 
job creation and stifles economic growth. This call for a government-
wide review of regulations and rules is an opportunity for the 
President to demonstrate results by eliminating unnecessary regulations 
already in the pipeline or delaying poorly thought-out proposals that 
are costing jobs.
    Some of the most concerning regulatory proposals stem from the 
Environmental Protection Agency (EPA). At the beginning of this year, 
the EPA began regulating greenhouse gas (GHG) emissions from stationary 
sources under the Clean Air Act. While only the largest facilities will 
be regulated at first, this action sets the stage for future regulation 
of much smaller sources. Manufacturers are also concerned that states 
are unprepared for the new permitting requirements, which will cause 
significant delays. This permitting gridlock will discourage 
manufacturers from building new facilities or expanding their current 
facilities, hurting competitiveness and discouraging job creation. 
Furthermore, additional facilities--including hospitals, agricultural 
establishments and even the smallest businesses--will be phased into 
the onerous permitting requirements in the near future.
    While we are pleased that OSHA has announced that it intends to 
withdraw its proposed changes to noise control requirements, 
manufacturers still face many burdens from this agency. Specifically, 
manufacturers are concerned with OSHA's plans to make it more difficult 
for employers to work cooperatively with the agency to comply with 
workplace safety standards. Through a series of both proposed 
regulations and sub-regulatory administrative actions, OSHA is in the 
process of gutting key components of compliance assistance programs 
that have been proven to help employers make their workplaces safer 
while allowing the agency to focus its resources more effectively.
Conclusion
    I appreciate the opportunity to testify before the Committee today 
to provide an overview of some of the many challenges currently facing 
manufacturers. It is my hope that Congress can embrace strategies that 
enhance our competitiveness and foster job creation. I respectfully 
request permission to submit a plan created by the National Association 
of Manufacturers in June 2010--the Manufacturing Strategy for Jobs and 
a Competitive America.
                                 ______
                                 
    Chairman Kline. Dr. Boushey.

  STATEMENT OF HEATHER BOUSHEY, SENIOR ECONOMIST, CENTER FOR 
                       AMERICAN PROGRESS

    Ms. Boushey. Thank you, Chairman Kline, Ranking Member 
Miller, Representative Andrews, and everyone on this committee 
today for inviting me here to speak. My name is Heather Boushey 
and I am the senior economist with the Center for American 
Progress Action Fund, and I am glad to be here to discuss the 
state of the American workforce. Until we fill the demand gap, 
we will have continued high unemployment which, in turn, will 
continue to drag our economy down.
    Today's high unemployment was caused by the mismanagement 
of the economy in the 2000s, a financial sector not focused on 
fostering productive investments and a housing bubble.
    We must address these root causes. Creating jobs now means 
making investments that not only boost employment in the short 
term, but lay the foundation for long-term economic growth. 
Jobs will not be created by limiting regulation, repealing the 
Affordable Care Act or focusing exclusively on the short-term 
deficit.
    Now, the private sector has been adding jobs every month 
for a full year and at a faster rate than during the 2000 
economic recovery. Even with the success of the Recovery Act in 
boosting job growth, however, at this pace we will not reach 5 
percent unemployment for decades. Unemployment has stood at or 
above 9 percent for a record 20 months, and there is growing 
evidence that workers may not again find jobs at their prior 
pay rates. Job losses have been widespread and not only 
concentrated in the sectors hardest hit by the bursting of the 
housing bubble.
    This directly contradicts the notion that the jobs crisis 
is a structural program. The continuing slow pace of the jobs 
recovery stems from insufficient aggregate demand in the 
overall economy. Gross domestic product has grown for five 
quarters now, and it is likely we will find out on Friday it 
has grown again. Much of this growth has been due to the 
Recovery Act and other policies aimed at addressing the fallout 
from the financial crisis. Yet our economy continues to have a 
gap between what our economy currently produces and what it 
would be producing if workers and the economy's productive 
assets were to be used at full employment.
    About a third of this total output gap is due to the lost 
wages of the unemployed. Unemployment insurance fills that gap, 
and that is why it is critical to sustaining the economic 
recovery and that is why we can't just fill the gap with tax 
cuts.
    Now, investment is the key to creating jobs now and 
building the foundation for a high productivity future. Even 
though corporate America is flush with cash, investment is at 
its lowest level in more than five decades. Yet the cost of 
capital continues to be at lows not seen since the 1960s, and 
small businesses continue to point to the problem as being the 
lack of customers. A lack of demand is their key problem.
    Now, we know that we need to spend at least $2.2 trillion 
over the next 5 years just to repair our crumbling 
infrastructure. This doesn't even include things like high-
speed rail, mass transit, and renewable energy investments, 
many of the things that the President talked about last night 
that we need to do to free ourselves from foreign oil and 
climate change.
    Infrastructure investments have traditionally been a 
bipartisan issue and one that hopefully this Congress can build 
a bridge across the aisle to address. We should not, however, 
repeat the mistakes of the Great Depression, or, as it now 
seems, the conservatives have done in the U.K. with austerity 
policies that will not create jobs.
    The most important reason for the rise in the deficit is 
rising unemployment and falling incomes. Economists Allen Blind 
and Mark Zandi have estimated that had Congress done nothing to 
address the fallout of the financial crisis, the deficit would 
have ballooned to more than 2\1/2\ times as large as it is 
currently projected to grow.
    Moving forward, policymakers like yourselves must continue 
to ensure that financial markets are focused on their real 
purpose: making funds available to promote investment in 
America, not just speculation and greater profits for those in 
the financial services industry.
    Yesterday the Financial Crisis Inquiry Commission clearly 
placed blame for the crisis on the lack of oversight and 
regulation of the financial sector. The agencies that oversee 
the financial markets must be fully staffed and allowed to do 
their job.
    We also need to make sure that if a goal of our trade 
policy is job creation, then we need to evaluate whether or not 
these policies that we are pursuing will actually reduce our 
trade deficit and, on net, create jobs. We know from economic 
research that local labor markets that have increased exposure 
to Chinese exports have had high unemployment, lower labor 
force participation, and reduced wages. And there is not good 
empirical evidence that shows that the Korea free trade 
agreement would generate economically meaningful job gains. We 
need jobs now and we need the kind of investments that will 
transform our economy and renew long-run prosperity.
    Thank you very much.
    Chairman Kline. Thank you.
    [The statement of Ms. Boushey follows:]

        Prepared Statement of Heather Boushey, Senior Economist,
                Center for American Progress Action Fund

    Thank you, Chairman Kline and Ranking Member Miller for inviting me 
here today to testify on the state of the American workforce. My name 
is Heather Boushey and I'm a senior economist with the Center for 
American Progress Action Fund.
    The challenges workers are as great as they've been in generations. 
The Great Recession has wrought havoc in the lives of millions of 
families. The policies that will create jobs are those that will 
increase aggregate demand by making investments that will not only 
boost employment in the short-term, but lay the foundations for long-
term economic growth.
    Until we fill the demand gap, we will have continued unemployment, 
which in turn will continue to drag down economic growth. 
Unemployment--the ultimate unused capacity--is a terrible thing. 
Allowing it to fester when you have tools at your disposal to alleviate 
it sends a message that our government not only doesn't care about the 
very real hardships families are facing, but that they don't recognize 
the enormous waste of human potential.
    The real question is whether policymakers will focus on not 
repeating the mistakes of the Great Depression and, rather, continue to 
focus on boosting investment until the recovery solidly takes hold.\1\ 
While the immediate imperative is to address in the short-term high 
unemployment, we must also simultaneously begin to address the deep 
structural challenges to long-term growth and job creation.
    Jobs will not, however, be created by limiting regulation or 
repealing the Affordable Care Act, nor by creating by cutting spending 
or focusing on the short-term deficit. And, I would caution you on 
focusing too much on the short-term deficit. That deficit is not due 
the result of overspending, but rather due to the failed economic 
policies and two unfunded wars of the Bush Administration, and the 
higher costs and lower tax revenues caused by the Great Recession.
The issues facing workers
    Today's high unemployment is a function of the reality that there 
simply aren't enough jobs to go around because there is not sufficient 
demand in our economy. While the economy has been growing for at least 
five quarters now, businesses have not yet begun to ramp up hiring. 
While unemployment creates significant hardships for individual 
families, it also threatens the nascent economic recovery: the 
unemployed can't spend what they don't earn and spending is what keeps 
our economy humming. Thus, there is a direct link between lack of 
hiring and future economic growth.
High unemployment threatens economic stability of millions of American 
        families
    While the recession ended in June 2009, for everyday Americans, 
there's been no recovery. The private sector has been adding jobs every 
month for a full year and averaged 128,000 jobs per month over the past 
three months.\2\ This is a faster pace than in the 2000s economic 
recovery, but at this rate, we won't reach 5 percent unemployment for 
decades (Figure 1).\3\ To get to 5 percent unemployment by November 
2012, we'd need to add more than four times the number of jobs that our 
economy is adding now--551,000 jobs each month.
    Unemployment has stood at or above 9 percent for a record 20 months 
and economists predict it will remain this high at least through 2011. 
Nearly half of those unemployed have been job searching for at least 
six months.\4\ The odds of finding work continue to look rather grim. 
For every five people searching for a job, there is only one job 
available. It's like a sad game of musical chairs: one chair, five 
seeking a seat. We all know how that game ends.
    High unemployment has long-term consequences for workers and their 
families, as well as our economy overall. The more than 6 million 
unemployed workers who have been searching for a new job for at least 
six months are unable to make use of their skills or contribute to our 
nation's productive capacity. Consider these facts: Average mature 
workers who lose a stable job will see their earnings fall by 20 
percent over 15 years to 20 years,\5\ and the labor market consequences 
of graduating from college in a bad economy are large, negative, and 
persistent.\6\
    Many workers may never find jobs at the level of the job they lost 
during this Great Recession. Recent data from the Bureau of Labor 
Statistics has found that as of last year at this time among those who 
were displaced from their job--permanently losing their job or laid off 
because their employer's plant closed or business failed--between 2007 
and 2009, just half (49 percent) were reemployed. This is lowest 
reemployment rate on record for the series, which began in 1984. Of 
those reemployed in full-time work, more than half (55 percent) were 
earning less than they did prior to displacement.\7\
                                figure 1


The continuing slow pace of the jobs recovery stems from one factor: 
        Insufficient aggregate demand in the overall economy
    Gross domestic product, or GDP, grew at an annual rate of 2.6 
percent in the third quarter of 2010, the fifth quarter of positive 
growth in a row.\8\ Much of this growth would not have happened without 
the American Recovery and Reinvestment Act and other policies aimed at 
addressing the fallout from the financial crisis.
    Yet, our economy continues to have what economists call ``excess 
capacity,'' which means there is not enough demand for all the goods 
and services we have the capacity to produce, and thus not enough 
demand for more workers. As of December 2010, capacity utilization was 
76 percent, 4.6 percent below its average from 1972 to 2009.\9\ Excess 
capacity is a technical term that economists use to describe what 
Americans are currently seeing everyday around them--excruciatingly 
high unemployment, especially long-term unemployment, and the 
devastation it causes families and communities all around our nation.
    Another way to measure excess capacity is the ``output gap,'' the 
gap between what our economy currently produces and what it would be 
producing if workers and the economy's productive assets were to be 
used at full employment. Currently, the output gap is equal to over 6 
percent of our total gross domestic product (Figure 2). This is down 
from 7.5 percent when growth was at its nadir and just before the 
American Recovery and Reinvestment Act was passed and signed into 
law.\10\
                                figure 2


    Currently, about a third of the total output gap is due to the lost 
wages of the unemployed.\11\ To put some back of the envelope numbers 
on this, think of it this way: the typical worker brings home about 
$40,000 annually and about 15 million are out of work, leaving our 
economy about $600 billion smaller this year due to unemployment.\12\ 
It's that gap that unemployment insurance fills and why it's critical 
to sustaining the economic recovery. And, why we can't just fill the 
output gap with tax cuts.
    And, we are now in another jobless recovery, while profits soar. 
From December 2008 to September 2010, profits in the nonfinancial 
corporate sector rose in inflation-adjusted terms by 92.0 percent 
before taxes and 93.3 percent after taxes. In September 2010, profits 
were at their highest point since at least September 2007, before the 
recession started. The nonfarm nonfinancial business sector is holding 
more than $1.9 trillion in cash, totaling 7.4 percent of total 
corporate assets in the third quarter of 2010--the highest level since 
the fourth quarter of 1959.\13\
    Even though corporate America is flush with cash, investment is at 
the lowest level in more than five decades. So far in this business 
cycle, from December 2007 to September 2010, business investment has 
averaged 9.8 percent of gross domestic product, the lowest average for 
any business cycle since the late 1950s (Figure 3). This low level of 
investment is not because of the cost or availability of capital, which 
continues to be at lows not seen since the 1960s.\14\
    Without investment, our resources--the American people--languish in 
unemployment. A key challenge for policymakers is sorting out how to 
encourage investment.
                                figure 3


This jobs crisis is not a structural problem
    In May of 2007, the unemployment rate was 4.5 percent. Just over a 
year and a half later, the private sector was shedding 700,000 to 
800,000 jobs per month and unemployment continues to linger above 9 
percent. For the unemployment problem to be structural, it would have 
to be the case that our nation's workers and employers all of a sudden 
become mismatched due to some new set of technological advances that 
made one in 10 workers instantaneously obsolete. There is no evidence 
that this has been the case in the years since 2007.
    If today's high unemployment were largely about shifting workers 
out of the sectors hardest hit by the bursting of the housing bubble--
primarily construction--job losses would have to be concentrated there. 
But, this has not been the case. In fact, the Great Recession has seen 
fairly broad, widespread job losses across industry, which contradicts 
the idea that there's one or two sectors that U.S. workers need to 
transition out of (Figure 4). Manufacturing, professional and business 
services, transportation and warehousing, financial activities, leisure 
and hospitality, and information services have all lost a larger share 
of jobs than construction.
    Further, if unemployment was structural, the money pumped into the 
economy through monetary and fiscal policy would lead to higher prices. 
If more money were chasing a limited pool or workers or capacity, then 
prices should go up. Yet, in fact what we've seen is the opposite. Over 
the past year, prices have risen by just half a percent, just barely 
above deflation.
                                figure 4


    If the problem with unemployment were structural, the primary 
policy lever to address this is education and training. There are many 
reasons for policymakers to be concerned about the skills of the U.S. 
labor force: American students are consistently behind their academic 
peers internationally. According the U.S. Department of Education, out 
of 30 peer countries, students in the United States were ranked 30th 
for math, 23rd for science, and 17th for reading.\15\ However, even if 
unemployment was a structural problem and training and education could 
solve it, this is not a solution that can address our immediate high 
unemployment. Setting up those programs, getting workers the skills 
they need will take time and our economy will not see the fruits of 
those endeavors for years. Investing in education is critical for our 
economy, but it cannot solve our current unemployment problem.
    In thinking about the challenges facing workers and their families, 
we also need to remain cognizant of the difference in employment 
patterns for specific demographic groups. Workers of color continue to 
experience higher unemployment than white workers and the trends in 
employment continue to play out differently by gender. Between December 
2007 and June 2009, the official timeframe for the recession according 
to the National Bureau of Economic Research, jobs held by men accounted 
for more than 70 percent of all the jobs lost. In ten of the past 12 
months of job gains, the growth in jobs for men outpaced the growth for 
women and last summer, women actually lost jobs while men saw small 
increases. Over 2010, men gained just more than a million jobs, while 
women gained a paltry 149,000 (Figure 5).
    The biggest gains for men have been in professional business 
services, where men gained 278,000 jobs, compared to 103,000 for women; 
trade, transportation, and utilities, where men have gained 245,000 
jobs, while women lost 74,000; and administrative and waste services, 
where men gained 231,000 and women gained 137,000. One of the biggest 
gender gaps in employment trends is in government employment
    The aid to the states as a part of the ARRA helped sustain women's 
employment through the Great Recession, but with the state budget 
crisis lingering, this could continue to bring down women's 
employment.\16\ Women make up the majority of state and local 
government employees. Last year, local governments shed 259,000 
workers, of whom 225,000 were women. At the state level, women have 
gained 55,000 jobs and men lost 43,000, but these gains for women were 
not enough to offset the local layoffs.
                                figure 5


How did we get here?
    Mismanagement of the economy in the 2000s, a financial sector only 
in service of its own profit rather than fostering productive 
investments, and a housing bubble all led to the economic disaster in 
front of us.
The failed economic policies of the 2000s
    We now know that the perception of prosperity in the 2000s was in 
many ways a mirage. The housing bubble and financial innovations and 
the Great Recession masked deeper structural problems. The housing 
bubble, rapid growth of the real estate and financial sectors, and 
debt-fueled growth during the Bush era masked what were otherwise 
largely negative trends for American workers.
    While the economy was growing, American workers were living through 
a lost decade. The 2000s saw no income gains for the typical American 
family \17\ and saw the weakest employment gains and weakest growth in 
business investment of any economic cycle in the post-World War II 
era.\18\ For most Americans, wages were stagnant, even though 
productivity rose.\19\ Moreover, over the past two decades, we've seen 
two ``jobless'' economic recoveries and, with the exception of a few 
years in the late 1990s, widening wage and income inequality.\20\
    Our labor market has become bifurcated, with fewer and fewer good 
jobs paying good wages and benefits and growth in employment at the 
high and low ends, leaving out the middle.\21\ This is not a recipe for 
a strong middle class, restoring economic opportunity, or long-term 
economic competitiveness. Beyond the Great Recession and its global 
consequences, this is the great economic policy challenge of our time.
    Most women now work outside the home and families have no one 
available to provide full-time care for children or ailing family 
members. Coupled with declining prospects for future job growth, this 
analysis gives a whole new meaning to middle-class squeeze.
The Recovery and Reinvestment Act
    Congress has taken important steps to encourage private sector job 
creation. The Congressional Budget Office credits the American Recovery 
and Reinvestment Act, or ARRA, signed into law in February 2009 with 
saving or creating 1.4 to 3.6 million jobs and they estimate that 2.6 
million jobs will be saved or created by in 2011.\22\ Last summer, 
economists Alan Blinder and Mark Zandi estimated that the American 
Recovery and Reinvestment Act and other fiscal policies have saved or 
created 2.7 million jobs and without them, unemployment would stand at 
11 percent and job losses would have totaled 10 million. On top of 
this, they estimate that if nothing had been done to address the 
financial crisis--no Troubled Asset Relief Program, no bailouts of 
American International Group Inc, and no investment in the auto 
industry--our economy would have 5 million fewer jobs than we do today 
and unemployment would be sharply higher, at 12.5 percent.\23\
    The ARRA kept teachers in schools and police officers on their 
beats, even as tax revenues fell. It kept money flowing into the 
pockets of the long-term unemployed, which in turn has not only helped 
those individual families hardest hit by the Great Recession, but also 
helped keep dollars flowing their local communities. It helped 
unemployed workers access health care, undoubtedly mitigating the well-
documented negative health effects of unemployment.
    Even with the success of the Recovery Act, there have been clear 
indications since 2009 that in order to fill in the output gap and 
lower unemployment, Congress will need to focus on policies that raise, 
not lower, aggregate demand.\24\ As Federal Reserve Chairman Ben 
Bernanke noted this month in testimony:
    Our nation's fiscal position has deteriorated appreciably since the 
onset of the financial crisis and the recession. To a significant 
extent, this deterioration is the result of the effects of the weak 
economy on revenues and outlays, along with the actions that were taken 
to ease the recession and steady financial markets. In their planning 
for the near term, fiscal policymakers will need to continue to take 
into account the low level of economic activity and the still-fragile 
nature of the economic recovery (emphasis added).\25\
    In this Great Recession, sustained government spending until the 
recovery hits its full stride is the best--and only--option to push the 
unemployment rate down. Because the Great Recession was preceded by a 
massive financial crisis, we knew from day one that it was likely to be 
deeper and more protracted than more recent recessions.\26\ We've also 
known for two years now that the Federal Reserve has no more room to 
lower interest rates to boost demand.\27\
    In other recent recessions, lowering interest rates was sufficient 
to push the economy toward sustainable growth, but this time it's not 
possible. The last recession that brought us double-digit unemployment, 
in the 1980s, was caused by tightening of monetary policy by the 
Federal Reserve under Chairman Paul Volcker as they were trying to 
address rampant inflation. The Federal Funds Rate hit nearly 20 percent 
in the 1981, which stopped inflation, but then also gave the Federal 
Reserve a great deal of room to lower rates to encourage economic 
activity. To boost growth, the Fed has pursued quantitative easing, 
using the proceeds from the central bank's mortgage bond portfolio to 
buy long-term government debt. That is, they are using unorthodox 
methods of pumping money into an economy and working to lower interest 
rates that central bankers do not usually control. Their effect is the 
same as printing money in vast quantities, but without ever turning on 
the printing presses.
    Yet there is a rising chorus of voices singing the praises of 
deficit reduction over the benefits of saving our economy through 
expansionary fiscal policies. Once our economy recovers, of course, the 
deficit must be addressed, but until unemployment begins to fall and 
the economic recovery is firmly in train, these voices push us in the 
wrong direction. Their rhetoric argues that we not burden the next 
generation with unsustainable debts, but the reality is this: by not 
boosting demand for goods and services by helping existing excess 
capacity--the nearly 15 million unemployed workers in our country 
today--millions of workers will find no means of support today and will 
see their economic future grows dimmer by the week.
    It is important to remember that by taking actions to avert greater 
unemployment, we averted a bigger federal deficit. The steps taken to 
shore up our economy have ended up being a better investment for jobs 
and for the deficit than doing nothing at all (Figure 6). Economists 
Blinder and Zandi estimated that had Congress done nothing, the deficit 
would have ballooned to more than 2.5 times as large as it did, hitting 
more than $2 trillion by the end of the 2010 fiscal year, $2.6 trillion 
in fiscal year 2011, and $2.25 trillion in fiscal year 2012. In 
actuality, they estimate that by the end of the 2010 fiscal year, the 
federal budget deficit will be $1.4 trillion and it will fall to $1.15 
trillion in fiscal year 2011 and $900 billion in fiscal year 2012.\28\
                                figure 6


    The most important reason for the rise in the deficit is rising 
unemployment and falling incomes.\29\ In 2009, federal receipts were 
$419 billion below 2008 levels, a 17 percent drop, which was the 
largest decline from one year to the next in more than 70 years. 
Individual income tax receipts decreased by 20 percent, and corporate 
income tax revenues plummeted by more than 54 percent, which means 
corporations paid less than half in taxes than they paid the year 
before.\30\
To fix the jobs problem, fix the aggregate demand problem
    Unlike any point in the decades since before World War II, the 
challenge of laying the foundation for a strong economy lies with you 
and this body of government. These are unusual times because it 
continues to be the case that fiscal policy is the primary lever that 
the federal government has at its disposal to spur economic growth. I 
urge you to consider that these extraordinary times call for 
extraordinary action--continued spending to aid to the long-term 
unemployed. The sense of imminent collapse of our financial sector, 
thankfully, now appears behind us, but the fallout for our economy 
remains and it is just as dramatic and continues to require bold steps.
    Let's be clear: An overgrown financial sector, bloated on the real 
estate bubble it helped create, threw our economy into crisis. Moving 
forward, policymakers must continue to ensure that financial markets 
are focused on making funds available to promote investment in America, 
not just speculation and dividends for those in the financial services 
industry. We need vibrant capital markets so that innovative companies 
can access funds to invest; we do not need innovative financial 
products to allow Wall Street to siphon off these funds for its own 
gain.
    Investment is the key to creating jobs now and building the 
foundation for a high-productivity future. The American Society of 
Civil Engineers estimates that we need to spend at least $2.2 trillion 
over the next five years just to repair our crumbling 
infrastructure.\31\ This doesn't even include things like high-speed 
rail, mass transit, and renewable energy investments we need to free 
ourselves from foreign oil and climate change.
    The Obama administration has proposed a $50 billion fund, which is 
a good start, but we need to invest more to both address today's jobs 
problem and lay the foundation for long-term economic growth. 
Infrastructure has been a traditionally bipartisan issue and one that 
hopefully this Congress can build a bridge across the aisle to address.
    We also need to make sure that if a goal of our trade policy is job 
creation, then we need to evaluate whether these policies reduces our 
trade deficit and, on net, create jobs.\32\ Economists estimate that 
local labor markets that have had increased exposure to Chinese imports 
have had higher unemployment, lower labor force participation, and 
reduced wages relative to local labor markets that have not had such 
exposure. What is notable is that although employment decline is 
concentrated in manufacturing, the declines in wages occur across the 
local labor market and are actually most pronounced outside of 
manufacturing.\33\ The authors note that:
    Growing import exposure spurs a substantial increase in transfer 
payments to individuals and households in the form of unemployment 
insurance benefits, disability benefits, income support payments, and 
in-kind medical benefits. These transfer payments are two orders of 
magnitude larger than the corresponding rise in Trade Adjustment 
Assistance benefits. Nevertheless, transfers fall far short of 
offsetting the large decline in average household incomes found in 
local labor markets that are most heavily exposed to China trade.\34\
    There is also not strong evidence that the Korea Free Trade 
Agreement will generate economically meaningful job gains. The U.S. 
International Trade Commission, the independent federal body that 
analyzes potential effects of trade pacts for Congress and the 
executive branch, estimate that while the Korea FTA would increase 
exports, it would increase imports even more and result in an increase 
in the total U.S. goods trade deficit of between $308 million and $416 
million.\35\ The largest estimated increases in the trade deficit would 
be in motor vehicles, electronic equipment, ``other transportation 
equipment,'' iron, metal products, textiles, and apparel.
    The unemployment insurance system and other automatic stabilizers 
must remain in working order. Filling the gap in demand will require 
continued attention to one of the key sources of demand: high 
unemployment. Most of the state's unemployment insurance trust funds 
are insolvent, however, with 30 states' owing a total of $41 billion, a 
debt that could rise to $80 billion.\36\ The loans from the federal 
government will require that in 2011, 25 states must pay an extra $2 
billion in federal unemployment taxes levied on employers, an increase 
of 30 percent over 2010.\37\
    We all have an interest in not seeing the cost of hiring workers 
rise as firms struggle to ramp up hiring, but we also need to make sure 
that the unemployment insurance system has the integrity to continue to 
act as an important automatic stabilizer. Recent analysis shows that 
this system generated significant positive economic effects and kept 
unemployment from rising to more than 11 percent.\38\
    With a mess like this, creating jobs isn't simple, but there 
couldn't be a better time to invest in America. Interest rates are low. 
Wages are low. We need jobs now and we need the kind of investments 
that will transform our economy and renew long-run prosperity.
    Thank you.
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David H. Autor, Lawrence F. Katz, and Melissa S. Kearney. 2008 ``Trends 
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Piketty, Thomas, and Emmanuel Saez. 2003 ``Income Inequality in the 
        United States, 1913-1998.''Quarterly Journal of Economics 118 
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        in the Wake of the Great Recession'' In Woodrow Wilson School 
        of Public and International Affairs, Princeton University 
        Princeton, N.J.: 2010. Reprint.
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Xie, Holly, Howard L. Fleischman, Paul J. Hopstock, Marisa P. Pelczar, 
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                                endnotes
    \1\ Christina D. Romer, ``Back to a Better Normal: Unemployment and 
Growth in the Wake of the Great Recession'' in Woodrow Wilson School of 
Public and International Affairs, Princeton University (Princeton, 
N.J.2010).
    \2\ Bureau of Labor Statistics, Employment Status of the Civilian 
Population by Sex and Age (U.S. Department of Labor, 2010), table A-1, 
Adam Hersh and Isha Vij, ``Economic Growth Continues, but Too Slowly to 
Secure Recovery: Policy Consistency Targeting Jobs Is Necessary,'' 
available at http://www.americanprogress.org/issues/2011/01/december--
jobs.html (last accessed 1/25/2011 2011).
    \3\ ------, ``Economic Growth Continues, but Too Slowly to Secure 
Recovery: Policy Consistency Targeting Jobs Is Necessary''.
    \4\ Bureau of Labor Statistics, ``Employment Status of the Civilian 
Population by Sex and Age'', Hersh and Vij, ``Economic Growth 
Continues, but Too Slowly to Secure Recovery: Policy Consistency 
Targeting Jobs Is Necessary''.
    \5\ Henry Farber, ``What Do We Know About Job Loss in the United 
States? Evidence from the Displaced Workers Survey, 1984-2004,'' 
Federal Reserve Bank of Chicago: Economic Perspectives 2 (2005).
    \6\ Lisa B Kahn, ``The Long-Term Labor Market Consequence of 
Graduating from College in a Bad Economy,'' Labour Economics 17 (2010): 
303-16.
    \7\ Bureau of Labor Statistics, ``Worker Displacement: 2007-2009,'' 
available at http://www.bls.gov/news.release/disp.nr0.htm.
    \8\ Bureau of Economic Analysis, National Income and Product 
Accounts Table 1.1.1, (December 22, 2010).
    \9\ Federal Reserve Statistical Release. ``Industrial Production 
and Capacity Utilization.'' Table G.17, (January 14, 2011).
    \10\ Hersh and Vij, ``Economic Growth Continues, but Too Slowly to 
Secure Recovery: Policy Consistency Targeting Jobs Is Necessary''.
    \11\ Bureau of Economic Analysis, National Income and Product 
Accounts.
    \12\ Author's calculations from U.S. Census Bureau and U.S. Bureau 
of Labor Statistics
    \13\ Adam S. Hersh and Christian E. Weller, ``Measuring Future U.S. 
Competitiveness: U.S. Productivity and Innovation Snapshot'' 
(Washington, DC: Center for American Progress, 2011).
    \14\ Ibid.
    \15\ Holly Xie, Howard L. Fleischman, Paul J. Hopstock, Marisa P. 
Pelczar, and Brooke E. Shelley, ``Highlights from Pisa 2009: 
Performance of U.S. 15-Year-Old Students in Reading, Mathematics, and 
Science Literacy in an International Context'' (Washington, DC: 
National Center for Education Statistics, 2010).
    \16\ Boushey, Heather. ``Compromising Women's Jobs.'' Center for 
American Progress, (February 9, 2009).
    \17\ Karen Davenport Heather Boushey, Joy Moses, Melissa Boteach, 
``What the Census Tells Us About the Great Recession: New Data Reveals 
Decreased Income and Health Coverage'' (Washington, DC: Center for 
American Progress, 2010).
    \18\ U.S. Congressional Joint Economic Committee, ``Stemming the 
Current Economic Downturn Will Require More Stimulus'' (Washington, DC, 
2008).
    \19\ Lawrence Mishel, Jared Bernstein, and Heidi Shierholz, The 
State of Working America 2008-9 (Ithaca, NY: Cornell University Press., 
2009).
    \20\ Thomas Piketty and Emmanuel Saez, ``Income Inequality in the 
United States, 1913-1998,'' Quarterly Journal of Economics 118 (1) 
(2003): 1-39.
    \21\ Lawrence F. Katz David H. Autor, and Melissa S. Kearney, 
``Trends in U.S. Wage Inequality: Revising the Revisionists,'' The 
Review of Economics and Statistics 90 (2) (2008): 300-23.
    \22\ U.S. Congressional Budget Office, ``Estimated Impact of the 
American Recovery and Reinvestment Act on Employment and Economic 
Output from January 2010 through March 2010'' (Washington, DC, 2010).
    \23\ Alan Blinder and Mark Zandi, ``How the Great Recession Was 
Brought to an End'' (Washington, DC: Economy.com, 2010).
    \24\ A wide array of economists agree with this sentiment. See: US 
Congress, Senate Committee on Finance, Testimony of Mark Zandi on Using 
Unemployment Insurance to Help Americans Get Back to Work: Creating 
Opportunities and Overcoming Challenges,Cong., 111th Congress, 2nd 
session sess., 2010.; Lawrence H. Summers, ``Reflections on Fiscal 
Policy and Economic Strategy, ``Remarks at the John Hopkins University, 
May 2010;
    \25\ Testimony before Committee on the Budget, U.S. Senate http://
www.federalreserve.gov/newsevents/testimony/bernanke20110107a.htm
    \26\ Carmen Reinhart and Kenneth Rogoff, ``The Aftermath of 
Financial Crises,'' American Economic Review (Papers and Proceedings) 
99 (2) (2009): 466-72.
    \27\ Boushey, Heather. ``Keep the Money Flowing.'' The New York 
Times, (June 24, 2010).
    \28\ Blinder and Zandi, ``How the Great Recession Was Brought to an 
End''.
    \29\ Michael Linden, ``Breaking Down the Deficit'' (Washington, DC: 
Center for American Progress, 2009).
    \30\ Ibid.
    \31\ American Society of Civil Engineers. ``America's 
Infrastructure Report Card.'' (March 25, 2009).
    \32\ As Paul Krugman wrote in a recent column: ``If you want a 
trade policy that helps employment, it has to be a policy that induces 
other countries to run bigger deficits or smaller surpluses. A 
countervailing duty on Chinese exports would be job-creating; a deal 
with South Korea, not.'' Paul Krugman, ``Trade Does Not Equal Jobs,'' 
The New York Times, Dec. 6, 2010.
    \33\ David H. Autor, David Dorn, and Gordon H. Hanson, ``The China 
Syndrome: Local Labor Market Effects of Import Competition in the 
U.S.'' Working Paper Cambridge, MA: UCSD and NBER, 2010).
    \34\ Ibid.
    \35\ U.S. International Trade Commission. ``U.S.-Korea Free Trade 
Agreement: Potential Economy-wide and Selected Sectoral Effects.'' 
USITC Publication 3949. September 2007, Corrected printing March 2010, 
at 2-14, Table 2.3, Available at: http://www.usitc.gov/publications/
332/pub3949.pdf
    \36\ Cooper, Michael and Mary Williams Walsh. ``U.S. Bills States 
$1.3 Billion in Interest Amid Tight Budgets.'' The New York Times. pg. 
A1 (January 15, 2011).
    \37\ U.S. Department of Labor
    \38\ Wayne Vroman, ``The Role of Unemployment Insurance as an 
Automatic Stabilizer During a Recession'' (Washington, DC: U.S. 
Department of Labor, 2010).
                                 ______
                                 
    Chairman Kline. Dr. Holtz-Eakin.

 STATEMENT OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION 
                             FORUM

    Mr. Holtz-Eakin. Thank you Chairman Kline, Ranking Member 
Miller, and Mr. Andrews and members of the committee, it is a 
great honor to be here today.
    In my written testimony I emphasized four points. First, 
that the distress of the American workforce is very real and 
easy to document.
    The second, that the most imperative thing at the moment is 
to concentrate on pro-growth policies and at every juncture, 
when faced with a policy decision, ask will this or will this 
not make it easier for an employer to put one more person on 
the payroll. With about 6 million employers, if everyone hired 
1 person, we would take care of three-quarters of the 
unemployment problem very fast.
    The third is that many of the policies in which we are 
currently engaged are at odds with that requirement for pro-
growth imperatives.
    And then the last is that over the longer term, when it is 
the return to full employment, our workforce will be best 
served by being better skilled, more flexible and better able 
to compete internationally, and that this committee is well 
situated to discuss the K-12 and higher education reforms that 
would be necessary to pursue that.
    Given the limited time that I have, I am going to go very 
light on number one--not because it is unimportant, the 
distress is real--and number four, not because it is 
unimportant, but you already know everything about it and I 
have nothing really to add here.
    I want to focus on the need for pro-growth policies and 
some of the things that I see on the landscape right now. Pro-
growth policies are different than countersystemic cyclical 
policies, or stimulus in the political parlance. Stimulus is 
appropriate when the economy is falling, and we can debate the 
effectiveness of the American Recovery Act, and probably will, 
as an economics profession, for a long long time.
    But that is not the situation in which we find ourselves. 
We have been growing since the third quarter, a year ago. We 
are growing far too slowly. It is a growth rate that is 
consistent with the trajectory of the economy's postfinancial 
crisis. All the evidence is, there are slow and long recoveries 
from financial crisis. That places an imperative on raising the 
growth rate to the maximum amount possible during that 
trajectory to get people back to work.
    Where will that growth come from? It won't be from 
households. Households have seen their net worth badly damaged. 
Their pensions aren't worth what they used to be. They are 
badly in debt. Their homes are underwater in some case. They 
are not going to spend this economy to prosperity. And if we 
write them checks, it will be--there is no way to do that to 
replace their lost wealth. It is a strategy that will fail.
    The same is true for governments. Our governments are on 
red ink everywhere. I applaud Governor McDonnell for avoiding 
such distress in Virginia, but if you look across the 
landscape, State and local governments are in deep financial 
trouble. They cannot be counted on to spend their way to 
prosperity.
    The Federal Government budget is something I am happy to 
expand on but, put simply, if we pursue the path that is laid 
out, for example, in last year's administration budget or 
something that looks like the CBO report released earlier 
today, we will be downgraded as a sovereign borrower within 
this decade. And we cannot pretend that we can spend as a 
sustained mechanism to recover.
    That leaves, by process of elimination, the business 
community and then exports, both of which have to be given 
every opportunity to power this economy going forward.
    What is on the landscape at the moment in that area? Well, 
we have the fiscal outlook, which is in and of itself a threat 
to expansion. It is a promise of either higher taxes or higher 
interest rates in the financial classes in years to come, and 
the sooner Congress closes that debt by reducing the growth of 
spending, the better off the business environment will be.
    We have on the agenda the administration's commitment to 
higher taxes. We heard last night about corporate tax reform. I 
am happy to give a sermon on the virtues of internationally 
competitive tax policies. But we also have the promise to raise 
taxes in 2013, including those on small businesses, which are 
the engines of job creation in the United States. That is a 
negative from the point of view of the jobs outlook.
    The recently passed Patient Protection and Affordable Care 
Act is riddled with bad economic policy from the point of view 
of growth. There are $700 billion worth of new taxes in that 
act. Those taxes, by any measure, will be passed along to 
workers in the form of lower wages or fewer jobs. And even the 
research of Christy Roemer, who was the former chairwoman of 
the President's Council of Economic Advisors, suggests that 
discretionary tax increases have the single most powerful 
negative impact on economic recovery. It is the wrong time to 
be doing that. There are higher mandates. Employers are going 
to have to pay the cost of those mandates by again cutting 
wages or jobs, and higher premiums.
    The law, as I lay out in my written testimony, is a recipe 
for higher insurance premiums, which in the end will hurt 
employers as they try to hire people.
    And the last, which has been mentioned before, is the 
regulatory environment. 2010 was a banner year for regulators 
and saw an 18 percent increase in Federal Register pages 
devoted to regulation. The cost of that regulation ranged from 
$20 billion, as Governor McDonnell mentioned, to 40 billion by 
some of our estimates. We can do better in providing an 
environment in which employers can put workers on the payroll 
and those workers can receive higher pay as we move forward.
    So I thank you for the opportunity to be here today and 
look forward to answering your questions.
    [The statement of Mr. Holtz-Eakin follows:]
    
    
    
                                ------                                

    Chairman Kline. Thank you all for your testimony. We will 
move now to questions from the members. We will be abiding by 
the 5-minute rule here. I don't have the same reservations 
about the gavel for my colleagues as I might for the witnesses. 
And we will try to get as many questions in as we can. And, 
again, I am mindful of the fact that members are having to 
leave as they look at their flight schedules shifting. You may 
see people taking a look at their BlackBerries and discovering 
that they have to leave even sooner. And so to give members a 
maximum opportunity, I am going to delay my own questioning and 
turn on my side to Dr. Bucshon.
    Mr. Bucshon. Thank you, Chairman. I am going to direct this 
question to Governor McDonnell. Thank you all for coming. We 
appreciate it. I am from Indiana and the Daniel's 
administration has estimated that the expansion of the Medicaid 
program, if 100 percent of the people sign up, may cost the 
State as much as $3.6 billion. I am going to make a few 
comments about Medicaid and what it does to access to health 
care, and then I will ask you a question about what your 
options are, what you see as the State's options if we can't 
get around that type of a mandate.
    As a physician, the Medicaid programs in many States 
already are severely strapped for funds. In fact, a neighboring 
State of mine, they run out of money in September or October 
every year. And from a provider's standpoint, from a hospital 
or a physician, you basically have to re-bill the State later 
on, of which a good portion of that is further written off. 
What this has done across the country is it severely limits 
access to health care for Medicaid patients because providers 
won't take them or they limit the amount of time that they have 
available in their day to see these patients. So at a time when 
we are trying to expand health care coverage for Americans, the 
Medicaid program, in my view, will expand coverage; but if you 
don't have anybody to take care of you or that will accept what 
you have, then that doesn't really help you very much.
    The other thing I would like to comment on is our strapped 
emergency rooms. Across the country already, as everyone knows, 
emergency rooms already are overcrowded with long wait times, 
and statistically this population of folks are the highest 
utilizers of emergency room services. So if you see that in 
your public hospitals in your States, a massive expansion of ER 
utilization at a time when we are trying to control health care 
costs, we are going to have the opposite effect.
    So my question, Governor, is from your State's standpoint, 
what do you see as the options for the States if they have to 
come up with this extra money? What do they do with their 
public hospitals for funding? How will it affect your overall 
budget at your State? Will it cause tax increases at your 
State? And just give me kind of a general overall view of what 
you see this particular portion of the health care bill will 
affect you.
    Governor McDonnell. Well, thank you Congressman Bucshon. We 
have looked at that and, of course, while my State is in 
litigation, we still know that with the clock ticking to 2014, 
we still have to take the prudent steps to build exchanges and 
do the things to implement the law.
    Let me give you a pre-health-care reform view of Medicaid 
in my State, and this is across the board with other Governors 
as well. Medicaid spending in Virginia has gone from--it has 
increased 1,600 percent in the last 27 years. It has gone from 
consuming 5 percent of the budget to now 20 percent. Other 
States are already in the high 20s, 27, 28.
    We are a relatively low-coverage State, and so with the 
impact of the Federal health care reform, we will have a 
precipitous increase in the Medicaid population in our State, 
such that we estimate by over the next 10 years it will--
Medicaid spending in Virginia will go up even that much more 
and consume close to 30 percent of the budget. And that is 
about $2 billion of increased spending for Medicaid, unfunded 
from the Federal Government, by the year 2022.
    So we are looking at ways now to implement these 
requirements from the Federal law in a way that is least 
bureaucratic and most efficient. I have got initiatives before 
our general assembly this year to look at far more use of 
managed care across the spectrum for all health services, 
including mental health, more generics, co-pays, but also more 
education.
    You mentioned the issue of the overuse of the emergency 
room, which is the most expensive place to get medical care by 
this population, so education is obviously a part of it. But 
there is a tremendous budget-busting concern, I believe, of 
every Governor in the country about the growth in Medicaid on 
its own, plus the Federal mandate, with the new legislation 
growth and what it is going to do. So we are struggling to find 
ways to reduce Medicaid spending in a way that still keeps a 
healthy, quality, safety net but doesn't break the bank on 
spending and force cuts in other areas or pressure more tax 
increases.
    It is a timely question. We don't yet have the answer and, 
ultimately, depending on what the courts decide on this 
measure, and what we can implement in our legislatures for 
reductions, that will make a difference.
    The one last thing I would say, Mr. Chairman, is I know you 
have gotten letters from a number of us Governors asking you 
for some consideration on flexibility with the MOE 
requirements. For us to be innovators in our State governments 
and to find ways to implement this law and also to keep the 
costs of Medicaid as low as possible, we have got to have some 
relief from some of the mandates, from some of the MOE 
requirements, more flexibility.
    I talked to Governor Daniels, in fact, yesterday about this 
issue. I think we will probably have another letter to you 
coming on this exact subject to say, Please, as long as this is 
the law, at least provide us more flexibility on how we can 
implement creative cost-cutting measures in Medicaid so that we 
can control our populations and our costs a little better.
    Chairman Kline. Thank you, Governor. The gentleman's time 
has expired. Mr. Andrews.
    Mr. Andrews. Thank you, Mr. Chairman. Thank the ladies and 
gentlemen of the panel for excellent testimony.
    The President said last night, and I think we should all 
embrace the goal you have reiterated of working together to 
foster an environment where entrepreneurs and businesses can 
create jobs for the people of our county.
    And Mr. Messinger, I wanted to thank you for taking time 
away from your family and your business. You are a very 
effective advocate for your beliefs as a small manufacturer. 
And I wanted to ask you just retrospectively for a minute, do 
you think that Congress did the right thing when we passed the 
TARP bill?
    Mr. Messinger. I happen to think that the TARP legislation 
was excellent. A quick story: I happened to go see Congressman 
Coble who had voted initially against it, and requested that he 
please vote for it. And I don't know if it was just my showing 
up, but others too on the telephone, I think it stabilized our 
country.
    Mr. Andrews. I appreciate your advocacy efforts. I agree 
with you. And I think it was an important step forward and I 
appreciate you saying that, both previously and now.
    Governor, welcome. It is not an easy time to be Governor. I 
sure do know that. And I wanted to ask you about an initiative 
that you have launched that sounds a lot like some of what we 
have heard the last few days around here, which I understand is 
a $4 billion transportation investment program for the 
Commonwealth of Virginia. And if I understand it correctly, you 
are expediting some bonds the Commonwealth already issued, I 
think to the tune of like 1.8 billion or so. And then you are 
proposing to borrow 1.1 billion and support that debt service 
with Federal payments from the transportation trust fund.
    Two questions. One is, you know, there is consideration of 
reduction of discretionary domestic spending by 25 percent. 
Would you ever want to see us exempt the transportation trust 
fund from that 25 percent, or would you want to see us do the 
25 percent cut?
    Governor McDonnell. Obviously, that policy is very similar 
to yours. What I can say is that I think infrastructure 
investment in Virginia and America is one of our top 
priorities, especially for us in Virginia. You have probably 
driven around the southern part of the Beltway and understand 
what congestion does to the quality of life.
    Mr. Andrews. I was actually parked on the southern part of 
the Beltway.
    Governor McDonnell. I increased the speed limit to 70 miles 
an hour last year. Some in Northern Virginia said, We would be 
happy going 30.
    Mr. Andrews. Seventy miles a day would be pretty good in 
Northern Virginia.
    Governor McDonnell. But I would say to you that 
infrastructure investment is critical. I honestly think it was 
a lost opportunity to the degree that the stimulus policy was 
the right thing to do, there was very little money in there. 
Only about 6 percent of your total spending was there. That 
would have been nice. But I do think that, given the posture we 
are in, for us to use debt responsibly for the mortgage-like 
infrastructure is prudent, and I think we are going to get that 
done.
    Mr. Andrews. I agree. I do think that is one of the areas 
we should avoid, that 25 percent. And I want to square that 
comment with Mr. Holtz-Eakin's testimony. And please forgive me 
if I mischaracterize what you say, or misunderstood, Mr. Holtz-
Eakin, but I think you said that further stimulus at this time 
is ill-advised. And it seems to me the kind of transportation 
investment the Governor is supporting in Virginia, using 
Federal funds, is that kind of stimulus. Do you disagree with 
him about that point?
    Mr. Holtz-Eakin. Infrastructure can be a central part of 
the supply-side economics where you get good long-term growth 
as part of the productivity of the Nation. What I would urge 
you to not do is judge it by construction jobs created. If we 
look back and somehow judge the construction of the interstate 
highway system by the construction jobs created, we would have 
missed its economic importance completely.
    Mr. Andrews. Using that litmus test, what would you think 
about the expansion of high-speed rail, like the President 
proposed last night?
    Mr. Holtz-Eakin. The thing I would most urge you to do is 
before you start looking at the dollars, you start looking at 
the quality of the programs. I participated for the past 3 
years in something known as the Bipartisan Policy Center's 
national transportation policy project. And I won't belabor you 
with the findings. It is a bipartisan project. We have a bigger 
report called Performance Driven, all of which suggests that 
before you spend a dollar, you have to take the hundred or so 
programs in the Department of Transportation and turn them into 
something that generally has a Federal rationale and is 
motivated on economic growth.
    Mr. Andrews. What about high-speed rail? Do you think it 
fits that litmus test or not? Do you agree with the President 
or disagree?
    Mr. Holtz-Eakin. I would probably disagree at this point 
because the notion that you should pick a mode--we should not, 
you should not care how it gets done. You should care what gets 
done.
    Mr. Andrews. What do you think would have a higher 
priority, then? Which program would be better?
    Mr. Holtz-Eakin. That which from a national perspective 
most improved national connectivity. Whether it is from a port 
to a rail or from a port to a passenger will differ in parts of 
the country, and to pick a single mode, high-speed rail, is to 
actually get the formulation of the policy wrong.
    Mr. Andrews. So transportation investment based on economic 
productivity is something you support.
    Mr. Holtz-Eakin. Yes.
    Mr. Andrews. Thank you very much. I yield back.
    Chairman Kline. I thank the gentleman. Dr. Heck, you are 
recognized for 5 minutes.
    Mr. Heck. Thank you, Mr. Chairman. And also I would like to 
thank the panelists for braving the elements and taking the 
time to be with us this afternoon.
    My question is for the Governor. I represent southern 
Nevada which has the dubious honor of having the highest 
unemployment rate in the Nation right now with 14.9 percent, 
estimated that actual unemployment is about 22 percent. But I 
am intrigued by Virginia's ability to be the fourth best in job 
creation and having an unemployment rate that is, you know, at 
ninth in the country, showing that there is still opportunity 
for success even in these tough economic times. I realize the 
demographics between Virginia and Nevada are very different.
    But Governor, if you were to pick one or two policies or 
programs that you could state had a significant effect on your 
unemployment rate and lowering it and creating jobs, what would 
those be? And likewise, were there any policies or programs you 
tried which you found were not successful?
    Governor McDonnell. I guess I would like to answer in part 
where I started with my remarks is there are certain 
fundamentals to economy and job creation and recruitment of 
entrepreneurs and innovation for small business that I think 
are universal, and that is keeping an environment where taxes 
and regulation and litigation are low. And the President 
frankly commented on all of those last night: that he wanted to 
see spending reform; keep taxes low; discretionary spending 
freezes; regulatory reform; medical malpractice reform. I mean, 
he said a lot of the right things last night that, if you all 
will work on that, I think are going to do some good things.
    We have tried to do that. For instance last year, we were 
faced with a $4.2 billion budget deficit. Some had proposed 
halving that with a tax increase of $2 billion, the largest in 
Virginia history. We said no. We made the tough decisions. We 
have cut spending $4.2 billion and now we have got 5 percent-
plus revenue growth, robust job creation numbers, and we have a 
$400 million surplus. I think those kind of physical principles 
is what I would say is the foundation.
    And then secondly is, you have got to be aggressive. The 
American dream is still well and alive, but you have got to be 
able to reach out to the entrepreneur and the small business 
person in particular and show them why coming to your State is 
going to make a difference for them; 71 or so percent of all 
the jobs in America are still created by that small business 
person, under 250 jobs or so, and they have unique challenges; 
and a lot of them are the tax policies and the regulatory 
policies that inhibit them from getting started and then 
staying in business. Sixty percent fail within the first 5 
years, and the number one reason is bad management. The number 
two reason is government interference, taxes, regulation, 
litigation, et cetera.
    So I think those fundamentals are universal and we have 
found a way for a while, frankly, with Democrat and Republican 
Governors to keep that formula in place and it is working.
    Mr. Heck. Mr. Chair, if I may. Were there any programs or 
policies that you put into place that you found might have been 
detrimental to your job creation and job growth, things that 
you would advise others to avoid?
    Governor McDonnell. Well, of course, I would say the flip 
side is the tax increases. We had our largest tax increase back 
in 04 and we didn't fare too well after that. Of course, some 
of that was the global economic downturn.
    But I would say that the programs that are used--and we 
have created some--and my response to Mr. Andrews earlier, we 
have created some that are targeted at things like mega sites 
and corporate tax credits to come to Virginia, particularly in 
the tech and manufacturing sectors. And I have an opportunity 
fund of essentially flexible money for me to make offers for 
businesses to come here, as most States do, and frankly, a lot 
of foreign countries, particularly the Pacific Rim has now. So 
that is part of the market right now.
    But if it is just corporate giveaways without targeted ROI 
analysis aimed at your core strengths, then I think you will 
waste money, and we have probably done a little bit of that 
over the years. So I think that is the key--strategic, targeted 
investments in those things that are going to grow on your core 
competencies in your State, and then be aggressive telling your 
story.
    Mr. Heck. Thank you, Governor. Thank you, Mr. Chair. I 
yield back.
    Chairman Kline. Thank you. Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman. And Governor, as a 
resident of Hampton Roads, spending a lot of time up here in 
Northern Virginia, I am looking forward to those transportation 
improvements.
    You referred to your Top Jobs of the 21st Century 
Initiative. And the President talked last night about there is 
a close correlation between education and jobs. Can you tell me 
what it is going to take to create 100,000 new degrees over the 
next 15 years, a total of 6,000 a year. That is a lot of 
students. How are we going to do that?
    Governor McDonnell. First, we have got to be able to get 
the universities to grow the pie and expand the number of 
degrees that they offer. UVA has been the first taker; 1,400 
new degrees they are going to offer over the next couple of 
years. Right now, only 38 percent of the kids in Virginia can 
actually go to a Virginia university. So we have got enormous 
physical plant--only 38 percent of Virginians that are applying 
to college can actually go to a Virginia college. That is the 
limits on our capacity. About 42 percent have a college degree, 
but 4 percent or so of those earn those out of State. But we 
have to be able to use the enormous physical plant at our 
universities, weekends, summers, et cetera, to expand the 
opportunities.
    Secondly, there is enormous potential with the Internet for 
distance education, having partnerships between multiple 
universities, which we now see in Virginia, to use virtual 
learning experiences. And they have to focus, Congressman, I 
believe on the STEM areas.
    The President mentioned that last night. I think he is 
absolutely right. That is where our future competitive 
disadvantages will occur compared to the Pacific Rim countries 
and other emerging countries that get that and are graduating 
more engineers and scientists per capita than we are. But I 
think we have to realize, then, that universities can't be all 
things to all people. We may not need 43 different degrees in, 
let's say, philosophy. But we need a lot more in science and 
medical schools and engineering.
    So what it is going to cost in Virginia, I am investing 
about $75 million by cutting other things out of the budget and 
reinvesting it in these core priorities of transportation and 
higher education. But it is going to take a sustained 
investment to create about 1,000 new degrees over a year.
    Mr. Scott. Now, the President mentioned education past the 
high school level. All of that won't be 4-year degrees. Are you 
focussing also on vocational educational opportunities?
    Governor McDonnell. Yeah. I think that is exactly right. 
There are a number of great paying jobs, not only in Virginia 
but around the country, that a 2-year certificate in welding or 
firefighting or a 2-year associate's degree will earn you. And 
that is why I think the focus on workforce development is 
critically important. It is probably the number one or two 
thing people ask for when they want to come to Virginia: What 
kind of educational establishment do you have? How well trained 
are your workers? Because in the long term, that is what is 
going to be able to sustain their growth.
    Mr. Scott. From a jobs perspective, you faced, as all 
States did, significant budgetary challenges last year. Can you 
indicate what the revenue sharing part of the stimulus package 
did to your budget and how many fewer people you had to lay off 
because you got money from the stimulus package?
    Governor McDonnell. Well, I think certainly the components 
dealing with education and the Medicaid funding certainly were 
helping us in plugging some of the holes that we had, although, 
you know what? If I didn't have it, I would have asked for more 
cuts. We cut $4.2 billion. Another billion, we would have found 
a way to do it, but it certainly lessened the blow in the short 
run.
    Mr. Scott. Well, if you had cut a billion dollars out of 
the State budget, that would have had employment implications, 
would it not?
    Governor McDonnell. It would. But I tell you what, 
virtually all the claims that were made were vastly overblown. 
We did some cuts to education. Your money that you provided 
last year helped to plug some of that. But the estimates were 
laying off 30,000 teachers. In essence, it really came out to 
be less than 1,000. And I will tell you why. When you give 
people less resources and you tell them to do more with less, 
our dedicated employees at the State and Federal level will do 
it. They will be more entrepreneurial, they will be more 
innovative, they will be more efficient.
    And that is what happened in Virginia, Congressman, is we 
didn't have nearly those kind of layoffs. And of the job 
creation--maybe this will help answer your question. Of the job 
creation numbers that I have mentioned, about 60,000 net new 
jobs created over the last year in Virginia, only about 15 
percent of those were public sector jobs.
    Governor McDonnell. The rest of them were all private 
sector jobs.
    Mr. Scott. Do you count government contracts like a road 
project as a private job or a public job? Although it is paid 
for----
    Governor McDonnell. No, I don't know how they are counted. 
I assume they are counted probably as private sector jobs 
because they would contract those out.
    Mr. Scott. Mr. Holtz-Eakin, you know in the 1990s we had 
great budget surpluses being developed and many jobs. In the 
2000s we had a bad budget and bad jobs. Was that a coincidence?
    Mr. Holtz-Eakin. I think that there are many more 
complicated explanations of that. We also had a dot-com bubble 
in the late 1990s, early 2000s, that drove Federal receipts and 
probably the primary factor on top of some severe budgetary 
stringency in the late '90s that drove the budget to surplus. 
2000 was littered with some bad economic shocks that. Attacks 
on the U.S. directly, Sarbanes-Oxley, scandals, Enron, 
WorldCom. We have had a number of impacts both on the up and 
the downside over that period, and there is no simple 
explanation for the performance.
    Chairman Kline. The gentleman's time has expired. Mrs. 
Roby.
    Mrs. Roby. Thank you, Mr. Chairman. My question is for 
Governor McDonnell. Being from another right-to-work State, 
could you explain more about how it has either helped or 
hindered the economic growth in increasing jobs during a 
recession? And are there any specific lessons or insights that 
you could share with the committee as it relates to that?
    Governor McDonnell. Of course there is another 22 right-to-
work States, and I have the privilege of being Governor of one 
of them. And it just obviously makes the opportunities and the 
flexibility for management that much greater in how they 
control their workforce.
    It is one of the top selling points that I use when I ask 
companies to come to Virginia. We recently had Northrop Grumman 
moving their corporate headquarters to Fairfax County. The 
largest data center in Microsoft's history I believe is coming 
to Mecklenburg County this year. And one of the things that I 
tell them about why they ought to come here is because they 
will be able to have maximum flexibility under our law to 
control their workforce, set their policies.
    And so I think that is a critical selling point. I 
mentioned the card check bill. We were strongly opposed to that 
in Virginia, almost unanimously. Almost every business 
organization in Virginia sent letters and lobbied against that 
when you considered that in a last couple of years because we 
thought that would be a significant undermining of a key asset 
for our State and yours, Congresswoman, as well for expanding 
jobs and creating opportunities that reduce costs.
    Mrs. Roby. Thank you. I yield back.
    Chairman Kline. Thank the gentlelady for setting that 
example.
    Ms. Hirono, you are recognized.
    Ms. Hirono. Thank you, Mr. Chairman. My first question is 
for Governor McDonnell. I completely agree with you that more 
of the stimulus money should have gone for infrastructure 
support for our States and counties. It is good that you have 
that perspective.
    Would you support the Federal Government putting more money 
into supporting infrastructure development for our States and 
counties?
    Governor McDonnell. Not if it adds a penny to the debt or 
the deficit. That is the overriding concern that I hear from 
people in my State. And you have to understand it is a foreign 
concept, honestly, for a Governor. I think all but--49 States 
have a balanced budget amendment. We do not understand deficit 
spending very well because we are not allowed to do that under 
our Constitution.
    So I would say if you would reset the priorities and make 
some of the tough choices even in entitlements. Essentially 
that is what we did in Virginia last year with health care and 
education and things that are quasi-entitlements in our State. 
We cut, and it worked out pretty well. People did more with 
less, with smart decisions. If you retargeted that into 
infrastructure, I think that would be a good thing. That is 
real new jobs.
    The Federal Government has estimated that $100 million in 
transportation construction supports about 3,000 jobs. That is 
a significant return, not only in getting something done but 
also in job creation.
    Ms. Hirono. So as long as it does not add to the deficit, 
then you would be all for it? Is that a view that is shared by 
your fellow Governors of the other 49 States?
    Governor McDonnell. I think we do believe that to the 
degree that you discern in Article I, section 8 that it is the 
responsibility of Congress at all to get into transportation. 
Perhaps under the general welfare clause.
    Ms. Hirono. The jurisdiction of this committee.
    Governor McDonnell. If you deem that to be a proper role of 
the government, then I would say that these infrastructure 
investments in partnership with the State governments are 
something that is a top need for States and for our Nation. You 
have heard the stories obviously about roads, bridges, other 
infrastructure crumbling, 60, 70 years old. Something that I am 
focusing on, as I said to Mr. Andrews earlier here.
    Ms. Hirono. It is clear in our country that we are 
trillions of dollars behind in supporting our infrastructure.
    You noted in your testimony that one of the areas that you 
would like Congress to focus on is the burden of regulation and 
you cite to the Heritage Foundation report that focused on 43 
significant new rules. And I have a copy of that report. It is 
called Red Tape Rising. And one of the regulations that was 
focused on by the Heritage Foundation is one that has to do 
with crane and derrick safety standards to prevent cranes from 
falling into buildings and killing people, which is what was 
going on. If you read the regulation, the Heritage Foundation 
focused on the cost of the regulation, which it is true about 
150 million, but when you look at the benefit side of the 
equation it actually saved 209 million.
    So if you were just doing a simple cost-benefit analysis 
then the savings or the benefits would exceed the costs. But 
you know when you are talking about saving lives, I would say 
that that should have been even heavier on the side of the 
benefit side.
    So my question is are you aware whether the Heritage 
Foundation took the offsetting of the benefits into account 
when they cited to these 43 rules and the costs of those rules?
    Governor McDonnell. I can't tell you. Under your analysis I 
think there are qualitative aspects after you do the cost-
benefit analysis just on dollars, then there has to be some 
good management judgment applied. So perhaps in your analysis 
or your example that might not be one we might all embrace. But 
the macro point is that if this is the largest number of major 
new rules at 43 that has promulgated since 1981, there is a 
problem. And I have the same problem in Virginia. When I was 
Attorney General we did a regulatory reform task force for 2 
years and we had a similar standard that is what President 
Obama just put in his executive order. And that is that if 
there is a better way to do it that respects the free market, 
that reduces cost, then we ought to look at a different way of 
doing it and we got rid of about 350 pages of regulations. I 
have got 24,000 pages left.
    Ms. Hirono. I agree with you. I am not a big fan of 
unnecessary regulations either. But there is also a danger when 
you do the cost-benefit analysis that we really have the full 
package.
    Going on to Mr. Messinger, did you say that you thought the 
stimulus bill was a good thing? Did I hear you correctly?
    Mr. Messinger. I think the question was on TARP.
    Ms. Hirono. What did you think of the stimulus?
    Mr. Messinger. I think parts of it were very helpful. I 
will give you an example. Our customers are highway contractors 
and they, and I think the rest of the country, expected more 
infrastructure money to come out of the stimulus.
    Ms. Hirono. I am with you on that.
    Mr. Messinger. Okay. And as a result our customers put off 
purchases of new equipment because they didn't see any 
certainty to what was going on. So we didn't see a huge benefit 
for our business out of the stimulus.
    Chairman Kline. The gentlewoman's time has expired.
    Ms. Hirono. I am so sorry. Thank you very much.
    Chairman Kline. Mr. Thompson, you are recognized.
    Mr. Thompson. Thank you, Mr. Chairman. Thanks to the panel 
for being here and lending your expertise today.
    Governor McDonnell, my question has do with workforce in an 
area that we haven't touched on specific to your State; 
concerns offshore oil and gas development off of Virginia's 
coast. As I understand it, the President announced that 
Virginia's lease sale 220 would be included in the current 
2007-2012 5-year plan and then following the Deep Water Horizon 
accident the administration withdrew the sale. Did Virginia 
play a role in making that decision not to move forward?
    Governor McDonnell. No, we didn't. I will say with respect 
to the administration we did play a role in the initial 
decision that the President made in March to authorize Virginia 
lease sale 220 to go forward. We were delighted and we thought 
the President made the right decision. I had a number of 
conversations with Secretary Salazar and meetings with him in 
advance, and I was delighted with the administration's decision 
to allow us to go forward as the first State on the East Coast 
to drill for oil and natural gas.
    The Secretary did call me shortly about an hour before the 
President made the decision that he was pulling the plug, 
frankly indefinitely, on offshore exploration. I told the 
Secretary that I appreciated the call but it was short-sighted 
and reflected no confidence in the Federal Government to be 
able to properly react to this disaster in the Gulf and no 
confidence in the ability of American industry to create the 
new technology that was necessary to react. And I didn't think 
we ought to give up and write off an entire industry that could 
create tremendous capital investment and jobs at this time in 
America and that I was very disappointed.
    Mr. Thompson. Given that sounds like a unilateral decision 
on the part of the administration, have you made any estimates 
as to the economic impact exploration might have for the State 
or frankly the potential job growth that could be associated 
with the industry?
    Governor McDonnell. Congressman Thompson, there were 
several estimates by various groups that have been made over 
the last couple of years. Some of the problems dealt with the 
fact that because the ban had been in place for so long that 
the seismic studies were largely outdated and so there is so 
much better technology to know better what is out there. And I 
would say that a couple of the more reputable estimates 
indicated about 1,900 to 2,600 jobs over the next 10 years, 
about $10 billion in capital investment, and about $250 million 
in revenue sharing. And that would assume that Congress would 
allow offshore drilling off the Atlantic Coast to have the same 
revenue sharing deal that the Gulf States have, which is about 
37.5 percent. If we got something like that sharing it with 
Virginia, it would be significant new revenue.
    In fact, I had a bill passed the last session of the 
general assembly approving offshore drilling and dedicating 80 
percent of that new revenue from offshore drilling to 
transportation infrastructure. So we were ready to go with the 
President's announcement. Unfortunately, now that is not the 
case.
    But what we do know is that it is an extraordinary 
opportunity. We don't have great beaches just like they do on 
the Gulf Coast. I don't want to drop a well on those beaches. 
We understand the need to be slow and prudent, but not to pull 
the plug indefinitely as I understand where we are now where 
Virginia really does not have a shot for an indefinite period 
of time.
    Mr. Thompson. You mentioned the beautiful beaches in 
Virginia. Do you believe that the oil and natural gas 
exploration in the Atlantic could coexist not just with the 
beautiful beaches, but obviously the presence of the Navy in 
that area?
    Governor McDonnell. We do. And I think national security 
ought to take the first priority. We have got the greatest 
naval base in the world in Norfolk, Virginia. It is a great 
source of pride for us in Virginia. We have had some 
discussions with some of the leaders down there about their 
operations to discuss what areas might need to be off limits 
and what areas could still be used for offshore exploration of 
gas, oil, or wind without affecting naval operations. We have 
the same issue with Wallops Island, the spaceport off of the 
Virginia-Maryland coast. But I believe those industries can 
coexist very well with offshore energy exploration.
    Some areas would have to be off limits, but some can still 
be used and I think that is just a matter of logistics. My 
concern is writing off the industry indefinitely because of 
clearly a disaster of significant proportions. But when you 
have 4,000 oil rigs that have been working reasonably well for 
40 years and then to throw in the towel on the industry, that 
does not seem like the American way. We are better than that. 
And that is what I expressed to the Secretary, and I hope 
Congress would consider taking some action maybe to move this 
along a little bit quicker.
    Thank you.
    Mr. Thompson. Thank you, Chairman.
    Chairman Kline. The gentleman's time has expired. Mrs. 
McCarthy, you are recognized.
    Mrs. McCarthy. Thank you, Mr. Chairman. Ms. Boushey, 
listening to the testimony, one of the things I think is 
missing is we are hearing everybody saying the job killing 
effects of Federal regulation. And yet when you look at this 
chart, the brown area is basically during the Bush years and 
they had deregulation. During Obama's 2 years we had 
regulation, yet we had job growth.
    Can you explain the difference between the regulation and 
deregulation and why we have job growth during those years?
    Ms. Boushey. Thank you. That is an excellent question, and 
it does underscore that that can't necessarily be the answer to 
what was going on with jobs necessarily. Two things that I 
would point out on the regulatory front. First of all, the 
Recovery Act was not necessarily a bunch of new regulations but 
was a bunch of spending designed to spur economic growth and to 
spur job creation, which clearly it did. It has been 
significantly effective.
    And I very much enjoyed some of the conversation on this 
panel talking about how we should have spent more of that money 
on infrastructure. My understanding of the political process 
was that a lot of--about a third of that money went towards tax 
cuts that did not have the biggest bang for the buck that those 
infrastructure dollars would have had. So that is something the 
next time this comes around I hope this conversation comes back 
up and we can spend all of that money on infrastructure.
    But the second piece that we need to note when we are 
thinking about regulation is of course when we are talking 
about regulation it is a wide array of different sorts of 
themes and different things that the government is doing. One 
piece--and again I would point to the report that came out 
yesterday from the commission that studied the financial 
markets and what happened. It was the lack of regulation that 
actually caused this whole crisis to begin with.
    And so when we are talking about this as if it was some 
sort of monolith, I would like us to just focus for a moment. 
The reason we saw these massive job losses was because we 
weren't doing our job regulating the financial markets, and 
that is something that looks like is going to come up again in 
this Congress, whether or not we are going to make sure that 
the money is there to fund the agencies to do that regulation, 
to hire that staff to do that.
    One thing that I always sort of note when you look at the 
fantastic people that do government service, those folks who 
are doing the regulating in those agencies are folks like you 
that are not making the big bonuses trying to regulate this 
very large industry with a lot of money at its disposal. But we 
need to make sure that those agencies are fully funded.
    I hope that answers at least part of your question.
    Mrs. McCarthy. Last night the President talked about the 
infrastructure of this country and many of us, probably many of 
us sitting here and in certainly some of the other committees, 
happen to think of putting more money into the stimulus for 
infrastructure. I can talk about the great State of New York. 
You know, our bridges, roads, basically are falling apart. 
States don't have the money to do it. The high unemployment 
rate with our union contractors and our union laborers. So I 
happen to think that is where we are going with it.
    On the financial, I think people are starting to forget 
because the economy is coming back now. The Dow went over 
12,000 today, and that is something that everybody has been 
looking for. But with that being said, we had a slow economy as 
far as getting people back to work because people were still 
holding their money. And as far as saying there are too many 
regulations out there, when you think of all the tax cuts we 
gave to those particular corporations to be able to buy 
equipment, to be able to have a tax write-off going down 5 
years on equipment that they bought, I don't think people 
actually understand what we have been doing. And if you have 
any answers to that, that would be great.
    Ms. Boushey. I would like to comment on infrastructure and 
needing to do more. Where I live here in the District of 
Columbia I have seen a small business owner across the street 
from me have to deal with three different water main breaks 
that has closed down his business for a number of days at a 
time. One of the things that we haven't heard enough about in 
this infrastructure conversation is how important these 
investments are, especially for small- and medium-sized 
businesses who can't relocate as easy as the big multinational 
can to a State with a better infrastructure to deal with it. 
But the traffic, the kinds of things that we were joking about 
earlier, that has a real impact on economic growth.
    And so making those investments will certainly boost jobs 
and boost employment, but it is also good for small business, 
even if it is not directly employment. It is helping them to do 
their business better.
    Mrs. McCarthy. Extremely important for small businesses. I 
live in Mineola, Nassau County, Long Island, New York. Most of 
our villages are 50 to 100 years old and the pipes are all 50 
to 100 years old and we have already had reports of many of the 
mains breaking. They have no money and they can't even do the 
roads because there is no sense doing the roads until the mains 
are fixed. So it has been a round robin. That hurts our small 
businesses and that hurts downtown. And those revenues 
basically go into the villages to keep up the upkeep as far as 
they can. So I agree with you on that.
    And I guess what I would say, too, also, if right-to-work 
States--I happen to think it is a problem mainly because one of 
the things when you talk about OSHA, they haven't been 
aggressive enough to make sure that our people aren't getting 
injured. The amount of injuries and the amount of deaths in 
this country because of workplace violations, shall we say, and 
we have seen those statistics and yet in my opinion it does not 
matter what administration has been there, they have not 
enforced the laws that are already on the books.
    Chairman Kline. The gentlelady's time has expired. I am 
going to take this opportunity to ask--take a little bit of 
time and ask some questions.
    Mr. Holtz-Eakin. Mr. Chairman?
    Chairman Kline. Yes.
    Mr. Holtz-Eakin. With all due respect, I want to make the 
record to correct----
    Chairman Kline. I am going to start with you. We have 
multiple competing things here. Let me go to you, Dr. Holtz-
Eakin, because I know that you wanted to say something about 
the regulatory issues.
    Mr. Holtz-Eakin. I wish mostly to make sure the record 
correctly reflects that I am a sitting member of the Financial 
Crisis Inquiry Commission. I have served for nearly 2 years and 
I appreciate the honor of the appointment. The commission will 
not report until tomorrow at 10 a.m. So anything that Ms. 
Boushey may believe about the findings of that commission are 
premature. There is no public release of the document. I don't 
know what she is referring to. I would ask members to read the 
complete report and the additional views by all members before 
drawing any conclusions.
    Chairman Kline. Thank you. I am going to continue to ask 
questions. I will yield just a moment for a unanimous consent 
request.
    Mr. Andrews. I ask unanimous consent to include the 
statement of Congressman Kucinich in the record.
    Chairman Kline. Hearing no objection, so ordered.
    [The statement of Mr. Kucinich follows:]

    Statement and Questions Submitted From Hon. Dennis J. Kucinich,
          a Representative in Congress From the State of Ohio

    I thank the Chairman for holding this important hearing on the 
state of the American workforce.
    We know from our constituents that they are hurting. In my home 
state of Ohio, the unemployment rate is at 9.6%. In October of 2010, 
there were 588,000 individuals in the State of Ohio who were forced to 
rely on unemployment insurance benefits to keep their heads and their 
families' heads above water. And nationwide, according to the 
Department of Labor, nearly 8.3 million Americans were receiving 
unemployment compensation as of early November. The recession has 
pushed America's middle class to the brink. Families across America are 
hanging on by their fingertips.
    Many are blaming the dire state of America's workforce on small 
businesses regulations, unions, pension obligations, the health care 
bill, and even China. In my home state of Ohio, there is a movement to 
eliminate collective bargaining rights for home health care and child 
care workers, and to restrict the bargaining rights of police officers 
and fire fighters. I want to say clearly: targeting the right of 
workers to organize is no solution to our continuing economic crisis.
    Placing the blame on workers or on regulations ignores one of the 
main reasons for job loss in the United States: free trade policies. We 
have actively pursued policies that have shipped American jobs overseas 
and left our domestic manufacturing sector in shambles. We are here 
because we all agree we must do more to ensure that American 
industries, as a foundational part of our economy, remain strong.
    Some of the witnesses today have spoken about the effect of 
regulations on small business. Yet they neglected to mention the free 
trade policies that give the same U.S. business incentives to close 
local factories and ship their production and jobs overseas for cheap 
labor.
    Question: In your testimony, Ms. Boushey, you make a very important 
point that I would like to highlight to the other members of this 
Committee. As you know, the President is urging Congress to approve a 
free trade agreement with South Korea that the Administration recently 
negotiated. You state in your testimony:

          There is also not strong evidence that the Korea Free Trade 
        Agreement will generate economically meaningful job gains.

    Ohio's economy was already struggling long before the current 
recession hit. According to the Bureau of Labor Statistics, Ohio lost 
approximately 430,000 manufacturing jobs from 1990 through July of 
2010.
    So it seems that the ``free trade'' is actually a complex class war 
in which US CEOs who move their manufacturing to other countries are 
among the winners, and US workers are among the losers.
    Question: Ms. Boushey, would it be correct to say that one of the 
main effects of free trade policies is to incentivize US corporations 
into taking advantage of cheaper foreign labor by moving jobs to those 
other countries?
    So would you agree that the evidence is that free trade policies do 
not automatically increase employment, as some claim?
    Second Question: Ms. Boushey: I am particularly concerned with the 
bleak budget situation faced by state and local governments, who are 
the backbone of service to Americans. When our constituents turn to 
help from their government, they are most often using a state or local 
government service. In your testimony, you sound the alarm that funds 
from the President's Economic Stimulus program (the American Recovery 
and Reinvestment Act) has prevented the employment level of women from 
dropping, and that this support is running out. You state in your 
testimony that last year, local governments in this country cut 259,000 
workers, of which 225,000 were women, offsetting some modest statewide 
government increases in employment of women. You state in your 
testimony that we need policies that create jobs and measures to 
increase aggregate demand and lay the foundations for economic growth. 
And I know that this means, among other efforts, a big movement to 
repair and replace infrastructure in this country. It is correct to say 
that in the area of infrastructure investment, it is not that the 
private sector does not want to invest in massive infrastructure 
projects but that they simply do not have the resources to do so?
                                 ______
                                 
    Chairman Kline. Put me on the clock. I am going to try to 
mind my own regulations here. It is a little bit of a challenge 
sometime.
    I want to continue with you, Dr. Holtz-Eakin, for just a 
minute. You mentioned trade, and I think the Governor may have 
as well. What impact do you think that the year after year 
delay of enacting the free trade agreements that have been 
sitting in front of us has had on economic growth and job 
creation?
    Mr. Holtz-Eakin. I think they are unambiguously bad. If you 
look at the Colombia free trade agreement, for example, it is 
already the case that Colombian companies have free access to 
American markets. The only thing that signing that agreement 
would do would be to allow U.S. workers through American 
companies to have the same access to Colombian markets, and we 
are sitting on the sidelines giving up the opportunity to sell 
these products abroad and create jobs in America.
    It also sends the signal to our international competitors 
that we will not be at the table and we are not an important 
country to negotiate with and we get bypassed in other 
opportunities to expand our access to trade. 95 percent of the 
world's consumers are outside of our borders. Those are the 
markets our children will sell into and each day that we are on 
the sidelines we harm our future.
    Chairman Kline. What about, we talk about regulations. What 
about other regulations that may exist that are getting in the 
way or causing U.S. jobs to go overseas in this regulatory 
environment?
    Mr. Holtz-Eakin. Every business location decision is a 
weighing of the value of the business proposition: What do I 
get in the way of a skilled labor force, the capacity to 
produce, and low taxes, low regulation, low litigation. We have 
at the moment a range of regulatory initiatives that are quite 
threatening to the business community. The EPA has five 
separate rulemakings at the moment ranging from the mercury 
rule to greenhouse gases under the Clean Air Act, intake for 
clean water; all are estimated to be quite expensive. Some will 
have dramatic impacts on particularly the electricity 
generation industry and that affects the manufacturing. So this 
is not in and of itself an explanation of anything but it is 
another piece of a puzzle that says if you want to create jobs 
do not create barriers over which businesses have to leap.
    Chairman Kline. Okay. One more question. We have voted a 
number of times in this Congress to extend unemployment 
benefits, as we have had historically high unemployment 
continually month after month. And we hear an argument that Dr. 
Boushey mentioned and others have said that continuing these 
unemployment benefits is good for the economy. Fills the gap, I 
think. I am trying not to put words in her mouth. Do you have 
some observation on the effects of extending these unemployment 
benefits?
    Mr. Holtz-Eakin. It is a complicated issue. The first thing 
is to recognize what dominates anything is getting a job. And 
so the premium should be put on all the factors that create 
pro-growth policy environment.
    The second would be that at some point you no longer are 
doing unemployment benefits. This is not a temporary bridge 
between jobs. You need to have effective education programs for 
workers to move into new industries, because they are not 
temporarily unemployed and we should recognize that.
    The third is that the extension is not unambiguously a good 
thing. Economics is in the end a calculus of benefits versus 
cost and there are costs to extensions of unemployment 
insurance, including harm to the worker's skills themselves. 
Lots of evidence suggest that the longer someone is on a UI 
program the less likely they are to be employed and when 
employed at lower wages. And so in the research literature you 
find unemployment insurance extensions associated with 
continued high unemployment. Reduced extensions actually do 
lower the unemployment rate. And in some cases that is a 
benefit to the worker by getting them back into the labor force 
before their skills deteriorate.
    Chairman Kline. I was going to move to the Governor but I 
can see that I am going to run out of time. I think an 
important message there is that we have workers now who are 
simply never going to go back to the job, maybe even the 
industry where they were employed. And so worker training and 
education is going to be an important part of what we look at.
    Thank you. I see I am about to run out of time. And Ms. 
Woolsey.
    Ms. Woolsey. Thank you, Mr. Chairman. I am concerned that 
because of this new found fever to cut regulations we might 
have an open season on any regulations a Member of Congress or 
the business community doesn't like regardless of its merits. 
So let's be very careful that that is not where we go with all 
of this. The everything-on-the-table approach is quite 
worrisome because it has the potential to undermine rules meant 
to protect workers, rules that took decades to achieve.
    So as the President stated in his speech last night, we 
have to keep common sense regulations that protect people, even 
as we do away with rules that may in some way hinder job 
growth. The fact of the matter is that if more regulations had 
been on the books and government regulators had done their 
jobs, we may have averted the housing crisis that jump-started 
the recession in the first place. It should be clear to all of 
us that some areas of the economy need to be highly regulated. 
Complying with regulations should not be an excuse for failing 
to create jobs. And as the President pointed out last night, 
corporate profits are at record highs. Corporate profits are at 
record highs and the stock market is booming. United States 
businesses are sitting on nearly $2 trillion in cash. They need 
to start spending some of that money and making investments 
necessary to get our economy moving again.
    So this brings me to questions to you, Dr. Boushey. You are 
quoted and you have said in your statement that we need to find 
and fill the demand gap, that women--which I am assuming means 
that women and minorities have to be trained and educated and 
prepared for the jobs that we have available in our country now 
and jobs of the future.
    But what we are finding out and we do find out that most 
women are already working outside of the home and their 
families and they are struggling. Not only finding a job that 
pays a livable wage--not only finding a job but finding one 
that pays a livable wage but also affording to work in the 
first place, including child care.
    So what would be your recommendation that this--how can 
they contribute to balancing work and family--not just for 
women but for all workers--with these profits they are sitting 
on? What would you do to ensure a better workplace?
    Ms. Boushey. Thank you, Congresswoman. I appreciate the 
question. There is a couple of things. Certainly first and 
foremost there is a lot of the great companies out there that 
are already doing a lot for their employees in terms of their 
families and in terms of workplace flexibility. There is a lot 
of opportunity for other companies to learn from that and to do 
more and the White House has had an initiative this year and 
they are going out to places around the country and talking 
about flexibility and what companies can do and doing some 
community forums. I think that is number one.
    Number two, as we have seen the budget crisis play out in 
the States, we have seen a lot of things that help them keep 
their jobs be some of the first things on the chopping block. 
Child care assistance, home health aides, after school 
programs. These are things that not only disproportionately 
employ women but also help families and provide the care they 
need and do their jobs. And one of the tragedies--there are so 
many tragedies of this great recession, but one of them is that 
as we have seen job losses at State level and a quarter of 
million job losses at the local level over the past year, that 
has disproportionately affected women workers. So making sure 
that that those items are not always the first on the chopping 
block is something that we can think about.
    If I may just digress for just one moment, I did want to 
add one thing about the unemployment insurance system, which is 
that we do know that it is not from the conversation earlier, a 
lot of the economics, the bulk of the economics research shows 
that people who get these benefits, they need them and this has 
had the biggest bang for the buck relative to almost any other 
program we have. A recent report from the DLS shows that it has 
been about $2 into the economy for every $1 spent on those 
programs. I would just venture to say that we do need to 
continue these benefits until the unemployment rate comes down 
and not have them be sacrificed in the name of short-term 
deficit cutting. But I will let you continue your questions.
    Ms. Woolsey. Well, thank you very much. I have just a short 
question if I have time for the Governor. You mentioned 
regulations and the importance of the oil industry in the Gulf 
Coast area. There were regulations that are safety regulations 
that were ignored that had something to do, of course, with the 
deaths and the destruction that occurred. Would that cost jobs 
if those regulations had been in place or do you think there 
are some regulations we should be stricter with and about?
    Governor McDonnell. Yes, ma'am, absolutely. I don't think 
anybody is advocating some arbitrary 30 percent across-the-
board reduction. There should be a targeted strategy. We 
mentioned some of them. The President did in his executive 
order; That is, essentially does the cost of compliance and the 
cost of enforcement, does it far exceed whatever the benefit is 
from a public safety or consumer protection standpoint? Is 
there a better way to do it with less bureaucracy? And those 
ought to be the test.
    And in your example not only should those regulations have 
been in place, they should have been enforced better than what 
we are hearing now. That certainly is not the type of 
regulation we are talking about. It is the ones--we all know 
that regulations are such that businesses don't pay taxes, nor 
do they really pay for the cost of regulations. They 
incorporate it in their price of goods and services and pass it 
on to you and me.
    So that is, I think, the concern that I have. Those that 
don't pass that kind of test, that increase the cost of goods 
and services, is the ones that we ought to get rid of.
    Chairman Kline. Thank you. The gentlewoman's time has 
expired.
    Mr. Rokita.
    Mr. Rokita. Thank you, Mr. Chairman. And I thank the 
panelists for your time. Following up on that a little bit, 
Governor, I appreciate the test that you just proposed but it 
is also true, isn't it, that we can develop a regulation or a 
thousand that protects everyone? We could do things to make 
sure that no one gets killed and watch every single job that is 
left in this country go to China. So there is a balance test 
here. It is intangible. And the fact of the matter is in a free 
society and a free public, if we are going to keep it, 
sometimes bad things happen to very good people. And it can't 
be the mission of the Federal Government at every turn to try 
to stop it because it will fail.
    Governor, another point to you. You mentioned the word 
``latitude'' at the very beginning of your remarks when you 
said if the Federal Government or this Congress would allow the 
States more latitude. I imagine you said that because you are a 
gentleman. That is all I have known from Virginia. But as a 
former statewide official and knowing a little bit of your 
history, I also understand that you are a constitutionalist. 
And it seems to me that we ought to be recognizing the fact 
that it is not for us to decide what latitude to give to the 
States. It is for the States and the people to decide under the 
enumeration clause what latitude to give us. And I have only 
been here 19 or so days, but I can already say that the last 
thing that this Federal Government needs or anyone even up here 
on the dais needs is more latitude to control, run, and 
otherwise dictate the lives of the people.
    I would ask you then, and the question is to you: Would you 
help us? There are some of us here who would like to see that 
turned around. Would you help us, with Governor Daniels, 
Governor Christie, others, to see the enumeration clause 
empowered again?
    Governor McDonnell. It is a very good question and you are 
correct. Philosophically I agree 100 percent with what you 
said. Many of us Governors in both parties talk about the 10th 
amendment as the forgotten amendment and that is the by-product 
of both Republican and Democrat congressional actions probably 
over the last 70 or 80 years.
    And so most Governors, while we appreciate certain Federal 
help and actions, especially if it is consistent with Article 
I, section 8, which is pretty much the founder's mission for 
you, we do believe that most of the rest of those things to the 
maximum extent possible should be left to the States and the 
people respectively. That is the charter.
    So I think that is a great prescription for success in a 
new system of federalism for all of us going forward because 
when the Federal Government is not doing things that it 
shouldn't be doing, one, you save money. And two, you allow the 
States, the laboratories of democracy closer to the people, to 
do some of the things that they ought to do. And we got an 
example of that I think just yesterday where we had a 
bipartisan letter from both Governor Gregory and Governor 
Heinemann, the Chairman and Vice Chairman of the National 
Governors' Association, saying please don't pass a law letting 
States file bankruptcy. One, you will take accountability away 
from us, and, two, we don't need that kind of help. What we do 
need to do is make sure that we are governing ourselves 
accordingly in the States.
    I do think that you are going to hear more from the 
Nation's Governors, and we appreciate the invitations like 
today for us to come and speak on these issues, to help us to 
discuss--have a robust dialogue about the rebirth of federalism 
and maybe a little bit different balance in State-Federal power 
because of the 10th amendment. I think you are right.
    Mr. Rokita. Thank you, Governor. I yield, sir.
    Chairman Kline. I thank the gentleman.
    Mr. Payne.
    Mr. Payne. Thank you very much to the panel. Governor, I 
was interested in your comment that you like a program if it 
doesn't add to the debt. I recall years ago, in the 50s and 
60s, I used to travel in Virginia a lot and there was just 
Route 1. Many, many years later I came to Congress and met a 
late Congressman, Norm Sisisky. Norm was very effective. I know 
that many of the new Members do not like programs called by 
earmark, but Norm Sisisky actually added to the national debt 
because he built that highway system that brought Home Depot 
and all those great businesses into Virginia.
    Now, if he took your notion--of course, it did add to the 
Federal debt. Of course I think it has been paid back many 
times, at least to the State of Virginia. So I am trying to 
reconcile if you say it is a penny into debt, even though 
outward years it is going to be beneficial. Could you go 
through that again very briefly? Because Virginia wouldn't be 
in the great position it is in today as a hub for Home Depot 
and those roads that were built through Norm Sisisky from 
Virginia getting the money to Virginia, adding to the debt. But 
it is helping your State in a robust way.
    Governor McDonnell. Congressman Sisisky was a very 
effective Congressman and we are fortunate to have a lot of 
effective Congressmen from the Great Commonwealth. What I would 
say, Congressman, is I think what I have heard from a lot of 
Virginians and on both sides of the political spectrum is that 
they are tremendously concerned about the future of this 
country if we stay on this trail of debt now at $14 trillion, 
the deficit going up a trillion over the last couple of years, 
and frankly billions, hundreds of billions before that under 
Republican administrations. So it is a bipartisan problem.
    When I as a Governor have to balance the budget every year, 
we borrow up to 5 percent of our total revenues solely for 
capital projects. What we don't do is what people are concerned 
about Congress doing, and that is borrowing for the hot dogs, 
diapers, pencils, and cigarettes, the daily operations of 
government. That is a concern.
    So these targeted investments in infrastructure that are 
made by the Congress to invest in the States and claiming that 
as a priority without increasing spending in other areas, I 
think that is something a lot of people embrace. But if it 
continues to add to the price tag that my kids and your kids 
and our grandchildren have to pay back, that is what you are 
hearing from citizens far and wide that they are rejecting.
    Mr. Payne. Another--thank you for that clarification. You 
mention in your testimony that to post a workplace notice to 
employees outlining their rights under the NLRA that it is 
counterproductive, detrimental to the message that you are 
trying to send in Virginia. So I am just wondering how is 
informing a worker of their rights to you detrimental to the 
State of Virginia?
    Governor McDonnell. That may have been a little harsh.
    Mr. Payne. It is your testimony. You said it.
    Governor McDonnell. I know. I said it. But what I believe 
we don't need to do in a right-to-work State is advertise how 
to create more labor unions. It has been a hallmark of 
Virginia's success. That is why we are ranked number one in 
Forbes and CNBC and every other periodical in the last 5 years 
as a place that business wants to relocate because of the tax 
regulatory litigation climate, the right-to-work laws, and our 
education system. Those are the fundamentals that build that.
    My point in that, while not stated as best as I could, my 
point is that a right-to-work State if we are advertising how 
to create more unions it is the opposite message that we are 
trying to send to create jobs and opportunity.
    Mr. Payne. Just very quickly, talking about right-to-work 
States, out of the three worst unemployment problems in the 
country, two are right-to-work States, including the worst in 
the Nation, Nevada, right-to-work, 14.5; California is a free 
bargaining State, 12.5; Florida, right-to-work State, 12 
percent.
    So I think a lot is being played into the right to work and 
not right to work. It does not seem that much of an impact. As 
a matter of fact, out of the 10 or highest unemployment, five 
are right-to-work, five are not.
    But just before my time expires, on the drilling we are 
happy about the President's order to hold back. The companies 
did know what was right and wrong, but we had the big spill 
because they took a shortcut. And I think America is great, as 
you mentioned, and we ought to be able to get over these 
problems. However--and we don't have time for an answer--but 
business seems that enough profit is not enough. So there is no 
ceiling. The question is how do you get people to know that 
that cap was not sufficient to prevent that blowup in the Gulf?
    Chairman Kline. The gentleman's time has expired. I am 
eager to keep my commitment to close this hearing at 4 o'clock, 
but I would like to yield a couple of minutes to Mr. Barletta, 
who has been waiting patiently.
    Mr. Barletta. My question is to Mr. Messinger. As a former 
business owner, I understand what a business looks for when 
making decisions for investment for the long-term. Uncertainty 
in the business environment today is handcuffing businesses in 
deciding whether to expand or invest or start a new business.
    We all can agree that we would like to save whatever 
manufacturing jobs we have left here in America, and I believe 
you had mentioned in your testimony that 70 percent of American 
manufacturers are subchapter S corporations. My question to you 
is do you believe that the current health care bill and the 
extension of the current tax rates for only 2 years is 
contributing to that uncertainty?
    Mr. Messinger. Absolutely, Congressman. I am going through 
a renewal process right now in our health insurance, and while 
we don't have a final rate they are telling us in the 15 
percent range. And clearly that is on top of prior years of 
multiple rate increases employing. The private insurers are 
unsure of what is going on and how they are going to be 
effected. So yes, on health insurance for sure.
    While I applauded many things the President said last 
night, especially concerning jobs in this country, I was 
concerned that he laid out his own cap for taxes, saying that 
they should be increased. Now is not the time for us to be 
worrying about what tax rates should be in 2 years. We should 
be worried about job creation today. And I think in my 
testimony, I have laid out some of the things that I feel are 
important there.
    Mr. Barletta. Thank you.
    Chairman Kline. I thank the gentleman. We are rapidly 
approaching 4 o'clock. I would like to certainly thank the 
witnesses and yield to Mr. Andrews for any closing remarks he 
might have.
    Mr. Andrews. I would also like to thank the witnesses for 
their preparation and their time. I have a unanimous consent 
request that a letter prepared by 250 economists supporting the 
health care bill be entered into the record.
    Chairman Kline. Without objection.
    [The information follows:]

                                                  January 26, 2011.
Hon. John Kline, Chairman; Hon. George Miller, Ranking Member,
U.S. House of Representatives, Education and the Workforce Committee, 
        Washington, DC 20515.
    Dear Chairman Kline and Representative Miller: Congress this week 
is holding hearings on the economic impact of health care reform. We 
write to convey our strong conclusion that leaving in place the Patient 
Protection and Affordable Care Act of 2010 will significantly 
strengthen our nation's economy over the long haul and promote more 
rapid economic recovery in the immediate years ahead. Repealing the 
Affordable Care Act would cause needless economic harm and would set 
back efforts to create a more disciplined and more effective health 
care system.
    Our conclusion is based on two economic principles. First, high 
medical spending harms our nation's workers, new job creation, and 
overall economic growth. Many studies demonstrate that employers 
respond to rising health insurance costs by reducing wages, hiring 
fewer workers, or some combination of the two. Lack of universal 
coverage impairs job mobility as well because many workers pass up 
opportunities for self-employment or positions working for small firms 
because they fear losing their health insurance or facing higher 
premiums.
    Second, the Affordable Care Act contains essentially every cost-
containment provision policy analysts have considered effective in 
reducing the rate of medical spending. These provisions include:
     Payment innovations such as greater reimbursement for 
patient-centered primary care; bundled payments for hospital care, 
physician care, and other medical services provided for a single 
episode of care; shared savings approaches or capitation payments that 
reward accountable provider groups that assume responsibility for the 
continuum of a patient's care; and pay-for-performance incentives for 
Medicare providers.
     An Independent Payment Advisory Board with authority to 
make recommendations to reduce cost growth and improve quality within 
both Medicare and the health system as a whole
     A new Innovation Center within the Centers for Medicare 
and Medicaid Services charged with streamlining the testing of 
demonstration and pilot projects in Medicare and rapidly expanding 
successful models across the program
     Measures to inform patients and payers about the quality 
of medical care providers, which provide relatively low-quality, high-
cost providers financial incentives to improve their care
     Increased funding for comparative effectiveness research
     Increased emphasis on wellness and prevention
    Taken together, these provisions are likely to reduce employer 
spending on health insurance. Estimates suggest spending reductions 
ranging from tens of billions of dollars to hundreds of billions of 
dollars. Because repealing our nation's new health reform law would 
eliminate the above provisions, it would increase business spending on 
health insurance, and hence reduce employment.
    One study concludes that repealing the Affordable Care Act would 
produce job reductions of 250,000 to 400,000 annually over the next 
decade. Worker mobility would be impaired as well, as people remain 
locked into less productive jobs just to get health insurance.
    The budgetary impact of repeal also would be severe. The 
Congressional Budget Office concludes that repealing the Affordable 
Care Act would increase the cumulative federal deficit by $230 billion 
over the next decade, and would further increase the deficit in later 
years. Other studies suggest that the budgetary impact of repeal is 
even greater. State and local governments would face even more serious 
fiscal challenges if the Affordable Care Act were repealed, as they 
would lose substantial resources provided under the new law while 
facing the burdens of caring for 32 million more uninsured people. 
Repeal, in short, would thus make a difficult budget situation even 
worse.
    Rather than undermining health reform, Congress needs to make the 
Affordable Care Act as successful as it can be. This would be as good 
for our economy as it would be for the health of our citizens.
            Sincerely,

Henry J. Aaron, Senior Fellow, The Brookings Institution
Jean Marie Abraham, Assistant Professor, University of Minnesota School 
        of Public Health
Randy Albelda, Professor of Economics, University of Massachusetts, 
        Boston
Sylvia A. Allegretto, Economist, University of California, Berkeley
Stuart Altman, Sol C. Chaikin Professor of National Health Policy, 
        Brandeis University
Elizabeth Oltmans Anant, Assistant Professor of Public Policy and 
        Economics, Duke University
Rania Antonopoulos, Director, Gender Equality and the Economy Program, 
        Levy Economics Institute
Kenneth J. Arrow, Professor of Economics Emeritus, Stanford University
Michael Ash, Associate Professor of Economics and Public Policy, 
        University of Massachusetts, Amherst
David Autor, Professor and Associate Head, Department of Economics, 
        Massachusetts Institute of Technology
Susan L. Averett, Charles A. Dana Professor of Economics, Lafayette 
        College
Christopher Avery, Roy E. Larsen Professor of Public Policy, Harvard 
        University, Kennedy School of Government
Rojhat B. Avsar, Assistant Professor of Economics, Columbia College
M.V. Lee Badgett, Professor of Economics, University of Massachusetts, 
        Amherst
El-hadj Bah, Lecturer, University of Auckland
Ron Baiman, Director of Budget and Policy Analysis Center for Tax and 
        Budget Accountability
Asatar Bair, Professor of Economics, City College of San Francisco
Dean Baker, Co-Director Center for Economic and Policy Research
Radhika Balakrishnan, Professor, Women's and Gender Studies, Rutgers, 
        The State University of New Jersey
Nesecan Balkan, Department of Economics, Hamilton College
Erol Balkan, Professor of Economics, Hamilton College
Steve Balkin, Professor of Economics, Roosevelt University
Nina Banks, Associate Professor of Economics, Bucknell University
William Barclay, Adjunct Professor, University of Illinois at Chicago
Drucilla K. Barker, Professor and Director, Women's and Gender Studies, 
        University of South Carolina
David Barkin, Profesor de Economia, Universidad Autonoma Metropolitana-
        Xochimilco
Anirban Basu, Associate Professor, Department of Health Services, 
        University of Washington
Francis M. Bator, Lucius N. Littauer Professor of Political Economy 
        Emeritus, Harvard University, Kennedy School of Government
Charles M. Becker, Associate Chair and Research Professor, Department 
        of Economics, Duke University
Marc F. Bellemare, Assistant Professor, Duke University
Gunseli Berik, Professor of Economics, University of Utah
Carole Biewener, Professor of Economics, Simmons College
Cyrus Bina, Distinguished Research Professor of Economics, University 
        of Minnesota
Christine E. Bishop, Atran Professor of Labor Economics, Brandeis 
        University
Josh Bivens, Economist, Economic Policy Institute
Heather Boushey, Senior Economist, Center for American Progress
Roger Even Bove, Department of Economics & Finance (retired), West 
        Chester University
James K. Boyce, Professor of Economics, University of Massachusetts, 
        Amherst
Elissa Braunstein, Associate Professor, Colorado State University
Clair Brown, Professor of Economics, University of California, Berkeley
Thomas Buchmueller, Waldo O. Hildebrand Professor of Risk Management 
        and Insurance, Ross School of Business, University of Michigan
Colin Cameron, Professor of Economics, University of California, Davis
Jim Campen, Professor of Emeritus, Economics University of 
        Massachusetts, Boston
Kathleen Carey, Associate Professor, Boston University School of Public 
        Health
Ann M. Carlos, Professor, Department of Economics, University of 
        Colorado
Frank Chaloupka, Distiguished Professor of Economics and Director, 
        Health Policy Center, University of Illinois at Chicago
Richard Chapman, Professor of Economics, Westminster College
John Dennis Chasse, Professor Emeritus, State University of New York, 
        Brockport
Howard Chernick, Professor of Economics, Hunter College and the 
        Graduate Center, City University of New York
Raj Chetty, Professor of Economics, Harvard University
Kimberly Christensen, Joanne Woodward Chair of Public Policy, Sarah 
        Lawarence College
Betsy Jane Clary, Professor of Economics, College of Charleston
Paul D. Cleary, Dean of Public Health, Yale School of Public Health
Jonathan Conning, Associate Professor of Economics, Hunter College and 
        the Graduate Center, City University of New York
Karen Smith Conway, Professor of Economics, University of New Hampshire
Philip J. Cook, ITT/Sanford Professor of Public Policy, Duke University
Paul Cooney, Associate Professor, Federal University of Para, Brazil
Richard R. Cornwall, Professor of Economics, Emeritus, Middlebury 
        College
J. Kevin Crocker, Undergraduate Program Director, University of 
        Massachusetts, Amherst
David Cutler, Otto Eckstein Professor of Applied Economics, Harvard 
        University
Rada K. Dagher, Assistant Professor, University of Maryland
Anita Dancs, Assistant Professor, Department of Economics, Western New 
        England College
Charles Davis, Professor, Labor Studies, Indiana University
Susan M. Davis, Associate Professor, Department of Economics and 
        Finance, Buffalo State College
Partha Deb, Professor of Economics, Hunter College and the Graduate 
        Center, City University of New York
Gregory E. DeFreitas, Professor of Economics, Hofstra University
Brad DeLong, Professor of Economics, University of California, Berkeley
Timothy M. Diette, Assistant Professor of Economics, Washington and Lee 
        University
Marisa Elena Domino, Associate Professor of Health Economics, The 
        University of North Carolina
David E. Dowall, Professor, University of California, Berkeley
Arindraijit Dube, Assistant Professor, Department of Economics, 
        University of Massachusetts, Amherst
Niev Duffy, President, Eastern Economic Research
Mark Duggan, Professor of Economics, University of Maryland
Randall P. Ellis, Professor of Economics, Boston University
Elizabeth Elmore, Professor of Economics, Richard Stockton College of 
        New Jersey
Christopher L. Erickson, Professor, UCLA Anderson School of Management
Jose Escarce, Professor of Medicine, David Geffen School of Medicine at 
        UCLA
Loretta Fairchild, Professor of Economics, Nebraska Wesleyan University
Sasan Fayazmanesh, Professor Emeritus of Economics, California State 
        University, Fresno
Steven Fazzari, Professor of Economics, Washington University
Judy Feder, Professor of Public Policy, Georgetown University
Susan Feiner, Professor of Economics, University of Southern Maine
Deborah M. Figart, Professor of Education and Economics, Richard 
        Stockton College of New Jersey
Kade Finhoff, Assistant Professor of Economics, University of 
        Massachusetts, Boston
Jason Fletcher, Assistant Professor of Public Health, Yale University
Nancy Folbre, Professor of Economics, University of Massachusetts, 
        Amherst
Austin Frakt, Assistant Professor of Health Policy and Management, 
        Boston University School of Public Health
Jeffrey Frankel, Harpel Professor of Capital Formation and Growth, 
        Harvard University
Gerald Friedman, Professor of Economics, University of Massachusetts, 
        Amherst
Bianca Frogner, Assistant Professor, The George Washington University
Bill Ganley, Professor of Economics and Finance, Buffalo State College
Lorenzo Garbo, Professor of Economics, University of Redlands
Irwin Garfinkel, Mitchell I. Ginsberg Professor of Contemporary Urban 
        Problems, Columbia University School of Social Work
Paul J Gertler, Li Ka Shing Professor of Health Policy and Management, 
        University of California, Berkeley
Mwangi wa Githinji, Assistant Professor of Economics, University of 
        Massachusetts, Amherst
Devra L. Golbe, Professor of Economics, Hunter College and the Graduate 
        Center, City University of New York
Heather Taffet Gold, Associate Professor of Public Health, Weill 
        Cornell Medical College
Claudia Goldin, Henry Lee Professor of Economics, Harvard University
Don Goldstein, Professor of Economics, Allegheny College
Jose A. Gomez-Ibanez, Derek C. Bok Professor of Urban Planning and 
        Public Policy, Harvard University, Kennedy School of Government
Joshua Goodman, Assistant Professor of Public Policy, Harvard 
        University, Kennedy School of Government
Neva Goodwin, Co-Director, Global Environment and Environment 
        Institute, Tufts University
Elise Gould, Economist, Economic Policy Institute
Ulla Grapard, Associate Professor of Economics and Women's Studies, 
        Colgate University
Daphne Greenwood, Professor of Economics and Director, Colorado Center 
        for Policy Studies, University of Colorado, Colorado Springs
Tai Gross, Assistant Professor, Department of Health Policy and 
        Management, Mailman School of Public Health, Columbia 
        University
Michael Grossman, Distinguished Professor of Economics, City University 
        of New York Graduate Center
Jonathan Gruber, Professor of Economics, Massachusetts Institute of 
        Technology
Kwabena Gyimah-Brempong, Professor and Chair, Department of Economics, 
        University of Souh Florida
Jack Hadley, Professor and Senior Health Services Researcher, George 
        Mason University
Paul Hancock, Professor of Economics, Green Mountain College
Jeffrey S. Harman, University of Florida Research Foundation Professor, 
        University of Florida
Oliver Hart, Professor of Economics, Harvard University
John T. Havey, Professor of Economics, Texas Christian University
Gillian Hewitson, Department of Political Economy, University of Sydney
Richard Hirth, Professor of Health Management and Policy, University of 
        Michigan School of Public Health
Vivian Ho, Baker Institute Chair of Health Economics and Professor, 
        Rice University
Joan Hoffman, Professor and Chair, Department of Economics, John Jay 
        College of Criminal Justice, City University of New York
Ann M. Holmes, Associate Professor, Indiana University-Purdue 
        University, Indianapolis
Barbara Hopkins, Associate Professor of Economics, Wright State 
        University
Jill R. Horwitz, Professor of Law, Co-Director, Program on Law and 
        Economics, University of Michigan Law School
Candace Howes, Professor of Economics, Connecticut College
Hilary Hoynes, Professor of Economics, University of California, Davis
Dorene Isenberg, Professor and Chair, Department of Economics, 
        University of Redlands
Ken Jacobs, Chair, Labor Center University of California, Berkeley
Joyce P. Jacobsen, Andrews Professor of Economics, Wesleyan University
Sanford M. Jacoby, Professor of Management and Public Policy, 
        University of California, Los Angeles
Habib Jam, Associate Professor of Economics, Rowan University
Russell A. Janis, Senior Lecturer in Economics, University of 
        Massachusetts, Amherst
Arjun Jayadev, Assistant Professor of Economics, University of 
        Massachusetts, Boston
Neil Jordan, Assistant Professor and Director, Health Economics Center, 
        Feinberg School of Medicine, Northwestern University
Ted Joyce, Professor of Economics and Finance, Baruch College, City 
        University of New York
Geoffrey Joyce, Director of Health Policy, Schaeffer Center for Health 
        Policy & Economics, University of Southern California
Kyoungrae Jung, Assistant Professor, Health Policy and Administration, 
        Pennsylvania State University
Daniel Kahneman, Professor of Public Affairs, Emeritus, Princeton 
        University
Rajani Kanth, Professor of Economics (Visiting), Loras College & 
        Washington College
Ethan Kaplan, Visiting Professor of Economics, Columbia University
Lawrence Katz, Allison Professor of Economics, Harvard University
Donald Katzner, Professor of Economics, University of Massachusetts, 
        Amherst
Paula M. Kazi, Assistant Professor, Bucknell University
Valerie K. Kepner, Assistant Professor of Economics, King's College
Farida Khan, Professor of Economics, University of Wisconsin-Parkside
Marlene Kim, Associate Professor, Department of Economics, University 
        of Massachusetts, Boston
Steven J. Klees, Professor of Education and Economic Development, 
        University of Maryland
Andrew I. Kohen, Professor Emeritus of Economics, James Madison 
        University
Brent Kramer, City University of New York
Brent Kreider, Professor of Economics, Iowa State University
Jill Kriesky, Economist, West Virginia Center on Budget and Policy
Karl Kronebusch, Associate Professor, City University of New York
Alan Krueger, Professor of Economics, Princeton University
David Laibman, Professor (retired), Deparment of Economics, City 
        University of New York
Melaku Lakew, Professor of Economics, Richard Stockton College of New 
        Jersey
Thomas Lambert, Economics Lecturer, Indiana University Southeast
Robert Lawrence, Albert L. Williams Professor of Trade and Investment, 
        Harvard University, Kennedy School of Government
Arleen A. Leibowitz, Professor, School of Public Affairs, University of 
        California, Los Angeles
David I. Levine, Trefethen Professor of Business Administration, Haas 
        School of Business, University of California, Berkeley
Frank Levy, Rose Professor of Urban Economics, Massachusetts Institute 
        of Technology
Peter M. Lichtenstein, Emeritus Professor of Economics, Boise State 
        University
Jeffrey B. Liebman, Malcolm Wiener Professor of Public Policy, Harvard 
        University, Kennedy School of Government
Peter H. Lindert, Distinguished Research Professor of Economics, 
        University of California, Davis
Richard C. Lindrooth, Associate Professor, Colorado School of Public 
        Health, University of Colorado
Victor D. Lippit, Professor of Economics, University of California, 
        Riverside
Linda Loubert, Assistant Professor, Economics Department, Morgan State 
        University
Harold S. Luft, University of California, San Francisco
Catherine Lynde, Associate Professor, Economics, University of 
        Massachusetts, Amherst
Sean P. MacDonald, Assistant Professor of Economics, City University of 
        New York
Diane J. Macunovich, Department of Economics, University of Redlands
Mark Maier, Professor of Economics, Glendale College
Ann Markusen, Professor, Humphrey School of Public Affairs, University 
        of Minnesota
Eric S. Maskin, A.O. Hirschman Professor of Social Science, Institute 
        for Advanced Study
Thomas Masterson, Research Scholar, Levy Economics Institute of Bard 
        College
Julie Matthaei, Professor of Economics, Wellesley College
Peter Hans Matthews, James Jermain Professor of Political Economy, 
        Department of Economics, Middlebury College
Kathleen McAfee, Associate Professor, Political Economy and 
        International Relations, San Francisco State University
Elaine McCrate, Associate Professor, Economic and Women's and Gender 
        Studies, University of Vermont
Thomas G. McGuire, Professor of Health Economics, Harvard Medical 
        School
Ellen Meara, Associate Professor, Darmouth Institute for Health Policy 
        and Clinical Practice
Michael Meeropol, Visiting Professor, Economics, John Jay College of 
        Criminal Justice, City University of New York
Martin Melkonian, Adjunct Associate Professor, Economics, Hofstra 
        University
David Meltzer, Associate Professor, Department of Medicine and 
        Associated Faculty Member, Department of Economics, University 
        of Chicago
Peter B. Meyer, Professor Emeritus of Urban Policy and Economics, 
        University of Louisville
Marcelo Milan, Assistant Professor of Economics, University of 
        Wisconsin-Parkside
Lawrence Mishel, President, Economic Policy Institute
Alan C. Monheit, Professor of Health Economics, School of Public 
        Health, University of Medicine and Dentistry of New Jersey
Taryn Morrissey, Assistant Professor of Public Administration and 
        Policy, American University
Karoline Mortensen, Assistant Professor of Health Services 
        Administration, University of Maryland
Tracy Mott, Associate Professor and Department Chair, Department of 
        Economics, University of Denver
Alicia H. Munnell, Peter F. Drucker Professor, Carroll School of 
        Management, Boston College
Richard J. Murnane, Professor, Harvard University
Jason Burke Murphy, Department of Philosophy, Elms College
Ellen Mutari, Professor of Economics, Richard Stockton College of New 
        Jersey
Reynold F. Nesiba, Associate Professor of Economics, Augustana College
David Neumark, Professor of Economics and Director of Graduate Studies, 
        University of California, Irvine
Len M. Nichols, Director of the Center for Health Policy Research and 
        Ethnics, Professor of Health Policy, George Mason University
Laurie Nisonoff, Professor of Economics, Hampshire College
Brendan O'Flaherty, Professor of Economics, Columbia University
Albert A. Okunade, Professor of Health Economics, University of Memphis
Oladele Omosegbon, Professor of Economics, Indiana Wesleyan University
Shaianne T. Osterreich, Associate Professor, Economics, Ithaca College
Zhaochang Peng, Department of Economics, Rollins College
George Perry, Senior Fellow, The Brookings Institution
Mark A. Peterson, Professor of Public Policy and Political Science, 
        UCLA School of Public Affairs
Karl Petrick, Assistant Professor of Economics, Western New England 
        College
Kathryn A. Phillips, Professor of Health Economics and Health Services 
        Research, University of California, San Francisco
Steven D. Pizer, Associate Professor, Boston University School of 
        Public Health
Harold Pollack, Helen Ross Professor of Social Service Administration, 
        University of Chicago
Daniel Polsky, Professor of Medicine, University of Pennsylvania
Paddy Quick, Professor of Economics, St. Francis College
Matthew Rabin, Professor of Economics, University of California, 
        Berkeley
Sarah Reber, Assistant Professor of Public Policy, University of 
        California, Los Angeles
Jim Rebitzer, Professor of Management, Economics and Public Policy, 
        Boston University School of Management
Michael Reich, Professor of Economics, University of California, 
        Berkeley
Uwe Reinhardt, James Madison Professor of Political Economy, Princeton 
        University
Dahlia Remler, Professor, School of Public Affairs, Baruch College, 
        City University of New York
Alice M. Rivlin, Senior Fellow, The Brookings Institution
Charles P. Rock, Professor of Economics, Rollins College
Christina D. Romer, Class of 1957, Professor of Economics, University 
        of California, Berkeley
Samuel Rosenberg, Acting Vice Provost for Faculty and Academic 
        Administration, Roosevelt University
Meredith Rosenthal, Associate Professor of Health Economics, Harvard 
        University School of Public Health
Roy J. Rotheim, Professor of Economics, Skidmore College
Anne Beeson Royalty, Associate Professor of Economics, Indiana 
        University, Purdue University, Indianapolis
Cristopher J. Ruhm, Professor of Public Policy and Economics, 
        University of Virginia
Emmanuel Saez, E. Morris Cox Professor of Economics, University of 
        California, Berkeley
Harwood D. Schaffer, Research Assistant Professor, University of 
        Tennessee
John Schmitt, Senior Economist, Center for Economic and Policy Research
Charles L. Schultze, Senior Fellow Emeritus, Economic Studies, The 
        Brookings Institution
Eric A. Schutz, Professor, Economics, Rollins College
Joseph M. Schwartz, Professor of Political Science, Temple University
Charles R. Sebuharara, Visiting Assistant Professor of Finance, Pamplin 
        College of Business, Virginia Tech
Eric Seiber, Assistant Professor of Health Services Management and 
        Policy, The Ohio State University
Janet Seiz, Associate Professor of Economics, Grinnell College
Bisakha Sen, Associate Professor, Department of Healthcare Organization 
        and Policy, University of Alabama, Birmingham
Mark Setterfield, Professor of Economics, Trinity College
Anwar Shaikh, Professor of Economics, New School for Social Research
Nina Shapiro, Professor of Economics, Saint Peter's College
Judith Shinogle, Senior Research Scientist, Maryland Institute for 
        Policy Analysis
Peter Skott, Professor of Economics, University of Massachusetts, 
        Amherst
Timothy Smeeding, Arts and Sciences Distinguished Professor for Public 
        Affairs, University of Wisconsin-Madison
Eugene Smolensky, Professor of the Graduate School, University of 
        California, Berkeley
Bryan Snyder, Department of Economics, Bentley University
Eswaran Somanathan, Visiting Professor, Princeton University
Paula H. Song, Assistant Professor, Health Services Management & 
        Policy, The Ohio State University
Neeraj Sood, Associate Professor, Schaeffer Center for Health Policy 
        and Economics, University of Southern California
Janet Spitz, Associate Professor of Business, College of Saint Rose
James Ronald Stanfield, Emeritus Professor of Economics, Colorado State 
        University
Sally C. Stearns, Professor of Health Economics, University of North 
        Carolina at Chapel Hill
Bruce Stuart, Professor, University of Maryland School of Pharmacy
Paul Swanson, Professor of Economics, William Paterson University
Katherine Swartz, Professor of Health Economics and Policy, Harvard 
        University School of Public Health
Donald H. Taylor, Jr., Associate Professor of Public Policy, Duke 
        University
Mark Thoma, Professor of Economics, University of Oregon
Chris Tilly, Professor and Director of the Institute for Research and 
        Employment, University of California, Los Angeles
Mariano Torras, Professor of Economics, Adelphi University
Pravin K. Trivedia, J.H. Rudy Professor of Economics, Indiana 
        University-Bloomington
Jennifer Troyer, Associate Professor of Economics, University of North 
        Carolina at Charlotte
Laura Tyson, S.K. and Angela Chan Chair in Global Management, Haas 
        School of Business, University of California, Berkeley
Robert Otto Valdez, Robert Wood Johnson Foundation Professor, Family & 
        Community Medicine and Economics, University of New Mexico
Paul N. Van de Water, Senior Fellow, Center on Budget and Policy 
        Priorities
Courtney Harold Van Houtven, Associate Professor, Duke University
Lane Vanderslice, Editor, Hunger Notes, worldhunger.org
Elizabeth Richardson Vigdor, Research Scholar, Duke University
Anca Voicu, Assistant Professor of Economics, Rollins College
Mark E. Votruba, Associate Professor of Economics and Medicine, Case 
        Western Reserve University
Geetha Waehrer, Research Scientist, Pacific Institute for Research and 
        Evaluation
Jane Waldfogel, Professor of Social Work and Public Affairs, Columbia 
        University
Kenneth E. Warner, Avedis Donebedian Distinguished University Professor 
        of Public Health, University of Michigan
David Warner, Wilbur Cohen Professor of Public Affairs, LBJ School of 
        Public Affairs, University of Texas at Austin
Mark Weisbrot, Co-Director Center for Economic and Policy Research
Thomas E. Weisskopf, Professor Emeritus of Economics, University of 
        Michigan
Charles K. Wilber, Emeritus Professor of Economics, University of Notre 
        Dame
Michael Wilson, Instructor, Harvard Medical School
Cecilia Ann Winters, Associate Professor of Economics, Manhattanville 
        College
Jon D. Wisman, Professor of Economics, American University
Barbara Wolfe, Professor, Economics and Political Science, University 
        of Wisconsin-Madison
Justin Wolfers, Associate Professor of Business and Public Policy, The 
        Wharton School, University of Pennsylvania
Robert S. Woodward, Professor of Health Economics, University of New 
        Hampshire
Vivian Wu, Assistant Professor, University of Southern California
David Zalewski, Professor of Finance, Providence College
Joshua Graff Zivin, Associate Professor of Economics, University of 
        California, San Diego
                                 ______
                                 
    Mr. Andrews. Finally, thank you for conducting this hearing 
so fairly. We would like to move to working together on good 
legislation that will help create jobs in our country. Thank 
you.
    Chairman Kline. I thank the gentleman. I will close by 
saying thanks to my colleagues. Thank you very much to our 
witnesses--what a terrific panel--for enduring the weather and 
the voting and all of those things. Thank you very much. And 
thanks to my colleagues. Have a good safe trip.
    The committee is adjourned.
    [Additional submission of Mr. Messinger follows:]
    
    
    
                                ------                                

    [Ms. Boushey's responses to questions submitted by Mr. 
Kucinich follow:]

    Dear Congressman Kucinich: Thank you for your interest in my 
testimony before the Committee on Education and Workforces' hearing 
entitled ``State of the American Workforce,'' on January 27, 2011. My 
answers for the record to your questions are:

    Question 1. You ask whether it would be correct to say that one of 
the main effects of free trade policies is to incentivize U.S. 
corporations into taking advantage of cheaper foreign labor by moving 
jobs to those other countries? Would you agree that the evidence is 
that free trade policies do not automatically increase employment, as 
some claim?

    Answer: Let's start with what free trade agreements are supposed to 
do. The U.S. interest in these agreements is to promote trade, both 
imports and exports, with other countries. These agreements do not 
typically lower tariffs only in one direction but rather lower tariffs 
in both directions. Our economy's total demand for goods and services 
is defined as consumption, plus investment, plus government spending, 
plus net exports, exports minus imports. Trade agreements typically 
lower tariffs for both U.S. exports and imports from other countries 
and should therefore raise both exports and imports. Given this, a 
pirori, there's no reason to think they will increase U.S. jobs, unless 
we sign agreements heavily weighted in favor of U.S. exports.
    In the case of the Korea free trade agreement, the U.S. 
International Trade Commission, the independent federal body that 
analyzes potential effects of trade pacts for Congress and the 
executive branch, has estimated that while the Korea FTA would increase 
exports, it would increase imports even more. As a result, the U.S. ITC 
estimates that the Korea FTA will lead to an increase in the total U.S. 
goods trade deficit of between $308 million and $416 million.\1\ The 
largest estimated increases in the trade deficit would be in motor 
vehicles, electronic equipment, ``other transportation equipment,'' 
iron, metal products, textiles, and apparel.
---------------------------------------------------------------------------
    \1\ U.S. International Trade Commission. ``U.S.-Korea Free Trade 
Agreement: Potential Economy-wide and Selected Sectoral Effects.'' 
USITC Publication 3949. September 2007, Corrected printing March 2010, 
at 2-14, Table 2.3, Available at: http://www.usitc.gov/publications/
332/pub3949.pdf

    Question 2: You ask, is it correct to say that in the area of 
infrastructure investment, it is not that the private sector does not 
want to invest in massive infrastructure projects but that they simply 
---------------------------------------------------------------------------
do not have the resources to do so?

    Answer: As daunting as it seems, the level of capital investment 
needed in our nation's infrastructure must grow. American businesses 
have the funds and access to credit markets to make investments. From 
December 2008 to September 2010, profits in the nonfinancial corporate 
sector rose in inflation-adjusted terms by 92.0 percent before taxes 
and 93.3 percent after taxes. In September 2010, profits were at their 
highest point since at least September 2007, several months before the 
start of the Great Recession.\2\
---------------------------------------------------------------------------
    \2\ Christian Weller, ``Economic Snapshot for January 2011,'' 
Center for American Progress, January 31, 2011, available at http://
www.americanprogress.org/issues/2011/01/econsnap0111.html.
---------------------------------------------------------------------------
    But, even with strong profits, much of the infrastructure 
investment we need to do is in repairing our crumbling basic 
infrastructure. The American Society of Civil Engineers estimates that 
we need to spend at least $2.2 trillion over the next five years just 
to make repairs.\3\ This includes projects like replacing aging water 
facilities that are near the end of their useful life, repairing aging 
and deficient dams, and quarter of our nation's bridges that are either 
structurally deficient or functionally obsolete.
---------------------------------------------------------------------------
    \3\ American Society of Civil Engineers, ``America's Infrastructure 
Report Card'' (2009), available at http://
www.infrastructurereportcard.org/sites/default/files/
RC2009_full_report.pdf.
---------------------------------------------------------------------------
    Roads, bridges, broadband, water and sewer lines, and a host of 
other goods require large-scale investments. For any one company it may 
be too expensive, but moreover, the public has an interest in creating 
widespread access to these goods. Businesses large and small and 
employees all benefit from infrastructure investments that they are 
able to make use of. If every bridge were private, then the toll costs 
and time wasted stopping for tolls might be prohibitively expensive and 
inefficient. Programs like Build America Bonds, which provides 
municipalities with subsidies to float bonds for long-term 
infrastructure projects, could help increase the capital available for 
these kinds of projects.
                                 ______
                                 
    [Whereupon, at 4:00 p.m., the committee was adjourned.]

                                 
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