[Joint House and Senate Hearing, 117 Congress]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 117-292

                    BUILDING ON A STRONG FOUNDATION:
                      INVESTMENTS TODAY FOR A MORE
                          COMPETITIVE TOMORROW

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

                            VIRTUAL HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE

                                 of the

                     CONGRESS OF THE UNITED STATES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 27, 2022

                               __________

          Printed for the use of the Joint Economic Committee




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]










        Available via the World Wide Web: http://www.govinfo.gov 
                             _________
                              
                 U.S. GOVERNMENT PUBLISHING OFFICE
                 
47-925                   WASHINGTON : 2022
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

HOUSE OF REPRESENTATIVES             SENATE
Donald S. Beyer Jr., Virginia,       Martin Heinrich, New Mexico, Vice 
    Chairman                             Chairman
David Trone, Maryland                Amy Klobuchar, Minnesota
Joyce Beatty, Ohio                   Margaret Wood Hassan, New 
Mark Pocan, Wisconsin                    Hampshire
Scott Peters, California             Mark Kelly, Arizona
Sharice L. Davids, Kansas            Raphael G. Warnock, Georgia
David Schweikert, Arizona            Mike Lee, Utah, Ranking Member
Jaime Herrera Beutler, Washington    Tom Cotton, Arkansas
Jodey C. Arrington, Texas            Rob Portman, Ohio
Ron Estes, Kansas                    Bill Cassidy, M.D., Louisiana
                                     Ted Cruz, Texas

                  Tamara L. Fucile, Executive Director
                Kevin Corinth, Republican Staff Director 
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                            C O N T E N T S

                              ----------                              

                     Opening Statements of Members

                                                                   Page
Hon. Donald Beyer Jr., Chairman, a U.S. Representative from the 
  Commonwealth of Virginia.......................................     1
Hon. Mike Lee, Ranking Member, a U.S. Senator from Utah..........     3

                               Witnesses

Dr. Josh Bivens, Director of Research, Economic Policy Institute, 
  Washington, DC.................................................     5
Dr. Michelle Holder, President and Chief Executive Officer, 
  Washington Center for Equitable Growth, Washington, DC.........     7
Dr. Sudip Parikh, Chief Executive Officer, Executive Publisher, 
  Science Family of Journals, American Association for the 
  Advancement of Science, Washington, DC.........................     9
Dr. Tyler Goodspeed, Kleinheinz Fellow at the Hoover Institution, 
  Stanford University, Stanford, CA..............................    11

                       Submissions for the Record

Prepared statement of Hon. Donald Beyer Jr., Chairman, a U.S. 
  Representative from the Commonwealth of Virginia...............    28
Prepared statement of Hon. Mike Lee, Ranking Member, a U.S. 
  Senator from Utah..............................................    29
Prepared statement of Dr. Josh Bivens, Director of Research, 
  Economic Policy Institute, Washington, DC......................    31
Prepared statement of Dr. Michelle Holder, President and Chief 
  Executive Officer, Washington Center for Equitable Growth, 
  Washington, DC.................................................    42
Prepared statement of Dr. Sudip Parikh, Chief Executive Officer, 
  Executive Publisher, Science Family of Journals, American 
  Association for the Advancement of Science, Washington, DC.....    54
Prepared statement of Dr. Tyler Goodspeed, Kleinheinz Fellow at 
  the Hoover Institution, Stanford University, Stanford, CA......    64
Graphs submitted by Representative Schweikert
    Nominal and Real Wages--Average Hourly Earnings (All 
      Employees).................................................    70
    Nominal and Real Wages--Average Hourly Earnings (Production 
      and Nonsupervisory Employees)..............................    71
    Nominal, Trend, and Real--Average Hourly Earnings (All 
      Employees, Total Private)..................................    72
    Cost of the Average Monthly Electricity Bill.................    73
    Cost of a Gallon of Gas......................................    74
    Cost of the Average Monthly Natural Gas Bill.................    75
    Cost of Rent.................................................    76
    Cost of Food.................................................    77
    Cost of an Annual Physical with a Doctor.....................    78
Question for the Record for Dr. Josh Bevins submitted by Senator 
  Klobuchar......................................................    79
Question for the Record for Dr. Josh Bevins submitted by Senator 
  Warnock........................................................    79
Response from Dr. Michelle Holder to Question for the Record 
  submitted by Senator Klobuchar.................................    79
Response from Dr. Michelle Holder to Question for the Record 
  submitted by Senator Warnock...................................    81
Response from Dr. Sudip Parikh to Question for the Record 
  submitted by Senator Warnock...................................    82

 
                    BUILDING ON A STRONG FOUNDATION: 
                      INVESTMENTS TODAY FOR A MORE 
                          COMPETITIVE TOMORROW 

                              ----------                              


                       WEDNESDAY, APRIL 27, 2022

                    United States Congress,
                          Joint Economic Committee,
                                                    Washington, DC.
    The WebEx virtual hearing was convened, pursuant to notice, 
at 2:30 p.m., in Room G-01, Dirksen Senate Office Building, 
Hon. Donald S. Beyer Jr., Chairman, presiding.
    Representatives present: Beyer, Trone, Schweikert, Pocan, 
and Beatty.
    Senators present: Lee, Hassan, and Kelly.
    Staff: Ismael Cid-Martinez, Chelsea Daley, Hugo Dante, Sebi 
Devlin-Foltz, Ron Donado, Carly Eckstrom, Ryan Ethington, 
Tamara Fucile, Devin Gould, Owen Haaga, Erica Handloff, Colleen 
Healy, Jeremy Johnson, Adam Michel, Michael Pearson, Elisabeth 
Raczek, Alexander Schunk, Nita Somasundaram, Sydney Thomas, 
Ivan Torrez, Emily Volk, Brian Wemple, and Katie Winham.

 OPENING STATEMENT OF HON. DONALD BEYER JR., CHAIRMAN, A U.S. 
        REPRESENTATIVE FROM THE COMMONWEALTH OF VIRGINIA

    Chairman Beyer. This hearing will come to order. I would 
like to welcome everyone to the Joint Economic Committee's 
hearing ``Building on a Strong Foundation: Investments Today 
for a More Competitive Tomorrow.''
    I would like to thank all of our distinguished witnesses 
for sharing their expertise today. We have an exceptional panel 
of experts, and I am looking forward to hearing from them.
    Two years ago the United States discovered its first case 
of COVID. Since then, hundreds of thousands of lives have been 
lost, and the Nation has experienced the worst recession since 
the Great Depression. Virtually overnight, more than 22 million 
jobs disappeared and the GDP cratered. This loss of life is a 
national tragedy and we mourn the lives that were taken too 
soon.
    Today's hearing will focus on how our country is overcoming 
the economic effects of the pandemic and the steps we can take 
to ensure our economic health for the long term.
    As we convene this discussion, our Nation's economic 
rebound has exceeded all expectations. The American Rescue Plan 
and other pandemic relief, including the successful 
dissemination of vaccines have created a remarkably different 
economic reality than the one we were facing at the start of 
2021. To date, nearly 93 percent of the jobs lost during the 
pandemic have been regained. The unemployment rate has fallen 
to just one-tenth of one percentage point above its pre-
pandemic rate. And GDP has reached the fastest pace of job 
growth in nearly 40 years.
    President Biden has overseen the creation of 7.9 million 
jobs, and 2021 set a record for the most new businesses ever 
started. Far from guarantee, the speed and strength of the 
economic recovery is a direct result of increased public 
investment.
    Thanks to the effort of this Congress and the Biden 
administration, the United States has experienced the fastest 
recovery among G-7 nations. In fact, it is the only major 
economy who has recovered to its pre-pandemic economic growth 
or what would have been absent from a coronavirus recession. 
But the United States has not escaped the global spike in 
inflation that is denying workers and their families the full 
benefits of the recovery.
    Global supply chain disruptions have pushed up prices 
worldwide, and Putin's invasion of Ukraine is exacerbating the 
effects of energy and food prices. We in Congress have an 
opportunity to lower costs for workers and families, spur job 
creation, and promote U.S. competitiveness now and for 
generations to come.
    Evidence shows the public investment in research and 
technology drive innovation and boost productivity, which is 
the bedrock of economic growth. Historically, U.S. economic 
growth has been fueled by investments in science and technology 
that were initiated and sustained by public funding.
    For example, we all know about the public investment in the 
Defense Advanced Research Projects Agency, DARPA, to help 
support the development of the personal computer and the 
Internet. Together, these growths in technologic revolution 
turbocharged U.S. productivity and radically changed the way 
people conduct their lives, not to mention the creation of 
hundreds of thousands of new jobs.
    The goal of our government is to drive broadly shared 
economic growth, and ensure that the United States remains 
internationally competitive. Public investment is essential for 
this.
    The recently passed bipartisan Infrastructure Investment 
and Jobs Act is a down payment. It will address years of 
inadequate Federal investment in critical infrastructure--
roads, bridges, broadband--to create jobs, enhance 
productivity, and improve supply chain resilience.
    The economy-wide benefits will reduce long-term 
inflationary pressures. Congress should build on this 
foundation and pass the Bipartisan Competition bills, drive 
economic growth, and shared prosperity. The investments in 
innovation, research, and manufacturing will boost our economic 
capacity, create high-quality jobs in communities across the 
country, and raise worker wages. And by promoting increased 
efficiency among workers and businesses, the investments will 
also lower costs. This is the long-term strategic structural 
way to address inflation.
    The bill's focus on racial, gender, and geographic 
diversity and training and education will help ensure that 
communities that have been historically excluded are able to 
share in the benefits.
    We have all experienced the many ways disinvestment in 
American-made products has contributed to a recent supply chain 
disruption, and the investments in this legislation will help 
to shore up American supply chains and domestic manufacturing.
    The pandemic shined a new light on inequality in this 
country. It exposed underlying vulnerabilities in our economy 
that are constricting our collective potential. We have an 
opportunity now to lower out-of-pocket costs for families on 
the biggest household expenses, while also paving the way for 
economic growth in the longer term that is stronger, stabler, 
and much more broadly shared.
    As we dive into these issues, I look forward to the 
testimonies of our expert witnesses. I would now like to turn 
it over to Senator Lee for his opening statement.
    Senator?
    [The prepared statement of Chairman Beyer appears in the 
Submissions for the Record on page 28.]

  OPENING STATEMENT OF HON. MIKE LEE, RANKING MEMBER, A U.S. 
                       SENATOR FROM UTAH

    Senator Lee. Thank you, Mr. Chairman. Before the COVID-19 
pandemic, pro-growth policies brought the American economy 
roaring to life in a way that bigger government and more 
central control never could. But while the strong economy 
lifted up all Americans, historically disadvantaged groups 
benefited the most. Unemployment for Hispanic Americans, Black 
Americans, and Asian Americans fell to the lowest rates on 
record. The unemployment rate for women dropped to its lowest 
level in almost 70 years, and low-income workers saw their 
wages rise at some of the fastest rates ever recorded.
    All told, in the three years leading up to the pandemic, 
poverty reached an all-time low. Real median income increased 
by almost $6,000 per household, and the bottom 50 percent of 
American households saw their wealth increase by over 70 
percent.
    The recipe for this broad-based prosperity was lower taxes 
and less regulation. Today, after two years of mandates, 
subsidies, and expert control, government has all but 
eviscerated this strong foundation. Americans have been forced 
to endure government's shuttering their livelihoods, schools, 
and communities.
    Measured against the pre-pandemic trend, 6.6 million 
workers are currently missing from the workforce. These 
Americans are missing out on not only the financial rewards of 
the job, but also the community and purpose that come from 
work.
    In contrast with the pre-pandemic economy that especially 
benefited low-wage workers and historically disadvantaged 
Americans, these groups are again falling further behind, with 
more government getting in the way, the middle class and low-
wage workers that are hurting the most.
    Democrats' $1.9 trillion partisan spending has ignited the 
worst inflation in four decades, inflation that is hitting my 
home state of Utah harder than almost anywhere else. Even if 
prices were to stop rising tomorrow and things were just held 
in place as they are now, Utah families will have to pay nearly 
$8,500 his year just to afford the same items that they 
purchased at the beginning of the Biden administration--
according to the Joint Economic Committee's steak inflation 
tracker.
    Meanwhile, school closures have caused devastating learning 
losses for the youngest and lowest income students. The Penn-
Wharton Budget Model estimates that these losses will weaken 
our productivity and wages for the next 30 years. Unconditional 
stimulus checks and explicit anti-work incentives have 
increased the use of harmful substances at a time of 
vulnerability for many Americans. Drug overdose deaths are back 
to an all-time high, and suicides and alcohol abuse have also 
spiked.
    Lockdowns have triggered rising crime rates across the 
country causing Americans to feel less safe in their 
communities. The murder rate jumped almost 30 percent in 2020, 
the largest increase ever on record. It is clear that so-called 
investments from Washington have failed to produce the 
prosperity the Biden administration promised. And many of the 
proposals I hear from my colleagues will make problems worse--
much worse.
    Plans to keep spending money that we do not have will pour 
more fuel on the inflation fire. Tax hikes on businesses will 
make it harder for Americans to innovate at home and harder to 
compete abroad. And legislation that takes a clue from China's 
state-directed economy, by federally commandeering research and 
development here in the United States is the opposite of what 
has made America the world's strongest and most prosperous 
nation.
    We will never beat China by becoming more like China, 
never. We know what works. Before the pandemic, tax cuts and 
deregulation supported a thriving economy, one that benefited 
families and workers of all walks of life. The free market 
system that prizes ingenuity and rewards people for using their 
God-given talents in service of their neighbors resulted in 
benefits for the Americans who needed it most.
    After two years of policies that have assaulted and eroded 
this strong foundation, I hope we can learn from our mistakes. 
I hope we have learned that when we choose to remove government 
barriers to Americans' creativity and freedom, families of all 
types prosper.
    Thank you.
    [The prepared statement of Senator Lee appears in the 
Submissions for the Record on page 29.]
    Chairman Beyer. Senator, thank you very much.
    I would like to introduce our four distinguished witnesses. 
Dr. Josh Bivens is the Director of Research at the Economic 
Policy Institute. His areas of research include macroeconomics, 
fiscal and monetary policy, economics of globalization, and 
social insurance in public investment.
    Prior to becoming Director of Research, Dr. Bivens was a 
research economist at EPI. Before that, an Assistant Professor 
of Economics at Roosevelt University, and provided consulting 
services to Oxfam America. Dr. Bivens has a Ph.D. in Economics 
from the New School for Social Research and a B.A. from the 
University of Maryland at College Park.
    Dr. Michelle Holder is the President and CEO of the 
Washington Center for Equitable Growth. Dr. Holder is also an 
Associate Professor of Economics at John Jay College, City 
University of New York, where she is currently on academic 
leave. Her research focuses on the Black community and women of 
color in the U.S. labor market. Before joining CUNY, Dr. Holder 
worked as an Applied Economist in the nonprofit and government 
sectors for a decade, and also served as Finance Director at 
Demos. Dr. Holder earned a Ph.D. and an M.A. of Economics from 
the New School for Social Research, an MPA from the University 
of Michigan, and a B.A. in Economics from Fordham University.
    Dr. Sudip Parikh is the Chief Executive Officer of the 
American Association for the Advancement of Science, and 
Executive Publisher of the Science Family of Journals. From 
2001 to 2009, Dr. Parikh served as Science Advisor and 
Professional Staff for the U.S. Senate Appropriations Committee 
where he was responsible for negotiating the budgets for the 
NIH, CDC, BARDA, and other scientific and health agencies. 
Prior to joining AAAS, Dr. Parikh was Senior Vice President and 
Managing Director of DIA Global. Before that, he was General 
Manager of the Health and Consumer Solutions Business Unit and 
Vice President at Battelle. Dr. Parikh earned his Ph.D. in 
Macro Molecular Structure and Chemistry from the Scripps 
Research Institute in La Jolla, California, and a B.A. in 
Material Science from the University of North Carolina at 
Chapel Hill.
    Finally, Dr. Tyler Goodspeed is the Kleinheinz Fellow at 
the Hoover Institution at Stanford University. From 2020 to 
2021, he served as Acting Chairman and Vice Chairman of the 
Council of Economic Advisors, after being appointed as a member 
of the CEA by President Trump in 2019. In that role, he advised 
the Trump administration's economic response to the Coronavirus 
pandemic, as well as subsequent economic recovery packages. He 
also served briefly as the Chief Economist--maybe not briefly--
for macroeconomic policy and senior economist for tax, public 
finances, and macroeconomics at the CEA. Before that, Dr. 
Goodspeed was a professor of economics at the University of 
Oxford. He was a lecturer of economics at Kings College, 
London. He was also an adjunct scholar at the CATO Institute. 
Dr. Goodspeed received a B.A, M.A. and Ph.D. from Harvard 
University, and is a Kleinheinz Fellow at the Hoover 
Institution, Stanford University.
    Dr. Bivens, we will hear your testimony, and then we will 
continue in this order. Dr. Bivens, the floor is yours.

  STATEMENT OF DR. JOSH BIVENS, Ph.D., DIRECTOR OF RESEARCH, 
           ECONOMIC POLICY INSTITUTE, WASHINGTON, DC

    Dr. Bivens. Thank you so much. I would like to thank the 
Chair, Vice Chair, and Ranking Member, and the rest of the 
committee for the chance to talk today about building on a 
strong foundation.
    I am Josh Bivens, a macroeconomist and the Research 
Director of the Economic Policy Institute. EPI is a think tank 
whose mission is to make sure the economic fortunes of low- and 
middle-income families are given their proper due in policy 
debates. And I would like to make a couple of quick points in 
the statement, and these are mostly fleshed out in the written 
testimony I have submitted.
    First, I think U.S. economic growth before the pandemic 
over a span of decades was too slow and too unequal. Over each 
successive business cycle since 1979, average growth slowed and 
the share of income accruing to the bottom 90 percent of the 
population declined. From this very broad overview, there does 
not seem to be any tradeoff between equity and growth. Instead, 
less equity has gone hand in hand with slower growth.
    Second, overall growth clearly has been hampered by a 
pronounced slowdown in public investment over that time period. 
This contraction of public investment did not lead to more 
private investment; instead, all forms of investment have been 
weakened in recent decades outside of a pretty brief one-off 
period in the late 1990s as the U.S. business sector connected 
to the Internet. While there are some tools that hold some 
promise to induce more private investment, they largely do not 
include tax cuts for capital owners and corporations, nor a 
broad-based assault on Federal regulations. Instead, what can 
work to induce more private investment is to keep the economy 
penned at full employment, make sure recessions are short and 
recovery is rapid, and taking measures to incentivize 
technology of the future like things that might boost private 
investments in fields like clean energy. But of course the most 
direct way to boost overall investment through public policy is 
simply by undertaking more public investment in both shared 
physical infrastructure as well as human capital and families' 
economic security more generally.
    Given the large rise in inequality in recent decades, 
income growth for the middle fifth of households has lagged far 
behind even the slower overall growth over this time period. 
Crucially, the vast majority of growth for the middle fifth of 
households could be attributed to the legacy of past rounds of 
large-scale investments in social insurance. To say it more 
plainly, without the influence of Social Security, Medicare, 
Medicaid, income growth for the middle fifth of U.S. households 
since 1979 would have been essentially stagnant.
    Since the beginning of 2021, we have made a very good start 
in trying to build a better post-pandemic economy. The first 
order of business was undertaking the substantially more 
ambitious fiscal policy response to the pandemic recession. The 
result has been far more rapid jobs recovery since the end of 
the pandemic recession when compared to some other previous 
recessions.
    However, stabilizing the economy after a shock is just a 
necessary, not a sufficient condition for reversing the slow 
and unequal growth of recent decades. A full reorientation of 
policy to significantly boost incomes and economic security for 
the vast majority requires continued public investments in both 
infrastructure and people.
    Blocking these investments in the name of fighting the 
recent rise in inflation makes very little sense from either an 
economic perspective or a policy perspective. Fighting 
inflationary surges by throttling back demand growth is just 
not a job that fiscal policy is nimble enough to do. There are 
huge lags between the time when fiscal policymakers start 
debating an issue, passing a bill to address it, and then it 
gets implemented. Those long lags are why the Federal Reserve 
is the Nation's first-line of defense against inflationary 
surges. That division of labor makes a lot of sense.
    The second reason why it makes little sense to block 
proposed investment packages in the name of fighting inflation 
is that most of these recent proposed public investment 
packages are not fiscal stimulus. It is not meant to be a very 
large surge of spending in the short run that boosts spending 
and puts inflationary pressure on the economy; instead, the 
spending is spread out over a long period of time. It is 
gradual. It is meant to provide long-lived investment, not 
fiscal stimulus. And many of the investment proposals put 
forward recently have been fully paid for. So that would blunt 
even the incredibly minimal inflationary pressure that spending 
would put into the economy.
    The final way I would say the evidence linking the 
inflation of 2021 and early 2022 to sort of economic 
overheating caused by too generous fiscal relief passed in the 
wake of--passed in response to the COVID pandemic and the 
American Rescue Plan specifically, is exceedingly weak. Just 
the clearest reason why is; the inflation has been global. If 
you look across countries, they did very, very different things 
in terms of their fiscal response to COVID.
    We were on the more generous end. Many countries did much 
less generous fiscal relief, and yet the inflation experience 
is about the same everywhere. So linking it to something that 
specific just in the U.S. misses the global picture.
    And finally, I will just end by saying that going forward 
both the fiscal response to the COVID shock and further Federal 
investments will make future inflationary outbreaks like we 
have seen in the past year far less likely. This past year's 
inflation has its roots in past policy failures, most 
conspicuously the failure to invest enough in both fighting 
recessions with proper force, and in building up the Nation's 
full productive capacity.
    Thank you so much for the opportunity to talk on this 
issue.
    [The prepared statement of Dr. Bivens appears in the 
Submissions for the Record on page 31.]
    Chairman Beyer. Dr. Bivens, thank you very much. We will 
now hear from Dr. Holder. Dr. Holder, the floor is yours.

 STATEMENT OF DR. MICHELLE HOLDER, Ph.D., PRESIDENT AND CHIEF 
  EXECUTIVE OFFICER, WASHINGTON CENTER FOR EQUITABLE GROWTH, 
                         WASHINGTON, DC

    Dr. Holder. Well thank you, Chair Beyer. And thank you as 
well to Ranking Member Lee, Vice Chair Heinrich, and members of 
the Joint Economic Committee for inviting me to speak today. It 
is an honor to be here.
    My name is Michelle Holder, as Chair Beyer noted. I am the 
President and CEO of the Washington Center for Equitable 
Growth, an organization that seeks to advance evidence-backed 
ideas and policies that promote strong, stable, and broad-based 
economic growth. I also serve as an Associate Professor of 
Economics at John Jay College, which is part of the City 
University of New York.
    At Equitable Growth, we aim to understand how economic 
inequality in all its forms affects growth and stability. The 
evidence demonstrates the decades-long trends of increasing 
inequality that hurts both families and the long-term 
trajectory of the U.S. economy.
    Making different policy decisions that support key public 
investments in social and physical infrastructure can help 
reverse inequality and make our economy stronger. Today I will 
show how three pillars of robust government investment have 
previously been and continue to be vital to promoting racial 
equity and boosting economic growth.
    The first pillar is ensuring a full and equitable recovery 
from the COVID-19 recession.
    The second pillar is revitalizing the manufacturing sector.
    And the third pillar is strengthening the future by leading 
on green energy.
    Let's start with the recovery efforts. By passing the CARES 
Act and the American Rescue Plan the government made key 
investments to support workers and stabilize our economy. What 
were the results?
    For starters, the bounce-back in GDP was much quicker in 
the U.S. than any developed country. While inflation is 
elevated across the globe, as my colleague, Dr. Bivens, pointed 
out, the U.S. has created more jobs and higher wages than most 
developed nations. And the overall unemployment rate is now 
close to its pre-pandemic level.
    One of the more powerful policies that came from the 
Federal Government's response was the expansion of the Child 
Tax Credit. By providing families with monthly income support 
to supplement their own earnings, the Enhanced Credit lifted an 
estimated 3.7 million children out of poverty. It also helped 
reduce racial disparities in household incomes, as poverty 
rates fell drastically for Black and Latinx children. This type 
of policy is a clear blueprint for success.
    Building off this blueprint, government investments can 
also make a positive difference for the manufacturing sector 
that can once again be an engine for equitable economic growth. 
There is strong precedence for this. Research suggests that 
prior public investments in manufacturing, particularly during 
World War II, had long-term positive effects on growth, 
employment, and wages.
    Historically, the manufacturing sector has been a path to 
the middle class, especially for Black and Latino workers with 
less formal education. While upward economic mobility has been 
limited by racism, including discrimination and segregation, 
manufacturing continues to play an important role in providing 
good union jobs.
    A recent Economic Policy Institute report finds that Black, 
Latinx, Asian Americans, and Pacific Islander and White workers 
without a college degree all earned substantially more in 
manufacturing than in nonmanufacturing industries.
    For instance, for median wage non-college educated 
employees, both Black and Latinx workers in manufacturing 
earned 18 percent more annually than in nonmanufacturing. The 
problem is, manufacturing employment in the U.S. has been 
steadily declining for decades, and productivity in 
manufacturing has been slow. This decline has resulted in 
significant earnings and employment losses, particularly for 
Black workers, many of whom live in former industrial hubs.
    We therefore have ample room for investments in 
manufacturing. These can include, but are not limited to, 
``R&D'' spending and equitable trade policies.
    Finally, the third public investment pillar is 
strengthening the future by leading on green energy. Recent 
economic research demonstrates the importance of investment in 
green energy. For example, Columbia University economist Joseph 
Stiglitz demonstrates that investments in renewable energy and 
energy efficiency typically have high multipliers. Meaning 
initial investments generate additional economic activity over 
time and thus delivers high returns. They also create more 
jobs, including ones that cannot be taken offshore, such as 
those in home energy retrofitting.
    Moreover, according to recent research from Heidi Garrett-
Peltier, an economist at the University of Massachusetts 
Amherst, for every $1 million in public investments in 
renewable energy or energy efficiency, almost three times as 
many jobs are created than if the same money were invested in 
fossil fuels.
    In conclusion, there is clear precedent and ample 
opportunity for government investments to promote growth and 
address the harmful consequences of economic stratification in 
our Nation. To make the U.S. economy more resilient and 
equitable, we need to build off the strong foundations of the 
current recovery and continue to make robust investments, 
especially in manufacturing and green energy.
    Thank you.
    [The prepared statement of Dr. Holder appears in the 
Submissions for the Record on page 42.]
    Chairman Beyer. Dr. Holder, thank you very much. We will 
now hear from Dr. Parikh. Doctor, the floor is yours.

STATEMENT OF DR. SUDIP PARIKH, Ph.D., CHIEF EXECUTIVE OFFICER, 
   EXECUTIVE PUBLISHER, SCIENCE FAMILY OF JOURNALS, AMERICAN 
   ASSOCIATION FOR THE ADVANCEMENT OF SCIENCE, WASHINGTON, DC

    Dr. Parikh. Thank you, Chairman Beyer, Ranking Member Lee, 
and members of the Committee. Thank you for inviting me today.
    I am a biochemist and not an economist, so I want to talk 
about the future in a slightly different way. I would like to 
ask a simple, hopefully rhetorical, question, which is: Do we 
want to be the Nation that discovers, develops, and 
manufactures the economic, environmental, and health advances 
of the future? Or do we want to be a nation that lags in these 
critical areas while we attempt to buy solutions from at best 
friendly competitors or, at worst, geopolitical adversaries.
    In the 1800s, Europe was the center of gravity for 
scientific discovery. English scientist Michael Faraday was 
describing an electricity-related discovery to Parliament, and 
future Prime Minister William Gladstone asked: What use is it? 
And Faraday supposedly replied: I don't know, but there's every 
probability that you'll soon be able to tax it.
    He was right. The discovery of electricity marked an 
inflection point in history. It opened entirely new fields of 
technology and improved the well-being of humanity, leading to 
everything from the light bulb to the Internet. It also grew 
the economy in ways that we never imagined.
    Now today we stand at the cusp of similar inflection points 
in many science and engineering fields. Just three weeks ago, 
scientists at the Fermilab in Illinois reported that the W 
boson, which is a fundamental particle, weighs more than was 
predicted by the Standard Model of Physics. Now you may ask 
what that means.
    If this finding is repeated and verified, it means that 
there is a completely new frontier of physics for us to 
discover beyond what is currently known. It can be a discovery 
that parallels Benjamin Franklin's epiphany that the sparks 
that he could make on earth were caused by the same phenomenon 
as lightning in the sky. A little bit more expensive than a 
key, but it is the same kind of thing.
    And someday it could lead to entirely new parts of the 
economy that you might even be able to tax. Now even if this 
discovery does not pan out, we are at similar inflection points 
in the fields of artificial intelligence, quantum computing, 
synthetic biology, gene editing, space travel, and more. We are 
at the cusp of revolutions in multiple sciences at once, with 
potential implications for our economy that could be as game 
changing as electricity.
    Now for over 75 years we have followed a recipe that has 
grown our economy in ways that you could not have thought of at 
the beginning of the 1900s--investments in research at the 
Department of Defense, NIH, NSF, and 20 other Federal agencies, 
coupled with complementary investments by industry have driven 
transformative innovations. And investments in R&D have led to 
sustained bursts of economic activity, bursts of exponential 
growth in new industries that have led to good jobs across the 
spectrum. Now this recipe has been so successful that other 
nations have copied it. Increasingly with even more vigor than 
us.
    Now the time has come for us to redouble our efforts and 
build on our strengths and show the world again what American 
intellect, ingenuity, investment, and risk-taking can 
accomplish for the benefit of all Americans. So today I would 
like to make three recommendations to ensure that we continue 
to lead the world in scientific discovery and deliver it to 
benefits to all.
    The first is to provide robust investment in research and 
development across a broad range of disciplines and 
geographies.
    Second, we should be investing in our people to ensure that 
we are drawing upon the talents of all Americans in our 
scientific research, and that all Americans benefit from our 
investments.
    Third, we need to balance a portfolio of R&D investment 
that includes short-term incremental research, translational 
research, and high-risk/high-reward research that, if 
successful, can change lives and revolutionize the economy.
    I provide a lot more detail about these recommendations in 
my written testimony, but it is important to remember that the 
world is not standing still. Remember that the extraordinary 
result I talked about from scientists at Fermilab that might 
change our fundamental understanding of physics, well the 
instrument where that data was collected was decommissioned 
several years ago. So the verification of that result is not 
going to come in the U.S. It will have to come from the cutting 
edge instruments of today which are based in Europe and Asia 
and not in the U.S.
    In the last 20 years, the U.S. R&D expenditure from all 
sources, government and industry, has only grown at the rate of 
3.1 percent annually in constant prices. This investment has 
been eclipsed by the meteoric 14.3 percent annual rise in 
China's R&D expenditure over the same period, as well as more 
robust investments by many others. Look, no nation on earth is 
more responsible than the United States for getting us to the 
cusp of inflection points in so many scientific disciplines, 
inflection points that can create step changes in economic 
growth and human well-being.
    The decisions that we make today on where and how to invest 
are going to determine whether we will make the discoveries and 
translate the science into health and prosperity, or whether 
someone else will, or whether, worst of all, no one else will. 
So will the advances that change the world come in Chicago, in 
Shanghai, or nowhere?
    Recognizing our potential, I remain optimistic that we are 
going to rise to the challenges, and I stand ready to work with 
you and look forward to your questions. Thank you.
    [The prepared statement of Dr. Parikh appears in the 
Submissions for the Record on page 54.]
    Chairman Beyer. Dr. Parikh, thank you very much. And now 
let me finally recognize Dr. Goodspeed for his testimony.

 STATEMENT OF DR. TYLER GOODSPEED, Ph.D., KLEINHEINZ FELLOW AT 
   THE HOOVER INSTITUTION, STANFORD UNIVERSITY, STANFORD, CA

    Dr. Goodspeed. Thank you, Chairman Beyer, Ranking Member 
Lee, Vice Chairman Heinrich, and members of the Committee. I 
served on the Council of Economic Advisors from 2017 to 2021, 
including as Acting Chairman of that Council from 2020 to 2021. 
I am now a Kleinheinz Fellow at the Hoover Institution at 
Stanford University.
    I wanted to take this afternoon to reflect on the economic 
recovery from the two most recent U.S. recessions, and the 
lessons from those recoveries for prospective economic policy.
    So the labor market recovery from the 2007 and 2009 global 
financial crisis was the slowest in post-war U.S. history, 
taking 77 months to recover the jobs lost during the recession, 
compared to a post-war average of 23. And when the Council of 
Economic Advisors studied this unprecedentedly slow recovery, 
we observed two historical anomalies.
    First, the contribution of capital intensity to labor 
productivity growth actually turned negative. That means that 
firms' investment in new plants and equipment per worker was 
insufficient to keep pace with the depreciation of existing 
capital plants and equipment per worker.
    Second, despite ongoing population growth, the prime age 
labor force in the United States--those between the ages of 25 
and 54 either employed or actively looking for work, shrank by 
1.6 million workers from the start of the recovery in July 2009 
through the end of 2016.
    So it was in response to this phenomenally slow recovery 
that in 2017 to 2019 the U.S. Government implemented an agenda 
of tax and regulatory reform designed to lower the cost of 
domestic business investment, including in domestic energy 
production, and to reduce tax expenditures and reinvest those 
revenue savings into marginal personal income tax rate 
reductions in order to encourage increased labor force 
participation. And the results are quite striking.
    So whereas between July 2009 and December 2016 the prime 
age labor force shrank by 1.6 million workers, from January 
2017 through December 2019 the prime age labor force actually 
increased by 2.3 million workers. Real inflation adjusted wages 
for the bottom tenth of the wage distribution rose 10 percent 
during that period, compared to 5 percent for the top tenth of 
the distribution, the exact opposite pattern of what prevailed 
from July 2009 through the end of 2016. And real median 
household income in the three years from 2017 through 2019 rose 
by more, $5,900 bucks, than in the entire 20 years from 1996 to 
2016. So as a result, wages, income, wealth equality declined, 
labor share of income rose.
    Now that is where we were on the eve of the COVID shock, 
which the Organisation for Economic Co-operation and 
Development projected would result in a 12 percent decline in 
U.S. output over the four quarters of 2020. And the 
congressional Budget Office projected that the unemployment 
rate would end the year above 10 percent.
    Instead, the unemployment ended the year at 6.7 percent, 
and even the broadest measure of labor market underutilization 
had declined to 11.7 percent, which was lower than in August 
2014. So by December 2020, the U.S. had recovered 55 percent of 
the job losses of March and April 2020 and the U.S. economy had 
recovered 78 percent of the decline in the level of output.
    So it was in the face of this 11-month-old recovery, that 
Congress in March 2021 passed a fiscal stimulus equal to 9 
percent of the U.S. economy, with the immediate effect that 
demand for goods increased 10.7 percent month over month in 
March 2021. That was a huge increase in demand, at the same 
time the supply side was still recovering. And furthermore, 
some of the provisions in that package actually further 
impaired the supply side recovery by raising implicit marginal 
tax rates on the return to work, and introducing some business 
tax uncertainty.
    As a result, whereas in the 12 months through February 
2021, inflation had risen by less in the United States than in 
the Euro area. Since February 2021, the increase in the rate of 
inflation in the United States was five times greater than in 
the Euro area, using a harmonized index of consumer price 
inflation to compare apples to apples. Therefore, explanations 
of high U.S. inflation that are global in nature, semiconductor 
shortages, supply chain disruptions, cannot explain all or most 
of the increase in inflation in the United States-because 
inflation has risen by so much more here than in other advanced 
economies. And as a result, sector-specific investments and 
subsidies are unlikely to resolve inflationary pressure that is 
fundamentally macroeconomic in nature.
    Rather, I think the lesson of recent recoveries from 
recessions in the United States is that we should ensure a 
broad-based incentive to domestic capital formation and labor 
force participation. The lesson from 2017 to 2019 is that this 
is the policy recipe for generating strong and longrun and 
sustainable economic growth that delivers real gains across the 
income distribution.
    [The prepared statement of Dr. Goodspeed appears in the 
Submissions for the Record on page 64.]
    Chairman Beyer. Dr. Goodspeed, thank you very much. We have 
heard from our witnesses, and now turn to questions.
    Let me start with Dr. Bivens. In your recent testimony you 
say many continue to insist that the American Rescue Plan is 
the root cause of recent inflation--in fact, we just heard this 
from Dr. Goodspeed--that that hence any further fiscal policy 
interventions should be blocked in the name of reining in this 
inflation. And these arguments rest from extraordinarily flimsy 
evidentiary grounds.
    Dr. Goodspeed has postulated that the inflation is 
fundamentally macroeconomic in nature, which in my 
interpretation means too much money. The unemployment 
insurance, Child Tax Credit, and the like.
    Dr. Bivens, why is this argument false? Why is this not 
true?
    Dr. Bivens. As I sort of mentioned in my statement, and 
which is in my testimony, the rest of sort of--for countries we 
have data on what the fiscal response to COVID was, kept by the 
IMF from their fiscal policy data base where they measure 
countries' response, there is no relationship between the size 
of the fiscal response and the acceleration in inflation those 
countries have seen in the past year relative to the pre-
pandemic.
    And so any idea that we can sort of pin the uptick in 
inflation we have seen in the U.S. on specific pieces of 
legislation particularly, I just do not think it is there, 
because we can do that using the IMF data on fiscal policy 
response and inflation. And then I think there are plenty of 
other reasons to think it is not just a simple imbalance of 
supply and demand. I think there is lots of distortions that 
the pandemic imposed on the U.S. economy and the global economy 
that can account for a lot of the common inflation experience.
    And then finally I would just say there is an argument 
about the past. It is good that we have it. We should 
understand what happened. Then there is an argument about 
what's--going forward, and the sort of investment packages that 
have been proposed in Congress in recent months. Those are very 
different from the fiscal stimulus that was passed earlier in 
the year. Whatever you think about the American Rescue Plan, it 
was meant to be stimulus. It was meant to be entirely front-
loaded and to provide a real sort of burst of spending in a 
very short period of time. The proposed investment packages 
largely in front of Congress, they do not do that. They are 
much more gradual, much less of the spending hits in the first 
year. They are meant to be a near-permanent increase just in 
the level of public investment that is done. So even their 
spending will have much less inflationary effect. And then many 
of the proposals come with pay-fors that will raise revenue and 
that will further blunt even the very minimal inflationary 
impact that might come from the spending.
    So I think the analysis of why do we have inflation so far, 
linking it to the American Rescue Plan, is pretty flawed, and 
then I think even if you believed that, that has very little 
relevance to the debates about whether or not we should do 
long-lived investment plans which are different than the 
stimulus that people are talking about in terms of past fiscal 
measures.
    Chairman Beyer. Thank you very much.
    Dr. Holder, you wrote and spoke that employment gains made 
by Blacks, women, and Latino workers suggests that the recovery 
efforts in the past usually come to them last. And in this 
recession, it hit a much quicker pace than previous recessions. 
What part of our Rescue Plan so far has helped the people who 
need it most?
    Dr. Holder. Yes. Thank you for the question, Chair Beyer. 
So I will talk about the American Rescue Plan. Now that piece 
of legislation helped an average of over 500,000 jobs per month 
through the end of 2021, for a total of 6.1 million new jobs in 
2021.
    As my colleague, Dr. Bivens, just noted, the American 
Rescue Plan was a fiscal stimulus meant to encourage and to 
support increased demand for goods. And by doing that, the 
natural result would be job creation. And so ARP precisely 
reached that goal of increasing demand, stimulating demand, and 
thereafter leading to job creation.
    And by comparison, that level of job creation, half a 
million jobs per month, eclipses monthly job growth after the 
Great Recession, our last cyclical downturn, which job creation 
averaged just about 130,000 jobs a month from 2010 to 2011.
    Economic evidence suggests that success also extends to 
wages. Wages are increasing for those who have historically 
been left behind during past recoveries. Using the Atlanta Fed 
Wage Growth Tracker, we see younger workers saw a 9.7 percent 
wage increase, and the bottom 25 percent of earners saw a 5.1 
percent raise. Workers with a high school education and those 
at the bottom of the income distribution all saw wage growth 
stronger than average for a recovery period.
    This is still true when you account for the effects of 
inflation. Multiple sources find that around the bottom 70 
percent of workers had real hourly wage increases over the past 
two weeks. While there is still much work to be done such as 
the CARE sector which is currently lagging behind, it is clear 
that the recovery efforts have been a boom to working families. 
And I will end by saying actions such as the Economic Impact 
Payments, the Supplemental Unemployment Insurance Payments, 
$350 billion in funding for state and local governments to save 
jobs and sustain aggregate demand in the face of budget 
shortfalls, and other measures were vital to supporting 
families as the economy recovered.
    Chairman Beyer. Thank you, Dr. Holder, very much.
    My time is up. I am hoping we have a second round because, 
Dr. Parikh, I want to get back to you on the boson before we 
go.
    So we have the good Senator from Utah, Senator Lee.
    Senator Lee. Thank you.
    Dr. Goodspeed, President Biden and many of my colleagues 
here claim that inflation is primarily the result of two 
things. First, Russia's war on Ukraine. And secondly, corporate 
greed. But you noted in your testimony that inflation was 
caused by the Federal Government flooding the economy, and 
doing so with more than $5 trillion of spending at the same 
time that politicians were trying to keep our businesses closed 
and actively disincentivizing work.
    Now Dr. Bivens argues that the evidence linking inflation 
to fiscal stimulus is, quote/unquote, ``exceedingly weak.''
    Can you break this down for us? To what extent is inflation 
the result of some combination of corporate greed and Putin's 
aggression on the one hand, and on the other hand to what 
extent has inflation been triggered by excessive fiscal 
stimulus?
    Dr. Goodspeed. Thank you, Senator. So I think that the 
important thing to do is to have an appropriate control group. 
And that is why in my testimony I pointed to the Euro area, 
which is another large advanced economy, globally integrated. 
And, yes, there was fiscal stimulus across advanced economies 
in 2020. The key divergence occurred in 2021, and specifically 
March 2021, and that is why I think it is an observation that 
must not be ignored that in the 12 months through February 
2021, inflation in the United States averaged 1 percent. 
Inflation in the Euro area averaged 1.1 percent. Since February 
2021, the increase in the rate of inflation in the United 
States has been more than five times that in the Euro area, and 
that preceded the invasion of Ukraine by the Russian 
Federation.
    Senator Lee. That makes sense to me. It seems like a very 
good control group, and I think that backs up your answer.
    Dr. Goodspeed, as you pointed out, the economy delivered 
widely shared prosperity for Americans prior to the pandemic. 
In 2019, the real median household income grew by a record 6.8 
percent. And this took us to an all-time high of nearly 
$69,000. Poverty, meanwhile, fell to a record low for Americans 
across every race and every ethnicity.
    Now some analysts have claimed that our prior economic 
achievements were simply a natural continuation of the roughly 
decade-long recovery from the Great Recession, and that workers 
would have been even better off had the government spent and 
regulated more during the years between 2008 and 2020.
    Do you think that alternative narrative is correct? And 
what do you think we can learn from the pre-pandemic economy 
that might be applicable today?
    Dr. Goodspeed. Right. So first of all, one can estimate a 
trend in various macroeconomic indicators during the expansion 
period from July 2009 through the end of 2016.
    You can project those trends into 2017, 2018, 2019, and 
there was a huge out-performance relative to trend. But you do 
not have to take my word for it on that. Just look at what the 
Congressional Budget Office, the nonpartisan congressional 
Budget Office, was projecting in their final projection in 
2016. And relative to those projections, the U.S. economy 
through the end of 2019 added 5 million more jobs than 
projected. And in the first two months of 2020 alone, the U.S. 
economy added more jobs, almost half a million, than the 
Congressional Budget Office had previously projected for the 
entire year.
    GDP, the gross output of the United States' economy, was 
$300 billion, or 1.2 percent larger, and the unemployment rate 
was 1.4 percentage points lower. So I think that this was an 
out-performance relative to trend and relative to forecast. And 
I think the lesson to be learned is that when you have in place 
broad-based incentives, as I pointed out earlier, increased 
domestic business investment and increased labor force 
participation, then you observe gains across the board. And in 
fact we saw, as I said, not just the bottom tenth of the 
distribution doing better than the top tenth, we saw wealth 
inequality decline. We saw workers wages rise faster than 
managers' wages. And that was a complete reversal from the 
trends that were underway pre-2017.
    Senator Lee. Thank you. That is helpful. As I mentioned in 
my opening comments, I am a little bit worried about the fact 
that both the House and the Senate have passed different bills 
in the direction of industrial policy to the tune of $250 
billion to $400 billion in Federal spending.
    Do you think going down that path, the path of state-
sponsored industrial policy, is the best way to help us achieve 
long-term economic growth? And what do you think the 
consequences of that would be?
    Dr. Goodspeed. Well, it has not worked in the past, and I 
might suggest that you just ask the United Kingdom or France 
circa 1970s.
    Senator Lee. Right. Thank you. I see my time has expired. 
Thank you, Mr. Chairman. Thank you, Dr. Goodspeed.
    Chairman Beyer. Thank you, Senator, very much. Let me 
recognize our distinguished Congressman from Madison, 
Wisconsin, Mr. Pocan.
    Representative Pocan. Thank you very much, Mr. Chairman. 
And thanks to all of our panelists today. You are appreciated.
    It seems odd that we have had record fast recovery. We have 
got job creation and low unemployment. Because of quality 
science, we are largely leaving the COVID era. The COVID 
hangover is done. Yet inflation right now for people seems to 
block all of those really good things that have happened. The 
Rescue Plan, as Dr. Bivens talked to us, we have money in the 
economy, the Infrastructure bill and the more long-term way to 
put money into the economy.
    But what I just heard was that inflation, according to 
Democrats, is because of the war in Ukraine, which certainly is 
having an additional impact on gas prices and on corporate 
greed, which I am going to ask about in a second, but I have 
been a small business owner since I was 23 years old, since I 
had a pretty full head of hair, a long time ago, and I can tell 
you what I found is when everything reopened last year, here in 
the country and around the world, because we do not make enough 
things in the United States, and because everywhere stopped 
production, there was a lot of demand for everything at once. 
Scarcity. Scarcity drives up the cost of goods, and we are all 
paying more. There were three steel increases last year. I had 
one this year. And I just got a new one that went up 11 percent 
again on purchasing steel.
    So I guess the questions I have, Dr. Bivens, let me start 
with you, I mean this question of corporate profits, I went to 
your website and I saw you have got some stuff there. Can you 
talk a little bit about corporate profits and inflation? And 
can you talk about the fact that we don't make things here 
anymore? And we have lost that control, and how that effects 
inflation in particular?
    Dr. Bivens. On the corporate profit issue, I mean just as a 
matter of decomposing what has driven in an accounting 
framework, sort of the rise of prices and sort of the 
nonfinancial corporate sector. We have data that lets us do 
that.
    During normal times, labor costs are supposed to contribute 
about 60 percent of the costs; profits about 15 percent. If you 
look at sort of the trough of the pandemic recession until now, 
labor costs are only contributing about eight percent. Normally 
it is 60. Corporate profits are well over 50 percent. It is 
supposed to be 15, one-five. And so it is clearly the case that 
it is sort of thicker profit margins that are in an accounting 
way the much bigger thing driving price increases. What does 
that mean? I mean to my mind it means a couple of things.
    One, there were some extreme distortions imposed on the 
economy by the pandemic, and basically a huge swing away from 
services into durable goods. Take the example of used cars. A 
lot of people moved to the suburbs, no longer take public 
transit to work. They have to get a car. A huge demand in this 
narrow sector of used cars. Just the supply chain snarls that 
are also driven by the pandemic made it really hard to deliver 
those used cars. If you were a dealer who had cars on your lot, 
you made out like gangbusters, and so your profit margins went 
up.
    And so I think it is mostly those pandemic distortions that 
have channeled corporate power into price increases this time. 
And then I think, you know, I just talked about the supply 
chain snarls being a forcing factor there. Yes, I think a lot 
of those snarls are because over the past couple of decades we 
have chosen a mode of production to just make sure the 
component is always produced in the absolute cheapest place 
possible, without trying to build any resiliency into the 
system. And so I think that has led the companies to spread out 
things in ways that made supply chains very fragile because 
they were way too myopic. And I think that is a big problem, 
and I think we also just did not do the public investment in 
the basic infrastructure that would have provided more 
resiliency, too. So I think all those things add up to the 
perfect storm of inflation that we have.
    Representative Pocan. And if I can in the minute and ten 
seconds or so I have left, specifically gas and food. Those are 
the two biggest things I am hearing wherever I go. I remember 
when gas prices went up last March when Texas did not invest in 
their grid and they had cold weather and suddenly power went 
out and prices stayed up. And, yes, they have gone up again 
because of what is happening in Russia and Ukraine. But they 
maintained that level for a long time, and also on food prices.
    Can you talk just a little bit about gas and food in 46 
seconds?
    Dr. Bivens. I will try. So the gas and food prices tend to 
always be volatile. There is very little you can do in the very 
short run with macro policy to tamp them down, and you probably 
should not try. You will just cause more collateral damage if 
you do.
    People forget. They also do go down. They really do, 
eventually. And so that is the only sort of word of comfort. 
And I do think there is some suggestive evidence that they do 
not necessarily go down quickly enough after a spike, and that 
could actually be some manifestation of corporate power, and 
even some price gouging. And so to the degree that regulatory 
agencies should keep an eye on that, and to make sure that 
prices go down as input costs go down, I think that is 
something to think about for sure.
    Representative Pocan. I appreciate it. I yield back, Mr. 
Chairman. Thank you.
    Chairman Beyer. Thank you, Mr. Pocan, very much. I will now 
recognize my friend from Arizona, Doctor--Congressman 
Schweikert.
    Representative Schweikert. Thank you, Chairman Beyer.
    Interesting witnesses. Some bizarre statements, and 
particularly in some of the writeups, but I guess it is not 
polite to take shots at each other's witnesses. And 
particularly one of the witnesses--and forgive me if I 
mispronounce the name--Dr. Parikh really, really appreciate the 
discussion and fixation on disruption and technology leaps, and 
what that means to future prosperity.
    I almost wish I could convince Don to have a discussion of 
what a disruptive competitive economy embracing technology 
would mean for productivity, for the wealth of the working 
poor, those things.
    But, Mr. Chairman, I have a number of charts and reports I 
wish to put into the record that basically show--and it's graph 
after graph after graph that the Democrats on your spending 
binge from last March, and you can actually see on charts. Here 
is one on rents, on fuel, on food, that basically you see the 
charts just blow up after March of last year. So with your 
permission, I would like to submit those for the record.
    Chairman Beyer. Without objection.
    [The graphs of Representative Schweikert appear in the 
Submissions for the Record on pages 70-78.]
    Representative Schweikert. Dr. Goodspeed, sometimes the 
simplest chart actually explains the story. I am holding one 
here that basically is inflation and real wages. So real 
purchasing power for the working poor, the middle class, and it 
shows, as you see that alligator mouth expanding, it shows you 
that the fact of the matter is the brothers and sisters in this 
country are getting poorer every single day. And the math is 
the math. I mean I know our friends desperately want to run 
away from this, but the math is the math. They are getting 
poorer every day, and it is because of fiscal policy, and 
probably 50-50. It is half the Federal Reserve built a pile of 
kindling, and a year ago we threw a flaming log on it.
    I turn to you, Doctor, and said from a policy standpoint 
what could we do right now to spike productivity so we would 
make more things? So there would be more goods and services to 
purchase, maybe tapping down inflation? Are there things we 
could do to encourage people to move money into their 
retirement funds to remove liquidity?
    What could we as Congress do right now to do some 
mitigation of this inflation monster that is really hurting 
retired people and working people in the country?
    Dr. Goodspeed. Well thank you, Congressman. And, yes, I 
think you are quite right to point out that real wages--wages 
have been struggling to keep pace with inflation. And 
historically that is what happens, because wage contracts tend 
to be negotiated at lower intervals than other prices, and so 
real wages for average American workers have been declining.
    I think that there are a number of things that Congress 
could be doing now. One would be to help make up for the large 
cumulative shortfall in business investment in the United 
States that has accumulated since the start of the pandemic. 
Introduce some business tax certainty so that firms have an 
incentive to invest in more plants and equipment in the United 
States. Because right now there has been a lot of uncertainty 
both in the direction of the statutory corporate income tax 
rate, but also on the question of whether or not the full 
expensing of new equipment investment will be extended.
    Representative Schweikert. Doctor, right there on that 
subject. You say, okay, expensing right now, I think this year 
we fell to what, 80 percent of the purchase. And then if you do 
inflation, the costs of the new productive piece of equipment, 
it is actually--you know, if it has gone up 20 percent, you are 
looking at a 40 percent margin. You have to have a very 
substantial step up in productivity for that capital investment 
to actually have value.
    From a policy standpoint, what if we did a--we put 
expensing back to 100 percent, but you do not get it until the 
productive piece of equipment is in production, is actually 
producing? What would you do?
    Dr. Goodspeed. Well, without getting into the technicals, I 
think that some certainty over the longer run direction of 
expensing is one way to now increase business investment not 
only in equipment but also I would consider expanding it to 
other asset types. In addition, I would be looking to provide 
some regulatory certainty for domestic energy production. And I 
would provide some certainty on the future direction of 
marginal personal income tax rates to help encourage workers to 
return to the labor force because we are still well below pre-
COVID levels of labor force participation.
    Representative Schweikert. I appreciate that, Doctor. I 
think on the energy hydrocarbon production, unless we get 
something cleaned up on the capital stack and the regulatory 
threat there, I am fearful we are going to continue to fall 
further behind in energy.
    Mr. Chairman, thank you. I yield back.
    Chairman Beyer. Thank you, Mr. Schweikert. Now let me 
recognize my friend from Maryland, Congressman Trone.
    David, I think you are muted.
    Representative Trone. Okay, are we on, Mr. Chairman? Thank 
you, Mr. Chairman.
    Dr. Bivens, in your testimony you talked about ambitious 
fiscal policy response to the pandemic recession to help pave 
the way for a stronger recovery. I always see big investments 
of the American Rescue Plan, nationally, locally. We are proud 
to have a $60 million funding in the American Rescue Plan to 
the Mental Health Association and Addiction in Maryland, which 
helps Marylanders. What investments can we make to help provide 
resources for individuals who are working toward recovery, and 
those entering the workforce after they have sought treatment?
    Dr. Bivens. That is a really good question. I would say, so 
I am not an expert in that sort of human services investment. I 
do think the great thing about the American Rescue Plan, or one 
of the great things about it, was it gave a lot of flexibility 
to state and local governments, along with substantial 
resources, in order to let them expand those investments. But 
in terms of the specific ones we should make and the research 
on that, that is not my sort of wheelhouse of expertise.
    Representative Trone. Okay. Any idea of how to highlight 
these on a state and local level?
    Dr. Bivens. No great ones. I mean I would definitely say, 
one thing I appreciated as well about the fiscal relief that 
was included in the ARP to the state and local governments was 
the Treasury Department provided a set of guidelines about what 
that aid could be and should be used for. And it sort of 
prioritized things that really would be investments in 
historically disadvantaged communities, investments in 
economically distressed communities were really high on the 
list of things they urged state and local governments to invest 
in.
    It sounds to me, as a nonexpert, like those sorts of 
investments absolutely fit the bill. It discouraged things 
like, it actually forbade just tax cuts across the board. And 
so it really urged state and local governments to make those 
investments targeted. How well each state is doing is probably 
subject to a ton of areas.
    Representative Trone. Okay, to jump over to Dr. Parikh, in 
your testimony you highlighted the importance of diversity in 
scientific research. In Maryland, high school graduation rates 
were on the rise, especially in underrepresented communities. 
So unlike their peers, the underrepresented students face 
additional barriers to higher education that is typically 
required for a STEM career.
    So what do we do to level the playing field for students of 
all backgrounds? And what role do career training centers play 
in bridging that gap?
    Dr. Parikh. Thank you, Congressman, for that question. We 
have to start very early, but we have to be able to--if we are 
to level the playing field, we have to make up for a whole 
bunch of challenges that have built up over time. And that 
means starting very early with education around science and 
math and engineering with kids that are even pre-kindergarten 
who can be excited about math. There is a program in Chicago on 
the South Side of Chicago that gets young boys and girls on the 
south side of Chicago interested in algebra in the 5th grade. 
And it has over 600 alumni that are populating companies like 
Boeing, and elsewhere, terrific engineers. It shows that at the 
small scale we can do this. We just have to scale up those 
kinds of programs to get these kids there.
    Representative Trone. Our competitors like China and India, 
are they starting this early?
    Dr. Parikh. They are starting extremely early. I will tell 
you, I can tell you from my own personal family experience that 
if you are a young child in India, being an engineer or being a 
doctor is part of the culture. It is part of what we are 
teaching--of what is being taught to kids that they are going 
to become. And we have got to be doing that here. We have to 
set people's expectations to be that high.
    Representative Trone. U.S. global research, when you see 39 
percent of it, Doctor, now we are down 30 percent and we are 
heading the wrong way. What are your thoughts about career 
training in this area, trying to get world class talents?
    Dr. Parikh. We have got to make sure that we are pulling 
talent from the Central Valley of California, from the 
Appalachia area, from the Mississippi Delta, and from Palo Alto 
and from Cambridge. We have got to be pulling all of our 
talent. Because, look, there are 1.4 billion people in China 
and there are 330 million people here. We are not going to win 
this on just sheer numbers.
    We have this amazing diversity of thought and diversity of 
experience that comes from the fact that we are a remarkably 
diverse nation. And we have high achieving scientific minds in 
every one of those places. We have got to pull from every one 
of those areas, and also----
    Representative Trone. How about if anybody who came here to 
our country to study if we gave them a path to citizenship?
    Dr. Parikh. We are--we have been on record saying that it 
would be very important for having scientists who come here to 
train, that if they stay here and they want to be Americans 
that we should provide a path.
    Representative Trone. I yield back, Mr. Chairman.
    Chairman Beyer. Thank you, Mr. Trone, very much. Votes will 
be here in about 15 minutes, so we have some more time and I 
would love to start a second round for anybody who is with us.
    Let me begin. First, Dr. Parikh, thank you for bringing up 
the heavy W boson. I had not heard that yet, and I am anxious 
to hear how we tax it. In the meantime, I know in your AAAS 
role you know how exciting it is what is happening on the 
fusion side. As we think about a limitless source of energy, 
what it can do to economic growth, to poverty, and of course to 
climate change in the immediate future.
    And by the way, this is more than a trillion dollars just 
for fusion. So how does the long-time horizon, the nonstimulus 
nature so that there is the infrastructure bill, how does that 
play out over the economy? Is it better, or worse as an 
investment?
    Dr. Parikh. It is an incredible investment. Because what 
happens--and we have seen patterns of this throughout history--
is that in certain areas we get to an inflection point. Fusion 
is one of those areas. Fusion has always been--the joke has 
always been it is 40 years away. And that we are not quite 
there.
    But those are remarkable amounts of energy right now in the 
private sector and the public sector moving toward sustainable 
energy production by fusion. There are public companies that 
are getting investment, and that hope to have inputs and 
outputs equal by the end of the decade. Now that would be a 
remarkable achievement. That is harnessing the power of the sun 
here on earth and getting just as much energy out as you put 
in.
    Now the government is doing that. There are governments 
around the world working on it. And what it shows is the power 
of the American ecosystem. We have financial capital. We do 
have world beating companies that are working on fusion.
    We have the U.S. investment in ITER, which is in Japan. We 
have got an incredible amount of talent that comes together in 
this ecosystem of public and private sector that if anybody can 
do it, I put my money on us.
    Chairman Beyer. Thank you very much.
    Dr. Bivens, I was struck this afternoon by the different 
fact sets, figure sets, data sets we have on the past. I 
respect Dr. Goodspeed's many different charts and analyses, but 
I am having trouble reconciling some of them with at least the 
facts that I have read. How can it be that the bottom 10 
percent grew more quickly, their incomes, than the top 10 
percent when almost all of the Tax and Jobs Act went to the top 
10 percent? And when the wealthiest two individuals in America 
have more assets than the bottom 50 percent combined?
    How do you put those together?
    Dr. Bivens. I think there is something important there, and 
there are two separable questions, which is: What is the state 
of the macro economy and the business cycle and labor market 
tightness versus what is the policy doing to either contribute 
to that or to do things outside of that?
    And so I totally agree that 2017, 2018, and 2019 were 
actually quite good years from a business cycle perspective. I 
disagree, like I think it really was just a continuation of 
trend. I think what really was the sort of game changer in 
2017, 2018, 2019 relative to what the CBO predicted beforehand 
was the Federal Reserve who for the first time in a long time 
said, you know what? We are going to let unemployment fall 
really, really low without preemptively stopping the recovery.
    And so I think those were pretty very good years, low 
unemployment, lots of gains including for low-end workers, and 
so reinforces to me the value of low unemployment is really a 
good thing and something policymakers should always target.
    Then the question becomes: Did the Trump administration 
policies do anything to lock that in and make it happen faster, 
secure it for a longer time? And to my mind, the answer to that 
is absolutely not, for the reason you said. Their signature 
policy achievement was a tax cut for owners of capital.
    So the direct benefits went to the richest households. It 
did almost nothing to boost economy-wide investment, which was 
its sort of stated rationale. So I think it is true that tight 
labor markets are really good for workers, particularly 
historically disadvantaged workers, and we had tight labor 
markets in 2017, 2018, and 2019. I just do not think the Trump 
policies were the reason why labor markets were tights. I think 
it really was just a continuation of trend, along with the 
change, and admirable change, in Federal Reserve policy that 
allowed that to happen.
    Chairman Beyer. And despite all that, even with the Tax and 
Jobs Act, we never did get the 3 percent growth. In fact, I 
believe that growth in 2019 before the pandemic was 2.3 
percent, which was, you know, like what it was in 2014.
    I mean, I am not bragging on how fast things grew. They 
grew too slow.
    Let me--I should move on because the clock has turned 
green, but Mr. Schweikert, are you still with us?
    [No response.]
    Chairman Beyer. Actually, he abandoned us. So I will keep 
going. Please answer. You seem eager to, Dr. Bivens.
    Dr. Bivens. Yes, sorry about that. I put myself on mute. I 
agree with that. I would say the Tax Cuts and Jobs Act really 
was a pure redistribution policy. It just redistributed a bunch 
of money to people who own corporate equities, largely, and it 
had almost no footprint at all in increasing the rate of growth 
in the economy.
    And I think the biggest indicator of that is the way it was 
going to increase the growth rate of the economy, like the way 
most proponents talked about it, was increasing business 
investment. That was really the centerpiece of the economic 
case for it. Business investment did not increase in the wake 
of the TCJA. It was clearly decelerating rapidly before the 
pandemic hit.
    It just had no impact at all on the aggregate economy. All 
it did was redistribute income around. And it redistributed to 
the top, which is not the way I would prefer that happen.
    Chairman Beyer. Dr. Holder, in your leadership at the 
Center for Equitable Growth, one of the things the Joint 
Economic Committee in these two years has really focused on is 
income inequality, and wealth inequality. And what are you 
seeing happening to the GINI Index, especially looking at it 
over the last 10 years, and over the last 50 years? Because I 
keep reading things like Bob Putnam's book that it has not been 
this bad since the 2013-2015.
    Dr. Holder. Yes, I thank you for that question, Chair 
Beyer. You know, the evidence is very clear that income 
inequality in the U.S. is increasing. So with regard to the 
GINI coefficient and the direction that that is moving, it is 
absolutely clear that income inequality is widening in the U.S. 
And I will, if you will permit me, we do not only need to look 
at where GINI coefficient is going. We could also look at the 
distribution of income over time. And this is actually a really 
simple exercise that I give my students in terms of really 
proving that more income is going to the top 20 percent of 
households in this country, and less income to the bottom 20 
percent.
    And so if I could just quickly, the Bureau of Labor 
Statistics, which is the statistical arm of the U.S. Department 
of Labor, contains a bevy of information. And so in addition to 
that, also the U.S. Census Bureau has data. And I believe one 
of the pieces of data they have, and they update regularly, is 
on income distribution in the United States.
    And one of the tables clearly shows over time that the top 
20 percent of households in the U.S. is taking in an increasing 
share of all income generated in this country, while the bottom 
20 percent of households--and when I say top 20 percent of 
households and bottom 20 percent I am really talking about by 
income. So low-income households versus high-earning 
households, or wealthy households.
    Analogously, the bottom 20 percent of households, it is 
very clearly over the last several decades, is taking in a 
smaller share of all income that is generated in this country. 
And so along with looking at the direction of the GINI Index, 
the statistical evidence is absolutely clear and undisputable 
that income distribution is widening, and income inequality is 
widening in the United States. The evidence is very clear, and 
it is concrete.
    Chairman Beyer. Thank you. And Dr. Parikh, the good Dr. 
Goodspeed talked about, maybe in response to a question from my 
friend Mr. Schweikert, that if we want an industrial policy we 
need to look at Great Britain or France in the 1970s.
    What is the difference in terms of our investment and the 
COMPETES Act, whatever it is being called, the infrastructure 
bill, in building factories, the doubling of the investment in 
the National Science Foundation, how is that different?
    Dr. Parikh. It is a really important question. And, look, 
imagine as we were coming out of the pandemic, one of the 
things that is not talked about--we always talk about the 
discoveries, and how we got the MRNA vaccine, and other 
technologies to get vaccines into the field so quickly.
    The thing we do not often talk about is the scale up in the 
manufacturing. The fact that we could go from zero to 300 
million doses in a matter of months is actually an equivalent 
success to the scientific success. That is remarkable. And it 
is not something that every country can do. And imagine that if 
instead of meeting the capacity in building and making vaccines 
we needed, the solution involved semiconductor microchips. We 
would not have been able to do that. We would have been 
beholden to other nations to actually get a solution to the 
pandemic if that were the case.
    And there are other areas of our economy that are just that 
dependent on semiconductor microchips. And we cannot let--we 
cannot let it be that one of the most critical components of so 
much of our technology is not actually manufactured here in the 
United States.
    And so it is critically important to have not just the 
infrastructure to do it, but the workforce to do it. And so the 
rest of that legislation in the USICA, COMPETES Act is about 
the funding of the National Science Foundation.
    I mentioned several critical areas where we are close to an 
inflection point. Artificial intelligence, quantum computing, 
launch systems to low earth orbit. These are places where other 
nations have seen that we are on that cusp and are investing. 
And should we invest the same way? Absolutely not. We should do 
it the American way, which means that we have this wonderful 
ecosystem that has Federal investment plus industry investment. 
Industry investment has gotten to around 3 percent of GDP. That 
is wonderful. The problem is, Federal investment has fallen to 
about 0.6 percent of GDP. And what that means is we have an 
imbalance between research and development, and we have got to 
work on that.
    So it is different. It is very different from the 
industrial policy that is picking winners. It is not about 
picking winners. It is about looking at which parts of the 
scientific ecosystem are about to take that exponential burst 
of industrial activity and placing some bets.
    Chairman Beyer. Thank you very much. I would really like to 
thank all of you. The vote actually did start, so I need to get 
over to do that. But this is a really interesting, productive 
conversation on a more equitable economy.
    And I appreciate the various charts and interpretations 
that these are worth fighting over, and trying to understand 
how best to go forward.
    Thanks to the efforts of this Congress and the Biden 
administration, unemployment is down to 3.6 percent. It is just 
a tenth above the highlight before the pandemic at the end of 
the Trump administration. The economy grew at the fastest pace 
in 40 years. Businesses have hired more workers faster than 
ever reported. Thirty percent increase in small business 
applications over the prior record. But we have not escaped the 
global spike in inflation, and that is hurting an awful lot of 
families, especially families at the low end. So we need to 
lower those costs for U.S. workers and we need to advance 
economic growth and competitiveness and we have to act now to 
build the capacity of the American people and our economy.
    And I think we started that work with the Infrastructure 
Investment and Jobs Act and the investments to make competition 
bills are the next step to powering this new era of America's 
leadership in innovation and technology. The investments we 
have discussed today will drive inclusive economic growth and 
put us at the front of addressing complex challenges. And they 
are complex. And we can do it while strengthening the 
bargaining power of workers and realigning corporate incentives 
to reward long-term pro-growth investment that generates 
society and economy wide returns.
    The potential for these investments is exciting. I deeply 
believe that America's best days lie ahead. There is a better 
tomorrow for U.S. families, workers, and businesses.
    So thank you to each of our panelists for their 
contributions to this timely and ongoing discussion. And thanks 
to my colleagues, coming and going, for being a part of this 
discussion and sharing their insights.
    The record will formally remain open for three business 
days. This hearing is adjourned.
    [Whereupon, at 3:48 p.m., Wednesday, April 27, 2022, the 
hearing was adjourned.]

                       SUBMISSIONS FOR THE RECORD

         Prepared statement of Hon. Donald Beyer Jr., Chairman,
                        Joint Economic Committee
                              recognitions
    This hearing will come to order. I would like to welcome everyone 
to the Joint Economic Committee's hearing, ``Building on a Strong 
Foundation: Investments Today for a More Competitive Tomorrow.''
    I want to thank each of our distinguished witnesses for sharing 
their expertise today. We have an exceptional panel of experts, and I'm 
looking forward to hearing from them.
                           opening statement
    Just over two years ago, the United States confirmed its first case 
of COVID.
    Since then, hundreds of thousands of lives have been lost, and our 
Nation has experienced the worst recession since the Great Depression. 
Virtually overnight, nearly 22 million jobs disappeared and GDP 
cratered.
    The loss of life is a national tragedy, and we mourn those lives 
that were taken too soon.
    Today's hearing will focus on how our country is overcoming the 
economic effects of the global pandemic and what steps we can take now 
to ensure our economic health for the long term.
    As we convene for this discussion, our Nation's economic rebound 
has exceeded all expectations. The American Rescue Plan and other 
pandemic relief, including the successful dissemination of vaccines, 
have created a remarkably different economic reality than the one we 
were facing at the start of 2021.
    To date, nearly 93 percent of the jobs lost during the pandemic 
have been regained. The unemployment rate has fallen to just 0.1 
percentage points above its pre-pandemic rate. And GDP has reached the 
fastest pace of growth in nearly 40 years. President Biden has overseen 
the creation of 7.9 million jobs, and 2021 set a record for the most 
new businesses started.
    Far from guaranteed, the speed and strength of our economic 
recovery is a direct result of increased public investment. Thanks to 
the efforts of this Congress and the Biden administration, the United 
States has experienced the fastest recovery among G7 countries. It 
remains the only major economy that has recovered to its pre-pandemic 
trend of economic growth, or what it would have been absent the 
coronavirus recession.
    But the United States has not escaped the global spike in inflation 
that is denying workers and families the full benefits of the recovery. 
Global supply chain disruptions have pushed up prices worldwide, and 
Putin's invasion of Ukraine is exacerbating the effects on energy and 
food prices.
    We, in Congress, have an opportunity to lower costs for workers and 
families, spur job creation and promote U.S. competitiveness now and 
for generations to come.
    Evidence shows that public investment in research and technology 
drives innovation and boosts productivity, which is the bedrock of 
long-term economic growth. Historically, U.S. economic booms have been 
fueled by investments in science and technology that were initiated and 
sustained by public funding.
    For example, public investments in the Defense Advanced Research 
Projects Agency helped support the development of the personal computer 
and the internet. Together, these drove a technological revolution that 
turbocharged U.S. productivity and radically changed the ways people 
conduct their lives--not to mention the creation of hundreds of 
thousands of new jobs.
    If a goal of our government is to drive broadly shared economic 
growth and ensure that the United States remains internationally 
competitive, public investment is essential to success.
    The recently passed bipartisan Infrastructure Investment and Jobs 
Act is a down payment. It will address years of inadequate Federal 
investment in critical infrastructure--such as roads, bridges and 
broadband--to create jobs, enhance productivity and improve supply 
chain resilience. The economy-wide benefits will reduce long-term 
inflationary pressures.
    Congress should build on this foundation and pass the bipartisan 
competition bills to drive economic growth and shared prosperity. The 
investments in innovation, research and manufacturing will boost our 
economic capacity, create high-quality jobs in communities across the 
country and raise worker wages. And by promoting increased efficiency 
among workers and businesses, these investments will also lower costs 
for everyone.
    The bills' focus on racial, gender and geographic diversity in 
training and education will help ensure communities that have 
historically been excluded are able to share in the benefits.
    We've all experienced the many ways disinvestment in American-made 
products has contributed to recent supply chain disruptions, and the 
investments in this legislation will help shore up American supply 
chains and domestic manufacturing.
                      turn it over to senator lee
    The pandemic shined a new light on inequality in this country and 
exposed underlying vulnerabilities in our economy that are constricting 
our collective potential.
    We have an opportunity now to lower out-of-pocket costs for 
families on their biggest household expenses while also paving the way 
for economic growth in the long term that is stronger, stable and more 
broadly shared.
    As we dive deeper into these issues, I look forward to the 
testimonies of our expert witnesses. Now I would like to turn it over 
to Senator Lee for his opening statement.
                               __________
          Prepared statement of Hon. Mike Lee, Ranking Member,
                        Joint Economic Committee
    Before the COVID-19 pandemic, pro-growth policies brought the 
American economy roaring to life in a way that bigger government and 
more central control never could.
    While the strong economy lifted up all Americans, historically 
disadvantaged groups benefited the most. Unemployment for Hispanic 
Americans, Black Americans, and Asian Americans fell to the lowest 
rates on record. The unemployment rate for women dropped to its lowest 
level in almost 70 years. And low-income workers saw their wages rise 
at some of the fastest rates ever recorded.
    All told, in the three years leading up to the pandemic, poverty 
reached an all-time low; real median income increased by almost $6,000 
per household; and the bottom 50 percent of American households saw 
their wealth increase by over 70 percent. The recipe for this broad-
based prosperity was lower taxes and less regulation.
    Today, after two years of mandates, subsidies, and `expert' 
control, government has all but eviscerated this strong foundation. 
Americans have been forced to endure governments shuttering their 
livelihoods, schools, and communities.
    Measured against the pre-pandemic trend, 6.6 million workers are 
currently missing from the workforce. These Americans are missing out 
on not only the financial rewards of a job, but also the community and 
purpose that come from work.
    In contrast with the pre-pandemic economy that especially benefited 
low-wage workers and historically disadvantaged Americans, these groups 
are again falling further behind. With more government getting in the 
way, middle class and low-wage workers are hurting the most.
    Democrats' $1.9 trillion in partisan spending has ignited the worst 
inflation in four decades--inflation that is hitting my home state of 
Utah harder than almost anywhere else. Even if prices were to stop 
rising tomorrow, Utah families will have to pay nearly $8,500 this year 
to afford the same items they purchased at the beginning of the Biden 
administration, according to the Joint Economic Committee's state 
inflation tracker.
    Meanwhile, school closures have caused devastating learning losses 
for the youngest and lowest-income students. The Penn Wharton Budget 
Model estimates that these losses will weaken our productivity and 
wages for the next 30 years.
    Unconditional stimulus checks and explicit anti-work incentives 
have increased the use of harmful substances at a time of vulnerability 
for many Americans. Drug overdose deaths are back to an all-time high, 
and suicides and alcohol abuse have spiked.
    Lockdowns have triggered rising crime rates across the country, 
causing Americans to feel less safe in their communities. The murder 
rate jumped almost 30 percent in 2020--the largest increase on record.
    It's clear that so-called `investments' from Washington have failed 
to produce the prosperity the Biden administration promised. And many 
of the proposals I hear from my colleagues will make our problems 
worse.
    Plans to keep spending money we don't have will pour more fuel on 
the inflation fire. Tax hikes on businesses will make it harder for 
Americans to innovate at home and compete abroad. And legislation that 
takes a cue from China's state-directed economy by federally 
commandeering research and development is the opposite of what has made 
us the world's strongest and most prosperous nation. We will never beat 
China by becoming more like China.
    We know what works. Before the pandemic, tax cuts and deregulation 
supported a thriving economy that benefited families and workers of all 
walks of life. The free market system that prizes ingenuity and rewards 
people for using their God-given talents in service of their neighbors 
resulted in benefits for the Americans who needed it most.
    After two years of policies that have assaulted and eroded this 
strong foundation, I hope we can learn from our mistakes. I hope we've 
learned that when we choose to remove government barriers to Americans' 
creativity and freedom, families of all types prosper.
    Thank you.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
              Question for the Record for Dr. Josh Bevins
                     submitted by Senator Klobuchar
    The U.S. is facing a manufacturing skills gap that's estimated to 
leave over 2 million jobs unfilled by 2030 and could cost the U.S. 
economy as much as $1 trillion. My Apprenticeships to College Act with 
Senator Moran, which was included in the House-passed America COMPETES 
Act, would allow workers to earn college credit for completed 
apprenticeships, creating a pathway for workers to gain skills while 
earning a good wage.

      What role does collaboration between the public and 
private sectors play in closing the skills gap and strengthening 
American manufacturing?
                               __________
              Question for the Record for Dr. Josh Bevins
                      submitted by Senator Warnock
    You noted in your testimony, ``Before the pandemic struck, economic 
growth in the United States was too-slow and too-unequal for decades.'' 
How can Federal investments help contribute to a more equitable 
recovery? What impact would this have on the overall economy?
                               __________
      Response from Dr. Michelle Holder to Question for the Record
                     submitted by Senator Klobuchar
    One of the most persistent workforce challenges, especially in 
rural communities, is access to affordable child care. Many 
manufacturers and businesses have job openings, but cannot find enough 
trained workers due to the lack of affordable childcare options. That's 
why I introduced the bipartisan Child Care Workforce and Facilities Act 
to educate and retain child care workers and build and expand 
facilities in child care deserts.

    How are child care access and affordability a barrier for parents 
interested in returning to the workforce?

    The current market for child care does not meet the needs of 
working families. This is not simply an issue for families with young 
children. Accessible, affordable, and high-quality care also has the 
potential to generate substantial economic activity and growth that 
benefits the entire U.S. economy.

    In 2019, even before the pandemic's devastating effects on the 
child care industry, roughly half of U.S. families lived in child care 
deserts, defined as U.S. Census Bureau tracts where there are three 
young children for every licensed slot for child care. The COVID-19 
pandemic only worsened these supply challenges. Further, at an average 
annual cost of more than $9,000, the price tag of care puts child care 
out of reach for many U.S. families.

    The inability to access affordable, high-quality child care is 
devastating for families. It also constricts the economy's ability to 
grow. Research shows that when the supply of child care in a community 
increases, so too does that community's parental labor supply. 
Likewise, when the cost of child care decreases, researchers time and 
again find an associated increase in parental labor supply.

    Recent studies in the U.S. context find that a 10 percent reduction 
in the cost of child care increases maternal employment by between 0.5 
percent and 2.5 percent. To put that in more concrete terms, in a State 
such as West Virginia, where about 136,000 women have children at home 
and participate in the civilian labor force, a 10 percent reduction in 
child care costs would lead to around 3,400 women entering the labor 
force. That's 3,400 more breadwinners for families with children, 3,400 
more productive workers, and more dollars in the pockets of 3,400 
consumers to support local businesses.

    More research is needed to understand how the quality and 
continuity of available child care options affects parental labor force 
participation. But a 2008 study of mothers in low-wage jobs found that 
19 percent stopped working entirely in the same quarter in which they 
experienced a disruption to their child care arrangements, compared to 
only 9 percent who did not experience such a disruption. The evidence 
strongly suggests that when child care is available, affordable, and 
high quality, more parents get jobs and keep them.

    As a result, the economy grows. Employers have access to a larger 
workforce from which to select talent, and workers are less likely to 
leave well-matched jobs prematurely, which saves firms rehiring and 
retraining costs. And it's not just workers who are brought off the 
sidelines, but entrepreneurs as well. Parents with winning business 
ideas will be free to launch ventures and pursue the American Dream, 
household incomes rise and drive consumer spending, and the tax base 
from which we can fund pro-growth government programs grows.

    As we have recently seen all too clearly, child care also has an 
important role to play in stabilizing the macro economy. The child care 
market is fragile. A combination of reliance on out-of-pocket payments 
that strain parents' budgets and slim profit margins means that even a 
small downturn in the economy can cause a damaging and persistent 
ripple through the child care sector as parents pull their children out 
of child care. This pushes providers into the red, which results in 
layoffs, reduced capacity, and permanent closures from which it can be 
difficult or impossible to rebound.

    We've seen this play out during the COVID-19 pandemic, as well as 
prior economic recessions. When unemployment rates increase in the 
broader labor market, they increase more quickly in the child care 
sector: Every 1 percent decline in a state's overall employment is 
associated with a 1.04 percent decline in child care employment. But 
when the economy rebounds, the child care sector lags: Every 1 percent 
increase in a state's overall employment is only associated with a 0.75 
percent increase in child care employment.

    We are seeing this slower recovery play out in real time. As of 
April 2022, the child day care sector remains approximately 116,000 
jobs (or approximately 10 percentage points) below February 2020 
levels. Hiring in child care has plateaued in recent months, likely 
driven by low wages in the sector failing to keep up with inflation and 
wages offered in competing sectors. With low profits and insufficient 
government investment, providers are constrained in how much they can 
raise wages without passing on higher prices to families, who are 
already struggling to afford child care services.

    Together, these factors suggest that hiring in the child care 
sector will continue to lag behind the broader economy. This lag can be 
a drag on reemployment, as we are seeing today: Parents who seek to 
return to work after a period of unemployment must be able to secure 
child care, which will be out of reach without greater public 
investment.

    Indeed, while the United States once held a competitive edge in the 
global economy due to growth in women's labor force participation over 
the past century, that growth has since stagnated, and the labor force 
participation rate in the United States now falls below the average for 
OECD nations. During the first year of the COVID-19 pandemic, when 
families struggled without adequate access to paid leave and child 
care, women's labor force participation fell--hitting a low we haven't 
seen since 1988.

    The child care industry remains in crisis with the supply of good-
quality care too low, the cost of care too high, and child care workers 
earning too little, stopping parents from working and causing pressure 
on family budgets. We need a child care program in which no family is 
asked to pay more than is manageable to ensure that their child is safe 
and nurtured during the work day, that ensures that early care 
educators can focus on the children for whom they care without being 
distracted by their own financial hardship, and that the system has the 
resources it needs to ensure that children are receiving high-quality 
care.

    When the supports we deliver to families to ensure that care is 
adequate meet these benchmarks, when we have built a policy environment 
that values care for all people who need it--whether it's people with 
disabilities who need professional support to fully engage in their 
communities; young children who should be able to grow up in households 
that are economically secure, so that their parents can meet the 
family's basic needs and focus on parenting; or older adults who have 
spent their lives providing care for others and now need support 
themselves--when this happens, we will know that we have sufficiently 
shifted our orientation to care to correct our market failure and allow 
the economy to grow.
                               __________
      Response from Dr. Michelle Holder to Question for the Record
                      submitted by Senator Warnock
    What would the economic ramifications been if Congress failed to 
pass programs such as the CARES Act and the American Rescue Plan to 
support hard-working families during the pandemic? Is there any data 
you can point to that supports your answer?

    The unprecedented speed and size of the American Rescue Plan and 
the CARES Act helped millions of workers and households withstand the 
economic pain brought on by the COVID-19 pandemic in a remarkably rapid 
rebound. The bounce back in Gross Domestic Product, for example, was 
much quicker in the United States than in most other high-income 
countries. The safeguards and subsidies provided to families through 
this legislation provided an effective stop-gap to prevent income 
shocks that can have long-term impacts on workers and households, 
compared to previous recessions in which hard-hit groups faced long-
term poor economic outcomes in earnings and employment even into the 
recovery.

    The prime-age employment rate, one of the best measures we have of 
overall labor market health by looking at workers in their prime 
working years, is now close to its pre-pandemic level. And workers in 
the bottom of the wage distribution have been experiencing real wage 
growth. Labor demand has skyrocketed, giving workers more power to 
negotiate higher pay and better working conditions, including sparks in 
the labor movement.

    As such, job openings in the United States reached a series high 
since data began being collected in 1999, of 11.1 million in July 
2021--an almost 60 percent increase from February 2020--and have 
remained elevated since. The jump in open positions has been 
particularly stark in industries such as leisure and hospitality, which 
declined steeply early in the pandemic, and manufacturing.

    Indeed, the recovery in overall employment has been extraordinarily 
quick, compared to previous U.S. economic downturns. According to 
Moody's Analytics, in a counterfactual scenario in which this fiscal 
response was not provided, real GDP would have fallen 11 percent in 
2020--more than three times its actual decline. The economy would have 
also succumbed to a double-dip recession in early 2021. Without 
government support, jobs lost during the pandemic recession would not 
have been regained until 2026.

    Furthermore, the Federal Government's investment in enhancing 
Unemployment Insurance and expanding the Child Tax Credit bolstered 
family economic security across the socioeconomic spectrum, reduced 
poverty for millions of children, allowed workers to search for jobs 
that matched their skills, and improved the ability of parents to 
invest in their children's critical human capital development. 
Following the unprecedented shock to the labor market caused by the 
COVID-19 pandemic in March 2020, Congress supported workers who lost 
their jobs through enhancements to the existing Unemployment Insurance 
program. The Census Bureau found that in 2020, Unemployment Insurance 
reduced the overall poverty rate by 1.4 percentage points, pulling 4.7 
million people out of poverty. Research also shows that when workers 
access more unemployment benefits, they are able to seek out jobs that 
are good matches for their skills to the benefits of themselves, their 
employers, and the broader economy.

    Then, in 2021, by providing families with monthly income support to 
supplement their own earnings and help offset rising prices, the 
temporarily enhanced Child Tax Credit lifted an estimated 3.7 million 
children out of poverty. It also helped reduce racial disparities in 
household income, as poverty rates fell drastically for Black and 
Latinx children. This temporary policy provides a clear blueprint for a 
successful permanent program.

    While inequities in the U.S. labor market remain persistent, 
employment gains made by Black women and Latina workers suggest the 
recovery efforts are reaching those who are often the last to recover 
from a recession at a much quicker pace than previous recessions. The 
fiscal response to the COVID-19 pandemic is directly responsible for 
the swift recovery we're experiencing today. With economic growth still 
strong, there exists a real opportunity to continue to make government 
investments to ensure the recovery is not just strong, but also 
equitable and thus more enduring.
                               __________
       Response from Dr. Sudip Parikh to Question for the Record
                      submitted by Senator Warnock
    You noted in your testimony, ``There is some evidence that the way 
we fund science is increasingly risk-averse.'' Will you expand on how 
taking ``safer bets'' could lead us to fall behind on the global stage 
and its overall consequences to our economy?

    The United States' commitment to basic science R&D has led to 
greater original ideas and discoveries. Basic research lays the 
groundwork for future scientific and technological development, and it 
often addresses society's largest challenges, such as mitigating 
climate change, curbing antibiotic resistance, or bolstering food and 
water security. It is not a stretch to say that almost every 
technological or medical miracle of today finds its roots in 
fundamental discovery-driven research, often built on decades of work 
that came before. It is the U.S. Federal research agencies--both 
defense and nondefense--that are the primary investor of basic research 
that has fueled this innovation ecosystem.

    As I noted in my written statement, a significant barrier to 
adopting a more dynamic, less risk-averse funding system is funding 
itself. The pressure and competition within the Federal funding system 
reinforces the tendency to go for the sure thing. Safer bets and 
incremental advances may yield positive outcomes, but they risk 
crowding out projects that could bring game-changing rewards.

    A strong and sustained upward funding trajectory can create the 
opportunity to take more risks or pursue greater experimentation--
essentially, it can let us loosen the reins and really try new things. 
It would allow us to stretch our ideas and creativity to the horizon of 
discovery in addition to performing incremental research. For example, 
it would allow us to tackle a significant scientific question by 
funding more than one research project that approach a solution to that 
question in novel ways. That is the innovation strategy that other 
nations are pursuing and why we see the research intensity of countries 
like China scaling up dramatically. These countries are willing to take 
risks by investing heavily in research on critical, emerging 
technologies and implementing effective policies for high-risk, high-
reward research. For example, in China it encourages research proposals 
that steer away from the mainstream. The OECD published a report on 
this subject last year.

    The challenge we face today is political will--and the patience to 
know that spending on high-risk, high reward research does yield 
tremendous results, but often over longer periods of time. That is 
challenging for a legislative body that appropriates on an annual basis 
and operates in a 2-year legislative cycle--but not impossible.
  

                                  [all]