[Congressional Record Volume 148, Number 118 (Wednesday, September 18, 2002)]
[Senate]
[Pages S8711-S8714]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE STATE OF ECONOMIC SECURITY
Mr. DASCHLE. Madam President, we had a very good discussion this
morning with the President talking about national security in several
contexts--of course, the war on terror and the important challenges
this country faces in continuing to make this country and the world a
safer place in which to live. The arrests over the weekend and the
cooperation we got from Pakistan ought to be particularly noted, and we
ought to thank the Government of Pakistan for their cooperation. We
talked about that this morning.
We talked about Iraq and the threat it poses to us. We talked about
the need for cooperation when dealing with the threats posed by Iraq,
not only within the Congress and the country, but in the international
community. So we had a very good discussion about national security,
and I believe it ought to be uppermost in the minds of all people, and
certainly the Congress as we continue to complete our responsibilities
in the second session of the 107th Congress.
Let me also say, just as we properly recognize the threat that exists
in more traditional national security areas, we, as a country and
particularly as a government, would be remiss in our responsibilities
were we not to address economic security, were we not to recognize the
peril this country is in economically, So, in addition to acknowledging
the importance of our defense activities, I also wanted to come to the
Chamber this morning to express my concern for the lack of attention
paid to the state of economic security, to express the concern that
many of us have with regard to what has been a very unfortunate, some
would even say tragic, economic trend in this country over the course
of the last 18 months.
I have a number of charts that reflect more graphically some of these
concerns, and I want, if I may, to walk through some of them at this
time.
If we look at the record of this administration over the past 18
months, perhaps it is best summarized in the very first chart: Record
job losses; weak economic growth; declining business investment;
falling stock market; shrinking retirement accounts; eroding consumer
confidence; rising health care costs; escalating foreclosures;
vanishing surpluses and higher resulting interest costs; raiding the
Social Security trust fund; record executive pay; and stagnating
minimum wage.
If you were going to use the shortest list with the greatest concern,
this chart is it.
Let me go through many of these individual concerns a little more
thoroughly. Over the last 2 years--actually
[[Page S8712]]
the last 18 months--we have lost 2 million jobs--private sector jobs in
this country.
If there is any one criteria that would, more than any other,
illustrate the health of the economy, it would be job growth. If the
economy is growing, jobs are going to be there. If it is contracting,
if the economy is weak or contracting, the jobs will not be there. We
have lost 2 million jobs in 18 months.
People might say: Well, that just happens; other administrations have
lost jobs.
If you wanted to go back and look at what other administrations have
actually done, you would probably have to go all the way back to the
1930s to see the last time in our Nation's history when we last
witnessed a loss in private sector jobs over the course of the life of
an administration. Private sector jobs during this administration have
declined by 1.2 percent on an average annual basis.
Over the last 50 years, in every administration since Dwight
Eisenhower, we have seen private sector job growth. It was not much in
the Eisenhower administration. It was even less under the first Bush
administration. And we have seen remarkable job growth on three other
occasions--the Johnson administration in the 1960s, the Carter
administration in the 1970s, and the Clinton administration in the
1990s.
What have we seen in the first few years of the current
administration? We have actually seen a decline in the number of
private sector jobs for the first time in 50 years.
One can look at it another way. It is not only how many jobs are
lost. It is also important to see how many people have been trying to
find jobs for long periods of time and have been unable to do so, those
who have been out of work for more than 6 months, the so-called long-
term unemployed. Some who lose their job are able to quickly find
another one. For those who are unable to do so, such as those who fall
into the category of long-term unemployed, we continue to come to this
Chamber and press for the passage of unemployment compensation
extensions.
In January of 2001, the number of long-term unemployed was 648,000.
In August of this year, that number had more than doubled to 1,474,000
people. That is also one of the most tragic figures. There is a human
story behind every one of those numbers. Not only is that individual
unemployed, but most likely that person and perhaps their family are
without income. Most likely it is a family trying to survive on what
meager unemployment compensation they have, looking for odd jobs, doing
whatever they can to make ends meet. And today you have more than 1.4
million people who have suffered as a result of this administration's
economic policies for the last 18 months.
The larger picture beyond employment that is frequently used to gauge
the performance of the economy is the change in our real gross domestic
product. That is probably the most traditional economic indicator for
assessing the strength of the economy. In the first 18 months of this
administration, the economy has grown by 1 percent. The rate of growth
was twice that figure under the first Bush administration. But those
are the two lowest economic performances, the most meager economic
performances we have seen in the last 50 years. President Eisenhower
had economic growth of 2.4 percent; Kennedy, 5.4 percent; Johnson, 4.9
percent; the Clinton administration, 3.6 percent. We have seen growth,
fortunately, in every administration.
But in all those administrations with all the economic ups and downs
we have seen, it is clear this administration has the worst performance
in terms of real economic growth that we have seen in the last 50
years. That anemic economic performance has had huge consequences in
national terms as well as in personal terms for American workers,
American businesses, American investors, and American pension holders.
This chart shows what has happened to the value of investments at the
New York Stock Exchange and the NASDAQ stock market under this
administration. When this administration took office in January, 2001,
the overall market value, the market capitalization in those two
markets alone, was $16.4 trillion. That was an all-time high. We had
never seen anything close to that level. Under the Clinton
administration, the markets had been booming. We saw growth in an
unprecedented way.
We expected, everyone expected, that growth to continue. But that is
not what happened. What happened, instead, was over the last 18 months
that $16.4 trillion pie has now shrunk to $11.9 trillion. We have lost
$4.5 trillion in market capitalization just in 18 months.
I defy anyone to find a record more abysmal when it comes to overall
market valuation that is even comparable to the enormous loss we have
seen in just the past 18 months.
It goes beyond that. If you look at an individual worker's retirement
savings--that is what we are talking about when we talk about the loss
of market capitalization--the impact is profound. If that worker had a
$100,000 retirement fund invested in the market in 2001 and kept it
there during the 18 months this administration has been in office, that
loss in market capitalization would mean the worker saw the value of
his retirement savings decline by more than $31,000. In other words,
the worker in just 18 months has lost nearly a third of the nest egg he
was counting on for the balance of his retirement, all of their
retiring years. One-third of his retirement savings meant for a life
time, gone in 18 months.
Not surprisingly, this shrinkage in market capitalization has had a
profound effect on pensioners. It is why, when I was home over both the
Fourth of July and August recesses, I was amazed to hear how frequently
people came up and said, Tom, you know, I just saw my latest statement
regarding my retirement. I think there was a mistake. I cannot believe
what has happened. The value of my pension has declined precipitously.
This is a shock to us all. You have to do something.
These large economic numbers have large financial consequences for
people in South Dakota and all over this country who believed if they
regularly contributed to their retirement investment accounts, they
would have retirement security. That security is not there today, a
mere 18 months after this administration took office.
Again, how does that compare? Some will say: Ups and downs in the
market are just a way of life; those are cycles; accept the cycles;
that is the way it works. However, if you look at the average annual
change in the value of the market, you have to go back a long time to
find a period where the performance is as bad as what we are witnessing
now.
During the Nixon administration, we lost approximately 5 percent in
the S&P 500 account. You have to go all the way back to Herbert Hoover
to see a performance in the Standard & Poors 500 equal to what we are
experiencing right now. We saw a 30 percent decline under Herbert
Hoover as compared to the 20 percent in the first 18 months of this
administration. And this administration's watch is still ticking; that
one is over.
But look at all the other years, all the other administrations, all
the other record performances, all the other economic strategies. It
grew 15 percent in the Clinton administration; it grew 14 percent in
the Ford administration; it even grew in the Coolidge administration.
But if I had to pick one chart that compares economic performance, I
cannot think of a more graphic illustration of how terrible this
economy truly is and how poorly our markets are performing and how
little confidence there is in the economic strategy of this
administration.
Again, I come back to what does this all really mean to the working
family, to that rancher or farmer or small businessman, or to that
hard-hat worker or blue-collar worker who comes to me in South Dakota?
We have seen that meager economic growth and a collapsing stock market
means fewer jobs, more unemployment, and less retirement security. But
what has happened to the costs of their basic goods and services?
Workers' payments for health insurance provides an excellent example
of how strapped these people are. In just the past 18 months since this
administration took office, the cost of an average family's health
insurance coverage, a basic need for all families, has gone up 16
percent. Single coverage has gone up 27 percent. That is the kind of
record we are talking about.
[[Page S8713]]
We can move this to other aspects of health care. We see a similar
trend when we look at the rising cost of prescription drugs. While the
Consumer Price Index has gone up 1.6 percent since this administration
took office, the cost of prescription drugs has grown by 5.7 percent,
almost four times greater than the overall inflation rate.
We also have seen something else we never thought we would see a
dramatic increase in the number of foreclosures. A number of our
colleagues have followed this even more closely than I have and have
noted we are not just talking here about minimum wage workers when we
talk about foreclosures. We are not just talking about people at the
lowest end of the economic scale. What has happened is a phenomena we
have not seen in a long time in this country. Middle-class workers,
people with good incomes when working, are watching their mortgages
foreclose. The thousands of layoffs have caused an increasing number of
them to suffer in another way, the personal pain of losing their home.
At the end of last year, 1.15 percent of mortgage loans were in
foreclosure. By the second quarter of this year, that number had grown
to 1.63 percent, an increase that affects not only lower income workers
but workers across the economic scale.
Another tragic aspect of this administration's economic policies can
be seen when we look at its impact on our fiscal circumstances. We have
talked about market capitalization. We have talked about the loss of
jobs. We have talked about the economic pain our working families are
feeling as they see their own pension security come down. As they see
unemployment rolls go up, as they see the long-term unemployed numbers
continue to climb, as they see all of that on one side and higher costs
for health care and prescription drugs on the other, they ask why.
How in the world could all of this happen in such a short period of
time? There are a lot of answers to that question. But if I could point
to one in particular, it would be this. If there is one reason we have
seen the dramatic turn in such a short period of time, the historic
turn in the economy, it is the unprecedented reversal in the federal
government's fiscal picture. When President Bush took office, the
Congressional Budget Office projected a $5.6 trillion surplus. As a
result of what the President has signed into law or is currently
proposing, the surplus projection becomes a $400 billion deficit. What
does that do to economic confidence? What does that do to market
capitalization? What does that do to long-term projections? To long-
term interest rates? What does that do to the overall psychology in the
economy, to see this precipitous a decline?
I was talking to a journalist the other day, about what history will
say about the last 2 years. I hope to have something to say about the
way it is written. I am excited about a project I am working on in that
regard. But he said, as we consider all of the historic moments of the
last 2 years, the one that he believes has the greatest consequence for
our country is the President's tax cut proposal. You know, a lot of
people would argue he was right. The tragic set of financial and
economic circumstances we are witnessing today, is directly connected
to the tragic decline in our fiscal circumstance.
This can be illustrated another way. At the beginning of last year,
CBO projected the publicly held debt would be $36 billion by the year
2008. In fact, members actually came to the Senate floor to argue we
were paying down the debt too quickly, and we would pay a price for
having done so. Let me say that problem is no longer a concern. There
is no way we are going to have to worry about paying off anything too
quickly because in the space of 18 months that projection has grown
from $36 billion to the new projection issued last month of $3.8
trillion. That is the record.
We have gone from a projected $5.6 trillion surplus to a $400 billion
deficit and from $36 billion in projected debt by 2008 to $3.8
trillion. What a tragic, deplorable, abysmal set of circumstances for
us to find ourselves in as we close out this session of Congress.
The Bush economic record could be also described in terms of what it
costs us. You can talk about deficits. You can talk about all the
economic impact that deficit may have, the accumulated debt. But
practically speaking, what it really means is that we have to pay
hundreds of billion in additional interest costs. It is thievery. It is
robbery. Increased interest payments steal from the very heart and soul
of the commitments we have to make, as a country, to national defense,
to education, to housing, to infrastructure, or to additional tax cuts.
In short, these costs take away resources from all of national
security, economic, and environmental priorities facing our nation
today. They are all robbed by the fact that we have to pay $1.9
trillion in interest costs over the next 10 years. When this
administration took office, we thought we were only going to have to
pay $620 billion. Since this administration took office, we have gone
from $620 billion in interest costs to $1.9 trillion. And every dollar
was either going to be dedicated to Social Security or dealing with the
investments we as a country must make, or in tax cuts, the need for
which both sides have talked about.
When you talk about what the historic fiscal reversal means in real
terms, it is higher interest costs, it is lack of an opportunity to
invest in national defense, education, and health.
But here is the real story. We all promised--I will bet there is not
a Senator in this Chamber who did not say: We are going to put Social
Security first; who did not rise to the standards set by the past
administration in saying to the country: Whatever else we do, we are
going to protect Social Security.
In fact, President Bush had a Web page. I haven't looked recently to
see if it is still there. But the President made a solemn pledge on
that Web page: I will never take a dollar of your Social Security trust
funds.
Here we are. We had a commitment in January of 2001 that we were
never going to touch those Social Security dollars. We find ourselves
now, in August of 2002, having already committed $2 trillion of the
Social Security trust fund--$2 trillion, and we are not finished yet.
That number is going to continue to grow. If current economic trends
continue and we enact the President's tax and spending proposals, there
is no doubt we will be spending even more of the Social Security trust
fund. What is the President's solution? Mr. President, President Bush's
solution appears to be pretty clear. There is not any other solution I
have heard this administration talk about. They have one all-purpose,
economic antidote to everything, and that is tax cuts--tax cuts largely
dedicated to those at the very top. The only thing I have seen the Bush
administration fail to suggest a tax cut for, so far, is the drought.
Except for the drought, I can't think of another serious problem this
country faces where the administration has offered up a tax cut as the
solution.
Let's look a little bit at the tax cut proposed by this
administration. The Bush economic record already is very clear. This is
already on the books. This is what is going to happen. The tax cuts
that have been enacted so far favor the very wealthiest of Americans.
If you are in the lowest 20th percentile, with an average income of
$9,300 a year, your average annual tax cut was $66. We have a lot of
South Dakotans in that category.
If you are in the second 20 percent, with an average income of
$20,000--and I would say that is the majority of South Dakotans, the
overwhelming majority--you get $375 a year.
If you are in the upper brackets in my State, making somewhere around
$40,000, your tax cut was $600 a year.
If you make $56,000--now we are getting into pretty rare air here in
my state--you get a tax cut of about $1,000. If you make about $100,000
year, you get a tax cut of $2,000. If you make $210,000--there are not
many of those in South Dakota--you get a tax cut of $3,345.
If you make an average of $1.1 million a year and you are in that top
1 percent, you get a tax cut of $53,000, an amount that is actually
twice the average income of the people in the State of the Presiding
Officer, South Dakota.
These are the beneficiaries. A lot of these people make a lot more
than $1 million a year. They make $700 million, $148 million, $127
million, down to $23 million a year. Look at all those names
[[Page S8714]]
and all that money, and you know where their friends are. You know who
their defenders are.
(Mr. JOHNSON assumed the Chair.)
Mr. SARBANES. Will the Senator yield for a question on that chart
momentarily?
Mr. DASCHLE. I am happy to yield.
Mr. SARBANES. If I understand this chart, if you are in the top 1
percent of the wealthiest Americans, under the President's proposal you
would receive a tax cut that would equal the income--not the tax cut--
of approximately six earners in the lowest 20 percent of the income
scale. In other words, the people in that income scale have an average
income of about $9,000 year, as I understand the chart. They would get
a tax cut of $66 a year. They get $9,000 in total income, while the
upper 1 percent will get a tax cut just shy of $54,000. The tax cut
alone is equal to the earnings of six people in the bottom 20 percent
of the income scale.
Is that correct?
Mr. DASCHLE. The chairman of the Banking Committee has put his finger
on exactly what it is we are trying to focus on here--the disparity and
the extraordinary maldistribution this tax cut represents. There is an
unbelievable disconnect here between those at the lowest end who have
already seen cuts in education and health care, declines in their
retirement accounts, and who are probably in many cases working three
or four minimum wage jobs, attempting to make a living. They get a $66
tax cut. Those making an average of $1.1 million a year get a tax cut
of more than $53,000. In fact, some in this category make more than
$700 million a year and who knows the size of the tax cut these people
would get?
The sad thing is--and the Senator from Maryland makes such a good
point--that those people who have virtually no tax cut available to
them are the very ones who have seen their purchasing power decline.
Since 1997, we have seen the real earnings of full-time minimum wage
workers, over half of whom are women and heads of households, decline
from $11,560 to $10,300. But can we get a minimum wage vote on this
floor? Can we get the kind of support on a bipartisan basis required to
deal with this situation? No. We can get the support for that $53,000
tax cut for the top 1 percent. But I can't find the Republican support
nor the administration support and leadership required to deal with
this extraordinary and sad consequence of the government's inaction on
the minimum wage.
Mr. CORZINE. Mr. President, will the leader yield for a question?
Mr. DASCHLE. I would be happy to yield to the Senator from New
Jersey.
Mr. CORZINE. Did I hear the leader suggest that we are talking about
taking $2 trillion out of the Social Security trust fund to fund the
other things that are going on with regard to economic policy? If I am
not mistaken, I think I saw a chart that projected $2 trillion and how
we would utilize the Social Security trust fund. I think those are
payroll taxes from working Americans from all walks of life.
Then, if I am not mistaken, as I looked at your chart where the tax
cuts are actually going, it would appear to me that we are using the
Social Security trust fund to fund tax cuts for those at the very high
end of the marginal tax brackets.
Is my analysis from looking at your charts correct? Does the leader
have a comment on that?
Mr. DASCHLE. The distinguished Senator from New Jersey makes a very
good point. Probably no one can make that point with greater
credibility than can he.
Let me just simply compare this chart. You have seen an increase in
the draw down of the Social Security trust fund. We have actually spent
$2 trillion of Social Security. We put those resources into this tax
cut, providing $53,000 per year to the top 1 percent of income earners
in this country. You have seen an income transfer from those paying
payroll taxes--largely at the lower end of the income scale--to those
at the upper end of the income scale. This represents an income
transfer in the opposite direction from poor working people to those at
the very top.
Mr. CORZINE. If the leader will bear with me a second, if we look at
the table he has with regard to the second level, it looks as though
some of the individuals who will benefit the most from this tax cut--it
is almost inconceivable that we are using payroll taxes for men and
women at WorldCom and Enron. It is just hard to believe.
Mr. DASCHLE. I know the Senator from New Jersey remembers this. But I
recall the House passed their economic stimulus package, and part of
that package included a $254 million retroactive tax cut for Enron. The
administration saw no problem with that. Our Republican friends were
anxious to vote for it. In fact, when we stopped it, we were called
obstructionists. But that was the kind of obstructionism that stopped
Enron from getting $254 million from their taxes.
To summarize, what ought to be going up is coming down and what ought
to be going down is coming up. What ought to go down is the raid on the
Social Security trust fund. It is going up. What ought to go down are
interest costs, but they are going up. What ought to go down is the
national debt, but it is going up. What ought to go down are
foreclosures, health care costs, and job losses, but they are going up.
What ought to go up--economic growth--is going down. What ought to go
up is business investment, the market, retirement accounts, consumer
confidence, and the minimum wage. They ought to go up. But in these
last 18 months, every single one of these factors has gone down.
This will be the subject of a lot more discussion, debate, and
hopefully illumination over the course of the next several weeks and
months. But we have to change these arrows. We have to ensure that
economic growth goes up. We have to ensure that the stock market,
retirement accounts, pension funds, consumer confidence, and the
minimum wage go up. We have to do what we did in the 1990s--have an
economic performance that gives people the sense that they can live in
dignity and in confidence, knowing their retirement accounts and Social
Security checks are going to be there.
We have to end the job loss, deal with health care costs, and make
sure we reduce the raid on the Social Security trust fund.
I hope Republicans and Democrats can do for economic security what we
are attempting now to for our national security--recognizing that this
won't change unless we do it together, and recognizing that while this
national security issue dealing with Iraq may be accomplished with one
resolution, it is going to take a lot more than one resolution to turn
our economy around. It is going to take the same kind of discipline we
demonstrated in the 1990s. It is going to take the same kind of
commitment on a bipartisan basis for these issues to be addressed, and
a lot more consequential.
As busy as we are and as important as the effort on Iraq is, I hope
this administration will dedicate some of its time this week to
economic security as well, to these declining numbers, to this
atrocious record, to a recognition that it takes leadership not only
with regard to international and foreign policy but leadership here at
home and economic policy as well. We haven't seen it to date, and the
time has come for leadership on this as well.
I yield the floor.
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