[Congressional Record Volume 150, Number 36 (Monday, March 22, 2004)]
[Senate]
[Pages S2840-S2842]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            ECONOMIC POLICY

  Mr. HAGEL. Mr. President, for those estimated 2.3 million Americans 
who have lost their jobs over the past 3 years, and for those worried 
about keeping their jobs, economic policy is not about abstract 
discussions or theoretical debates. It is about finding and keeping 
steady work at a decent wage. It is about affordable health care, 
buying a home, and sending their children to college.
  We live in a time of dramatic historical change, a transformational 
period. The byproducts of such change are uncertainty, complications, 
instability, and danger, as well as vast opportunities.
  America today, as at the end of World War II, is in a position to 
lead and shape the direction of this 21st century change.

[[Page S2841]]

  America's economic security and prosperity cannot be separated from 
our leadership of the global economy. During periods of uncertainty and 
change, some Americans seek refuge in an insular political tradition 
that, in the past, has contributed to isolationism at home and 
instability abroad.
  After World War I, America pursued an isolationist foreign and trade 
policy that resulted in a weakened international order that led to 
World War II.
  In contrast, after World War II, America's leaders laid the 
foundation for the World Trade Organization and a new global political 
and economic order. As a result, America and much of the world have 
enjoyed historic peace and prosperity for more than 50 years.
  The recent job losses in the United States must be analyzed and 
understood in the context of historic increases in American worker 
productivity, a global decline in manufacturing employment, and the 
changes occurring in the global economy.
  Michael Porter, in his classic work, ``The Comparative Advantage of 
Nations,'' wrote that:

       A nation's standard of living in the long term depends on 
     its ability to attain a high and rising level of productivity 
     in the industries in which its firms compete.

  Between 1997 and 2002, U.S. manufacturing productivity grew by 109 
percent. This remarkable increase in productivity has cost jobs in the 
manufacturing sector. Advances in technology lead to increases in 
productivity which requires fewer workers.
  Former Secretary of Labor Robert Reich recently wrote that despite 
these trends in the manufacturing sector ``this doesn't mean that we 
are left with fewer jobs.'' As a matter of fact, the trend, over time, 
is just the opposite. Advances in technology and gains in productivity 
mean more jobs in high-growth, high-tech, high-paying sectors.
  Robert Samuelson makes the case well when he said:

       Manufacturing employment peaked in mid-1979 at 19.5 
     million; now it's 14.5 million. But over that period, total 
     U.S. employment grew about 40 million, and manufacturing 
     output rose more than 80%. American companies became more 
     productive and shifted to more valuable products.

  The decline in employment in the manufacturing sector is a global 
phenomenon. The same technologies that have enhanced productivity in 
America's manufacturing sector are employed in the manufacturing 
sectors of other countries. For example, while the United States lost 
22 million factory jobs between 1995 and 2002--an 11-percent decline--
Japan lost 16 percent; Brazil, 20 percent; and China, 15 percent.
  The trend we see in manufacturing is the same trend we had seen over 
the past century in agriculture. One hundred years ago, 35 percent of 
Americans worked on a farm or in the agricultural industry. Today, 
because of dramatic increases in productivity due to improving 
agricultural technologies, science, and research, that number is 3 
percent.
  The globalization of technology and productivity has contributed to 
another related issue. Many politicians and the media have recently 
focused on the impact on U.S. employment of U.S. companies outsourcing 
manufacturing and service jobs overseas. Since March 2001, it is 
estimated that more than 1 million jobs in the manufacturing and 
service sectors have been outsourced. The U.S. economy currently has 
139 million jobs and showed an increase of 97,000 jobs in January and 
21,000 jobs last month.
  But outsourcing is not a zero sum loss for America. There are 
benefits for the United States. Outsourcing of some manufacturing 
operations has resulted in lower cost goods for U.S. businesses and 
consumers. The globalization of the information technology sector has 
resulted in a reduction of 10 to 30 percent in the price of computers 
and IT-related products. These reduced costs have contributed to 
increases of 2.5 to 2.8 percent in productivity growth in the United 
States and added at least $230 billion to the U.S. gross domestic 
product.
  Outsourcing cannot be understood as simply the number of jobs shipped 
overseas. It is more complicated. As American companies outsource jobs, 
there are also potential benefits to American businesses and workers. 
Companies can save in profit through the reduced costs gained by 
outsourcing some jobs. With expansion and additional revenues, more 
U.S. goods, services, and equipment are purchased to support those 
outsourced industries. This also contributes to innovation, growth, 
and, over time, better and more jobs for America's most competitive 
industries and technologies.
  Economic growth from outsourcing is not a zero sum gain or loss. Both 
sides gain. Economic growth in other nations creates markets, markets 
capable of purchasing more and more American goods and services.
  For example, Tom Friedman in a recent New York Times op-ed wrote 
about his visit to the 24/7 customer call center in Bangalore, India. 
There he observed that the computers were Compaq; the software, 
Microsoft; the air-conditioning, Carrier; and the drinking water 
distributor, Coca-Cola. And 90 percent of the company's shares were 
owned by U.S. investors.
  As attention is focused on the negative implications of outsourcing 
to India, often overlooked are the advantages to America's economy. 
American exports to India have grown from $2.5 billion in 1990 to $4.1 
billion in 2002.
  The larger picture is instructive because it guides our policy 
choices. Meeting the demands of a global economy requires maintaining 
America's leadership in free trade, expanding programs to retrain those 
workers who lose their jobs, and educating the next generation of 
Americans about what it will take to compete in a more competitive 
global economy.

  As Federal Reserve Board Chairman Alan Greenspan recently remarked to 
the Greater Omaha Chamber of Commerce:

       The loss of jobs over the past three years is attributable 
     largely to rapid declines in the demand for industrial goods 
     and to outsized gains in productivity that have caused 
     effective supply to outstrip demand. Protectionism will do 
     little to create jobs; and if foreigners retaliate, we will 
     surely lose more jobs. We need instead to discover the means 
     to enhance the skills of our workforce to further open 
     markets here and abroad to allow our workers to compete 
     effectively in the global marketplace.

  The expansion of free and fair trade will continue to be the most 
assured path for prosperity and job creation. Trade does not cost 
American jobs. Free trade has been an engine of economic growth, 
innovation, wealth, and job creation for the United States since World 
War II.
  The value of American exports grew substantially between 1994 and 
2003, from $703 billion to more than $1 trillion. More than 18 million 
new jobs were added to the economy because of trade. U.S. exports 
during the 1990s accounted for 25 percent of the growth in America's 
economy. Exports today support more than 12 million directly related 
jobs that pay as much as 18 percent more than the average national 
wage.
  In 2003, U.S. exports of advanced technology totaled $180 billion. 
Meanwhile, in America's high tech electronics sector, exports exceeded 
$100 billion annually between 1997 and 2003, showing that America 
continues to maintain its leadership in cutting edge technologies, a 
source of more and better paying jobs for Americans in the United 
States.
  American consumers and businesses also gain from trade through lower 
priced imports. Lower import prices mean increased purchasing power for 
consumers. As U.S. Trade Representative Robert Zoellick noted last year 
in testimony before the Senate Committee on Finance:

       By lowering prices through imports and increasing incomes 
     through trade, America's newest trade agreements will build 
     on the success of the North American Free Trade Agreement and 
     the Uruguay Round, which together already provide the average 
     American family of four with benefits amounting to $1,300 to 
     $2,000 each and every year.

  If consumers have more money, American businesses benefit from 
greater consumer demand, consumer demand for their businesses, their 
products, and their services. Businesses and entrepreneurs, therefore, 
have more resources to invest and spend and expand on plants, creating 
more jobs in the United States. Expanding free trade and fair trade 
also encourages foreign companies to invest and set up operations in 
the United States. Foreign-owned firms currently provide 6.4

[[Page S2842]]

million jobs throughout the United States.
  The North American Free Trade Agreement is testimony to the impact of 
expanded free trade for American jobs, growth, and prosperity. Since 
NAFTA's implementation, total trade among the United States, Mexico, 
and Canada has more than doubled from $306 billion in 1993 to $621 
billion last year. That is $1.7 billion in trade every day between our 
trading partners to the north and south.

  U.S. exports to Canada and Mexico have grown from $142 billion to 
$263 billion over these 10 years. U.S. exports to Mexico of cars and 
trucks totaled about $3.3 billion in 2003. That is an increase from 
exports of approximately $165 million in 1993.
  My State of Nebraska has directly benefited from increased trade and 
specifically from NAFTA. Nebraska's worldwide exports in 2003 were in 
excess of $2.7 billion. Mexico and Canada are Nebraska's largest export 
markets. Nebraska's exports to Mexico and Canada in 2003 were valued at 
over $1.2 billion. From 1999 to 2003, Nebraska's trade with Mexico 
increased by 87 percent and trade with Canada by 28 percent.
  Americans know that changes in the global economy lead to 
dislocations in domestic workforces. Dislocations are painful. They are 
difficult. No one wants to lose a job. Americans need retraining 
programs and education programs that address these global economic 
adjustments.
  Former Secretary of Treasury Robert Rubin has written in his recent 
book ``In An Uncertain World''

     . . . trade must be accompanied by effective programs to help 
     dislocated workers find new places in our economy. This is 
     not only fair, but will contribute both to productivity and 
     to political acceptance of trade liberalization.

  Many Americans who lose their jobs, especially jobs in the 
manufacturing sector, require assistance and retraining to find new 
work. In 2002, Congress spent $12 billion on 44 Federal programs, which 
helped 30 million Americans with job search assistance, employment 
counseling, and vocational training.
  These Federal programs include those authorized through the Trade 
Adjustment Assistance Act, the Workforce Investment Act, National 
Emergency Grants, and State-run worker training programs.
  These programs have helped and are helping displaced workers all over 
the country. In fiscal year 2004, approximately $1.3 billion will be 
spent on these benefits and programs of the TAA program alone.
  TAA programs have provided job training, as much as 130 weeks of 
unemployment compensation, monetary allowances for job searches and job 
relocation, tax credits for health insurance, and wage insurance.
  The greater longer view challenge for America is to ensure our 
students have prepared for the competitive global economy of the 21st 
century. America's universities are the best in the world.
  The global demand for what Secretary Reich has called the ``symbolic 
analytic'' sector professionals--research and development, design 
engineering, law, finance, medicine, and other fields--should and must 
remain high. It is in America's interest to maintain our leadership in 
these areas. As Secretary Reich puts it:

       America's long-term problem isn't too few jobs. It's the 
     widening gap between personal-service workers and symbolic 
     analysts.
       The long-term solution is to help spur upward mobility for 
     all workers by getting more Americans a good education, 
     including access to college.

  The trends in this area should be monitored carefully. For example, 
in 2002, 58 percent of all degrees awarded in China were in engineering 
and physical sciences. In the United States, only 17 percent of degrees 
awarded were in these fields. America's security and vitality depend on 
policies that are based on the strengths of America, not its 
insecurities. Adjusting to the global economy requires immigration 
policies that consider those seeking to live and work in the United 
States as assets and not burdens on our national economy. Daniel 
Henninger recently wrote in the Wall Street Journal:

       The global migration of human labor, on which there is 
     little organized data, is perhaps the most powerful force on 
     the globe today.

  Many politicians and commentators have portrayed immigration as a 
threat to American workers. But immigration is a vital part of 
America's strength. Throughout our history, immigration has played an 
important role in our economy. Free trade also directly affects 
American interests in promoting stability, security, and democracy in 
other nations. By pursuing free and fair trade, and by encouraging 
business and investment practices that contribute to more open 
societies at home and abroad, we are establishing partnerships with 
developed and developing nations that help make a more peaceful and 
prosperous world. That is in the interest of all nations, of all 
people, and certainly of America.
  Countries that trade with each other are less likely to go to war 
with each other. We are all shareholders in this enterprise. We all 
have a stake in its success. American leadership in free trade will 
over time reduce America's security commitments abroad, allowing a 
reduction in American peacekeeping, nation building, and force 
protection, thus saving American lives and dollars.

  The tough economic choices ahead will require leadership, vision, and 
courage. American leadership in the global economy will depend on 
confidence at home and abroad. Investor confidence is a catalyst for 
job creation. Excessive Federal deficits and a looming crisis in 
American entitlement programs can and surely will undermine our fiscal 
credibility and our economic leadership.
  The Federal deficit for fiscal year 2004 is now projected to be a 
half trillion dollars. In 2035, 75 million Americans will be over 65 
and entitled to Social Security and Medicare. That is double the number 
of Americans eligible today. Where will the money come from? It will 
come from economic growth, which will be driven by world affairs and 
trade, and American international leadership. To lead in the 21st 
century, America must combine fiscally responsible policies with a 
commitment to trade. Our economic policies will influence and affect 
the shape of America's domestic policies and programs, as well as 
political reform and change throughout the world.
  Now is not the time to retreat from our commitment to free trade, 
market economies, and democratic reforms. Since World War II, America 
has been the primary architect and leader of a global economic order 
that has provided the structure for unprecedented growth and 
opportunity both at home and abroad. Our economic policies, like our 
domestic and foreign policies, are about the limitless potential of all 
human beings. Trade is not a guarantee; it is an opportunity--an 
opportunity to compete and make a better world for all people.
  Mr. President, I yield the floor and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant journal clerk proceeded to call the roll.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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