[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[Senate]
[Pages 17031-17035]
[From the U.S. 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

[[Page 17032]]

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 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.

[[Page 17033]]

  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.
  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

[[Page 17034]]

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 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 a 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

[[Page 17035]]

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.

                          ____________________