[Congressional Record (Bound Edition), Volume 148 (2002), Part 15]
[Extensions of Remarks]
[Pages 21234-21236]
[From the U.S. Government Publishing Office, www.gpo.gov]




               ECONOMIC STEWARDSHIP? ARE YOU BETTER OFF?

                                 ______
                                 

                         HON. JAMES L. OBERSTAR

                              of minnesota

                    in the house of representatives

                       Thursday, October 24, 2002

  Mr. OBERSTAR. Mr. Speaker, as we return home to our Congressional 
Districts, I believe

[[Page 21235]]

that each of us should ask our constituents a slightly modified version 
of the question made famous by former President Ronald Reagan: ``Are 
you better off than you were two years ago?'' Clearly, we are not. The 
economy, under the stewardship of the House Republican Leadership and 
the Bush Administration, is faltering. In just two short years, we've 
gone from creating millions of new jobs to losing our many gains; from 
enjoying a budget surplus to projecting mounting deficits; from 
addressing the backlog of infrastructure needs to losing more ground.
  And we should expect our constituents to ask us: What are your plans 
to revitalize our economy and solve the most pressing domestic problems 
facing our Nation? The response of the House Republican Leadership and 
the Bush Administration can be summed up simply: tax breaks for the 
rich. And when that doesn't work, more tax breaks for the rich.
  House Democrats have a different economic plan, one that takes 
proactive measures to protect existing jobs and create new family-wage 
jobs. Today, I would like to talk about the state of the economy and a 
Democratic economic renewal plan. In particular, how one element of the 
Democratic plan, infrastructure investment, could undo much of the 
damage that the House Republicans and the Bush Administration have done 
to the economy and how the House Republican Leadership has prevented 
action on legislation to make new investments in our Nation's 
infrastructure and create family-wage, construction jobs.


                      Current State of the Economy

                        Increasing Unemployment

  While most of today's headlines focus on the stock market collapse, 
the market's performance is only symptomatic of the more fundamental 
decline in our Nation's economic well being during the past two years. 
For many Americans the macroeconomic problems of stock markets, budget 
deficits, and Social Security funding issues can be beyond 
comprehension because the numbers are simply too big to seem real. 
Also, the consequences, while scary, are uncertain and perhaps not 
immediate. But one measure of economic performance that virtually all 
Americans can relate to, arguably the most important measure, is the 
loss of a job.
  In January 2001, when President Bush took office, there were fewer 
than 5.7 million Americans unemployed. Less than two years later in the 
summer of 2002, after adjusting for seasonal variations, roughly 7 
million Americans were looking for jobs--a 23-percent increase in the 
number of Americans unemployed. During the eight years of the Clinton 
Administration, our economy created more than 22 million new jobs. 
During just one year of the Bush Administration, our economy lost 2.4 
million jobs. And as new jobs become more difficult to find, the 
periods of unemployment are getting longer, resulting in dire 
consequences for many American families. Roughly 1.5 million Americans 
have exhausted their state unemployment compensation benefits. Mortgage 
foreclosures are at an all-time high, as both middle class and working 
class Americans watch the dream of home ownership slip away.
  Economic dislocations are never evenly distributed around the Nation. 
Some regions and some groups are always more severely affected than 
others, and it is usually the working class that suffers most. The 
current situation is no exception. I want to focus on one area of 
economic activity where many Americans have been particularly hard 
hit--nonresidential construction. The Commerce Department recently 
reported that spending for new construction fell 0.4 percent in August 
as nonresidential construction activity hit a six-year low. 
Unemployment in this construction sector has swollen by more than 50 
percent from roughly 540,000 unemployed construction workers in January 
2001, to 824,000 in July 2002.

                         Stock Market Collapse

  The most widely reported element of the current economic malady is, 
of course, the collapse of the stock market. The loss in value is 
unprecedented--40 percent of the market's value, $4.5 trillion, has 
been wiped out. Many people who were planning to retire based on 
savings in their 401(k) accounts and other investments made in the 
eight years of prosperity under the Clinton Administration have now had 
to abandon those plans.
  Perhaps most disturbingly, despite the stock market collapse, the 
House Republican Leadership and the Bush Administration continue to 
tout privatization of Social Security and a greater reliance on 
individual investments in the stock market as the key to reforming the 
Social Security System. The folly of placing the social safety net that 
millions of older Americans rely on in the stock market should now be 
evident even to the most ardent supporter of privatization. Yet the 
Republicans persist.
  The Republicans have several plans for privatizing Social Security. 
However, to make their plans work they must either cut benefits or 
divert trillions of dollars from other programs--other programs that, 
in all likelihood, are targeted to benefit poor and working class 
Americans. According to one study, senior citizens, surviving spouses, 
and people with disabilities would see benefit cuts of between 30 and 
46 percent annually under the Republican proposals.


Republican Leadership and Bush Administration Response: Tax Breaks for 
                              the Wealthy

  The Administration's response to the declining economy has been the 
usual Republican panacea of cutting taxes for the wealthiest Americans 
and hoping it trickles down to the rest of the population. While many 
Americans got a check for $300 last year, the true beneficiaries of the 
Republican tax cut are those households making more than $370,000 per 
year, who will get an average benefit of more than $50,000 per year.
  These are not modest tax breaks. The long-term size of the Republican 
tax break package is more than double the entire long-term Social 
Security shortfall. The present value of the Social Security shortfall 
over the next 75 years is $3.7 trillion--less than one-half of the $8.7 
trillion that the Republican tax breaks will cost the Treasury.
  A recent Brookings Institution assessment of the Republican tax break 
package concluded that it would reduce the size of the future economy, 
raise interest rates, and make taxes more regressive. The assessment 
concluded that the Bush tax package was fiscally unsound and 
unsustainable even before the economic downturn and the September 11 
terrorist attacks--so much for Republican fiscal discipline.
  At the same time, President Bush, in his fiscal year 2003 Budget 
Request, proposed an $8.6 billion, or 27 percent, cut in our Nation's 
highway infrastructure investment, which would cost the economy more 
than 360,000 good-paying jobs.


         Impact on the Federal Budget: Eliminating the Surplus

  Instead of surpluses, the Republican Leadership and the Bush 
Administration are running ever-larger Federal deficits as far as the 
eye can see. Under the Bush Administration, the projected Federal 
budget for the next decade (2002-2011) is in the midst of a $5.3 
trillion swing in the wrong direction. A projected $5.6 trillion 
surplus has dwindled so that the Congressional Budget Office (CBO) now 
forecasts only a $336 billion surplus--all of which is in the Social 
Security Trust Fund. Excluding Social Security surpluses, CBO projects 
a $2 trillion budget deficit over the decade compared to the $3.1 
trillion surplus projected just last year--and that is before the long-
term consequences of President Bush's tax breaks or increased defense 
spending are factored into the equation. If we add these additional 
expenses to current budget estimates, the Federal budget will show a 
cumulative deficit of $3.2 trillion for the coming decade.
  The Republicans pledged that they would protect Social Security--but 
they have violated that pledge. The Republican Leadership has passed an 
economic plan that diverts $2 trillion from Social Security into other 
non-Social Security initiatives. If Congress continues these Republican 
policies, over the next decade, we will consume the entire Social 
Security Surplus, all of the Medicare surplus, and add at least a 
trillion dollars to the national debt.


         A Democratic Economic Plan: Infrastructure Investment

  Instead of passing tax breaks for the wealthy, the Republican 
Leadership and the Bush Administration could have developed a 
bipartisan plan to use the surplus to invest in our Nation's 
infrastructure, shore up the Social Security Trust Fund, and pay down 
the national debt. In less than two years, the Republican Leadership 
and the Bush Administration have squandered each of those 
opportunities.
  Unlike the Republicans and their ``trickle down'' approach to the 
economy, the Democrats have proposed a program to stimulate the economy 
by creating jobs--especially jobs in nonresidential construction--and 
rebuilding our Nation's infrastructure. One year ago today, the 
Democrats on the Committee on Transportation and Infrastructure 
introduced H.R. 3166, the Rebuild America: Financing Infrastructure 
Renewal and Security for Transportation Act (``Rebuild America FIRST 
Act''). The Rebuild America: FIRST Act would have provided $50 billion 
to enhance the security of our Nation's infrastructure, including 
improvements to rail, highway, transit, aviation, maritime, water 
resources, environmental, and public building infrastructure. Moreover, 
by leveraging Federal infrastructure investments, the 10-year cost to 
the Federal Treasury would be less than $32 billion.

[[Page 21236]]

  According to the U.S. Department of Transportation, each $1 billion 
in new highway infrastructure investment creates 47,500 jobs and $4.5 
billion in economic activity. The Democratic infrastructure investment 
and security bill would have created more than two million jobs--
virtually eliminating the job losses that have occurred since this 
Administration came into office--and restored more than $200 billion to 
our economy. Moreover, in the wake of the September 11, 2001 terrorist 
attacks, the bill provided that priority would be given to 
infrastructure investments that focus on enhanced security for our 
Nation's transportation and environmental infrastructure systems.
  Our infrastructure investment package called for investments in 
ready-to-go projects in each of the critical areas of our Nation's 
transportation and environmental infrastructure: $23 billion for rail 
including high-speed rail, freight rail, and Amtrak; $10.4 billion for 
highways and transit; $9.2 billion for environmental infrastructure 
including wastewater, drinking water, wet weather, and Corps of 
Engineers projects; $3 billion for airports; $2.5 billion for marine 
transportation; and $2 billion for economic development and public 
buildings.
  This package of infrastructure, transportation, and environmental 
investment and security enhancement made economic sense. It provided 
funds where they were most needed. It directly addressed unemployment 
problems. It directly addressed the Nation's security interests.
  The Republicans defeated it. On October 24, 2001, the House 
considered H.R. 3090, the Republican Economic Stimulus bill, and Mr. 
Rangel, Ranking Democratic Member of the Committee on Ways and Means, 
offered a Democratic Substitute amendment to the bill that included 
H.R. 3166. The Republicans defeated it, on a largely party-line vote, 
to accelerate their tax breaks for the rich.
  Even in those cases where Democrats and Republicans have worked 
together to design legislative proposals to invest in America, the 
House Republican Leadership has thwarted those bipartisan efforts. For 
example, on June 12, 2001, the House Committee on Transportation and 
Infrastructure unanimously reported H.R. 1020, the Railroad Track 
Modernization Act of 2001, by voice vote. The bill authorized $1 
billion of grants to short-line and regional railroads to help them 
upgrade their railroad tracks and bridges to be able to carry safely 
the 286,000-pound railcars that are becoming the standard in the 
railroad industry. One study found that the Nation's smaller railroads 
need $7 billion in new capital to make their necessary upgrades. Our 
failure to help keep these smaller railroads viable could have dire 
consequences for those in the industry and much of rural America. 
Despite these facts, for the past year and a half, the House Republican 
Leadership has refused to schedule the short-line railroad 
infrastructure bill for consideration by the House.
  Another, even more dramatic case in point, was the proposed 
legislation to provide funding for the development of high-speed rail. 
Republicans and Democrats spent more than a year working together to 
craft bipartisan, compromise legislation that effectively blended the 
best elements of two high-speed rail bills, one bill originally 
advanced by Mr. Young, the Chairman of the Committee on Transportation 
and Infrastructure, and another bill advanced by a bipartisan group of 
190 Members and me, the Committee's Ranking Democratic Member. The 
proposed compromise legislation, H.R. 2950 (``RIDE 21''), as favorably 
reported by the Subcommittee on Railroads, would have provided $79 
billion over 10 years to finance the construction of high-speed rail in 
America. By using a combination of tax credit bonds, tax-exempt bonds, 
loans, and loan guarantees, the bill's cost to the Federal Treasury 
would have been significantly less than $79 billion. However, the 
Republican Leadership made clear that, like the short-line railroad 
bill, it would not let the House consider the bill and it died in 
Committee.
  Similarly, on March 20, 2002, the House Transportation and 
Infrastructure Committee unanimously ordered reported H.R. 3930, the 
Water Quality Financing Act of 2002. The bipartisan legislation 
authorizes $20 billion to invest in our Nation's wastewater 
infrastructure and helps ensure the protection of our Nation's streams, 
lakes, and coastal areas for generations to come. H.R. 3930 increases 
wastewater infrastructure investment and provides increased flexibility 
for local communities to tailor their programs to meet local water 
quality needs. Such investment is necessary if our communities are ever 
going to meet many of the goals of the Clear Water Act. However, the 
House Republican Leadership made clear that the House would not be 
allowed to consider this legislation, placing at risk this Nation's 30 
years of effort to ``restore and maintain the chemical, physical, and 
biological integrity of the Nation's waters.''
  What has frustrated these efforts to invest in our Nation's 
infrastructure, stimulate the economy, and create family-wage jobs? Why 
has the Republican Leadership opposed virtually every attempt to invest 
in America? The answer is simple. The Republican Leadership opposes 
Davis-Bacon. Specifically, it opposes Davis-Bacon provisions in these 
infrastructure investment bills and refuses to schedule any bill 
containing these provisions for consideration by the House, despite the 
fact that these bills would create good-paying jobs for American 
workers and would stimulate the economy.
  Davis-Bacon ensures that construction projects financed by Federal 
tax dollars pay those who work on such projects the prevailing wage in 
the area where the construction takes place. Davis-Bacon provisions 
have been a part of infrastructure bills since the 1930's, but they are 
anathema to the House Republican Leadership and reflect a fundamental, 
philosophical difference between the Republican Leadership and, I 
believe, the majority of this House. The Republican leadership wants to 
roll back the clock. Prior to the 1930's, Federal contracting practice 
required that ``the lowest reasonable bill'' be accepted. While this 
may sound like an innocuous money-saving measure, in practice this 
meant that projects would be undertaken without any regard for the 
wages paid to workers or the conditions under which the work would be 
performed. In effect, this made the Federal government a collaborator 
with unscrupulous firms that sought to gain government contracts by 
exploiting workers. In 1931, Republican President Hoover signed the 
Davis-Bacon Act, so-named for its two Republican sponsors, to help 
stabilize the construction industry and secure fair wages for 
construction workers.
  Today, the Davis-Bacon Act prevents cutthroat competition from ``fly-
by-night'' firms that undercut local wages and working conditions and 
compete unfairly with local contractors. Davis-Bacon also helps 
stabilize the industry to the advantage of both employers and employees 
alike. In addition, Davis-Bacon assures the contracting agency of 
higher quality work as the employers are likely to hire the most 
competent and productive workers if they are required to pay the 
prevailing wage. As a result of Davis-Bacon, contracting agencies get 
better craftsmanship, less waste, more timely completion, reduced need 
for supervision, and fewer mistakes requiring corrective action. Thus, 
Davis-Bacon has the potential for actually saving the taxpayers' money 
on public construction projects.
  It is irresponsible for the House Republican Leadership to refuse 
consideration of these infrastructure investment bills simply because 
they include Davis-Bacon provisions. Members of Congress deserve the 
opportunity to vote for or against these bills on the merits of the 
legislation. Moreover, I encourage the House Leadership to schedule 
these bills under an open rule that allows all Members an opportunity 
to offer amendments to the bill. If the Republican Leadership or any 
other Member wants to offer an amendment to strike the Davis-Bacon 
provisions from these bills, so be it--let the votes be counted. That 
is our democratic system.
  Our Nation needs an economic stimulus program that creates jobs in 
hard hit sectors of our economy, rehabilitates our basic infrastructure 
to allow us to remain competitive in world markets, addresses the 
infrastructure security needs of our transportation and environmental 
systems, and helps to revise our stagnant economy. In response to these 
immediate needs, the Republican Leadership and the Bush Administration 
have provided tax breaks for the rich and renewed threats to the Social 
Security Trust Fund and have prevented Congress from even considering 
real economic stimulus legislation.
  The American people deserve better. As the people's representatives, 
we must do better. I call on the House Republican Leadership to give 
this House the opportunity to consider these bills to reinvest in 
America and its infrastructure.

                          ____________________