[Congressional Record (Bound Edition), Volume 161 (2015), Part 2]
[Senate]
[Pages 1752-1755]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE ECONOMY

  Mr. SANDERS. Mr. President, the good news is the country has made 
substantial economical progress in the last 6 years since President 
Bush left office. Instead of losing 800,000 jobs a month as we were 
during the final months of the Bush administration, we are now creating 
some 250,000 jobs a month and have seen steady job growth over the last 
58 months.
  Instead of having a record-breaking $1.4 trillion deficit as we did 
when President Bush left office in January 2009, the Federal deficit 
has been cut by more than two-thirds. Today the 10-year deficit 
projection is now $5.5 trillion lower than what the projections were 
back in 2010.
  Six years ago the world's financial system, as we all remember, was 
on the verge of collapse. Today that is not the case. In fact, some 
might suggest that Wall Street is doing too well.
  While we can take some satisfaction as to what has been accomplished 
in the last 6 years, one would be very naive not to appreciate there is 
also a lot of very bad news in our economy, especially for working 
families.
  Most significantly, the simple truth of the matter is the 40-year 
decline of the American middle class continues. Real unemployment is 
not 5.6 percent--including those people who have given up looking for 
work or people who are working part time when they want to work full 
time--it is over 11 percent. Youth unemployment--something we almost 
never talk about in this country--is a horrendous 17 percent, and 
African-American youth unemployment is over 30 percent. It is totally 
unacceptable.
  Real median family income has declined by nearly $5,000 since 1999. 
All over this country--in Vermont and in every other State in this 
country--we have people working longer hours for lower wages. We have 
husbands and wives working 50, 60 hours a week just to pay the bills. 
Incredibly, despite huge increases in productivity, in technology, and 
all of the global economy we hear so much about, the median male worker 
now earns $783 less than he did 42 years ago. Let me repeat that. That 
American male worker right in the middle of the economy now earns, 
after inflation adjusted for wages, $783 less than he did 42 years ago. 
The female worker right in the middle of the economy now makes $1,300 
less than she made in 2007.
  When you ask why people are angry, why people are stressed, why 
people are frustrated, that is exactly why. Further, this country 
continues to have, shamefully, the highest rate of childhood poverty of 
any major country on Earth, and 40 million Americans still have zero 
health insurance.
  In the midst of this tragic decline of the American middle class, 
there is, however, another reality. The wealthiest people and the 
largest corporations are doing phenomenally well. The result: The 
United States today has more income and wealth inequality than at any 
time since the Great Depression. Today the top one-tenth of 1 percent 
own almost as much wealth as the bottom 90 percent. Let me repeat that 
because that truly is a startling fact. Today the top one-tenth of 1 
percent--which is what this chart talks about--owns almost as much 
wealth as the bottom 90 percent.
  Today 1 family--the Walton family, owners of Walmart--owns more 
wealth than the bottom 40 percent of the American people, some 120 
million Americans.
  I don't believe most of our people think this is what the American 
economy should be about. In fact, this is not an economy for a 
democracy. This is what oligarchy is all about. One-tenth of 1 percent 
owning almost as much wealth as the bottom 90 percent, 1 family owning 
the equivalent of what 131 million Americans own, that is wealth. In 
terms of income--which is what we make every year--what we have seen in 
the last number of years since the Wall Street crash is virtually all 
new income is going to the top 1 percent.
  Last year--just as one example--the top 25 hedge fund managers earned 
more income than 425,000 public school teachers. Does anybody believe 
that makes sense? Twenty-five hedge fund managers making more income 
than 425,000 public school teachers. That gap between the very rich and 
everybody else is growing wider and wider and wider.
  The fact is that over the past 40 years, we have witnessed an 
enormous transfer of wealth from the middle class to the top 1 percent. 
In other words, what we are seeing in our economy is the Robin Hood 
principle in reverse. We are taking from the poor and the working 
families and transferring that income and wealth to the very wealthy.
  From 1985 to 2013 the share of the Nation's wealth going to the 
middle class has gone down from 36 percent to less than 23 percent. If 
the middle class had simply maintained the same share of our Nation's 
wealth as it did 30 years ago, it would have $10.27 trillion more in 
cumulative wealth than it does today. Almost $11 trillion would have 
stayed with the middle class but has disappeared since 1985.
  But while the middle class continues to shrink, while millions of 
Americans are working longer hours for low wages, while young people 
cannot afford to go to college or leave school deeply in debt, while 
too many kids in this country go hungry, we have seen, since 2009, that 
the top 1 percent has experienced an $11.5 trillion increase in its 
wealth. So the top 1 percent in recent years sees an $11.5 trillion 
increase in wealth, while in roughly the same period the middle class 
sees a $10.7 trillion decrease in wealth.
  This $11.5 trillion transfer of wealth from the middle class to the 
top 1 percent over a 5-year period is one of the largest such transfers 
of wealth in our country's history. Here is my point. This is not just 
a moral issue, although it is a profound moral issue--and Pope Francis, 
by the way, deserves a lot of credit for talking about this issue all 
over the world. Are we satisfied as a nation when so few have so much 
and so many have so little? Are we satisfied with the proliferation of 
millionaires and billionaires, at the same time as we have millions of 
children living in poverty? Is that what America is supposed to be 
about? That is the moral component of this debate.
  But this is not just a moral issue. It is also a fundamental economic 
issue. As we know, 70 percent of our economy is based on consumer 
spending. When working people do not have enough income, enough 
disposable income, they are unable to go out and buy goods and services 
that they would like or that they need. The so-called job creators that 
my Republican friends often refer to are not the CEOs of the large 
corporations.
  The CEOs of large corporations cannot sell their products or services 
unless people have the income to buy them. Someone can come up with the 
greatest product in the world, but if people do not have the money, 
they are not going to sell that product, they are not going to hire 
workers to produce that product.
  The truth is that the real job creators in this country are those 
millions of people who every single day go out

[[Page 1753]]

and purchase goods and services, but if they do not have adequate 
income, the entire economy suffers. There was a very interesting 
article, I believe it was yesterday or today, in the Wall Street 
Journal, written by Nick Timiraos and Kris Hudson, talking about how a 
two-tier economy is reshaping the U.S. marketplace.
  What they talk about is:

       It is a tale of two economies.

  Said Glenn Kelman, chief executive of Redfin, a real estate brokerage 
in Seattle.

       There is a high-end market that is absolutely booming. And 
     then there's everyone in the middle class. They don't have 
     much hope of wage growth.

  The article continues.

       Indeed, such midtier retailers as J.C. Penney, Sears and 
     Target have slumped.
       ``The consumer has not bounced back with the confidence we 
     were looking for,'' Macy's chief executive Terry Lundgren 
     told investors last fall.

  I ask unanimous consent that the article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             [From the Wall Street Journal, Jan. 28, 2015]

        How a Two-Tier Economy Is Reshaping the U.S. Marketplace

                   (By Nick Timiraos and Kris Hudson)

       The advance of wealthy households, while middle- and lower-
     income Americans struggle, is reshaping markets for 
     everything from housing to clothing to beer.
       Woodinville, Wash.--Five years ago, Quadrant Homes churned 
     out starter houses in the Seattle area with an average sales 
     price of $269,000 and the marketing slogan, ``More House, 
     Less Money.''
       But facing a debt-burdened middle class and rising land 
     prices, Quadrant has since exchanged entry-level buyers for 
     customers free of credit worries and ready to splurge. Its 
     new slogan, ``Built Your Way,'' accompanies homes with 
     vaulted ceilings and gourmet kitchens that last year sold for 
     an average price of $420,000. ``We used a lot of market 
     research to tell us that our old model wasn't going to 
     work,'' said Ken Krivanec, Quadrant's chief executive.
       The emergence of a two-tiered U.S. economy, with wealthy 
     households advancing while middle- and lower-income Americans 
     struggle, is reshaping markets for everything from housing to 
     clothing to groceries to beer.
       ``It's a tale of two economies,'' said Glenn Kelman, chief 
     executive of Redfin, a real-estate brokerage in Seattle that 
     operates in 25 states. ``There is a high-end market that is 
     absolutely booming. And then there's everyone in the middle 
     class. They don't have much hope of wage growth.''
       The recession blew holes in the balance sheets of all U.S. 
     households and ended a decadeslong loosening of credit for 
     middle-class borrowers. Now, credit is tight, and incomes 
     have been flat or falling for all but the top 10th of U.S. 
     income earners between 2010 and 2013, according to the 
     Federal Reserve.
       American spending patterns after the recession underscore 
     why many U.S. businesses are reorienting to serve higher-
     income households, said Barry Cynamon, of the Federal Reserve 
     Bank of St. Louis. Since 2009, average per household spending 
     among the top 5% of U.S. income earners--adjusting for 
     inflation--climbed 12% through 2012, the most recent data 
     available. Over the same period, spending by all others fell 
     1% per household, according to Mr. Cynamon, a visiting 
     scholar at the bank's Center for Household Financial 
     Stability, and Steven Fazzari of Washington University in St. 
     Louis, who published their research findings last year.
       The spending rebound following the recession ``appears to 
     be largely driven by the consumption at the top,'' Mr. 
     Cynamon said. He and Mr. Fazzari found the wealthiest 5% of 
     U.S. households accounted for around 30% of consumer spending 
     in 2012, up from 23% in 1992.
       Indeed, such midtier retailers as J.C. Penney, Sears and 
     Target have slumped. ``The consumer has not bounced back with 
     the confidence we were all looking for,'' Macy's chief 
     executive Terry Lundgren told investors last fall.
       In luxury retail, meanwhile: ``Our customers are confident, 
     feel good about the economy in general and their personal 
     balance sheets specifically,'' said Karen Katz, chief 
     executive of Neiman Marcus Group Ltd., last month. Reported 
     2014 revenues of $4.8 billion for the company are up from 
     $3.6 billion in 2009.
       Revenue for such luxury hotel chains as St. Regis and Ritz-
     Carlton rose 35% last year compared with 2008, according to 
     market research firm STR Inc. Revenues at midscale chains 
     such as Best Western and Ramada were down 1%.
       On grocery aisles, the recession and its aftermath boosted 
     sales of economy brands. At the high end, Whole Foods Market 
     Inc. reported record sales per gross square foot last year.
       ``Demand bifurcated,'' said Jason Green, chief executive of 
     the Cambridge Group, a growth strategy firm that is part of 
     Nielsen NV. ``The familiar stuff my middle-class family had 
     in the pantry, those are under significant pressure.''
       In the grocery market's middle tier, Safeway Inc., the 
     second-largest supermarket chain in the U.S. was purchased 
     last year by the private-equity group that owns Albertsons, 
     the fifth-largest grocery retailer. Company officials said 
     the deal would allow the companies to reduce costs--and lower 
     prices for customers--as they fend off competition from low-
     price outlets and high-end stores.
       In the cold case, sales of premium lagers are up 16% since 
     2007 after adjusting for inflation, while sales of economy 
     brands grew 8%, according to research firm Euromonitor 
     International. Sales of midprice beers are down 1%.
       The trend hit auto makers some years ago, when BMW AG's 
     former chief executive Helmut Panke described the U.S. market 
     as an hourglass: lots of demand for budget and luxury brands 
     but little in between. Steve Bates, general manager of BMW 
     Seattle for the past 12 years, said new-car sales at his 
     dealership were up 25% last year, while used-car sales were 
     flat. The M4 series, a sporty coupe priced from $64,000, has 
     been ``selling out as soon as it touches the ground,'' he 
     said.
       Then there are consumers like Vicki Oliver, 68 years old, 
     of Temecula, Calif. She bought a used Hyundai Sonata last 
     year to replace a wrecked 1995 Ford Explorer. Ms. Oliver and 
     her husband, a real-estate agent, added onto their home two 
     years ago so her daughter and son-in-law, a general 
     contractor, could move in with their family.
       ``That was a way to make things work in hard times,'' Ms. 
     Oliver said. Caribbean cruises and trips to Florida are now 
     memories. ``We haven't done that for years,'' she said.
       The housing market illustrates how weakness among middle-
     class consumers holds back the U.S. economy. Homes are 
     generally the biggest purchase Americans make. Housing 
     dollars ripple through the economy by triggering spending on 
     appliances, furniture and landscaping.


                         Inequality in America

       For the first time, U.S. builders last year sold slightly 
     more homes priced above $400,000 than those below $200,000. 
     As a result, the median price of new homes exceeded $280,000, 
     a record in nominal terms and 2% shy of the 2006 inflation-
     adjusted peak.
       Total sales last year, however, were up just 1% compared 
     with 2013, and more than 50% below their average from 2000 to 
     2002, before the housing bubble.
       New homes are also getting bigger. The median U.S. home was 
     more than 2,400 square feet in the third quarter of 2014, a 
     20% increase from early 2000 and a 10% increase from the peak 
     of the housing market in 2006.
       In Seattle, the median new-home size topped 2,500 square 
     feet last year, a record, according to research firm 
     Metrostudy Inc. Since the market hit bottom in 2011, sales of 
     new homes priced above $600,000 have tripled, while sales 
     below $400,000 are down 16%, according to CoreLogic 
     DataQuick. Builders boost profits selling more expensive 
     homes. But less construction overall means fewer new jobs and 
     reduced total spending.
       ``Over the long haul, I worry that you can't run our 
     housing market, which depends on volume, on affluent buyers 
     alone,'' said Diane Swonk, chief economist at Mesirow 
     Financial in Chicago.
       Young households have been slow to buy homes because of the 
     tough job market. Many would-be buyers can't save enough for 
     a down payment or don't earn enough to qualify for a 
     mortgage. Student debt holds others back.
       A typical household, for example, would need around $60,000 
     in cash to make a 20% down payment on the median-priced new 
     home in the U.S. To qualify for a mortgage, they would need 
     good credit and to show an annual income of about $45,000, 
     assuming little other household debt. A government-insured 
     loan in this example could call for an $11,000 down payment 
     but would require an annual income of $60,000.
       Lisa and Nathan Trione are looking for a house in Denver 
     big enough for their five children. But there is little in 
     their price range: $250,000 and under.
       ``You're already intimidated by the process,'' said Ms. 
     Trione, a 28-year-old paralegal and office manager. ``And 
     then you see this huge price, and you say, `I'm not ready to 
     do that right now.'''
       Ms. Trione is paying off debt she incurred while earning 
     her associate degree. She also is trying to raise her credit 
     score, which, she said, fell during a series of early 
     financial missteps.
       Well-heeled customers, meanwhile, have their pick of 
     mortgages. At the same time, some banks have pulled back from 
     federally insured loans that allow for smaller down payments.
       ``We would like to build a smaller, higher-quality and 
     less-volatile business,'' Marianne Lake, chief financial 
     officer at J.P. Morgan Chase & Co., told investors last year. 
     With fewer potential customers, builders have largely 
     abandoned the entry-level market. ``If a builder can make 
     money on something, he'll build it. The problem is that they 
     can't

[[Page 1754]]

     make money at the entry level,'' said John Burns, of Irvine, 
     Calif., a consultant to builders.
       But rentals, the low-end of the housing market, are 
     booming. Apartment construction has neared its fastest pace 
     since 1989. Two of the nation's largest home builders, Toll 
     Brothers Inc. and Lennar Corp., have both launched 
     multifamily construction divisions, each with around 5,000 
     units in the pipeline. ``We all wished we had a big apartment 
     portfolio through this downturn,'' said Douglas Yearley, 
     Toll's chief executive, during an earnings call last year.
       With sales plunging in 2009, Quadrant called in a research 
     firm that concluded more buyers might materialize if the 
     company built more expensive homes. ``When it's data driven, 
     the courage to make a remarkable change is easier than when 
     you're using your gut,'' said Mr. Krivanec, the company's 
     chief executive.
       Quadrant, a unit of TRI Pointe Homes Inc., was finishing 
     seven homes per workday in 2004. They now finish less than 
     two of the more expensive houses a day. But the share of 
     buyers who back out of a deal, typically because they can't 
     get a loan, is down 10% since 2010. To serve more higher-end 
     buyers, Quadrant opened a design studio two years ago that 
     lets buyers choose from dozens of cabinets, countertops, 
     tiles and flooring. Some new buyers spend nearly twice as 
     much on such upgrades, the company said, which adds to the 
     profitability of home sales.
       Common design features now include a walk-in closet and 
     bathroom nearly as big as the master bedroom. Kitchens have a 
     walk-in pantry.
       On a recent Tuesday afternoon on Little Bear Creek Place, a 
     cul-de-sac in this Seattle suburb, electricians, landscapers 
     and framers worked on some 23 Quadrant home sites.
       Nearby, Nick and Adriana Stoll unpacked boxes in their new 
     four-bedroom home. The home is twice the size of the 1,200-
     square-foot, one-bedroom apartment they rented in nearby 
     Bellevue.
       The Stolls customized almost every feature and finish, 
     including hinges on kitchen cabinets that prevent the doors 
     from slamming shut. ``I'm typically the kind of consumer 
     where I make a quick decision,'' Mr. Stoll said. ``But when 
     it comes to your home, well, we stared at 100 countertops for 
     an hour.''
       The Stolls survived the recession and have prospered. Mr. 
     Stoll purchased a Seattle condominium in 2008, the day before 
     learning he was losing his job at Washington Mutual, the 
     thrift sold to J.P. Morgan after it was seized by the Federal 
     Deposit Insurance Corp.
       Mr. Stoll changed jobs twice before he was recruited in 
     2011 to work at a technology company. He broke even on the 
     sale of his condo last year. ``Other people encountered 
     problems where maybe it's student loans or credit cards or 
     car payments,'' he said, ``and we have none of that.''
       The couple put 20% down on their new home, which cost 
     $579,000. Ms. Stoll works as a client associate for a large 
     financial services company.
       Growth in new home sales this year will depend, in part, on 
     whether builders revive their interest in first-time buyers.
       Two years ago, D.R. Horton Inc., the nation's largest home 
     builder, launched Emerald Homes, a luxury division. Last 
     year, the company rolled out Express Homes, a division that 
     pioneered no-frills housing for the entry-level market. Mr. 
     Krivanec, Quadrant's CEO, said he doesn't see a return to his 
     company's former model. There are enough people with good-
     paying jobs in the area--at Boeing, Amazon and Microsoft--to 
     keep sales going, even it means building fewer homes. ``We 
     like where we're at,'' he said.

  Mr. SANDERS. So what we are hearing--basically what this article 
tells us--is if people's income is going down, they are not going to 
Macy's, they are not going to Target. Those stores are not hiring 
workers or are getting rid of workers because the middle class does not 
have the income it needs.
  Here is a very important point. Within President Obama's recent 
budget--by the way, I think the President's budget is beginning to move 
us in the right direction--there was a very interesting projection that 
unfortunately got very little attention. Here is the point: Over the 
last 50 years GDP growth in the United States of America averaged about 
3.2 percent. What the President's budget is suggesting is that more or 
less over the next 10 years we are going to see 3-percent growth, 3-
percent--2.7, 2.5, 2.3. For the rest of the decade, 2.3 percent.
  The bottom line is, if we continue along the same type of economic 
growth we have had over the previous 50 years, unemployment would be 
substantially lower, people would be paying more taxes, Social 
Security, among other programs, would be in much stronger shape.
  The debate we are going to be having in the Budget Committee--I am 
the ranking member of the Budget Committee--are two very different 
philosophies. Our Republican friends believe in more austerity for the 
middle class and working families. Their goal, over a period of months 
and years, is to cut Social Security, cut Medicare, cut Medicaid, cut 
nutrition programs for hungry children, not invest in infrastructure, 
and then give huge tax breaks for millionaires and billionaires.
  In other words, more austerity for the middle class, tax breaks for 
the wealthy and large corporations. I believe that philosophy is wrong 
for many reasons, the most important being that if we want to grow the 
overall economy, if we want to create jobs, we have to put money into 
the hands of working people. We do not do that by cutting, cutting, 
cutting, and imposing more austerity on people who already desperately 
are hurting.
  A far more sensible approach is to create the millions of jobs that 
our country desperately needs by, among other things, investing heavily 
in our crumbling infrastructure. Last week I introduced legislation 
that would invest $1 trillion over a 5-year period into rebuilding our 
crumbling roads and bridges, rail, airports, water systems, wastewater 
plants.
  If we do that, we make our country more productive, safer, and create 
up to 13 million jobs, putting money into the hands of working people. 
It not only will improve their lives, but they will then go out and 
spend their money in their communities, creating further economic 
growth. That is the direction we should be going.
  We also have to raise wages. People cannot survive on the starvation 
minimum wage imposed at the Federal level of $7.25 an hour. If we raise 
the minimum wage over a period of years to $15 an hour, we are going to 
have billions of dollars go into the hands of people who need it the 
most, improve their lives, allow them to go out and invest in our 
economy, spend money and create jobs.
  We need pay equity for women workers. It is not acceptable that women 
are making 78 cents to the dollar for men who are doing the same work. 
We need to address the scandal of overtime right now, where we have so-
called supervisors at McDonald's who work 50, 60 hours a week, but 
because they are so-called supervisors do not get time and a half.
  We need to make college affordable for all of our workers. In a 
global economy we need the best educated workforce in the world, not 
the one where people cannot afford a higher education. We need trade 
policies that benefit working people and not just large multinational 
corporations, which is why we should defeat the Trans-Pacific 
Partnership.
  So there is a lot of work that needs to be done. But the bottom line 
is, if we are serious about dealing with the deficit and debt 
reduction, if we are serious about growing the middle class, we need an 
agenda which creates jobs, raises wages, makes college affordable, 
demands that corporate America start investing in this country and not 
in China.
  We need a proworker agenda, not an austerity agenda which will 
strangle the middle class of this country even more than it is hurting 
today.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Mr. President, I thank my colleague from Vermont for what 
he has said. I would note that there are many in our State who agree 
wholeheartedly. We are not a wealthy State. We are a proud State. We 
are not a State that believes in such a huge disparity of income. So I 
thank the Senator for what he said, not only here but when he has made 
similar remarks around the country.
  (The remarks of Mr. Leahy pertaining to the introduction of S. 356 
are printed in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  The PRESIDING OFFICER. The Senator from Texas.

[[Page 1755]]



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