Congressional Budget for the United States Government for Fiscal Year 2005-Continued
CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2005-CONTINUED
Mr. REED. Mr. President, first, I thank the chairman of the Joint Economic Committee, Senator Bennett, for arranging this discussion on the economic aspects of the budget before us. Also, I thank him for his gracious and very thoughtful chairmanship of the committee.
In 1992, it was popular to say, "It is the economy, stupid." I think circa 2004 the saying is, "It is jobs, stupid." I think the economy can be measured in many different ways. It can be measured by GDP, which seems to be moving along at a healthy pace. It can be measured in terms of productivity.
But for most families, the true measure is a very simple one: Do I have a good job? Will I keep this job for the next several years, hopefully until I retire? Will my children, who I have attempted to educate and give advantages to, be able to realize even better job opportunities and be able to hold those jobs in the future? Frankly, for families across this country, those questions are very uncertain at this moment as a result of the record of the last several years in terms of job creation, the record of the administration in terms of its economic stewardship of the most critical factor, and that is jobs for Americans.
There is much discussion about these numbers. For example, this morning, the distinguished Senator from Kentucky, Mr. McConnell, pointed out that in 1996 the unemployment rate was the same as it is now, 5.6 percent. He then stated that Democrats at that time argued that achieving that rate of unemployment was good news, but today we seem to be unsatisfied with the 5.6 percent unemployment rate.
First, the Senator from Kentucky is right about that fact. In January 1996, 3 full years into President Clinton's term, the unemployment rate was 5.6 percent. Now, 3 full years into President Bush's term, the unemployment rate is 5.6 percent. But that is where the similarities end.
When President Clinton took office in January 1993, he really did inherit a weak economy. The unemployment rate was 7.3 percent. Three years later, it was 5.6 percent, a drop of 1.7 percentage points. Of course, Democrats regarded that 5.6 percent unemployment rate as a significant improvement, and based on the experience of the Reagan-Bush years when the unemployment rate was always above 5 percent, it was about as good as it seemed to get.
What has been the experience under this President Bush? He inherited an economy that was definitely slowing down from the very strong growth achieved in the late 1990s. But the unemployment rate was 4.2 percent when he took office in January, 2001. The unemployment rate had been below 5 percent for 3½ years prior to his inauguration. So 3 years later, when the unemployment rate was 1.4 percentage points higher than when he took office, a 5.6 unemployment rate doesn't look very good at all. That is because it is a sign of continued weakness in the economy.
The unemployment rate has been above 5.5 percent for over 2 years. Put simply, under President Bush, unemployment went up. Under President Clinton, it went down. Families throughout this country recognize the difference.
Let's look not just at unemployment rates, but at job creation. When the unemployment rate stood at 5.6 percent in 1996, the economy had already created nearly 7 million new jobs under President Clinton. As we all know, the unemployment rate may be the same for President Bush at a comparable point in his Presidency; but instead of presiding over the creation of 7 million jobs, he has presided over the loss of 2.2 million jobs-one of the most significant records of job loss of any President of the United States in our history.
My colleagues on the other side sometimes think it is unfair to compare President Bush's job record with President Hoover's. We are not saying that the economy today is the same as it was in 1930. We are saying what the facts show. This is the most persistent jobless recovery since the 1930s. The unemployment rate is lower now, but we are not creating jobs.
One of the worst aspects of the job slump we are experiencing is a large faction of the unemployed have been unemployed more than 26 weeks and are no longer eligible for regular State unemployment insurance benefits. This morning, Senator McConnell argued that the President and our Republican colleagues were justified in not reviewing the Federal temporary extended unemployment compensation program because the unemployment rate was so low. But here again, the numbers tell a different story.
When President Clinton discontinued the temporary Federal extended benefits in 1994, the unemployment rate was 6.4 percent, as Senators MCCONNELL and BENNETT said. But the economy was creating jobs at a rapid pace at that time. The situation is starkly different now. The official unemployment rate may be 5.6 percent, but when you include people who want to work but have dropped out of the labor force and people who are working part-time because of the weak economy, you are talking about an unemployment rate that is 9.6 percent, and that is a function of one I think important point that must be made again and again: The way we measure unemployment in the United States is based upon the number of people who are in the workforce who are actively seeking work, either have work or are actively seeking it.
What the number really disguises is the number of people-hundreds of thousands of people-who have given up or are working part time. Let me say this again. If we were looking at all the people who historically, in the last several years, have been in the workforce, and we looked at the number of jobs, the rate of unemployment would be closer to 9.6 percent.
That is the difference between creating jobs in the mid-1990s when the waiting period for a job was much shorter and today when very talented, highly trained individuals are having a very difficult time to find any employment whatsoever.
With respect to the budget resolution at hand, the President's economic policies have failed, and the budget being proposed by the majority will lock us into that failed policy.
What the economy has needed for the past few years is short-term job-creating policies and long-term growth-creating policies. What we have instead are tax cuts that go disproportionately to upper income taxpayers and create a legacy of large budget deficits and mounting debt.
Those tax cuts have provided very little job-creating stimulus relative to their huge costs, and they will depress growth in the long run.
All of the economic analysis I have seen says that when the economy is in a slump with excess unemployment-which is the situation we have been in for several years now-the immediate policy objective is to stimulate job creation. Giving tax cuts to high-income taxpayers who are more likely to save those tax cuts than to spend them is exactly the wrong approach.
If this is an investment recession, then our policies have not been particularly geared to stimulating directed investment. These large income tax cuts to wealthy Americans have not translated into jobs.
If we really were interested in creating jobs, we could have targeted much more of these tax cuts to lower income Americans who would consume and thus drive up demand. We could give specific incentives to industry to provide investments in new plant and equipment. This approach, which would make much more sense if you are trying to deal with a lack of demand and an investment slump, could have been done, but it was not.
Last year, when we debated a similar stimulus package, the President's Council of Economic Advisers estimated that nearly 2 million jobs would be created in the second half of last year, with about half a million of those jobs coming as a direct result of the tax cuts.
Again, these are the projections of the Council of Economic Advisers: 2 million extra jobs and a half million jobs directly related to the tax cut.
In fact, however, in that period, only 124,000 jobs were created. We got the tax cuts-actually most of the tax cuts went to the wealthiest Americans-but we did not get the jobs.
I do not know when we will see a truly sustainable job-creating recovery, but I know it will not erase the legacy of large structural budget deficits that the policies of the past 3 years have produced.
Economic analysis tells us that persistent structural deficits are bad for the economy. They drain national savings and slow down or crowd out private investment. That means our standard of living grows more slowly and becomes more costly.
Analysis by the Congressional Budget Office and the Joint Committee on Taxation has found that tax cuts that add to the budget deficit are, on net, harmful to long-term growth.
Some have tried to distract our attention from the deteriorating long-term budget outlook by talking about cutting the deficit in half in 5 years. Such an approach completely ignores the real story, which is what happens to the budget when the baby boom generation starts to retire in just a few years.
In my opinion, the charts Senator Bennett showed historically looking back at the highs and lows of deficits miss a very important point. In the mid-sixties, in the mid-seventies, and even in the mid-eighties, we were not on the cusp of a huge number of Americans being entitled to Social Security benefits and Medicare benefits in the foreseeable future. I think failing to recognize the onset of the baby boom generation into these programs and reserving funds to deal with it is a tremendous mistake.
I read, as many did, a book about Secretary of the Treasury Paul O'Neill's tenure in the Bush administration, and I was struck by the fact that he and Chairman Greenspan apparently saw this onslaught of the baby boom generation with respect to Social Security, and they were working very diligently to reserve $1 trillion from our surplus to do the structural reforms about which so many talk. But what happened on the way to structural reforms? That trillion-dollar surplus turned into a trillion-dollar deficit, and our opportunity to deal honestly and in a timely fashion with Social Security, and also Medicare, evaporated along with the evaporating surplus.
The budget before us represents a continuation of the failed policies of the past 3 years. It has no effective programs to provide short-term job-creating stimulus and does nothing to address the problems faced by large numbers of American workers who see their jobs disappearing.
By making the tax cuts permanent, it locks us into a legacy of deficits that could leave us unprepared to deal with the demographic challenge of the baby boomers' retirement.
Those deficits will depress future standards of living by draining national savings, discouraging investment, and adding to our foreign indebtedness.
This is a situation that argues for different policies. I agree, I think, with the Senator from Utah that we are in a different type of economic climate. The information technology has transformed radically what we do in our economy, but the policies and programs espoused by the President and embraced by this budget do not recognize, in my view, this new reality, and certainly I do not think we can content ourselves with the view that in the long run everything will be fine because, as Maynard Keynes pointed out, in the long run we are all dead.
Our constituents expect us to act in the short run prudently and realistically to help them, and I hoped we could be here debating a budget that would invest in our people, would reassure the American people that we are working to help stimulate the creation of private jobs in this economy.
Finally, I point out what was most alarming to me in the last report from the Bureau of Labor Statistics last Friday is that not only was there negligible job growth-21,000 jobs-virtually none of these were in the private sector. They were public sector jobs.
We can do more, and we should do more, to ensure that every family in this country feels confident in their job and in the ability of their children to obtain meaningful work in this country. That should be the first priority of any government. This budget does not represent that type of priority.
I yield the floor.