The Role of Education in Rebuilding the American Economy
Floor Speech
BREAK IN TRANSCRIPT
Mr. TAKANO. Well, I thank my colleague, Mr. Garamendi of California. We're both Californians.
What this will do is further burden many of my students who are already burdened with a great deal of debt load from the University of California. But there are many students who bear even a greater debt load because they attend some of the private universities in my area. Many of my students leave my district for other schools and are going to out-of-State schools.
The student loan debt is, I think, a hugely serious, serious problem. Before I came to the Congress, I was a teacher for 23 years. I taught high school. I always tried to counsel my students to be careful about the debts they took on.
I would like to let my colleague know that when I was graduating from high school in the late 1970s and went on to an Ivy League school on the east coast, I had a package that the Ivy League school put together--contribution from my parents and some work study. But my total loan indebtedness from 4 years of Harvard College did not exceed $15,000. That was an amount that I could fairly easily manage. I am just horrified that students are racking up debts for undergraduate study of $80,000 or $100,000 worth of debt, let alone the debt they're going to have to incur when they go on to their master's programs.
A doubling of the interest rates would add just a tremendous burden to these students.
Mr. GARAMENDI. We can just take a very quick look at the math. If it's a $100,000 debt and it's 3.4 percent--and you're paying just the interest rate, not the principal of the loan--you're talking about $3,400 a year that you would be paying at the current rate. Double it, you're talking $6,800 a year. So just that alone, without paying down the principal, you're looking at a very significant burden on a person that's leaving school, graduating just this year. We need to deal with that. And the effort that's under way here by the Democrats in Congress--and also by President Obama, who's put forth, I think, a very solid program--gives the students an opportunity.
This is a very interesting chart here, MARK. And I think it's one that you're aware of. I know you've paid off your loan now, but that group hasn't.
Mr. TAKANO. I did actually take on some more debt to get my master's degree before I came here. Two years before I came to Congress I completed my master's degree, and it was a 2-year master's program. Because of my income as a teacher, many years as a teacher in, but I came close to $40,000 worth of debt that I'm paying off to the Federal Treasury. But it's not the Stafford loan that subsidized it. But I have a sense of just--that's part of my horror of the amount of debt load that students are carrying.
Mr. GARAMENDI. Well, then you're one of these students--ex-students. $1 trillion, this number, the total student loan, is well over $1 trillion today. This is greater than the total credit card debt of every American. So we're looking at a situation where student debt is now larger than the credit card debts of all Americans. This is an enormous burden.
But what this also does--and perhaps you have not only personal experience, but other--is that when a student graduates, their first obligation is to pay off this debt. You can't go into bankruptcy. This debt is going to follow you. With or without bankruptcy, you've got to make these payments.
Now, last year we passed a bill that tends to modify how much you can pay. I think it's no more than 10 percent. The President's proposal takes that further and applies the 10 percent not just to the new loans that are taken out, but to all existing loans. So as your income from a teacher, you would be required to pay no more than 10 percent of your income to pay down this debt. But if this debt has an interest rate of 3.4 percent, well, you can get it paid off more quickly. But if it's 6.8 percent, it's going to take longer and be more difficult.
Mr. TAKANO. The compounding effects on that amount of debt is going to seriously add to those students who will take, say, public service jobs or jobs in teaching, or jobs in the public sector, nonprofits. It will severely limit the kind of employment that young people might seek out.
Mr. GARAMENDI. Well, certainly that. And then a young person graduating from college, sometimes they want to get married. They may have to delay that. They want to form a household, buy a house, rent a house, buy the furniture. They can't because they've got to pay this off first.
Mr. TAKANO. Well, it certainly hurts our economy in that way. They're going to delay buying a car; they're going to delay buying a home; they're going to delay starting a family with this debt overhanging.
Beyond the interest rates, I also believe we need to focus on lowering the principal, making sure we support our public institutions of higher ed to make sure that the principal isn't there.
But certainly I support our caucus's effort to keep interest rates from doubling. It's a very sad fact to say that doing nothing--if we don't get our way, that doing nothing is actually better than what the Republicans propose.
BREAK IN TRANSCRIPT
Mr. TAKANO. I want to take a little different slant on this, if I might, John and Rush. I actually want to turn to a topic, and the reason why I want to turn to this topic is because of what the Senate is doing, what it was doing yesterday and today. They're considering the comprehensive immigration bill. Of course, in that comprehensive immigration bill is a provision on the DREAMers.
The point you're making about the Republican attempt to raise revenue without straightforwardly asking for it and put on the burden of our students, our young people, we wouldn't have to do this if this House would follow suit and pass a comprehensive immigration bill. I'm going to tell you why. I'm going to make an economic argument for why comprehensive immigration is good for our country and our economy.
As the debate continues on immigration reform, the effect that fixing the immigration system would have on our economy is becoming quite clear. Opponents of immigration reform don't seem to understand the benefits of our broken system. Many of the undocumented immigrants in this Nation are already working, yet because of their legal status they are forced to pay into the underground economy with no labor protections and no way to pay into the system.
We should allow these individuals to come out of the shadows and put them on the pathway to citizenship. As an example, say there's an undocumented worker in my district. Because he or she is undocumented, that worker may only be making $4 or $5 an hour instead of the California minimum wage of $8 an hour. If comprehensive immigration reform is passed, it will mandate that all workers be paid minimum wage, which will in turn increase their buying power, raise revenues for businesses, and drive up wages for everyone else, thus increasing our GDP growth rate, not needing to have to resort to these tricks of variable interest rates on our students to raise revenue for our government.
Recent analysis by the Social Security Administration showed that, without comprehensive immigration reform, our annual growth rate would only be 4.5 percent, but with comprehensive immigration reform, our annual growth rate shoots up to 6.1 percent. This increase in GDP is going to have a tremendous effect on our job market.
Earlier this year, Republican Senator Marco Rubio sent a letter to the Social Security chief actuary asking for an analysis of the legislation. In his response, Chief Actuary Goss said that the Senate immigration reform proposal would create 3.2 million jobs by 2024--new jobs.
In his reply, Chief Actuary Goss also said:
We estimate a significant increase in both the population and the number of workers paying taxes in the United States as a result of these changes on legal immigration limits.
3.2 million new jobs by 2024 is a serious jobs plan for America.
A report by the Cato Institute analyzed the data and estimates that there will be a $1.5 trillion increase in 10 years to household income.
The middle class has been struggling for some time as their wages have remained stagnant for 30 years. The squeeze on the middle class has forced average American families to go heavily into debt just to get by. Mortgage payments, college loans, and the cost of health insurance have all skyrocketed, but wages have barely increased. Passing comprehensive immigration reform will help close this gap.
The more people we have working and the more they consume means that our Federal deficit will come down at an estimated--get this--$875 billion over 20 years.
But it doesn't stop there. Social Security, itself, is going to benefit greatly as well. As some 75 million baby boomers prepare to retire, the immigrant community, which is generally younger than the overall population, will help the balance sheet by bringing in more revenue to offset retirees taking out benefits. It's been estimated that comprehensive immigration reform will add $4.6 trillion, net, to Social Security over the next 75 years.
The problem we face with Social Security is the ratio of workers to retirees. Sixty years ago, there were 16 workers for every retiree. Twenty years from now, when the last of the baby boomers retire, that ratio will be down to 2 1/2 to 1 unless we pass comprehensive immigration reform.
Comprehensive immigration reform is going to help Social Security in several ways:
First, most immigrants who come to the United States are between the ages of 18 and 35. For decades, these working immigrants will be contributing to Social Security;
Second, few come to the United States with their parents, and the seniors that do come aren't eligible for Social Security; and
Finally, immigrants tend to have more children than native-born Americans, and their offspring will also pay into the system for decades to come.
The numbers don't lie. Comprehensive immigration reform will improve our Nation in many different ways, but especially economically. The time is now.
Thank you.
BREAK IN TRANSCRIPT
Mr. TAKANO. It's my pleasure. You have seven points to our economic agenda. Really, comprehensive immigration reform should be the eighth one. The wealth of our country really is in the skills and knowledge of our people. We need to find the pathway for 11 million people--have them come out of the shadows, have a pathway to citizenship. That, tied together with investments and their skills and knowledge, really raises up the true wealth of our country, which is in her people.
Mr. GARAMENDI. This is the Make It in America agenda. As you say, you could easily add to this immigration reform as one of the things we need to do. These men and women--some 12 million who are here without documents--are unable to really rise up into these more highly skilled jobs. In many ways, their educational opportunities and their children's educational opportunities may be limited. This is the fundamental investment in any society; and giving access to people with that education, immigrant or not, allows us to build the American economy.
Mr. TAKANO. So much of the focus, as you say, does go back to education, the need to find effective ways to educate all the immigrant children.
If you could leave that poster up just a little longer, there are investments we need to make in our basic scientific research and to make sure we have the scientists. The scientists are so important. It takes years and years of developing people to become these highly skilled, highly knowledgeable scientists who will create, in turn, the inventions and the technology that will transfer into our preeminence in trade. We are a great country because we are so great at patents, because we are so great at creating new medications. This all comes from a highly educated workforce. By the way, comprehensive immigration reform means we can draw in some of the best talent into Silicon Valley, the best talent into our pharmaceutical research labs.
Mr. GARAMENDI. It's really true. The comprehensive immigration reform bill that's being discussed does bring into our economy those people who have the high skills, many of whom came here and got an education but who under the current law have to leave and go start their businesses in China, India or somewhere else around the world. Part of that comprehensive immigration reform would allow those men and women who have taken their education in the United States--gotten their degrees, their doctorates in engineering or electrical engineering or whatever--to stay in the United States.
It turns out that our State, California, is the great engine of economic growth. Some of it is in southern California with the entertainment industry and the way in which it is now merging into the electronic industry and all of the things that are going on with Google and the use of the smartphones for disseminating content--movies and the like. In the Silicon Valley, many of those start-up companies are immigrants. In fact, the majority of start-ups in the Silicon Valley are immigrants--a very interesting fact that goes back to the issue of immigration reform.
We want to bring to America the talent. We want to bring--we want to be able to use--in America these extraordinary workers and make sure that they have access to the education system that then is the fundamental investment and make sure that they are able to participate and move our economy forward.
Mr. TAKANO. Most of us come from immigrant stock. I think you're Basque Italian. My forebears came from Japan. We, ourselves, are examples of the striving of generations. I'm pretty sure your parents, as well as mine, instilled the importance of education. It's the story of America repeated over and over again--of people coming here because they hear about the freedom, the way of life that we have and the opportunity that our country represents. Much of it is embodied in our belief in education being the platform, the launching pad, for entering the middle class. Certainly, this dream will be cut short if we don't watch out for things like the doubling of the interest rates or allowing interest rates to be tied to variable rates.
As Mr. Holt pointed out, he asserts that, really, it's a very sly way to try to raise revenue without actually being straightforward about it. It's a way to raise revenue on the backs of our children. I say let's do sensible things--pass comprehensive immigration reform. It, by itself, by the numbers I just showed, provides a tremendous amount of revenue to our government simply by the fact that we harness the energy of so many aspirational people.
BREAK IN TRANSCRIPT
Source