We need a government that can look to the future and help our economy adjust to a rapidly changing world. We must develop an industrial strategy that includes ending our dependence on imported oil, creating good jobs here at home, and producing goods to sell abroad.
America has the strongest and wealthiest economy in the world. We produce 40% of the world's good's and services and are the leaders in scientific research and technological innovation. But we must not get complacent. We are not managing our great resources properly. We have become the world's largest debtor, and many of our industries are either in trouble or moving abroad. This trend threatens our prosperity and standard of living. We need a new leadership that thinks ahead and knows how to use our assets wisely.
America can lead the world into the age of renewable energy and sustainable economic growth. With the end of oil in sight, the price skyrocketing, and the destructive impacts of global warming already in progress, everyone knows the world has to find alternative energy sources. Let's get there first. As an alternative energy engineer, I can tell you: no place is better positioned for alternative energy development than our own District 11.
District 11 has an established wind-power industry to build on, one of the best solar resources in the country, agricultural wealth (biomass and bio-fuels), an abundance of highly educated workers and technicians, and an unmatched combination of transportation resources including a deep water port, railroads, interstate highways, and an industrial airport. These give us great advantages - a head start in developing this new industry. It's the right thing for America and it will bring the good jobs - jobs that cannot be outsourced - and unparalleled prosperity right here in the Valley.
Our nation has to commit to this path now. But we need leadership in Washington that understands what is needed and has the passion and commitment to make it happen. We need to invest in research and education, get rid of the tax breaks and subsidies that advantage the old fossil-fuel industries, and work with investors and local businesses to help get the new energy technology economy rolling in our community.
Thirty years ago, a small community on the peninsula changed the world by introducing consumer electronics. Today, we can do the same thing right here in District 11, ushering in a new economic era, and bringing prosperity to the entire region.
This is the future. I am committed to make it happen here.
The American economy is the engine of world economic growth. Our nation produces 40% of all the world's goods and services, and as our military and space accomplishments demonstrate, our scientific and technological leadership is still unchallenged. Besides our lead in computer technology, we possess over half of the earth's billionaires, and our major banks and corporations are instrumental in shaping the global economy. Yet most Americans find that life is getting harder. We are increasingly insecure about our futures and worry about what awaits our children. And we are right to be concerned.
In spite of its solid fundamentals, the American economy is being badly mismanaged. It has become no-holds barred opportunity for the wealthy who are riding roughshod over fair market rules and shutting the door to advancement for the middle class. No one is looking at the big picture and planning for the future. America has become the greatest debtor nation in the history of the world. The federal government is over $8.37 trillion in debt - $8,367,661,575,867.99 to be exact (as of 3/30/06). We paid $357 billion just in interest on the debt last year. However, debt is a problem that goes beyond government. Our total private and public debt has passed $40 trillion. American consumers carry $9 trillion in debt - mortgages, credit cards, and car loans. More than half of all this debt has come in just the last10 years - most of it that after the election of George W. Bush. If interest rates go up - which they eventually will - and/or we are hit by a recession, the average citizen and local business will be facing financial ruin.
The rising debt is a symptom of fiscal irresponsibility and grave economic mismanagement. A number of factors have come together to produce this dire situation.
The ballooning federal debt is largely the result of fiscal irresponsibility. The government spends much more than it takes in. 2004 saw a deficit of $413 billion dollars, the highest ever. The Bush administration has cut taxes by almost $2 trillion - tax cuts that primarily went to benefit America's wealthiest families and largest corporations - at a time when the nation is carrying on two wars and trying to provide for homeland security.
Much of our growing debt is linked to our trade deficit. We buy more goods produced by other nations than we sell back to them. And we borrow to pay the bill. In 2004, this trade deficit was a record high of $651 billion. A big part of this is the result our dependence on foreign oil. But increasingly, this deficit is tied to America's dwindling industrial production. For over a hundred years we were the manufacturing leader of the world. Since 1980 we have lost a third of our industrial jobs as increasing numbers of US corporations go out of business or move to low-wage countries. In 2004, we had a trade deficit with China of $162 billion.
Our rapidly expanding consumer debt reflects growing economic inequality. Too many Americans are not sharing in America's economic successes. Over the past decade, 80% of America's wage earners have seen their real take-home pay decline - by more than 3% since G.W. Bush took office. For some of us, it is because we have lost high paying manufacturing jobs and are now employed in lower paying service industries. However, even where good jobs remain, threats of plant closure, layoffs, and outsourcing have stifled wage demands. While labor productivity has risen over 3% each year during the last decade, the employees who produce that added wealth have not shared in the bounty.
There has been a big shift in the distribution of America's wealth. The greatest source of this shift comes from recent changes in our tax codes. A series of income tax cuts benefiting the wealthiest 2%, corporate tax cuts, reduction of taxes on capital gains and dividend incomes have shifted the federal tax burden to the working and middle class. In 1944, payroll taxes provided 7.9% of Federal tax revenues, while corporate taxes provided 33.9%. In 2003, payroll taxes contributed 40% and corporate taxes 7.4%. Until the 1970's, wage earners paid a small portion their earnings in income and payroll taxes. Today, 30.3% of the income of the average wage earner is withheld for Federal taxes. This is a higher percentage than people making over $400,000 pay. They pay just 21% in income and payroll taxes.
That's not fair, and it's not smart. The prosperity of the average American, the consumer is a pillar of our economy. If the incomes of working people decline, markets will shrink. Everyone will suffer.
Economists Are Worried
A survey of 172 members of the National Association of Business Economics (USA Today; 3/21/05) found that economists believe the ballooning debt is a bigger threat to the US economy than terrorism. About 1/4 of the national debt is owned by foreign interests, and our current prosperity largely depends upon foreign nationals investing the dollars gained from their trade surpluses in US Treasury Bills. As Nobel Prize-winning economist Joseph Stiglitz points out (Economist's Voice, Jan 2006), should these foreign interests decide not to invest their dollars in US bonds, but cash them in to purchase other currencies or invest in other nations, the effects could be catastrophic for the US economy.
Globalization and Free Trade'
I am deeply worried about the way this nation is plunging head-long into the global economy without a plan or a national consensus. New transportation and communication technology is transforming the world we live in and giving rise to an ever more closely connected world market. While this newly emerging global economy has benefited many large US corporations and investors, it has had a largely negative impact on local businesses and the average American wage earner. The de-industrialization of our nation has lowered our wage-base, and has been a major component of our growing trade deficit. By moving to Mexico, China or other free trade' zones, US companies not only get cheaper labor, but also avoid paying many US taxes. This is costing America billions of dollars every year - and setting in motion a race to the bottom' of the wage scale. We have to re-think how we participate in globalization. It's clear we have to move in this direction, but we must do so in a way that does not damage our national community.
We Must Think About Our Nations' Future
America has to get its economic house in order. The current binge of profligacy is eroding the foundations of our nation's prosperity and greatness. The government has to stop spending money it doesn't have. We have to re-establish a fair system of taxation and take steps to stop the widening income gap that threatens to impoverish growing numbers of Americans. The key to moving ahead is the development of a national plan for the revitalization of American industry. We have the resources to take the lead in developing alternative energy technology, 21 st Century communication systems, top-level computer and transportation industries, and to once again set the standards for world manufacturing. One of my first priorities will be to get the government to shift tax incentives away from the old' fossil fuel-based economy and invest in science, education, and infrastructure to help bring these changes about.
While we must invest in capital goods, we must also invest in our people. Besides higher paying jobs, we need to address our out-of-control health care costs, our struggling public education system, and our troubled retirement system. America has always prospered best when it spread the benefits widely. That's how a nation creates common purpose. That is what America needs now.