NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007--MOTION TO PROCEED -- (Senate - April 02, 2008)
Mr. KENNEDY. Madam President, a few minutes ago, I was over at the Joint Economic Committee, where we had Mr. Bernanke, who is the head of the Federal Reserve, talking about the economic challenges we are facing in this country and what the administration, and Federal Reserve are going to do about it. I must say, we were long in analysis in terms of how we got here but very short in terms of giving a great deal of hope to the American people as to the next steps that are going to be taken by the administration to help resolve this problem. That is, I find, enormously distressing.
I think American families ought to be certainly encouraged by the efforts that are being made in this body to try to develop a housing program, led by Senator Dodd and also by Senator Shelby and a number of others. I understand the leaders are going to have some announcements later on in the day about the progress that is being made, which is, I think, a very important and significant effort. Hopefully, it will result in providing some help and assistance to families so they can remain in their homes and, hopefully, permit some of those who have been foreclosed on to regain the opportunity to return to their homes.
We have seen in recent weeks a widespread breakdown in the financial markets. The crisis has had far-reaching effects on the rest of the economy, leaving 7.4 million Americans unemployed and 2 million families at risk of foreclosure. Approximately 7,000 families a day are facing that. It is true in my State of Massachusetts. It is true throughout New England and other parts of the country.
We need to act quickly now to keep families in their homes. We are looking forward to our committees making a recommendation on legislation that will permit us to do so.
It is time to restore confidence in our credit markets. That means cracking down on abusive practices in the mortgage industry and shining more light on the operations of investment companies such as Bear Stearns.
The Federal Government stepped in with nearly $30 billion to bail out Bear Stearns. That is a lot of corporate welfare coming before any relief for the millions of families on the brink of losing their homes.
Hundreds of billions of dollars in subsidized loans are being given out freely to banks and investment houses, but the administration is telling millions of Americans struggling to find work that it is too soon to give them additional unemployment benefits. That is unacceptable, and Congress needs to act.
I reviewed at the meeting earlier today the general economic circumstance we find ourselves in as a result of these costs over these last years. Since the President took office, the dollar has lost a third of its value. The Federal debt has skyrocketed by nearly $4 trillion. Our debt to foreign investors has increased by $1 trillion. The stock market on average has grown by only 2.5 percent each year since 2001, far lower than the 7.5-percent annual returns it averaged since 1968, and it lost $2.7 trillion in value since last May--$2.7 trillion in value since last May. Finally, this crisis has wiped out $2.7 trillion in home values in the past year alone. Some economists believe we could lose as much as $8 trillion before the crisis is over.
So I reminded Mr. Bernanke of what I hear from my constituents in Massachusetts who see their hard-earned savings being wiped out. Now we are reading in the papers that older workers are being forced to put off their retirement because of losses in the values of their home and retirement savings. So we ought to know what we can do to help respond to the staggering loss of the Nation's wealth and how working families can cope with their lost savings and wealth. That is a fair question, and I must say I didn't feel we got much of an answer during the course of the hearing this morning.
Some have said we have a devalued dollar and this will increase our exports. But it is true that after the dollar has been weakening for 6 years, the value of our imports is still roughly twice that of our exports, and we are still running a huge trade deficit. Some have said the Fed is taking appropriate steps by lowering interest rates and offering discount loans, but it is true that even after an extended period of lowering interest rates, the economy is still floundering.
One of the very important and significant consequences of this whole economic dilemma is its impact upon the States. States are finding enormous challenges in dealing with their economic situation, and they have two alternatives. They have two alternatives and both of them are bad and will have very adverse impacts on middle-class and working families. First, they can raise their taxes which, at a time when families are hard-pressed to make ends meet, is the wrong policy. Secondly, they can reduce or cut back on services such as Medicaid and other programs that reach out to the neediest in the community. That, obviously, has enormously adverse impacts.
There are ways of helping the States. We have done it in the past. When I asked Mr. Bernanke whether he would favor this administration providing some help and assistance to the States so they don't have to reduce services for their neediest people, he said that is a decision for Congress to make. Well, I asked him. He is the head of the Federal Reserve. Where is the administration? What is their position? I know the power of the Congress on fiscal policy, but where is the administration? We want to work with the administration to try and restore our economy. When Mr. Bernanke says: Well, we are trying to develop a policy of economic growth and price stability, we are all for that. We have seen that. We saw it in the early 1960s with President Kennedy and we have seen it at other times, including in the 1990s. That is a desired goal. But just stating that as being the desire for the administration at a time when we are facing these serious economic challenges remains, I think, an inadequate answer. The idea that the Chairman of the Federal Reserve would state to the Congress that he effectively has no position and the administration has no position on fiscal policy, on providing help and assistance to the States, is mind-boggling to me--mind-boggling--a complete failure to understand the economic challenges people are facing.
I asked the Chairman whether he thought we ought to have a system to effectively regulate the safety of financial products at a time when the financial community has been involved in products that are risky for consumers. We have a regulatory agency--the FDA--that tries and does a pretty good job of addressing the increasing challenge in terms of food safety. We have an FDA to try to deal with and make sure our prescription drugs are going to be safe and efficacious. It does a pretty good job. We are working to try to strengthen those agencies. We have a regulatory agency, the Consumer Product Safety Commission, to try to keep toys that are dangerous to children away from children. So we have a tradition of establishing regulations and regulatory agencies to help protect the consumer. Given the abuses we have seen with financial products in recent times, should we not have a similar agency to help protect consumers from unsafe financial products? Consumers are hard working. They spend a good deal of their time working all day and the rest of the time trying to look after their children. They spend some time with their children helping them to read and with their education, and they don't have a lot of time to go through the various complex financial statements that have become the common rather than the rare. Generally, we had what I consider to be kind of a wishy-washy answer on this one: That the Federal Reserve has some powers--it is useful to have some power--but no precision with regard to what can be done in order to protect average working families from the existing abuses that are out there.
I was discouraged by these responses at a time when we have a serious economic challenge. Families in my State are working and trying to keep their homes, trying, even at this time of the year, to get sufficient resources for home heating oil. Families who may experience the joy that many have in the last week when they receive the notices from colleges in my part of the country that have accepted their children to go on to higher education and then are sobered up by the extraordinary costs and wondering whether they can afford it. Frequently, they use their house as collateral, and now they wonder whether they can afford it. They see the ever-increasing cost of gasoline, and they are struggling and wondering if they can hold onto their jobs, let alone their health insurance.
Serious economic times demand leadership at the executive level and demands leadership in the Congress and demands a bipartisan response to these challenges. We do not have that at this time.
I will review briefly for the Senate about where we are in terms of our economic challenges.
I was asked yesterday morning--or 2 mornings ago, Monday morning--in Boston whether we were in an economic recession. I answered yes. When asked how one would describe it, Americans surveyed think the economy now is in recession; 76 percent say there is good reason why they should believe so. We have seen the response to these economic challenges. We have seen some $260 billion in subsidized loans to banks by the Federal Reserve. We don't know how the public taxpayer is being protected with these loans. We don't understand how the public interest is being protected. We have seen public loans at other times, and the most dramatic one was the automobile industry when the Congress actually was repaid for the loans. It was a successful negotiation, without which we would have seen the complete collapse of the automobile industry in this country and the loss of millions of jobs. It was carefully worked out and the public interest was protected. We don't know what those $260 billion in subsidized loans now will mean. Yet when we asked: Could we get the administration to help and assist us with the extension of the unemployment benefits, the answer was no. No. No to $10 billion to help individuals who work and who want to work, who have a history of working and are losing their jobs because of the economic downturn and need to have that help and assistance in the interim before they get the next job. Would the administration help them? The answer was no. Yet there is $260 billion in loans to the banks. This isn't right. This isn't fairness. This isn't being responsive to the needs of families and working people in this country.
This chart gives an idea about what is happening. While wages have been stagnating, consumers have been facing increasing costs, including the 84-percent increase in gasoline. We have seen health insurance costs continue to rise by 44 percent, college tuition by 47 percent, and wages effectively stagnant over this period, putting enormous pressure on these families.
This chart shows that millions of American families face losing their homes. The number of foreclosures were in the thousands in January of 2006, 100,000 in 2007, and 150,000 in January of 2008; it is up 124 percent from 2006. These are families who are losing their homes. This is a reflection of the loss of homes by hard-working people in this country.
We have now seen the growth of a tent city, something that I think none of us ever thought would again take place in this country. All of us are mindful of the extraordinary pressures that still exist on families as a result of Hurricane Katrina and the hardships those people are facing. But by and large, we don't generally think that because people are going to lose their houses to foreclosure, they are going to be pushed outside. The growth of this tent city has been a new phenomenon in the landscape of America.
This shows that home prices in major cities have fallen now by 11 percent in the last year alone. This chart shows what has been happening in different parts of the country, and it has generally been going down across the country. Some areas are suffering a great deal more than others. The losses in California, Las Vegas, and some of the States in the South have gone down a good deal more than others, but nonetheless it has been across the board, and it has been serious.
This chart demonstrates that the economy is shedding more and more jobs. In January of 2008, 22,000 jobs were lost. In February of 2008, 63,000 jobs, meaning 85,000 jobs were cut in just the past 2 months. We are going to get more jobs numbers on Friday of this week, and most believe we will see this continued trend of individuals losing their jobs. How many more indicators do we need? When you find out you are losing your home, you are unable to keep your job, the costs of all kinds of essentials which you need to have any quality of life are going through the roof--not to recognize we have some important responsibilities to our fellow citizens.
This chart shows 7.4 million Americans are competing for 4 million jobs. These are the numbers of Americans who are unemployed. These are the job openings that are out there at the present time. So we have many more unemployed than there are job openings. If that is the case--and these people want to work, they are glad to work, we want to give them an opportunity to work. Historically, we have said to those people: We are going to give you some unemployment compensation to carry you for a while until we get this number of job openings up, a restoration of our economy, and then you will be able to get the job. But these same people who have worked hard to try to provide for their family, they need to be eligible for some unemployment compensation. The trust fund itself is in surplus at this time. Workers have paid into the fund--and if they haven't paid in, they are unable to gain resources, generally speaking.
So this is the reason we have been struggling to get some help and assistance in unemployment. This is a rather ominous chart because this says economists predict unemployment will skyrocket next year. This says in 2007 the unemployment rate was 4.5 percent, 4.8 percent in 2008, and in 2009 it will be 6.5 percent. The lag time, historically, has reflected itself in the increasing numbers of unemployed. In 2009, we are going to see increasing unemployment across this country. That is the phenomenon.
If we know unemployment will continue to increase--and that was the testimony before the Joint Economic Committee--why aren't we preparing ourselves to reach out and make sure this kind of pressure that is on these families is reduced or at least accommodated to some extent? We know what is going to happen.
This administration missed the boat, so to speak, in understanding where we are going in terms of the economy. They should have known, but they didn't know. For some of us who look at the record of the administration, whether it is on Katrina or Iraq, we can understand how they have missed the boat on a number of different issues. We are finding out they certainly missed the economic boat.
Millions of Americans could lose their health insurance in a recession. We are seeing job losses and workers' declining bargaining power and benefit cuts. In a mild or moderate recession, 4.2 million Americans will lose their health insurance. We know when that happens, when they lose it, effectively the waiting room becomes the emergency room; that becomes their primary care. The average cost is $423 for a visit to the emergency room. When families lose health insurance, they go to the emergency room. And who picks up the tab if they don't have the money? It is the taxpayers who pay for it one way or the other. This will mean additional pressure on local taxpayers who are going to be increasingly pressured themselves because they will lose benefits and they are going to have to pay more in taxes, and the spiral continues.
Yet we have very little willingness from the administration to assist States and local communities to help permit these families to retain their health insurance, which they could do, and which we have done at other times.
This chart is a sad indicator. This says food stamp use nears record levels as the crisis squeezes workers. We have 28 million Americans who are projected to receive food stamps in 2009--record numbers in the history of this country, with families needing to use food stamps because they are desperate. This program was meant to be an emergency program, and it is. But we are finding more and more Americans dependent upon it. Just visit the food banks as I have. We have such superb food banks in Boston and in Massachusetts which have been enormously effective. They are well run, and they involve the community. We are finding out about the difficulty they have in getting good food and also the kind of pressures they are seeing every single day at the food banks.
This is what is happening. This puts millions more into poverty by 2011. The number of people in poverty has grown during this administration by nearly 5 million people, and over 1 million children have gone into poverty. This is going to get even worse in a recession. These numbers are growing.
I listened this morning with a good deal of interest about the increasing number of school dropouts. Colin Powell was on most of the morning programs talking about it. It is directly attributable to the increased poverty. When you get increased poverty in communities, you are going to have increasing numbers of children who will drop out, increasing amounts of gangs, and increasing amounts of violence, make no mistake. We have seen the complete insensitivity of the administration to providing assistance to local communities, whether it was in the COPS community policing program which was such a success or the Byrne grant programs that assist local law enforcement. The administration says: no, no, we have to cut those programs back. We are seeing increasing poverty, with all of its dangerous aspects.
These are very interesting charts. This one shows 22 percent more workers are exhausting Federal unemployment benefits today than at the start of the 2001 recession. Since 1991, we have extended unemployment compensation by 13 weeks some seven times. That's seven times. In the last 20 years--listen to me now--we have not had as high of a rate of long-term unemployment at any time Congress has first extended benefits as we have at the present time. This is an extraordinary phenomenon. These are fellow citizens who have worked hard, want to work, are continuing to look for jobs. They haven't even dropped out of the job market. Yet they are being cut loose here and being denied the unemployment compensation. So what we are demonstrating is increasing insensitivity to these families.
I will just take a few more moments. There are things that can be done. If we were able to get Mr. Bernanke to indicate that he believed some economic stimulus program could be put into place, we are looking for those that have been tried, tested, and demonstrated to have been effective.
You can see on this chart that for every dollar invested in food stamps, it had $1.73 of impact in boosting the economy. For unemployment, it was $1.64 of growth that you were buying for every dollar invested. For infrastructure, it is $1.59. The tax cuts the administration favors do not have as positive an impact. That is what we need. We need to have programs that will provide help and assistance for them.
This chart illustrates how the costs are rising faster than the rate of inflation. So I think we know what needs to be done. We need an economic stimulus program that is targeted to middle-class and working families and will benefit them. We heard today in the Joint Economic Committee about what we have been doing for the large investment firms which get hundreds of billions of dollars, but still there is not the will or desire to try to help real families who are having a most difficult time of it. That is wrong. I don't think the American people will tolerate that. They should not. They should be assured that there are many of us who will not tolerate it and will work effectively until we develop the kind of economic program that is really going to reach out to these families and say to our fellow citizens that help is on the way.
Madam President, I suggest the absence of a quorum.