Panel One of a Hearing of the House Education and the Workforce Committee - The Role of Education in Creating Jobs

HEADLINE: PANEL ONE OF A HEARING OF THE HOUSE EDUCATION AND THE WORKFORCE COMMITTEE

SUBJECT: THE ROLE OF EDUCATION IN CREATING JOBS

CHAIRED BY: REPRESENTATIVE JOHN BOEHNER (R-OH)

LOCATION: 2175 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

WITNESSES: ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE BOARD

BODY:

REP. BOEHNER: (In progress) -- this is an election year, and we all know in election years there's a temptation on both sides to point fingers instead of solving problems. And with due respect to all of my colleagues, I know my constituents are tired of a lot of finger- pointing. What they want is sound policies that will help them improve their lives and their families' lives. And it might take some doing on both sides, but I hope we can keep them in mind despite election year pressures.

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REP. THOMAS PETRI (R-WI): Thank you.

Chairman Greenspan, I know we all have to be concerned about deficit spending and it's a serious problem. But I tend to think that some spending is simply spending and other spending is investment. For the sake of our economy and all the good things that come from having a strong economy, we need to invest in education and also in highways and infrastructure necessary to get supplies to factories, goods to market and workers to their jobs. We obviously need to fight waste, fraud and abuse everywhere, but some kinds of spending are pro- growth rather than a drag on the economy, even when we do have deficits. I'd like to hear your comments on that.

MR. GREENSPAN: Well, what specifically would you like me to comment on? That's a pretty broad subject.

REP. PETRI: Well, it obviously is a broad subject. What I'm curious to know is whether we should cut back on education and infrastructure investment in order to improve the deficit numbers, or whether we should go ahead and invest prudently, but maintain and even increase investment in infrastructure and education in order to get a return from it for the economy which will help us reduce the deficit long term.

MR. GREENSPAN: We have basically, in my judgment, overcommitted in this country for the longer term. In other words, as I've said elsewhere, I believe that we have made commitments which I think we're going to have considerable difficulty actually delivering on.

And it's essentially a problem which happens to us periodically, and we have many such claims on limited resources, of which education is one and it is a critical one.

I think we are fortunate in a certain respect in that the private sector is picking up a very considerable part of the educational system: the reeducation system. I mean, for example, there's been a major increase in what we call corporate universities, where there's a very substantial amount of learning that's going on within businesses. And the community colleges are rising at a fairly rapid rate.

Remember, of course, that the vast majority of education spending in this country is state and local, and that a limited part-I believe less than 10 percent-is federal. I do think that we have to find ways of employing our resources as best we can, but there is no question that a crucial element in any budgetary policy is the aggregate GDP of the United States, or put another way the revenue base from which all other expenditures essentially are financed. If education is a critical issue in creating economic growth, as I hope I tried to demonstrate in my prepared remarks, then clearly that is a major economic policy question.

And while I'm not going to presume that I have great insights in how you allocate the very large numbers of very important programs to a limited budget, I would say that I think education, in one sense, is probably more important than infrastructure if I were have to choose between the two. I trust that that does not occur, but this is an increasingly idea-related economy and there's less physical things involved in the value added that we are involved with. So I would put education at the top.

REP. PETRI: Are there any techniques to maximize productive investments rather than just throwing money? I mean, we were arguing here, in the education area, that we were measuring our commitment to education by how much money we were spending rather than by the results of that spending, and we're trying to switch that some. But are there-anything that you'd like to highlight in that area to try to-in the private sector, you look at return on investment. We need to figure out some way of figuring out whether we're investing wisely or just throwing money at problems.

MR. GREENSPAN: I agree that measuring the input, which is putting the money in, is not a necessarily accurate measure of the output. I don't know enough about how to test various different outcomes in the education system. I do know that it is important that we do that because we are falling behind by any measure in our secondary schools. And I should think that we can rest on our legal infrastructure for just so much to create the-our ability to stay in the forefront of technology.

But I can't see-I can't see how we can move forward in this economy without having the right people run this very complex economy which is getting ever more complex every year, which means that our student body has got to get ever more skilled every year. In other words, it's not a question of bringing the skills up to a specific level; we have to increase them every year or we will fall behind.