The Economy

Floor Speech

THE ECONOMY -- (Senate - July 25, 2013)

Mr. SHELBY. Mr. President, as we all know, we have a jobs crisis in America. High unemployment and weak economic growth have festered for nearly 5 years. American families are increasingly dependent upon government, and businesses are being suffocated by it all over this country.

I believe our ability to emerge from this jobs crisis stronger than before depends upon government performing its proper role in the economy. In my view, that role is to establish the conditions for job creation and economic growth in the private sector. Through stable fiscal policy, a simplified tax code, and streamlined regulation, the government can create an economic environment conducive to risk-taking and innovation that leads to real job creation in this country. Unfortunately, the same toxic combination of government overreach and inaction which has failed to produce a jobs recovery in this country thus far also threatens to prolong the jobs crisis, I believe, for years to come.

We learned in the last few days that President Obama is planning a PR blitz to gloss over his failed economic agenda. Over a series of speeches he will give around the country, he said he will discuss his vision for the future. But he will offer nothing new. According to the New York Times, his jobs plan is ``largely repackaging economic proposals that the President has offered for years.'' We need a fresh free market approach to job creation. Stale Obama policy leftovers will not cut it. They are not new ideas. It is not a new beginning.

I will preface my remarks here on the fiscal, tax, regulatory, and monetary policy challenges we face in this country with a more detailed description of the current macro-economic conditions, starting with job numbers.

The official unemployment rate in the United States is 7.6 percent. That makes 54 straight months of unemployment above 7 1/2 percent. However, as grim as those figures are, they do not tell the full story. The Bureau of Labor Statistics reports that the real unemployment rate in this country--known as U6--is 14.3 percent unemployment. U6 includes those who are unemployed, those who want to work but have stopped searching for a job, and those working part time because they cannot find full-time work. Some 22.6 million Americans fall under this category I have just described. That is the real unemployment. That is sad.

The real unemployment rate was 14.2 percent when President Obama took office in January of 2009. It peaked at 17.1 percent in late 2009 and early 2010 but has not fallen below 13.8 percent during his time in office. By all measures this has been a jobless Presidency thus far.

Digging further into the numbers reveals more troubling trends. The number of people working part time because their hours were cut back or because they cannot find full-time work increased by 322,000 people last month to 8.2 million people in this country. The percentage of the unemployed who have been without work for 27 weeks or more also remains dangerously high at 36.7 percent.

An analysis by the Hamilton Project in February of this year found that we will not get back to full employment for another 10 years based on recent job-creation numbers. Meanwhile, economic growth remains sluggish.

The most recent figures from the Bureau of Economic Analysis indicate that the U.S. real gross domestic product, GDP, grew at a tepid 1.8-percent annual rate in the first quarter of 2013--this year.

Average annual real GDP growth was just 0.8 percent over President Obama's first term in office, the full 4 years.

We are experiencing the weakest economic recovery since the Great Depression. As a consequence, government dependency in this country is on the rise. Under President Obama, the number of Americans on food stamps has increased by 47 percent to 47 million people; 8.9 million Americans collect disability pay, and that number is increasing by 70,000 people a month, unheard of in the past.

These are alarming figures. How did we get there? I will explain.

Overspending. The current job crisis, I believe, is a product of the 2008 financial meltdown we all went through. No one denies that President Obama was dealt a tough hand coming into office. He was. But the question is, What did he do about it?

President Obama's first act in office, if you will recall, was to ram a $787 billion stimulus package through Congress. He promised the American people it would keep the unemployment rate from rising above 8 percent. Instead, the unemployment rate hit 10 percent in October of 2009 and remained above 8 percent for the next 43 consecutive months, according to the Bureau of Labor Statistics.

But President Obama's spending binge was just getting started. According to the Congressional Budget Office, the congressional budget deficit in 2009 was $1.413 trillion. In 2010, an additional $1.294 trillion. In 2011 it was another $1.3 trillion, and in 2012 $1.087 trillion--not billion, trillion. Although the 2013 deficit we are in now is projected to get below $1 trillion, it will still be $183 billion higher than any pre-Obama deficit.

Looking at the big picture, the national public debt now stands at just under $17 trillion, an increase of nearly 60 percent under President Obama.

What has been the result of this spending spree? Taxpayers got more debt, but job seekers didn't get more work.

Compounding our fiscal difficulties, Social Security and Medicare remain on an unstable long-term footing. These programs alone already account for 38 percent of Federal spending. But over the next 25 years, the Congressional Budget Office projects their share--that is Social Security and Medicare--of GDP to increase by 40 percent.

According to the trustees of the Social Security and Medicare trust funds, Medicare is expected to run out of money in 13 years, and Social Security will go broke by 2033. Saving these essential programs requires Presidential leadership. Unfortunately, there has been none to speak of. President Obama's spending binges have precipitated multiple budget showdowns and, as a result, they have also presented many opportunities for spending and entitlement reform.

But President Obama has not risen to the occasion yet, despite broad consensus that we must take action to save Social Security and Medicare. President Obama used the power of his office to campaign pre- and postelection for one thing, tax increases.

Tax increases are not the solution to a spending problem. Tax hikes do not create jobs. Tax hikes will not generate growth. Tax hikes kill jobs and allow President Obama to spend more and for Congress and the President to borrow more. I believe what we need in this country is structural tax reform, not tax increases.

According to the most recent data from the Internal Revenue Service, the top 1 percent of taxpayers, those making $369,000 or more, pay 37.38 percent of all income taxes. I wish to say it again. According to the IRS, 1 percent of the taxpayers paid 37 percent of all income taxes.

The top 5 percent of taxpayers, those making $161,000 or more, paid 59 percent of all income taxes. Think about it. The top 10 percent of all taxpayers, those making $116,000 or more, paid 70 percent of all income taxes.

The top 25 percent of taxpayers, those making $69,000 or more, pay 87 percent of all income taxes.

The top 50 percent of taxpayers, those making $34,000 or more, pay 97 percent of all income taxes.

Meanwhile, the other 50 percent, those making $34,000 or less, pay 2.36 percent, a little over, not quite 2.5 percent of all income taxes. In addition, approximately half of U.S. households pay no income tax.

Despite these imbalances, President Obama increased taxes on the wealthiest Americans by $617 billion in January of this year. Still, a Heritage Foundation analysis of Treasury Department data finds that President Obama's fiscal year 2014 budget contains an additional $1.1 trillion in proposed tax increases. This is a tax-and-spend administration.

The size and complexity of the Tax Code adds to the tax burden on the economy. The code contains 55,600 pages, I am told. Taking into account all explanatory materials and IRS rulings, the CCH-Standard Federal Tax Reporter comprises 70,000 pages. Even the instructions for the easiest tax form, the 1040EZ, run 46 pages.

The total cost of complying with the individual and corporate tax requirement in this country was $168 billion last year. According to the IRS Taxpayer Advocate Service, there has been approximately 4,680 changes to the Tax Code since 2001.

The Tax Code is filled with various credits, deductions, and corporate welfare. Analysis by the Joint Committee on Taxation finds that these so-called tax expenditures total $1.3 trillion. We could drastically simplify the Tax Code and lower individuals' rates by eliminating these provisions alone.

Unfortunately, President Obama's approach to taxes is the same as his approach to spending: more, more, more--but no structural reforms that would help us establish the conditions for job creation and economic growth in this country, which we desperately need.

Overregulation of the economy further deteriorates the conditions necessary for job creation and economic growth. The aggregate regulatory burden on American families and businesses is staggering.

A study by the Competitive Enterprise Institute estimates that total costs for Americans to comply with Federal regulations reached $1.806 trillion in 2012. This translates to nearly $15,000 annually per family or 23 percent of average household income.

According to the American Action Forum, the Federal Government so far this year alone has published regulations that will result in $61 billion in compliance costs and 80 million hours of paperwork.

Despite the failure of the stimulus package, President Obama put the unemployed on hold for more than a year while he forced government-run health care through Congress. He promised his plan would reduce health insurance premiums by $2,500. Instead, premiums have already increased by that amount, according to the Kaiser Family Foundation employee health benefits survey. A recent Wall Street Journal analysis finds that premiums could double or even triple for healthy consumers, even under ObamaCare.

All together, ObamaCare is 2,400 pages long and creates 159 new boards, commissions, and government offices. According to the Congressional Budget Office, the 10-year spending estimate for ObamaCare is $1.88 trillion. Analysis by the Joint Committee on Taxation shows that the law creates or raises 21 taxes totaling $1.1 trillion over the next 10 years.

The impact of ObamaCare on hiring is not surprising. According to the U.S. Chamber of Commerce Q2 2013 Small Business Survey, 71 percent of small businesses say the health care law makes it harder to hire people.

The same survey finds that one-half of small businesses say they will either cut hours, reduce full-time employees, or replace full-time employees with part-time workers to avoid the mandate. In addition, Gallup finds that 41 percent of small business owners say they have held off on hiring new employees in response to ObamaCare.

I welcome recent news that the Obama administration will temporarily delay the employer mandate. But in light of the evidence that ObamaCare is increasing health insurance costs and making it harder for the unemployed to find jobs, we should delay the whole law permanently for everyone. We should repeal it.

Congress should start over and craft legislation that will actually lower health care costs and preserve high-quality care without crushing businesses with unnecessary regulations.

President Obama's expansion of government did not end with ObamaCare. In 2010, he forced through Congress his purported response to the financial meltdown, the Dodd-Frank legislation.

We were told that the financial regulatory system needed to be streamlined to prevent future bailouts, and that is true. Instead, Dodd-Frank created more government agencies than it eliminated. Moreover, the law totals 2,300 pages and calls for 400 new rules.

A study by scholars at the Mercatus Center at George Mason University estimates that Dodd-Frank had already generated 2,109 restrictions in the Code of Federal Regulations by the end of 2011, and there is more to come.

At this rate, they project a 26-percent increase in restrictions in relevant sections of the code once all Dodd-Frank rulemakings are finalized in the future. Dodd-Frank will create jobs only for regulatory compliance officers, not for people working every day in the United States.

Earlier this year I introduced legislation that would require regulators to perform a rigorous cost-benefit analysis of new Dodd-Frank regulations. Under the legislation, a regulation dies if its costs exceed its benefits to the economy.

Unfortunately, the Democratic majority in the Senate has not brought up this legislation for consideration. Some observers have subscribed to the cynical view that the legislation is nothing more than an effort to undercut financial reform.

I am the only current Member of the Senate who voted against both financial deregulation in 1999 and the Wall Street bailout in 2008. I subscribe to the view that regulations should protect taxpayers without harming job creators.

President Obama's regulatory zeal finds an outlet now in a war on coal in this country. Aware that it does not have the votes to jam his carbon tax agenda through Congress, he now will direct the Environmental Protection Agency to implement it by way of regulation.

We all know his environmentalist crusade will kill jobs.

An analysis by the Heritage Foundation estimates that drastically reducing the percentage of coal in our Nation's energy portfolio would, by 2030, kill more than 500,000 jobs and increase electricity prices by 20 percent.

In contrast, a Wood Mackenzie study estimates 1.4 million American jobs could be created if the government adopted policies encouraging U.S. energy exploration and production.

I believe the Obama environmental agenda will do more to put family budgets in the red than it will to make the world green.

Instead of waging a war on coal jobs, I believe President Obama should approve and expedite the Keystone Pipeline. This would create tens of thousands of jobs and decrease energy bills for families and businesses. This is the type of clear-headed energy policy we should be pursuing in this country.

In light of the existing and increasing regulatory burden, it is not surprising the Federal Reserve estimates that manufacturers, domestic producers, and other nonfinancial American companies are sitting on a record $1.78 trillion stockpile of cash. Why? If we are to create the conditions for real job creation in this country, we must start by streamlining the regulatory burden on the economy. The rules, restrictions, and mandates facing those who wish to undertake an entrepreneurial endeavor or expand their business through investment and innovation is mind-numbing.

MONETARY POLICY

I would also like to talk a few minutes on monetary policy--very dry, complicated, but very important to all of us.

On July 17, Federal Reserve Chairman Ben Bernanke told members of the House Financial Services Committee ``if we were to tighten policy, the economy would tank.''

What does he mean? He was referring to the Federal Reserve's aggressive use of nontraditional monetary policy to prop up markets since the financial meltdown of 2008. The implied message is striking: The Fed is taking big risks through monetary policy because administration policy is not helping the economy.

The Federal Reserve's balance sheet quantifies just how big a risk Chairman Bernanke feels he must take with so-called monetary stimulus. It currently stands--the Fed balance sheet--at $3.5 trillion, and continues to grow at $85 billion a month under the Fed's so-called quantitative easing program. Among the assets included in the Fed's balance sheet are $2 trillion in U.S. Treasury securities and $1.2 trillion in Federal agency mortgage-backed securities.

To put the acceleration of the Fed's balance sheet into perspective, it took 95 years from the Fed's creation 100 years ago--1913--to reach $1 trillion. The Fed then added the second trillion in just 6 weeks, followed by the third trillion this past January. Under the current quantitative easing program, the Fed's balance sheet will reach $4 trillion in less than 6 months. Where does it end--$5 trillion, $6 trillion, $10 trillion?

As with fiscal policy, we are in uncharted monetary policy waters. The Fed's unprecedented measures carry substantial risk and uncertainty to every man, woman, and child in this country. Should inflation increase, and it will, the Fed would have to tighten monetary policy to contain it. However, should the Fed tighten monetary policy, it risks stalling an already weak economy here. As deep as our fundamental economic challenges already are, the thought that one wrong monetary policy move by the Fed could cripple our entire economy is deeply troubling.

In conclusion, I think we face a serious confluence of economic challenges in this country. It is obvious to me that President Obama's policies have not worked and they will not create work or jobs. Real job creation is a result of entrepreneurship and innovation and risk in the free market. I believe the government's role is to establish conditions for that to occur. We can do this by stabilizing our Nation's finances, simplifying our Tax Code, and streamlining our regulatory framework.

The more President Obama and this administration cling to the tired liberal ideology that more government is always the answer, the longer this job crisis will persist. America deserves better.

I yield the floor, and I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.

The assistant legislative clerk proceeded to call the roll.

Mr. HARKIN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. Without objection, it is so ordered.

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