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+
+ - STATE OF THE AMERICAN WORKFORCE
+
+[House Hearing, 112 Congress]
+[From the U.S. Government Publishing Office]
+
+
+
+
+
+ STATE OF THE
+ AMERICAN WORKFORCE
+
+=======================================================================
+
+ HEARING
+
+ before the
+
+ COMMITTEE ON EDUCATION
+ AND THE WORKFORCE
+ U.S. HOUSE OF REPRESENTATIVES
+
+ ONE HUNDRED TWELFTH CONGRESS
+
+ FIRST SESSION
+
+ __________
+
+ HEARING HELD IN WASHINGTON, DC, JANUARY 26, 2011
+
+ __________
+
+ Serial No. 112-1
+
+ __________
+
+ Printed for the use of the Committee on Education and the Workforce
+
+
+[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
+
+
+
+
+ Available via the World Wide Web:
+ http://www.gpoaccess.gov/congress/house/education/index.html
+ or
+ Committee address: http://edworkforce.house.gov
+
+
+
+
+
+ U.S. GOVERNMENT PRINTING OFFICE
+ 64-120 PDF WASHINGTON : 2011
+-----------------------------------------------------------------------
+For sale by the Superintendent of Documents, U.S. Government Printing
+Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
+area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
+20402-0001
+
+
+
+
+
+
+
+
+
+
+
+ COMMITTEE ON EDUCATION AND THE WORKFORCE
+
+ JOHN KLINE, Minnesota, Chairman
+
+Thomas E. Petri, Wisconsin George Miller, California,
+Howard P. ``Buck'' McKeon, Senior Democratic Member
+ California Dale E. Kildee, Michigan
+Judy Biggert, Illinois Donald M. Payne, New Jersey
+Todd Russell Platts, Pennsylvania Robert E. Andrews, New Jersey
+Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
+Virginia Foxx, North Carolina Virginia
+Duncan Hunter, California Lynn C. Woolsey, California
+David P. Roe, Tennessee Ruben Hinojosa, Texas
+Glenn Thompson, Pennsylvania Carolyn McCarthy, New York
+Tim Walberg, Michigan John F. Tierney, Massachusetts
+Scott DesJarlais, Tennessee Dennis J. Kucinich, Ohio
+Richard L. Hanna, New York David Wu, Oregon
+Todd Rokita, Indiana Rush D. Holt, New Jersey
+Larry Bucshon, Indiana Susan A. Davis, California
+Trey Gowdy, South Carolina Raul M. Grijalva, Arizona
+Lou Barletta, Pennsylvania Timothy H. Bishop, New York
+Kristi L. Noem, South Dakota David Loebsack, Iowa
+Martha Roby, Alabama Mazie K. Hirono, Hawaii
+Joseph J. Heck, Nevada
+Dennis A. Ross, Florida
+Mike Kelly, Pennsylvania
+[Vacant]
+
+ Barrett Karr, Staff Director
+ Mark Zuckerman, Minority Staff Director
+
+
+
+
+
+
+
+
+
+
+
+
+
+ C O N T E N T S
+
+ ----------
+ Page
+
+Hearing held on January 26, 2011................................. 1
+
+Statement of Members:
+ Andrews, Hon. Robert E., a Representative in Congress from
+ the State of New Jersey, letter, dated January 26, 2011,
+ from 250 economists in support of the Patient Protection
+ and Affordable Care Act of 2010............................ 66
+ Kline, Hon. John, Chairman, Committee on Education and the
+ Workforce.................................................. 1
+ Prepared statement of.................................... 3
+ Kucinich, Hon. Dennis J., a Representative in Congress from
+ the State of Ohio, prepared statement and questions
+ submitted.................................................. 58
+ Miller, Hon. George, senior Democratic member, Committee on
+ Education and the Workforce................................ 4
+ Prepared statement of.................................... 6
+ Roby, Hon. Martha, a Representative in Congress from the
+ State of Alabama, prepared statement of.................... 7
+
+Statement of Witnesses:
+ Boushey, Heather, senior economist, Center for American
+ Progress Action Fund....................................... 17
+ Prepared statement of.................................... 18
+ Responses to questions submitted by Mr. Kucinich......... 84
+ Holtz-Eakin, Douglas, president, American Action Forum....... 29
+ Prepared statement of.................................... 32
+ McDonnell, Hon. Bob, Governor, Commonwealth of Virginia...... 9
+ Prepared statement of.................................... 11
+ Messinger, Dyke, president and CEO, Power Curbers, Inc., on
+ behalf of the National Association of Manufacturers........ 12
+ Prepared statement of.................................... 14
+ Additional submission: ``Manufacturing Strategy for Jobs
+ and a Competitive America,'' dated January 2011........ 74
+
+
+ STATE OF THE AMERICAN WORKFORCE
+
+ ----------
+
+
+ Wednesday, January 26, 2011
+
+ U.S. House of Representatives
+
+ Committee on Education and the Workforce
+
+ Washington, DC
+
+ ----------
+
+ The committee met, pursuant to call, at 2:10 p.m., in room
+2175, Rayburn House Office Building, Hon. John Kline [chairman
+of the committee] presiding.
+ Present: Representatives Kline, Petri, Biggert, Platts,
+Wilson, Foxx, Hunter, Roe, Thompson, Walberg, DesJarlais,
+Hanna, Rokita, Bucshon, Gowdy, Barletta, Noem, Roby, Heck,
+Kelly, Miller, Payne, Andrews, Scott, Woolsey, McCarthy,
+Kucinich, Davis, and Hirono.
+ Staff Present: James Bergeron, Director of Education and
+Human Services Policy; Kirk Boyle, General Counsel; Casey
+Buboltz, Coalitions and Member Services Coordinator; Ed Gilroy,
+Director of Workforce Policy, Marvin Kaplan, Professional Staff
+Member; Barrett Karr, Staff Director; Ryan Kearney, Legislative
+Assistant; Brian Melnyk, Staff Assistant; Brian Newell, Press
+Secretary; Molly McLaughlin Salmi, Deputy Director of Workforce
+Policy; Mandy Schaumburg, Education Policy Counsel; Ken
+Serafin, Workforce Policy Counsel; Linda Stevens, Chief Clerk/
+Assistant to the General Counsel; Joseph Wheeler, Professional
+Staff Member; Aaron Albright, Minority Press Secretary; Tylease
+Alli, Minority Hearing Clerk; Jody Calemine, Minority General
+Counsel; Jose Garza, Minority Deputy General Counsel; Brian
+Levin, Minority New Media Press Assistant; Jerrica Mathis,
+Minority Legislative Fellow, Labor; Celine McNicholas, Minority
+Associate Labor Counsel; Richard Miller, Minority Senior Labor
+Policy Advisor; Megan O'Reilly, Minority Labor Counsel; Julie
+Peller, Minority Deputy Director of Policy and Planning;
+Meredith Regine, Minority Policy Associate, Labor; Melissa
+Salmanowitz, Minority Press Secretary; Michele Varnhagen,
+Minority Labor Policy Director; and Mark Zuckerman, Minority
+Staff Director.
+ Chairman Kline. A quorum being present, the committee will
+come to order. I want to make a couple of administrative
+announcements to our guests and to our panel and to my
+colleagues here on the committee. The weather, as all here
+know, has turned a little tough out there. Planes are being
+canceled, flights are being canceled and rescheduled and moved,
+and the roads are slippery, and I am advised that the Office of
+Personnel Management is encouraging Federal employees to leave
+at 4:00. While that doesn't directly apply to us, the
+conditions that will create out there does. So I am going to
+announce to all that we will have a hard stop at 4:00 out of
+respect to all.
+ I think, I want to, I am going to make an opening statement
+briefly and turn to Mr. Miller in a minute. But I want to thank
+members for coming and I know that Members of Congress will be
+leaving as the flight schedules direct. So when you need to go,
+when the plane is ready to roll, we understand you will be
+departing. All right.
+ Well, good afternoon and welcome to our first hearing of
+the 112th Congress. I appreciate the time our witnesses have
+spared to be with us today. Whether you are a Governor, a small
+manufacturer, an economist, your time is valuable and we are
+grateful for your participation today, all of us.
+ It is no secret the American workforce faces significant
+challenges. Over 20 consecutive months' unemployment has
+remained at 9 percent or higher. During that same period of
+time, more than 14 million Americans have been unemployed and
+searching for work. Roughly 1.3 million unemployed workers have
+become so discouraged by searching and coming up empty that
+they have given up hope and abandoned the labor force entirely.
+ Despite some unprecedented attempts, perhaps best reflected
+in the failed $814 billion stimulus bill passed in the early
+hours of the last Congress, the Federal Government cannot
+legislate or regulate its way to job creation in our country.
+It can, however, provide some sense of certainty that will give
+the young entrepreneur and small business owner the confidence
+he or she needs to go forward and invest in their new idea or
+company.
+ Unfortunately, over the last 2 years we have seen the
+Federal Government move in a disturbingly different direction,
+one that creates economic uncertainty felt by businesses both
+large and small. A number of policies and proposals have caused
+many business owners to think twice before expanding their
+operations or hiring additional workers.
+ At the center of this uncertainty is the recent health care
+law. We have all heard the story of a small business owner
+already struggling to make payroll, who now faces a penalty for
+failing to provide government-approved health care. Despite
+promises health care reform would lower costs, the chief
+actuary at the Centers for Medicare and Medicaid Services
+reports national health care spending will increase by some
+$311 billion over the next 10 years. This health care law has
+forced business owners to choose between higher health care
+costs or government penalties. To suggest this doesn't
+discourage job creation in this country is to ignore, I
+believe, reality.
+ The President has suggested a willingness to fix what is
+broken in the law. I would suggest the employer mandate is the
+place to start. While one arm of the Federal bureaucracy
+transforms our health care economy, another is considering
+sweeping changes to the law governing the relationship between
+employers and labor unions.
+ The National Labor Relations Board is supposed to safeguard
+the rights of workers against the illegal actions of both
+employers and unions. Today there are conversations taking
+place at the NLRB that will have profound consequences for
+America's workers. Many of the discussions going on behind
+closed doors should be debated here in this committee, on the
+floor of this Congress and in the public, in full view of the
+American people. No Federal agency or board should rewrite the
+rules of the game to favor any special interest over the
+interest of all Americans.
+ Despite these challenges, I am happy to see the
+administration reconsider various proposals that would have
+made it more difficult for businesses to plan and invest in the
+future. Recently the administration withdrew its proposal to
+re-interpret the noise feasibility standards, a proposal that
+would have imposed significant costs on businesses without any
+real justification. And yesterday the administration announced
+it is reconsidering proposed changes to employer injury and
+illness laws that would have created a significant paperwork
+burden for employers. While I welcome these actions by the
+President, more needs to be done.
+ Well, that is why we are here today. We want to learn about
+the policies that may be standing in the way of job creation
+and find better solutions to protect the rights, safety and
+prosperity of the country's workers.
+ And I am now pleased to yield to our senior Democratic
+member, the ranking member, Mr. Miller, for an opening
+statement.
+ [The statement of Chairman Kline follows:]
+
+ Prepared Statement of Hon. John Kline, Chairman,
+ Committee on Education and the Workforce
+
+ Good afternoon and welcome to our first hearing of the 112th
+Congress. I appreciate the time our witnesses have spared to be with us
+today. Whether you are a governor, a small manufacturer, or an
+economist, your time is valuable and we are grateful for your
+participation today.
+ It is no secret the American workforce faces significant
+challenges. For 20 consecutive months unemployment has remained at 9
+percent or higher. During that same period of time, more than 14
+million Americans have been unemployed and searching for work. Roughly
+1.3 million unemployed workers have become so discouraged by searching
+and coming up empty that they have given up hope and abandoned the
+labor force entirely.
+ Despite some unprecedented attempts, perhaps best reflected in a
+failed $814 billion stimulus bill passed in the early hours of the last
+Congress, the federal government cannot legislate or regulate its way
+to job creation in our country. It can, however, provide some sense of
+certainty that will give the young entrepreneur or small business owner
+the confidence he or she needs to go forward and invest in their new
+idea or company.
+ Unfortunately, over the last two years, we have seen the federal
+government move in a disturbingly different direction--one that creates
+economic uncertainty felt by businesses both large and small. A number
+of policies and proposals have caused many business owners to think
+twice before expanding their operations or hiring additional workers.
+ At the center of this uncertainty is the recent health care law. We
+have all heard the story of a small business owner already struggling
+to make payroll who now faces a penalty for failing to provide
+government-approved health care. Despite promises health care reform
+would lower costs, the chief actuary at the Centers for Medicare and
+Medicaid Services reports national health care spending will increase
+by $311 billion over the next 10 years. ObamaCare has forced business
+owners to choose between higher health care costs or government
+penalties. To suggest this doesn't discourage job creation in this
+country is to ignore reality.
+ The president has suggested a willingness to fix what's broken in
+the law. I would suggest the employer mandate is the place to start.
+ While one arm of the federal bureaucracy transforms our health care
+economy, another is considering sweeping changes to the law governing
+the relationship between employers and labor unions. The NLRB is
+supposed to safeguard the rights of workers against the illegal actions
+of both employers and unions. Today there are conversations taking
+place at the NLRB that will have profound consequences for America's
+workers. Many of the discussions going on behind closed doors should be
+debated here in this committee, on the floor of this Congress, and in
+the public--in full view of the American people. No federal agency or
+board should rewrite the rules of the game to favor special interests
+over the interest of all Americans.
+ Despite these challenges, I am happy to see the administration
+reconsider various proposals that would have made it more difficult for
+businesses to plan and invest in the future. Recently, the
+administration withdrew its proposal to reinterpret the noise
+feasibility standards, a proposal that would have imposed significant
+costs on businesses without any real justification. And yesterday, the
+administration announced it is reconsidering proposed changes to
+employer injury and illness logs that would have created a significant
+paperwork burden for employers. While I welcome these actions by the
+President, more needs to be done.
+ As we look to these recent decisions by the administration, we will
+be guided by President Reagan's aged wisdom--trust but verify. We will
+trust the president when he says he wants to review the regulatory
+structure's affect on jobs, but we will verify that promise against the
+actions his administration takes over the next two years.
+ That is why we are here today. We want to learn about the policies
+that may be standing in the way of job creation, and find better
+solutions to protect the rights, safety, and prosperity of the
+country's workers.
+ I am pleased to yield now to our senior Democratic member,
+ Mr. Miller, for an opening statement.
+ ______
+
+ Mr. Miller. Thank you very much, Mr. Chairman. And I want
+to also thank our witnesses for joining us this afternoon.
+ Today's hearing on where our Nation's workers stand is a
+timely and an important topic to explore. For most of the 20th
+century, America's working families and middle class made our
+democracy strong. The promise was that if you worked hard,
+played by the rules, you could save something for your kids'
+education, have enough left over to save for a comfortable
+retirement.
+ Unfortunately this promise is being broken for working
+families. For 30 years workers have been hit by stagnant pay,
+skyrocketing health costs, rising tuition and a loss of
+retirement security. In lieu of fair pay increases, Americans
+turned to credit to maintain their middle-class standards. With
+certain Federal policies making income inequality worse, wealth
+chased after the next bubble, leading to the Wall Street
+scandals. The economy became over-leveraged, and debt exploded
+to levels not seen since just before the Great Depression.
+ The bill came due in the fall of 2007. Since then more than
+8 million Americans lost their jobs, further fueling the
+foreclosure and the debt crisis. Swift and decisive action was
+needed to avoid the total economic catastrophe. Congress and
+the Obama administration came together and made immediate
+investments to save the economy. The Recovery Act was the first
+step, and we see the result today: Over 4.7 million jobs have
+been created or saved, according to the CBO, as a direct result
+of the Recovery Act.
+ The broad range of experts disagree, including private
+economists across the political spectrum and the nonprofit
+Congressional Budget Office. In official government statistics,
+our actions saved the economy from slipping into deeper crisis.
+ While there is much more work to be done to dig our country
+out of this mess, the private sector job growth has increased
+by 1.34 million jobs last year. That means that the Obama
+policies created more jobs in less than 2 years, than the
+entire 8 years under the Bush administration.
+ Even the manufacturing sector is seeing growth for the
+first time since 1997. Private economists are predicting a gain
+this year of 330,000 manufacturing jobs, a dramatic change from
+every year in recent memory. Ford announced its plan to add
+7,000 jobs over the next 2 years. Whirlpool, Dow Chemical and
+Caterpillar have all cannoned that they are going to keep jobs
+in America and even expand operations.
+ Also, corporate profits are back to their highest point
+since before the recession began, and the stock market is also
+up.
+ The non-farm, non-financial business sector is holding more
+than $1.9 trillion in cash, the highest level since 1959.
+ Policies to stimulate the economy are not, by themselves,
+enough. We must also begin to rebuild the foundations of a
+strong middle class. By doing, so we ensure that the recovery
+is fair and that it is sustainable.
+ On that front, Democrats in Congress, working with the
+Obama administration, took critical action to grow and
+strengthen our Nation's middle class. Today, all Americans will
+have access to quality, affordable health coverage, no matter
+if their employer provides it or if they change jobs or they
+lose their job.
+ Today, college students have access to critical financial
+assistance they need to go to college and to stay in college
+and to earn the critical skills to keep America competitive.
+Today, businesses have powerful new tax incentives for
+businesses to hire the unemployed Americans and expand their
+businesses. Today, workers have the Department of Labor that
+puts worker safety first, all of which has helped reduce
+workplace injuries and makes businesses more efficient. Today,
+workers have a fair minimum wage, a rate that was increased by
+Democrats after Republicans blocked an increase for a decade,
+shamefully allowing the value of the rate to drop to a 50-year
+low. Today, small businesses have more access to credit
+necessary to start and continue or expand their businesses. And
+today, we have a revitalized supervision of our Nation's
+financial institutions to avoid another meltdown in our
+financial system.
+ There is more to be done to heal our economy. We need to
+move forward on key investments to help unleash our Nation's
+competitiveness and innovation. One area that this committee
+can work on is the rewrite of the Elementary Secondary
+Education Act so that our Nation's school children can be
+successful in the classroom and beyond.
+ Every initiative that goes through this committee must be
+judged by whether or not it will grow and strengthen the middle
+class. We cannot double down on go-go bubble economics and
+trickle-down tax policy. All across the Nation, communities are
+confronting the lack of high-skilled workers, even as
+unemployment is high. In my own communities, business, labor,
+and community colleges have come together with a new urgency to
+tackle this problem.
+ We must support these local efforts to create jobs, to stay
+competitive, to act decisively, nationally, to build and to
+maintain a higher skilled workforce. Falling behind is not in
+America's DNA. It never has been and it never will be. We have
+the hardest-working people in the world, and as the President
+pointed out last night, the most productive workers in the
+world, and I hope that we can look forward to solutions that
+help grow and strengthen America's middle class.
+ And I thank you very much for having this most timely
+hearing. And I just want to apologize to the witnesses. I am
+one of those who is trying to catch the last flight tonight out
+of Dulles. So I love your testimony. I am not flying with you.
+ [The statement of Mr. Miller follows:]
+
+ Prepared Statement of Hon. George Miller, Senior Democratic Member,
+ Committee on Education and the Workforce
+
+ Good afternoon, Mr. Chairman.
+ Today's hearing on where our nation's workers stand is a timely and
+important t topic to explore.
+ For most of the 20th century, America's working families and middle
+class made e our democracy strong. The promise was that if y you work
+hard, play by the rules, you could save e something for your kids'
+education and have enough left over to save for a comfortable
+retirement.
+ Unfortunately, this promise is being broken for working families.
+For thirty years, workers have been hit by stagnant pay, skyrocketing
+health costs, rising tuition and loss of retirement security. In lieu
+of fair pay increases, Americans turned to credit to maintain their
+middle class standard of living.
+ With certain federal policies making income inequality worse,
+wealth chased after the next bubble, leading to the Wall Street
+scandals. The economy became over-leverage ed. Debt exploded to levels
+not seen since e just before the Great Depression.
+ The bill came due in the fall of 2 2007. Since then, more than 8
+million Americans s lost their jobs, further fueling the foreclosure
+and debt crisis. Swift and decisive action was needed to avoid total
+economic catastrophe.
+ Congress and the Obama administration came together and made
+immediate investments to save the economy. The Recovery Act t was the
+first step and we see the results today.
+ Over 4.7 million jobs have been created and saved according to the
+CBO as the direct result of the Recovery Act.
+ A broad range of experts agree--including private economists across
+the political spectrum, the nonpartisan Congressional Budget Office,
+and official government statistics--our actions saved the economy from
+slipping into a deeper crisis.
+ While there is much more work to be done to dig our country out of
+this mess, private sector job growth has increased by 1.3 million jobs
+last year. That means that the Obama policies created more jobs in less
+than two years then the entire eight years of the Bush administration.
+ Even the manufacturing sector has seen growth for the first time
+since 1997. Private economists are predicting a gain this year of
+330,000 manufacturing jobs--a dramatic change from every year in recent
+memory.
+ Ford announced that it planned to add 7,000 jobs over the next two
+years. Whirlpool, Dow Chemicals and Caterpillar all have announced that
+they are going to keep jobs in America and even expand operations.
+ Also, corporate profits are back to their highest point since
+before the recession began, and the stock market is up. The nonfarm,
+nonfinancial business sector is holding more than $1.9 trillion in
+cash, the highest level since 1959.
+ Policies to stimulate the economy are not, by themselves, enough.
+We must also begin to rebuild the foundations of a strong middle class.
+By doing so, we ensure that the recovery is fair and sustainable.
+ On that front, Democrats in Congress working with the Obama
+Administration took critical actions to grow and strengthen our
+nation's middle class.
+ Today, all Americans will have access to quality,
+affordable health coverage no matter if their employer provides it, or
+if they change jobs
+ Today, college students have access to critical financial
+assistance they need to go to college, and stay in college--and earn
+the critical skills to keep America competitive.
+ Today, businesses have powerful new tax incentives for
+businesses to hire unemployed Americans and expand their businesses
+ Today, workers have a Department of Labor that puts worker
+safety first--all which helps reduce workplace injuries and makes
+business more efficient.
+ Today, workers have a fairer minimum wage rate--a rate
+that was increased by Democrats after Republicans blocked an increase
+for a decade--shamefully allowing the value of the rate to drop to a 50
+year low.
+ Today, small businesses have more access to credit
+necessary to start, continue, or expand their business.
+ And today, we have a revitalized supervision of our
+nation's financial institutions to avoid another meltdown of our
+financial system.
+ There is more to be done to heal our economy. We need to move
+forward on key investments to help unleash our nation's competitiveness
+and innovation.
+ One area this committee can work on is to rewrite the Elementary
+and Secondary Education Act so that nation's schoolchildren can be
+successful in the classroom and beyond.
+ Every initiative that goes through this committee must be judged on
+whether it will help to grow and strengthen the middle class. We cannot
+double-down on go-go bubble economics and trickle down tax policy.
+ All across the nation, communities are confronting a lack of highly
+skilled workers, even as unemployment is high. In my own communities,
+business, labor, and community colleges have come together with a new
+urgency to tackle this problem.
+ We must support these local efforts to create jobs, stay
+competitive, and act decisively nationally to build and maintain a
+highly skilled workforce. Falling behind is not in America's DNA--it
+never has, and never will be.
+ We have the hardest working people in the world and I hope we can
+look forward to solutions to help grow and strengthen America's middle
+class.
+ I yield back.
+ ______
+
+ Chairman Kline. I thank the gentleman. And we all
+understand. There will be a Le Mans start for the airport here
+pretty quick, I am sure. I thank the gentleman for his
+statement and for the cooperation that he has shown over the
+years when he was the chair of this committee.
+ Pursuant to committee rule 7(c), all members will be
+permitted to submit written statements to be included in the
+permanent hearing record.
+ [The statement of Mrs. Roby follows:]
+
+ Prepared Statement of Hon. Martha Roby, a Representative in Congress
+ From the State of Alabama
+
+ Thank you Mr. Chairman. This being my first hearing of the
+Education and Workforce, I want to take a moment to express know how
+much I look forward to working with you over the next two years. I look
+forward to an open debate on reforming health care, ensuring our
+children have the resources to reach their full potential, and
+innovative ways for job creation. The hearing today is the first step
+toward this in regards to the state of our workforce. I want to thank
+the witnesses for appearing today at our first full committee hearing.
+ The Administration administered an $814 billion ``stimulus''
+package in 2009 that has done nothing to stimulate the economy--
+instead--resulting in a loss of 2.1 million jobs. During the Great
+Depression of the 1930s, the New Deal was designed to address the ``3
+Rs''--relief, recovery and reform. Out of the New Deal, this country
+became stronger with improved infrastructures like the Hoover Dam,
+improved national transportation system and a more secured financial
+system. Unfortunately, the Obama's Stimulus Package did not provide
+similar results. This nation is still left with an aging
+infrastructure, high unemployment, high levels of uncertainty in
+business, and an out-of-control federal debt.
+ During my travels around the district, I hear from so many
+constituents on about the negative impact that the recent efforts by
+the federal government are having on their businesses and jobs. I
+specifically hear about the opposition to the Patient Protection and
+Affordable Care Act signed into law last year. Last week, the House
+voted to repeal the law that created significant uncertainty for
+businesses-particularly for small business where job growth is so
+critical in turning around this recession. I recently spoke with one of
+my constituents from Headland, Alabama, who owns a Pizza Hut. He told
+me that he will most likely have to shut down his business due to the
+added cost from Obama Health Care. I heard from another constituent,
+who owns several pharmacies in the southeast, that he had the ability
+to create four new jobs bust has not due to the uncertainty of what the
+federal government will place on him next.
+ I look forward to the testimony today from our witnesses on their
+observations of these and other factors that have been roadblocks to
+America's recovery. Only last month it was reported that December was
+the 20th month that unemployment was still above 9 percent nationally.
+In my home state of Alabama, unemployment rose slightly to 9.1 percent,
+which represents 195,000 unemployed workers in the state. This
+Committee must move forward in legislation that will take away the
+obstacles to growth for small businesses to help turn around this
+recession. The answer to economic growth is not a national answer, but
+one on every Main Street and farm of this nation-for small business to
+operate and build upon innovation. Once again thank you Mr. Chairman
+for holding this hearing.
+ ______
+
+ Chairman Kline. It is now my pleasure to introduce our
+distinguished panel of witnesses. Governor Bob McDonnell is the
+71st Governor of Virginia. Prior to assuming office, the
+Governor served as the 44th Attorney General of Virginia from
+2005 to 2009, and was a member of the Virginia House of
+Delegates from 1992 to 2006. Governor McDonnell also served in
+the U.S. Army, both Active Duty and Reserve, retiring as a
+lieutenant colonel in 1997. In addition to his long and
+distinguished public and military service, the Governor also
+has experience in the private sector, having worked for
+American Hospital Supply Corporation, a Fortune 500 company,
+for a number of years. He holds master's degrees in business
+administration and public policy, as well as a law degree.
+Welcome, Governor.
+ Our next witness, Mr. Dyke Messinger, is the President and
+CEO of Power Curbers, Incorporated in Salisbury, North
+Carolina. Power Curbers is a 55-year old family-owned company
+in Salisbury, North Carolina, that manufacturers paving
+equipment to form concrete curbs and gutters, highway safety
+barriers and other special applications. In 2007 Mr. Messinger
+was awarded the Manufacturing Champion Award by the Charlotte
+Chamber of Commerce, as well as the Sam Walton Business Leader
+Award by the Salisbury, Rowan County Chamber of Commerce. In
+addition to his service with Power Curbers, Mr. Messinger
+serves on the Board of Directors of the National Association of
+Manufacturers.
+ Dr. Heather Boushey is a senior economist at the Center for
+American Progress. Her research focuses on employment, social
+policy, and family economic well-being. Prior to her work at
+the Center for American Progress. Dr. Boushey was an economist
+with the Joint Economic Committee of the U.S. Congress, the
+Center for Economic and Policy Research, and the Economic
+Policy Institute. Welcome.
+ And Dr. Douglas Holtz-Eakin is currently the President of
+the American Action Forum. Since 2001 he has served in a
+variety of policy positions which include his service as the
+chief economist of the President's Council of Economic Advisors
+and as the Director of the Congressional Budget Office from
+2003 to 2005.
+ Welcome to you all. There are little boxes in fronts of
+you. Those lights will illuminate. The system here is you get a
+green light at the start of your remarks and some 4 minutes or
+so into it, you get a little yellow light, and at the end of 5
+minutes you get a red light. We would ask you somewhere in
+there to try to wrap up. I am not prepared at this, my first
+hearing, to gavel anybody down when the light turns red. But
+please try to wrap up your comments. And we would like to hear
+from all of you. And then as time allows, we would move into
+questions. So, at this time, we will start here and go that
+way, Governor.
+
+ STATEMENT OF HON. ROBERT F. McDONNELL, GOVERNOR, COMMONWEALTH
+ OF VIRGINIA
+
+ Governor McDonnell. Mr. Chairman. Thank you very much for
+your kind invitation to come and talk to you about this
+critically important topic of job creation and economic
+development. I am delighted to come from across the Potomac to
+your south to be with you. It is good to be with my friend,
+Congressman Scott, as well. I don't think there is any more
+important issue facing the American public than that issue, as
+well as spending control, and so it is very timely that you
+make this your first topic.
+ I was particularly gratified with the President's speech
+last night and his focus on job creation and workforce
+development and access to the American dream. I think that is
+something that crosses all party lines, and the question is how
+do we best get there; what actually works at the state and
+Federal level to promote that?
+ I will share just a couple of thoughts with you in three or
+four categories about some experiences I have from Virginia
+that are working and then some things we would like to ask you
+to consider up here.
+ I would say that over the last year we have taken a very
+strong set of steps in Virginia to cut spending and focus on
+economic development. As a result of that, we have turned a
+deficit into a $400 million surplus and we have been ranked
+this year either number one or number two as far as the most
+business-friendly State in the country. We are ranked fourth in
+total job creation, ninth lowest unemployment rate. So we have
+learned a little bit about some of the things that work that I
+wanted to share with you.
+ First is what is the overall climate; what can you do in
+the States? It starts to keeping our environment where taxes
+and regulation and litigation are all kept to a minimum. Strong
+right to work laws. We are 1 of 22 states that have that. That
+is a magnet for business, great higher education system.
+ And then thirdly, some of the intangibles: tone, saying you
+are open for business and welcoming business, not attacking
+business, which I think is critically important and I was
+delighted to see some of that last night as well in the
+President's remarks.
+ We have also set some big aspirational goals, I think, that
+are helpful, making Virginia the best State in America for
+small business, making it the energy capital of the east coast.
+Businesses have now come and are gravitating around those
+goals.
+ The second topic that I would say is there are some things
+in the short run that both Congress and the States can do to
+really attract business. Some of the things we have done in
+Virginia would be creating new economic development incentives
+for businesses to come here. I look at me not competing just
+against Carolina, but against China, India, Singapore, Taiwan,
+and other countries and a global economy.
+ So we have been much more aggressive in funding things like
+a Governors Opportunity Fund to provide incentives to business
+to relocate; investments in mega sites, opening up trade
+offices in India, and China; focusing on some of the core
+competencies that our State has in things like aerospace and
+agriculture, tourism, film, wine, things we are good at; and
+then putting more incentives to attract new businesses as well.
+And then major tax credits and things that would create jobs
+and produce manufacturing jobs to return back to our
+Commonwealth.
+ The third thing I would say is the long-term approach. The
+President touched on this a little bit last night, and that is
+the importance of higher education. We have a major new
+initiative that I proposed to our general assembly just a
+couple of weeks ago to create 100,000 new degrees in Virginia
+over the next 15 years. I am very concerned, as you are, about
+the future of American competitiveness if we continue to lag
+behind in science, technology, engineering, math and health
+care, and the number of degrees that we are producing there
+compared to some of the Pacific Rim countries.
+ So we have got to invest and create more opportunities for
+our young people to be able to go to institutions of higher
+education. But we have got to run colleges, I think, a little
+bit more like a business so that we can keep the college
+tuitions low. They have doubled in the last 10 years in
+Virginia, and you price a lot of middle-class kids out if we
+don't find ways collectively to increase access, reduce cost,
+and focus on these areas of STEM.
+ The final area, Mr. Chairman, I would like to discuss with
+you are some of the things that you all here in the Federal
+Government can do to help us or to hurt us. And I want to tell
+you about a couple of those that I think can be impediments.
+And again, most Governors would say we really believe, not only
+under the tenth amendment, but the fact that we are closer to
+the people and therefore govern a little better, as Mr.
+Jefferson said, that we ought to have a little more latitude to
+be able to do these free-market things that we believe will
+work.
+ Let me tell you a couple that I think don't help. Major new
+regulations. I think Heritage has estimated there were 43 major
+new rules promulgated in 2010, the largest number in 30 years,
+at a cost of $26 billion to business nationally.
+ The President talked last night about introducing an
+executive order to say we are going to cut down on regulations,
+find things that don't work, inhibit entrepreneurship and small
+business development and free enterprise. I applaud that. I
+urge you to hold his feet to the fire and make sure you really
+do that to cut down on regulation.
+ Secondly is bills like card check and cap-and-trade that
+you have proposed and considered in the past that, for me as a
+coal-producing State, that dramatically hike up energy costs,
+undermine our Right to Work laws. That is not good for me as
+the chief executive officer of a State.
+ There are some rules that EPA has promulgated that are
+noble; for instance, in cleaning up the Chesapeake Bay. But the
+TMDLs will cost Virginia about $700 million in unfunded
+mandates in our State and our businesses over the next 15
+years.
+ Mr. Chairman, you mentioned health care. We estimate about
+$2 billion in unfunded mandates on the businesses and the State
+of Virginia over the next 2 years as a result of the health
+care bill.
+ So what I would say to you is that the things that we can
+do in the short and the long term involve more opportunity,
+more education--not more guarantees, keeping a lid on
+regulations, on taxes, inhibiting States like mine that have a
+Right to Work law with things like card check that get in the
+way. We would ask you to restrain from doing those things so
+that we can continue to be the laboratories of innovation that
+I think our Constitution contemplates.
+ So thank you, Mr. Chairman, I look forward to your
+questions.
+ Chairman Kline. Thank you, Governor.
+ [The statement of Governor McDonnell follows:]
+
+ Prepared Statement of Hon. Bob McDonnell, Governor,
+ Commonwealth of Virginia
+
+ Good afternoon, Mr. Chairman. Thank you for the kind invitation to
+join you all this morning to talk about the state of the American
+Workforce.
+ Over 400 years ago, the Commonwealth of Virginia began as an
+international business venture--and we have a strong and proven track
+record of success. While over the past few years the economy
+unfortunately slowed down in Virginia, as it did nationally, the fervor
+and passion of the entrepreneurial spirit continues to remain strong in
+the people across the Commonwealth from Chincoteague on the Eastern
+Shore to the Cumberland Gap in the far southwest.
+ When I took office just over a year ago, we set out to create a
+Commonwealth of Opportunity.
+ We are the northernmost ``Right to Work'' state, we have a pro-
+business environment that fosters economic growth with low taxes and
+reduce regulations. We have a strong, diverse workforce prepared to
+meet the needs of businesses today. We have been recognized nationally
+as one of the best states in which to do business. While still
+unacceptably high with an unemployment rate of 6.7 percent, and over
+280,000 Virginians out of work, we do have the 9th lowest unemployment
+rate in the nation.
+ We have put forth bold initiatives to get our economy moving again.
+I firmly believe it is the entrepreneur who makes businesses grow and
+prosper--not the government. Because of our trust in the men and women
+to determine the course of their business destiny--we have announced
+128 new projects, over $2.2 billion in new investment and over 11,673
+new jobs.
+ Since last February 55,400 net new jobs have been created in the
+Commonwealth, the fourth highest number in the nation--trailing only
+Texas, Pennsylvania and California.
+ Our accomplishments include the announcement that Northrop Grumman
+will move their headquarters from California to Virginia and
+Microsoft's announcement that they would make the largest investment in
+Southern Virginia history, opening a $500 million state of the art data
+center in Mecklenburg County.
+ We are committed to simultaneously attracting new employers while
+also strengthening our workforce--and I have recently announced my
+``Top Jobs for the 21st Century'' initiative that will enable our
+higher education institutions to issue an additional 100,000 degrees
+over the next 15 years, making Virginia one of the most highly educated
+states in the nation. Our initiative also places a greater emphasis on
+the high demand science, technology, engineering and math subjects
+through the formation of a public-private partnership that will engage
+the business and professional community in leveraging best practices
+for K-12 and higher education.
+ We are encouraged by the growth we have seen--slow and steady as it
+may be--and the steps we are taking to ramp up that growth are working,
+but there still remains a lot of work to do.
+ However, no matter what pro-free market and job-creation steps we
+take in Virginia, we cannot avoid the fact that what happens here in
+Washington can cancel much of it out and make our work that much more
+difficult.
+ As you know, our small businesses are the backbone of our economy.
+Our small businesses continue to struggle--and when they are able to
+rebound we will all be on a more prosperous path. According to a study
+just released by the by the National Federation of Independent
+Businesses, the largest problem currently confronting small businesses
+nationwide is weak sales, followed by taxes and government regulations.
+ A recent Heritage Foundation analysis reported federal agencies
+issued 43 new major rules increasing regulatory burdens in Fiscal Year
+2010. The total costs of these rules--as estimated by the regulators--
+exceeded $26.5 billion. That's the highest single-year cost recorded
+since 1981, the first year for which records are available. These
+increased burdens will stunt operations--especially for small
+businesses.
+ We can see the negative impact of excessive federal regulations
+throughout our Commonwealth.
+ For example, the total cost of implementation of the Environmental
+Protection Agency's mandated Chesapeake Bay Total Maximum Daily Load
+and the associated Watershed Implementation Plan for Virginia
+agriculture will be up to $2.5 billion. The Health Care Reform passed
+last year will increase the number of Medicaid enrollees in Virginia
+from 270,000 to 425,000, at a cost of $2 billion by the year 2022. Our
+business owners are concerned about how they are going to comply with
+the increased costs to provide insurance to their employees.
+ I am concerned--especially as the Governor of a Right to Work
+state--about the December announcement of the National Labor Relations
+Board announcing its intention to publish in the Federal Register a
+proposed rule requiring almost all private sector employers to post in
+the workplace a notice to employees outlining their rights under the
+National Labor Relations Act. The poster entitled, ``Employee Rights''
+lists seven bullet points that state employees have the right to
+organize, form or join a labor union and repetitively state they have
+the right to negotiate their wages, benefits and working conditions
+with their employer. This is counterproductive and detrimental to the
+message we are trying to send in Virginia.
+ Just last week President Obama announced what he called ``A 21st
+Century regulatory system,'' in which his Executive Branch agencies
+would seek ``affordable, less intrusive means to achieve the same ends-
+giving careful consideration to benefits and costs.'' He issued an
+executive order ``Improving Regulation and Regulatory Review''--
+instructing agencies to begin a retrospective analysis of their
+existing regulations--and we hope to see burdensome regulations
+actually repealed as a result.
+ Mr. Chairman, members of the Committee, I applaud you for bringing
+this panel together today to talk about this paramount issue: ``The
+State of the American Workforce.'' In Virginia we are working to keep
+taxes low, and regulation and litigation to a minimum in order to free
+our entrepreneurs and job creators to grow their businesses and create
+the private sector jobs our citizens need. We hope this Committee and
+this Congress will move aggressively and quickly to remove the
+obstacles that hinder job growth in our great Commonwealth and nation.
+ Thank you and I look forward to your questions.
+ ______
+
+ Chairman Kline. Mr. Messinger.
+
+STATEMENT OF DYKE MESSINGER, PRESIDENT, POWER CURBERS, INC., ON
+ BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS
+
+ Mr. Messinger. Good morning, Chairman Kline and
+distinguished members of the committee. I am Dyke Messinger,
+President and CEO of Power Curbers, Incorporated, headquartered
+in Salisbury, North Carolina. We employ 105 people in the
+United States. We were established in 1953, and manufactured
+the first automatic curb-building machine in the world. And I
+have been leading a manufacturing company for 35 years.
+ On behalf of manufacturers in the United States, I
+appreciate the opportunity to discuss impediments to job
+creation because, as we all know, manufacturing does mean jobs.
+Manufacturing supports an estimated 18.6 million jobs in the
+United States, about one in six private sector jobs. To put
+this in context, this is about the equivalent of the entire
+populations of the five largest cities in the United States:
+New York, Los Angeles, Chicago, Houston and Phoenix combined.
+ Manufacturing also means opportunity, innovation, security
+and economic growth. In my prepared testimony, I lay out a
+lengthy and, frankly, troubling list of these impediments in
+such areas as taxation, labor policy, trade, regulation, and
+innovation. Fundamentally, this should be understood not just
+as a list of impediments to job creation, but also to U.S.
+competitiveness.
+ We live in and operate in a global economy. Every time the
+Federal Government enacts a new law, tax, or regulation that
+makes it harder for a U.S. manufacturer to compete with foreign
+companies, that is also an impediment to us hiring people.
+ Change, inconsistency, uncertainty are also impediments.
+Employers who have no sense of what tax or regulatory policy
+will look like next year or 5 years from now are going to be
+cautious about hiring new workers.
+ The NAM last year developed our manufacturing strategy for
+jobs, and to make a competitive America, proposing policies
+that would lift these impediments. I would respectfully ask
+that this document be included in my submission to the
+committee.
+ The strategy sets three broad goals that, if completed,
+would mean that we achieve the kind of pro-manufacturing
+policies that encourage the hiring that is so important. We
+start with the goal that the U.S. will be the best country in
+the world to headquarter a company. It is critical that our
+national tax climate does not place manufacturers in the United
+States at a competitive disadvantage in the global marketplace.
+A pro-manufacturing tax policy must first acknowledge that when
+Congress raises taxes, it makes manufacturers in the U.S. less
+competitive. It is essential that Congress lower the corporate
+tax rate to 25 percent or lower, without imposing offsetting
+tax increases, as well as instituting permanent lower taxes for
+the over 70 percent of manufacturers that are S corporations
+and file as individuals.
+ We must also recognize that one of America's great
+competitive advantages is our dynamic labor market. Employers
+face growing uncertainty with NLRB efforts to enact the goals
+of the dangerous card-check legislation through executive
+action.
+ Additionally, manufacturers face further regulations from
+OSHA.
+ Health care is a pressing concern for all, of course. Above
+all, health care solutions must contain costs by building upon
+the existing employer-sponsored health care system without
+jeopardizing or mandating plan design.
+ Our second goal is one that President Obama recognized last
+night in his State of the Union address; that the United States
+should be the best country in the world to innovate, performing
+the bulk of a company's global research and development. The
+R&D tax credit is important to achieve this goal. It has passed
+and expired more than a dozen times.
+ This point reinforces my earlier comments about certainty.
+Business, investors, employers, we all crave predictability and
+permanence. A little more permanence in all tax policy would be
+a good thing.
+ And finally, our last goal is that the United States be a
+great place to manufacture, both to meet the needs of the
+American market, and serve as an export platform for the world.
+Manufacturers rely on overseas markets because the bulk of all
+U.S. goods and services are manufactured goods. Exports of
+manufactured goods have driven the 2009 and 2010 economic
+recovery. I know this well, as my company exports 75 percent of
+what we manufacture.
+ Rising energy costs continue to be an impediment to growth
+and job creation. We need a comprehensive, all-of-the-above
+energy policy that allows access to affordable sources of
+energy and promotes reliable generation of baseload power that
+meets the demands of a growing economy.
+ Mr. Chairman, members of the committee, I appreciate the
+opportunity to testify today to provide an overview of some of
+the many challenges currently facing manufacturers. Thank you
+very much.
+ Chairman Kline. Thank you, sir.
+ [The statement of Mr. Messinger follows:]
+
+Prepared Statement of Dyke Messinger, President and CEO, Power Curbers,
+ Inc., on Behalf of the National Association of Manufacturers
+
+ Good morning Chairman Kline, Ranking Member Miller and
+distinguished members of the Committee. I appreciate the opportunity to
+speak with you today about the state of the American workforce,
+impediments to job creation and manufacturing strategies for jobs and a
+competitive America.
+ I am Dyke Messinger, president and CEO of Power Curbers, Inc. Power
+Curbers is based in Salisbury, North Carolina and employs 105 people in
+the United States. Power Curbers was established in 1953 and
+manufactured the first automatic curb machine in the world. I have been
+leading a manufacturing company for 35 years.
+ On behalf of manufacturers in the United States, I appreciate the
+opportunity to discuss impediments to job creation because
+manufacturing means jobs. Manufacturing also means opportunity,
+innovation, security and economic growth. Our nation's manufacturing
+employees are ready to preserve and build upon the greatness built by
+generations past and by those in manufacturing today.
+ The United States is the world's largest manufacturing economy,
+producing 21 percent of global manufactured products. U.S.
+manufacturing alone makes up 11.2 percent of our nation's GDP. More
+importantly, manufacturing supports an estimated 18.6 million jobs in
+the U.S.--about one in six private-sector jobs. To put this in context,
+this is about the equivalent of the entire populations of the five
+largest cities in the U.S.: New York City, Los Angeles, Chicago,
+Houston and Phoenix combined. Nearly 12 million Americans (or 9 percent
+of the workforce) are employed directly in manufacturing. Manufacturing
+jobs are high paying jobs, too. In 2009, the average U.S. manufacturing
+worker earned $74,447 annually, including pay and benefits--22 percent
+more than the rest of the workforce.
+ But today's manufacturers face many challenges to our global
+competitiveness and job creation efforts. Proposals that increase taxes
+and impose new regulations will make business in the United States less
+competitive. These proposals will stifle the already weak recovery and
+destroy manufacturers' ability to create jobs.
+ Manufacturers need policymakers in Washington to embrace policies
+and solutions that will ensure that the United States is the greatest
+place in the world to be a manufacturer and to be a manufacturing
+employee, because manufacturing means jobs. We must focus on
+manufacturing strategies that have three key goals:
+ to be the best country in the world to headquarter a
+company;
+ to be the best country in the world to do the bulk of a
+company's research and development; and
+ to be a great place to manufacture goods and export
+products.
+The U.S. Must Be the Best Country in the World to Headquarter a Company
+ Manufacturing today is global and mobile. Companies often enjoy an
+array of attractive choices when deciding where to locate their
+headquarters, do their research or build new facilities. While the use
+of government incentives is commonplace today, a country's or state's
+business climate itself ultimately determines where a company will be
+located.
+ As a springboard for future economic growth, investment and jobs,
+manufacturers believe the United States must seek to be the best
+country in the world in which to locate a manufacturing company's
+headquarters.
+ To do this, we need a national tax climate that does not place
+manufacturers in the United States at a competitive disadvantage in the
+global marketplace. A pro-manufacturing tax policy must first
+acknowledge that when Congress raises taxes, it makes manufacturers in
+the U.S. less competitive. Our tax system must promote fair rules for
+taxing active foreign income of U.S. based businesses. Congress must
+reduce the corporate tax rate to 25 percent or lower without imposing
+offsetting tax increases. Over 70 percent of American manufacturers are
+S-corporations that file taxes at the individual rate. We must
+institute permanent lower tax rates for individuals and small
+businesses.
+ We must also recognize that one of America's great competitive
+advantages is our dynamic labor market. Companies must move quickly to
+meet the demands of a rapidly changing marketplace, and the continuing
+expansion of federal mandates and labor regulations undermines employer
+flexibility. In addition, increasing costs discourage the hiring of new
+employees.
+ To encourage competitiveness, the United States should reject new
+federal regulations that dictate rigid work rules, wages and benefits
+and that introduce conflict into employer-employee relations. We must
+also support initiatives at the Occupational Safety and Health
+Administration (OSHA) and other oversight agencies that encourage
+employers and employees to join in cooperative efforts for safer
+working environments. Employers' voluntary efforts to meet the needs of
+individual employees through flexible work schedules and benefit
+arrangements need to be recognized and promoted.
+ It is important that manufacturers are able to engage in positive
+and fair employee-employer relations. As employers, manufacturers face
+growing uncertainty in the area of labor law--especially from case
+decisions and regulations from the National Labor Relations Board
+(NLRB). While manufacturers greatly appreciate that Congress has
+rightfully recognized the dangers of ``card check'' legislation, any
+effort to implement the goals of that misguided legislation would be a
+threat to job creation. We continue to urge policymakers to uphold the
+principles of fairness and balance on which our labor laws have been
+developed for over seven decades.
+ Congress must also support health care reform that drives down
+costs. Above all, health care solutions must contain costs by building
+upon the existing employer-sponsored health care system without
+jeopardizing or mandating plan design. The health care law passed by
+Congress in 2010 must be continually assessed for its effectiveness,
+cost and unintended consequences. Regulations to implement this law
+must be fully transparent and must not add new employer mandates and
+costs.
+The U.S. Must Be the Best Country in the World to Innovate
+ Innovation has long helped manufacturing in the United States
+maintain its global leadership. Between 2000 and 2006, manufacturing
+productivity increased annually by an average of 3.8 percent, primarily
+due to innovation and technological advances spurred by research and
+development (R&D). U.S. manufacturers perform half of all R&D in the
+nation, which drives more innovation than any other sector. To maintain
+this competitive advantage, tax provisions must be enacted that will
+stimulate investment and recovery, including strengthening the R&D tax
+credit and making it permanent. Manufacturers in the United States need
+the certainty and incentives provided by a permanent and robust R&D tax
+credit.
+ The federal government must continue its focus on basic R&D that
+expands the knowledge base, spurring private-sector R&D as well as
+commercial development. Innovation is served by robust funding for
+federal research agencies as well as financial support for public- and
+private-sector research.
+ To ensure that we have the skilled workforce necessary to ensure
+our economic competitiveness, manufacturers must be able to attract the
+best talent from here in the United States and from the entire world.
+Between 1995 and 2005, immigrants founded or co-founded 25 percent of
+all U.S. high-tech firms. Our nation's immigration rules must allow
+substantial increases in the number of employer-sponsored visas.
+The United States Will Be a Great Place to Manufacture
+ An effective manufacturing strategy promotes domestic manufacturing
+that serves the U.S. and the increasingly integrated North American
+markets. It also supports companies that export and expand abroad to
+serve foreign markets. Manufacturing shipped a record $5.8 trillion in
+2008 ($1.6 trillion in value added) and provided 11 percent of the
+nation's GDP. Manufacturers rely on overseas markets because the bulk
+(57 percent) of all U.S. exports of goods and services are manufactured
+goods. Exports of manufactured goods have driven the 2009-2010 economic
+recovery which is demonstrated by the fact that 75 percent of Power
+Curbers product is shipped overseas.
+ Manufacturers need a level playing field. In today's global
+marketplace, we are no longer competing only against businesses in our
+state or region or even the country. We face competition from around
+the world. Foreign manufacturers often must comply with fewer
+regulations and have governments that use every tool at their disposal
+to give those companies a competitive edge, frequently at the expense
+of manufacturers in the United States.
+ The solution is to increase access to foreign markets through trade
+agreements and ensure the regulatory environment in the U.S does not
+put manufacturers at a disadvantage.
+ To do this, manufacturers need a progressive international trade
+policy that opens global markets, reduces regulatory and tariff
+barriers and reduces distortions due to currency exchange rates,
+ownership restrictions and various ``national champion strategies.''
+Congress must enact pending trade agreements and the Administration
+must negotiate additional agreements in the Pacific area and elsewhere.
+Trade agreements reduce the barriers to U.S. exports and create jobs.
+ In addition to leveling the playing field on trade, policies must
+help small and medium-sized manufacturers through expanded programs to
+help drive U.S. exports.
+ Manufacturers also need a comprehensive energy strategy that
+embraces an ``all of the above'' approach to energy independence that
+will allow access to affordable energy. Such a policy should encourage
+production of baseload electricity--the dependable power that is
+critical to manufacturing processes--including traditional coal,
+hydropower and natural gas, nuclear and renewable and alternative
+fuels. Reducing our dependence on foreign energy by increasing domestic
+supply will help achieve this goal. Congress should allow expanded
+production of oil and natural gas by lifting the moratorium on Outer
+Continental Shelf development, and encourage development of shale gas.
+Regulatory Environment
+ Employers across the U.S., especially manufacturers, face
+considerable uncertainty that stifles economic growth and prevents job
+creation. Burdensome regulations and government mandates do little to
+address this uncertainty. A regulatory environment needs to allow
+economic growth. For laws that affect manufacturers, there are often
+scores of regulations that impose substantial compliance costs--burdens
+often never anticipated by the lawmakers who passed the legislation.
+ The Small Business Administration recently estimated that the
+annual cost of federal regulations in the United States increased to
+more than $1.75 trillion in 2008. The portion of these regulatory costs
+that falls initially on businesses was $8,086 per employee in 2008.
+This study represents the best research available to identify the
+disproportionate burden placed on small business by regulation, and it
+is 36 percent higher than larger firms. Manufacturers bear the heaviest
+burden from environmental regulation, while facing similar or more
+stringent regulations in workplace safety, health, transportation,
+financial, trade, tax administration, homeland security and export
+controls.
+ This Administration is in the midst of proposing or implementing
+numerous regulations. If they are not substantially changed from their
+present form, they could cost millions of jobs and weaken an economy in
+a still fragile recovery.
+ Based on data from the Government Accountability Office, 43 major
+new regulations were imposed over the previous two years. Collectively,
+the cost of these rules topped $26.5 billion. Manufacturers appreciate
+President Obama's recent executive order to review federal regulations
+harming economic growth. Growing overregulation from Washington harms
+job creation and stifles economic growth. This call for a government-
+wide review of regulations and rules is an opportunity for the
+President to demonstrate results by eliminating unnecessary regulations
+already in the pipeline or delaying poorly thought-out proposals that
+are costing jobs.
+ Some of the most concerning regulatory proposals stem from the
+Environmental Protection Agency (EPA). At the beginning of this year,
+the EPA began regulating greenhouse gas (GHG) emissions from stationary
+sources under the Clean Air Act. While only the largest facilities will
+be regulated at first, this action sets the stage for future regulation
+of much smaller sources. Manufacturers are also concerned that states
+are unprepared for the new permitting requirements, which will cause
+significant delays. This permitting gridlock will discourage
+manufacturers from building new facilities or expanding their current
+facilities, hurting competitiveness and discouraging job creation.
+Furthermore, additional facilities--including hospitals, agricultural
+establishments and even the smallest businesses--will be phased into
+the onerous permitting requirements in the near future.
+ While we are pleased that OSHA has announced that it intends to
+withdraw its proposed changes to noise control requirements,
+manufacturers still face many burdens from this agency. Specifically,
+manufacturers are concerned with OSHA's plans to make it more difficult
+for employers to work cooperatively with the agency to comply with
+workplace safety standards. Through a series of both proposed
+regulations and sub-regulatory administrative actions, OSHA is in the
+process of gutting key components of compliance assistance programs
+that have been proven to help employers make their workplaces safer
+while allowing the agency to focus its resources more effectively.
+Conclusion
+ I appreciate the opportunity to testify before the Committee today
+to provide an overview of some of the many challenges currently facing
+manufacturers. It is my hope that Congress can embrace strategies that
+enhance our competitiveness and foster job creation. I respectfully
+request permission to submit a plan created by the National Association
+of Manufacturers in June 2010--the Manufacturing Strategy for Jobs and
+a Competitive America.
+ ______
+
+ Chairman Kline. Dr. Boushey.
+
+ STATEMENT OF HEATHER BOUSHEY, SENIOR ECONOMIST, CENTER FOR
+ AMERICAN PROGRESS
+
+ Ms. Boushey. Thank you, Chairman Kline, Ranking Member
+Miller, Representative Andrews, and everyone on this committee
+today for inviting me here to speak. My name is Heather Boushey
+and I am the senior economist with the Center for American
+Progress Action Fund, and I am glad to be here to discuss the
+state of the American workforce. Until we fill the demand gap,
+we will have continued high unemployment which, in turn, will
+continue to drag our economy down.
+ Today's high unemployment was caused by the mismanagement
+of the economy in the 2000s, a financial sector not focused on
+fostering productive investments and a housing bubble.
+ We must address these root causes. Creating jobs now means
+making investments that not only boost employment in the short
+term, but lay the foundation for long-term economic growth.
+Jobs will not be created by limiting regulation, repealing the
+Affordable Care Act or focusing exclusively on the short-term
+deficit.
+ Now, the private sector has been adding jobs every month
+for a full year and at a faster rate than during the 2000
+economic recovery. Even with the success of the Recovery Act in
+boosting job growth, however, at this pace we will not reach 5
+percent unemployment for decades. Unemployment has stood at or
+above 9 percent for a record 20 months, and there is growing
+evidence that workers may not again find jobs at their prior
+pay rates. Job losses have been widespread and not only
+concentrated in the sectors hardest hit by the bursting of the
+housing bubble.
+ This directly contradicts the notion that the jobs crisis
+is a structural program. The continuing slow pace of the jobs
+recovery stems from insufficient aggregate demand in the
+overall economy. Gross domestic product has grown for five
+quarters now, and it is likely we will find out on Friday it
+has grown again. Much of this growth has been due to the
+Recovery Act and other policies aimed at addressing the fallout
+from the financial crisis. Yet our economy continues to have a
+gap between what our economy currently produces and what it
+would be producing if workers and the economy's productive
+assets were to be used at full employment.
+ About a third of this total output gap is due to the lost
+wages of the unemployed. Unemployment insurance fills that gap,
+and that is why it is critical to sustaining the economic
+recovery and that is why we can't just fill the gap with tax
+cuts.
+ Now, investment is the key to creating jobs now and
+building the foundation for a high productivity future. Even
+though corporate America is flush with cash, investment is at
+its lowest level in more than five decades. Yet the cost of
+capital continues to be at lows not seen since the 1960s, and
+small businesses continue to point to the problem as being the
+lack of customers. A lack of demand is their key problem.
+ Now, we know that we need to spend at least $2.2 trillion
+over the next 5 years just to repair our crumbling
+infrastructure. This doesn't even include things like high-
+speed rail, mass transit, and renewable energy investments,
+many of the things that the President talked about last night
+that we need to do to free ourselves from foreign oil and
+climate change.
+ Infrastructure investments have traditionally been a
+bipartisan issue and one that hopefully this Congress can build
+a bridge across the aisle to address. We should not, however,
+repeat the mistakes of the Great Depression, or, as it now
+seems, the conservatives have done in the U.K. with austerity
+policies that will not create jobs.
+ The most important reason for the rise in the deficit is
+rising unemployment and falling incomes. Economists Allen Blind
+and Mark Zandi have estimated that had Congress done nothing to
+address the fallout of the financial crisis, the deficit would
+have ballooned to more than 2\1/2\ times as large as it is
+currently projected to grow.
+ Moving forward, policymakers like yourselves must continue
+to ensure that financial markets are focused on their real
+purpose: making funds available to promote investment in
+America, not just speculation and greater profits for those in
+the financial services industry.
+ Yesterday the Financial Crisis Inquiry Commission clearly
+placed blame for the crisis on the lack of oversight and
+regulation of the financial sector. The agencies that oversee
+the financial markets must be fully staffed and allowed to do
+their job.
+ We also need to make sure that if a goal of our trade
+policy is job creation, then we need to evaluate whether or not
+these policies that we are pursuing will actually reduce our
+trade deficit and, on net, create jobs. We know from economic
+research that local labor markets that have increased exposure
+to Chinese exports have had high unemployment, lower labor
+force participation, and reduced wages. And there is not good
+empirical evidence that shows that the Korea free trade
+agreement would generate economically meaningful job gains. We
+need jobs now and we need the kind of investments that will
+transform our economy and renew long-run prosperity.
+ Thank you very much.
+ Chairman Kline. Thank you.
+ [The statement of Ms. Boushey follows:]
+
+ Prepared Statement of Heather Boushey, Senior Economist,
+ Center for American Progress Action Fund
+
+ Thank you, Chairman Kline and Ranking Member Miller for inviting me
+here today to testify on the state of the American workforce. My name
+is Heather Boushey and I'm a senior economist with the Center for
+American Progress Action Fund.
+ The challenges workers are as great as they've been in generations.
+The Great Recession has wrought havoc in the lives of millions of
+families. The policies that will create jobs are those that will
+increase aggregate demand by making investments that will not only
+boost employment in the short-term, but lay the foundations for long-
+term economic growth.
+ Until we fill the demand gap, we will have continued unemployment,
+which in turn will continue to drag down economic growth.
+Unemployment--the ultimate unused capacity--is a terrible thing.
+Allowing it to fester when you have tools at your disposal to alleviate
+it sends a message that our government not only doesn't care about the
+very real hardships families are facing, but that they don't recognize
+the enormous waste of human potential.
+ The real question is whether policymakers will focus on not
+repeating the mistakes of the Great Depression and, rather, continue to
+focus on boosting investment until the recovery solidly takes hold.\1\
+While the immediate imperative is to address in the short-term high
+unemployment, we must also simultaneously begin to address the deep
+structural challenges to long-term growth and job creation.
+ Jobs will not, however, be created by limiting regulation or
+repealing the Affordable Care Act, nor by creating by cutting spending
+or focusing on the short-term deficit. And, I would caution you on
+focusing too much on the short-term deficit. That deficit is not due
+the result of overspending, but rather due to the failed economic
+policies and two unfunded wars of the Bush Administration, and the
+higher costs and lower tax revenues caused by the Great Recession.
+The issues facing workers
+ Today's high unemployment is a function of the reality that there
+simply aren't enough jobs to go around because there is not sufficient
+demand in our economy. While the economy has been growing for at least
+five quarters now, businesses have not yet begun to ramp up hiring.
+While unemployment creates significant hardships for individual
+families, it also threatens the nascent economic recovery: the
+unemployed can't spend what they don't earn and spending is what keeps
+our economy humming. Thus, there is a direct link between lack of
+hiring and future economic growth.
+High unemployment threatens economic stability of millions of American
+ families
+ While the recession ended in June 2009, for everyday Americans,
+there's been no recovery. The private sector has been adding jobs every
+month for a full year and averaged 128,000 jobs per month over the past
+three months.\2\ This is a faster pace than in the 2000s economic
+recovery, but at this rate, we won't reach 5 percent unemployment for
+decades (Figure 1).\3\ To get to 5 percent unemployment by November
+2012, we'd need to add more than four times the number of jobs that our
+economy is adding now--551,000 jobs each month.
+ Unemployment has stood at or above 9 percent for a record 20 months
+and economists predict it will remain this high at least through 2011.
+Nearly half of those unemployed have been job searching for at least
+six months.\4\ The odds of finding work continue to look rather grim.
+For every five people searching for a job, there is only one job
+available. It's like a sad game of musical chairs: one chair, five
+seeking a seat. We all know how that game ends.
+ High unemployment has long-term consequences for workers and their
+families, as well as our economy overall. The more than 6 million
+unemployed workers who have been searching for a new job for at least
+six months are unable to make use of their skills or contribute to our
+nation's productive capacity. Consider these facts: Average mature
+workers who lose a stable job will see their earnings fall by 20
+percent over 15 years to 20 years,\5\ and the labor market consequences
+of graduating from college in a bad economy are large, negative, and
+persistent.\6\
+ Many workers may never find jobs at the level of the job they lost
+during this Great Recession. Recent data from the Bureau of Labor
+Statistics has found that as of last year at this time among those who
+were displaced from their job--permanently losing their job or laid off
+because their employer's plant closed or business failed--between 2007
+and 2009, just half (49 percent) were reemployed. This is lowest
+reemployment rate on record for the series, which began in 1984. Of
+those reemployed in full-time work, more than half (55 percent) were
+earning less than they did prior to displacement.\7\
+ figure 1
+
+
+The continuing slow pace of the jobs recovery stems from one factor:
+ Insufficient aggregate demand in the overall economy
+ Gross domestic product, or GDP, grew at an annual rate of 2.6
+percent in the third quarter of 2010, the fifth quarter of positive
+growth in a row.\8\ Much of this growth would not have happened without
+the American Recovery and Reinvestment Act and other policies aimed at
+addressing the fallout from the financial crisis.
+ Yet, our economy continues to have what economists call ``excess
+capacity,'' which means there is not enough demand for all the goods
+and services we have the capacity to produce, and thus not enough
+demand for more workers. As of December 2010, capacity utilization was
+76 percent, 4.6 percent below its average from 1972 to 2009.\9\ Excess
+capacity is a technical term that economists use to describe what
+Americans are currently seeing everyday around them--excruciatingly
+high unemployment, especially long-term unemployment, and the
+devastation it causes families and communities all around our nation.
+ Another way to measure excess capacity is the ``output gap,'' the
+gap between what our economy currently produces and what it would be
+producing if workers and the economy's productive assets were to be
+used at full employment. Currently, the output gap is equal to over 6
+percent of our total gross domestic product (Figure 2). This is down
+from 7.5 percent when growth was at its nadir and just before the
+American Recovery and Reinvestment Act was passed and signed into
+law.\10\
+ figure 2
+
+
+ Currently, about a third of the total output gap is due to the lost
+wages of the unemployed.\11\ To put some back of the envelope numbers
+on this, think of it this way: the typical worker brings home about
+$40,000 annually and about 15 million are out of work, leaving our
+economy about $600 billion smaller this year due to unemployment.\12\
+It's that gap that unemployment insurance fills and why it's critical
+to sustaining the economic recovery. And, why we can't just fill the
+output gap with tax cuts.
+ And, we are now in another jobless recovery, while profits soar.
+From December 2008 to September 2010, profits in the nonfinancial
+corporate sector rose in inflation-adjusted terms by 92.0 percent
+before taxes and 93.3 percent after taxes. In September 2010, profits
+were at their highest point since at least September 2007, before the
+recession started. The nonfarm nonfinancial business sector is holding
+more than $1.9 trillion in cash, totaling 7.4 percent of total
+corporate assets in the third quarter of 2010--the highest level since
+the fourth quarter of 1959.\13\
+ Even though corporate America is flush with cash, investment is at
+the lowest level in more than five decades. So far in this business
+cycle, from December 2007 to September 2010, business investment has
+averaged 9.8 percent of gross domestic product, the lowest average for
+any business cycle since the late 1950s (Figure 3). This low level of
+investment is not because of the cost or availability of capital, which
+continues to be at lows not seen since the 1960s.\14\
+ Without investment, our resources--the American people--languish in
+unemployment. A key challenge for policymakers is sorting out how to
+encourage investment.
+ figure 3
+
+
+This jobs crisis is not a structural problem
+ In May of 2007, the unemployment rate was 4.5 percent. Just over a
+year and a half later, the private sector was shedding 700,000 to
+800,000 jobs per month and unemployment continues to linger above 9
+percent. For the unemployment problem to be structural, it would have
+to be the case that our nation's workers and employers all of a sudden
+become mismatched due to some new set of technological advances that
+made one in 10 workers instantaneously obsolete. There is no evidence
+that this has been the case in the years since 2007.
+ If today's high unemployment were largely about shifting workers
+out of the sectors hardest hit by the bursting of the housing bubble--
+primarily construction--job losses would have to be concentrated there.
+But, this has not been the case. In fact, the Great Recession has seen
+fairly broad, widespread job losses across industry, which contradicts
+the idea that there's one or two sectors that U.S. workers need to
+transition out of (Figure 4). Manufacturing, professional and business
+services, transportation and warehousing, financial activities, leisure
+and hospitality, and information services have all lost a larger share
+of jobs than construction.
+ Further, if unemployment was structural, the money pumped into the
+economy through monetary and fiscal policy would lead to higher prices.
+If more money were chasing a limited pool or workers or capacity, then
+prices should go up. Yet, in fact what we've seen is the opposite. Over
+the past year, prices have risen by just half a percent, just barely
+above deflation.
+ figure 4
+
+
+ If the problem with unemployment were structural, the primary
+policy lever to address this is education and training. There are many
+reasons for policymakers to be concerned about the skills of the U.S.
+labor force: American students are consistently behind their academic
+peers internationally. According the U.S. Department of Education, out
+of 30 peer countries, students in the United States were ranked 30th
+for math, 23rd for science, and 17th for reading.\15\ However, even if
+unemployment was a structural problem and training and education could
+solve it, this is not a solution that can address our immediate high
+unemployment. Setting up those programs, getting workers the skills
+they need will take time and our economy will not see the fruits of
+those endeavors for years. Investing in education is critical for our
+economy, but it cannot solve our current unemployment problem.
+ In thinking about the challenges facing workers and their families,
+we also need to remain cognizant of the difference in employment
+patterns for specific demographic groups. Workers of color continue to
+experience higher unemployment than white workers and the trends in
+employment continue to play out differently by gender. Between December
+2007 and June 2009, the official timeframe for the recession according
+to the National Bureau of Economic Research, jobs held by men accounted
+for more than 70 percent of all the jobs lost. In ten of the past 12
+months of job gains, the growth in jobs for men outpaced the growth for
+women and last summer, women actually lost jobs while men saw small
+increases. Over 2010, men gained just more than a million jobs, while
+women gained a paltry 149,000 (Figure 5).
+ The biggest gains for men have been in professional business
+services, where men gained 278,000 jobs, compared to 103,000 for women;
+trade, transportation, and utilities, where men have gained 245,000
+jobs, while women lost 74,000; and administrative and waste services,
+where men gained 231,000 and women gained 137,000. One of the biggest
+gender gaps in employment trends is in government employment
+ The aid to the states as a part of the ARRA helped sustain women's
+employment through the Great Recession, but with the state budget
+crisis lingering, this could continue to bring down women's
+employment.\16\ Women make up the majority of state and local
+government employees. Last year, local governments shed 259,000
+workers, of whom 225,000 were women. At the state level, women have
+gained 55,000 jobs and men lost 43,000, but these gains for women were
+not enough to offset the local layoffs.
+ figure 5
+
+
+How did we get here?
+ Mismanagement of the economy in the 2000s, a financial sector only
+in service of its own profit rather than fostering productive
+investments, and a housing bubble all led to the economic disaster in
+front of us.
+The failed economic policies of the 2000s
+ We now know that the perception of prosperity in the 2000s was in
+many ways a mirage. The housing bubble and financial innovations and
+the Great Recession masked deeper structural problems. The housing
+bubble, rapid growth of the real estate and financial sectors, and
+debt-fueled growth during the Bush era masked what were otherwise
+largely negative trends for American workers.
+ While the economy was growing, American workers were living through
+a lost decade. The 2000s saw no income gains for the typical American
+family \17\ and saw the weakest employment gains and weakest growth in
+business investment of any economic cycle in the post-World War II
+era.\18\ For most Americans, wages were stagnant, even though
+productivity rose.\19\ Moreover, over the past two decades, we've seen
+two ``jobless'' economic recoveries and, with the exception of a few
+years in the late 1990s, widening wage and income inequality.\20\
+ Our labor market has become bifurcated, with fewer and fewer good
+jobs paying good wages and benefits and growth in employment at the
+high and low ends, leaving out the middle.\21\ This is not a recipe for
+a strong middle class, restoring economic opportunity, or long-term
+economic competitiveness. Beyond the Great Recession and its global
+consequences, this is the great economic policy challenge of our time.
+ Most women now work outside the home and families have no one
+available to provide full-time care for children or ailing family
+members. Coupled with declining prospects for future job growth, this
+analysis gives a whole new meaning to middle-class squeeze.
+The Recovery and Reinvestment Act
+ Congress has taken important steps to encourage private sector job
+creation. The Congressional Budget Office credits the American Recovery
+and Reinvestment Act, or ARRA, signed into law in February 2009 with
+saving or creating 1.4 to 3.6 million jobs and they estimate that 2.6
+million jobs will be saved or created by in 2011.\22\ Last summer,
+economists Alan Blinder and Mark Zandi estimated that the American
+Recovery and Reinvestment Act and other fiscal policies have saved or
+created 2.7 million jobs and without them, unemployment would stand at
+11 percent and job losses would have totaled 10 million. On top of
+this, they estimate that if nothing had been done to address the
+financial crisis--no Troubled Asset Relief Program, no bailouts of
+American International Group Inc, and no investment in the auto
+industry--our economy would have 5 million fewer jobs than we do today
+and unemployment would be sharply higher, at 12.5 percent.\23\
+ The ARRA kept teachers in schools and police officers on their
+beats, even as tax revenues fell. It kept money flowing into the
+pockets of the long-term unemployed, which in turn has not only helped
+those individual families hardest hit by the Great Recession, but also
+helped keep dollars flowing their local communities. It helped
+unemployed workers access health care, undoubtedly mitigating the well-
+documented negative health effects of unemployment.
+ Even with the success of the Recovery Act, there have been clear
+indications since 2009 that in order to fill in the output gap and
+lower unemployment, Congress will need to focus on policies that raise,
+not lower, aggregate demand.\24\ As Federal Reserve Chairman Ben
+Bernanke noted this month in testimony:
+ Our nation's fiscal position has deteriorated appreciably since the
+onset of the financial crisis and the recession. To a significant
+extent, this deterioration is the result of the effects of the weak
+economy on revenues and outlays, along with the actions that were taken
+to ease the recession and steady financial markets. In their planning
+for the near term, fiscal policymakers will need to continue to take
+into account the low level of economic activity and the still-fragile
+nature of the economic recovery (emphasis added).\25\
+ In this Great Recession, sustained government spending until the
+recovery hits its full stride is the best--and only--option to push the
+unemployment rate down. Because the Great Recession was preceded by a
+massive financial crisis, we knew from day one that it was likely to be
+deeper and more protracted than more recent recessions.\26\ We've also
+known for two years now that the Federal Reserve has no more room to
+lower interest rates to boost demand.\27\
+ In other recent recessions, lowering interest rates was sufficient
+to push the economy toward sustainable growth, but this time it's not
+possible. The last recession that brought us double-digit unemployment,
+in the 1980s, was caused by tightening of monetary policy by the
+Federal Reserve under Chairman Paul Volcker as they were trying to
+address rampant inflation. The Federal Funds Rate hit nearly 20 percent
+in the 1981, which stopped inflation, but then also gave the Federal
+Reserve a great deal of room to lower rates to encourage economic
+activity. To boost growth, the Fed has pursued quantitative easing,
+using the proceeds from the central bank's mortgage bond portfolio to
+buy long-term government debt. That is, they are using unorthodox
+methods of pumping money into an economy and working to lower interest
+rates that central bankers do not usually control. Their effect is the
+same as printing money in vast quantities, but without ever turning on
+the printing presses.
+ Yet there is a rising chorus of voices singing the praises of
+deficit reduction over the benefits of saving our economy through
+expansionary fiscal policies. Once our economy recovers, of course, the
+deficit must be addressed, but until unemployment begins to fall and
+the economic recovery is firmly in train, these voices push us in the
+wrong direction. Their rhetoric argues that we not burden the next
+generation with unsustainable debts, but the reality is this: by not
+boosting demand for goods and services by helping existing excess
+capacity--the nearly 15 million unemployed workers in our country
+today--millions of workers will find no means of support today and will
+see their economic future grows dimmer by the week.
+ It is important to remember that by taking actions to avert greater
+unemployment, we averted a bigger federal deficit. The steps taken to
+shore up our economy have ended up being a better investment for jobs
+and for the deficit than doing nothing at all (Figure 6). Economists
+Blinder and Zandi estimated that had Congress done nothing, the deficit
+would have ballooned to more than 2.5 times as large as it did, hitting
+more than $2 trillion by the end of the 2010 fiscal year, $2.6 trillion
+in fiscal year 2011, and $2.25 trillion in fiscal year 2012. In
+actuality, they estimate that by the end of the 2010 fiscal year, the
+federal budget deficit will be $1.4 trillion and it will fall to $1.15
+trillion in fiscal year 2011 and $900 billion in fiscal year 2012.\28\
+ figure 6
+
+
+ The most important reason for the rise in the deficit is rising
+unemployment and falling incomes.\29\ In 2009, federal receipts were
+$419 billion below 2008 levels, a 17 percent drop, which was the
+largest decline from one year to the next in more than 70 years.
+Individual income tax receipts decreased by 20 percent, and corporate
+income tax revenues plummeted by more than 54 percent, which means
+corporations paid less than half in taxes than they paid the year
+before.\30\
+To fix the jobs problem, fix the aggregate demand problem
+ Unlike any point in the decades since before World War II, the
+challenge of laying the foundation for a strong economy lies with you
+and this body of government. These are unusual times because it
+continues to be the case that fiscal policy is the primary lever that
+the federal government has at its disposal to spur economic growth. I
+urge you to consider that these extraordinary times call for
+extraordinary action--continued spending to aid to the long-term
+unemployed. The sense of imminent collapse of our financial sector,
+thankfully, now appears behind us, but the fallout for our economy
+remains and it is just as dramatic and continues to require bold steps.
+ Let's be clear: An overgrown financial sector, bloated on the real
+estate bubble it helped create, threw our economy into crisis. Moving
+forward, policymakers must continue to ensure that financial markets
+are focused on making funds available to promote investment in America,
+not just speculation and dividends for those in the financial services
+industry. We need vibrant capital markets so that innovative companies
+can access funds to invest; we do not need innovative financial
+products to allow Wall Street to siphon off these funds for its own
+gain.
+ Investment is the key to creating jobs now and building the
+foundation for a high-productivity future. The American Society of
+Civil Engineers estimates that we need to spend at least $2.2 trillion
+over the next five years just to repair our crumbling
+infrastructure.\31\ This doesn't even include things like high-speed
+rail, mass transit, and renewable energy investments we need to free
+ourselves from foreign oil and climate change.
+ The Obama administration has proposed a $50 billion fund, which is
+a good start, but we need to invest more to both address today's jobs
+problem and lay the foundation for long-term economic growth.
+Infrastructure has been a traditionally bipartisan issue and one that
+hopefully this Congress can build a bridge across the aisle to address.
+ We also need to make sure that if a goal of our trade policy is job
+creation, then we need to evaluate whether these policies reduces our
+trade deficit and, on net, create jobs.\32\ Economists estimate that
+local labor markets that have had increased exposure to Chinese imports
+have had higher unemployment, lower labor force participation, and
+reduced wages relative to local labor markets that have not had such
+exposure. What is notable is that although employment decline is
+concentrated in manufacturing, the declines in wages occur across the
+local labor market and are actually most pronounced outside of
+manufacturing.\33\ The authors note that:
+ Growing import exposure spurs a substantial increase in transfer
+payments to individuals and households in the form of unemployment
+insurance benefits, disability benefits, income support payments, and
+in-kind medical benefits. These transfer payments are two orders of
+magnitude larger than the corresponding rise in Trade Adjustment
+Assistance benefits. Nevertheless, transfers fall far short of
+offsetting the large decline in average household incomes found in
+local labor markets that are most heavily exposed to China trade.\34\
+ There is also not strong evidence that the Korea Free Trade
+Agreement will generate economically meaningful job gains. The U.S.
+International Trade Commission, the independent federal body that
+analyzes potential effects of trade pacts for Congress and the
+executive branch, estimate that while the Korea FTA would increase
+exports, it would increase imports even more and result in an increase
+in the total U.S. goods trade deficit of between $308 million and $416
+million.\35\ The largest estimated increases in the trade deficit would
+be in motor vehicles, electronic equipment, ``other transportation
+equipment,'' iron, metal products, textiles, and apparel.
+ The unemployment insurance system and other automatic stabilizers
+must remain in working order. Filling the gap in demand will require
+continued attention to one of the key sources of demand: high
+unemployment. Most of the state's unemployment insurance trust funds
+are insolvent, however, with 30 states' owing a total of $41 billion, a
+debt that could rise to $80 billion.\36\ The loans from the federal
+government will require that in 2011, 25 states must pay an extra $2
+billion in federal unemployment taxes levied on employers, an increase
+of 30 percent over 2010.\37\
+ We all have an interest in not seeing the cost of hiring workers
+rise as firms struggle to ramp up hiring, but we also need to make sure
+that the unemployment insurance system has the integrity to continue to
+act as an important automatic stabilizer. Recent analysis shows that
+this system generated significant positive economic effects and kept
+unemployment from rising to more than 11 percent.\38\
+ With a mess like this, creating jobs isn't simple, but there
+couldn't be a better time to invest in America. Interest rates are low.
+Wages are low. We need jobs now and we need the kind of investments
+that will transform our economy and renew long-run prosperity.
+ Thank you.
+ references
+Autor, David H., David Dorn, and Gordon H. Hanson. 2010. ``The China
+ Syndrome: Local Labor Market Effects of Import Competition in
+ the U.S.'' Working Paper UCSD and NBER.
+Blinder, Alan, and Mark Zandi. 2010. ``How the Great Recession Was
+ Brought to an End.'' Washington, DC: Economy.com.
+Bureau of Labor Statistics, 2010. Employment Status of the Civilian
+ Population by Sex and Age U.S. Department of Labor.
+Bureau of Labor Statistics. 2010. ``Worker Displacement: 2007-2009.''
+ U.S. Department of Labor (http://www.bls.gov/news.release/
+ disp.nr0.htm)
+David H. Autor, Lawrence F. Katz, and Melissa S. Kearney. 2008 ``Trends
+ in U.S. Wage Inequality: Revising the Revisionists.''The Review
+ of Economics and Statistics 90 (2): 300-23.
+Farber, Henry. 2005 ``What Do We Know About Job Loss in the United
+ States? Evidence from the Displaced Workers Survey, 1984-
+ 2004.''Federal Reserve Bank of Chicago: Economic Perspectives 2
+ (
+Heather Boushey, Karen Davenport, Joy Moses, Melissa Boteach. 2010.
+ ``What the Census Tells Us About the Great Recession: New Data
+ Reveals Decreased Income and Health Coverage.'' Washington, DC:
+ Center for American Progress.
+Hersh, Adam S., and Christian E. Weller. 2011. ``Measuring Future U.S.
+ Competitiveness: U.S. Productivity and Innovation Snapshot.''
+ Washington, DC: Center for American Progress.
+Hersh, Adam, and Isha Vij. 2011. ``Economic Growth Continues, but Too
+ Slowly to Secure Recovery: Policy Consistency Targeting Jobs Is
+ Necessary.'' Center for American Progress (http://
+ www.americanprogress.org/issues/2011/01/december--jobs.html [1/
+ 25/2011, 2011]).
+Kahn, Lisa B. 2010 ``The Long-Term Labor Market Consequence of
+ Graduating from College in a Bad Economy.''Labour Economics 17
+ (303-16.
+Linden, Michael. 2009. ``Breaking Down the Deficit.'' Washington, DC:
+ Center for American Progress.
+McArthur, Travis, and Todd Tucker. 2010. ``Lies, Damn Lies and Export
+ Statistics: How Corporate Lobbyists Distort Record of Flawed
+ Trade Deals.'' Washington, DC: Public Citizen's Global Trade
+ Watch.
+Mishel, Lawrence, Jared Bernstein, and Heidi Shierholz. 2009. The State
+ of Working America 2008-9. Ithaca, NY: Cornell University
+ Press.
+Piketty, Thomas, and Emmanuel Saez. 2003 ``Income Inequality in the
+ United States, 1913-1998.''Quarterly Journal of Economics 118
+ (1): 1-39.
+Reinhart, Carmen, and Kenneth Rogoff. 2009 ``The Aftermath of Financial
+ Crises.''American Economic Review (Papers and Proceedings) 99
+ (2): 466-72.
+Romer, Christina D. ``Back to a Better Normal: Unemployment and Growth
+ in the Wake of the Great Recession'' In Woodrow Wilson School
+ of Public and International Affairs, Princeton University
+ Princeton, N.J.: 2010. Reprint.
+U.S. Congressional Budget Office. 2010. ``Estimated Impact of the
+ American Recovery and Reinvestment Act on Employment and
+ Economic Output from January 2010 through March 2010.''
+ Washington, DC.
+U.S. Congressional Joint Economic Committee. 2008. ``Stemming the
+ Current Economic Downturn Will Require More Stimulus.''
+ Washington, DC.
+Vroman, Wayne. 2010. ``The Role of Unemployment Insurance as an
+ Automatic Stabilizer During a Recession.'' Washington, DC: U.S.
+ Department of Labor.
+Xie, Holly, Howard L. Fleischman, Paul J. Hopstock, Marisa P. Pelczar,
+ and Brooke E. Shelley. 2010. ``Highlights from Pisa 2009:
+ Performance of U.S. 15-Year-Old Students in Reading,
+ Mathematics, and Science Literacy in an International
+ Context.'' Washington, DC: National Center for Education
+ Statistics.
+US Congress, Senate Committee on Finance. 2010. Testimony of Mark Zandi
+ on Using Unemployment Insurance to Help Americans Get Back to
+ Work: Creating Opportunities and Overcoming Challenges 111th
+ Congress, 2nd session sess.
+ endnotes
+ \1\ Christina D. Romer, ``Back to a Better Normal: Unemployment and
+Growth in the Wake of the Great Recession'' in Woodrow Wilson School of
+Public and International Affairs, Princeton University (Princeton,
+N.J.2010).
+ \2\ Bureau of Labor Statistics, Employment Status of the Civilian
+Population by Sex and Age (U.S. Department of Labor, 2010), table A-1,
+Adam Hersh and Isha Vij, ``Economic Growth Continues, but Too Slowly to
+Secure Recovery: Policy Consistency Targeting Jobs Is Necessary,''
+available at http://www.americanprogress.org/issues/2011/01/december--
+jobs.html (last accessed 1/25/2011 2011).
+ \3\ ------, ``Economic Growth Continues, but Too Slowly to Secure
+Recovery: Policy Consistency Targeting Jobs Is Necessary''.
+ \4\ Bureau of Labor Statistics, ``Employment Status of the Civilian
+Population by Sex and Age'', Hersh and Vij, ``Economic Growth
+Continues, but Too Slowly to Secure Recovery: Policy Consistency
+Targeting Jobs Is Necessary''.
+ \5\ Henry Farber, ``What Do We Know About Job Loss in the United
+States? Evidence from the Displaced Workers Survey, 1984-2004,''
+Federal Reserve Bank of Chicago: Economic Perspectives 2 (2005).
+ \6\ Lisa B Kahn, ``The Long-Term Labor Market Consequence of
+Graduating from College in a Bad Economy,'' Labour Economics 17 (2010):
+303-16.
+ \7\ Bureau of Labor Statistics, ``Worker Displacement: 2007-2009,''
+available at http://www.bls.gov/news.release/disp.nr0.htm.
+ \8\ Bureau of Economic Analysis, National Income and Product
+Accounts Table 1.1.1, (December 22, 2010).
+ \9\ Federal Reserve Statistical Release. ``Industrial Production
+and Capacity Utilization.'' Table G.17, (January 14, 2011).
+ \10\ Hersh and Vij, ``Economic Growth Continues, but Too Slowly to
+Secure Recovery: Policy Consistency Targeting Jobs Is Necessary''.
+ \11\ Bureau of Economic Analysis, National Income and Product
+Accounts.
+ \12\ Author's calculations from U.S. Census Bureau and U.S. Bureau
+of Labor Statistics
+ \13\ Adam S. Hersh and Christian E. Weller, ``Measuring Future U.S.
+Competitiveness: U.S. Productivity and Innovation Snapshot''
+(Washington, DC: Center for American Progress, 2011).
+ \14\ Ibid.
+ \15\ Holly Xie, Howard L. Fleischman, Paul J. Hopstock, Marisa P.
+Pelczar, and Brooke E. Shelley, ``Highlights from Pisa 2009:
+Performance of U.S. 15-Year-Old Students in Reading, Mathematics, and
+Science Literacy in an International Context'' (Washington, DC:
+National Center for Education Statistics, 2010).
+ \16\ Boushey, Heather. ``Compromising Women's Jobs.'' Center for
+American Progress, (February 9, 2009).
+ \17\ Karen Davenport Heather Boushey, Joy Moses, Melissa Boteach,
+``What the Census Tells Us About the Great Recession: New Data Reveals
+Decreased Income and Health Coverage'' (Washington, DC: Center for
+American Progress, 2010).
+ \18\ U.S. Congressional Joint Economic Committee, ``Stemming the
+Current Economic Downturn Will Require More Stimulus'' (Washington, DC,
+2008).
+ \19\ Lawrence Mishel, Jared Bernstein, and Heidi Shierholz, The
+State of Working America 2008-9 (Ithaca, NY: Cornell University Press.,
+2009).
+ \20\ Thomas Piketty and Emmanuel Saez, ``Income Inequality in the
+United States, 1913-1998,'' Quarterly Journal of Economics 118 (1)
+(2003): 1-39.
+ \21\ Lawrence F. Katz David H. Autor, and Melissa S. Kearney,
+``Trends in U.S. Wage Inequality: Revising the Revisionists,'' The
+Review of Economics and Statistics 90 (2) (2008): 300-23.
+ \22\ U.S. Congressional Budget Office, ``Estimated Impact of the
+American Recovery and Reinvestment Act on Employment and Economic
+Output from January 2010 through March 2010'' (Washington, DC, 2010).
+ \23\ Alan Blinder and Mark Zandi, ``How the Great Recession Was
+Brought to an End'' (Washington, DC: Economy.com, 2010).
+ \24\ A wide array of economists agree with this sentiment. See: US
+Congress, Senate Committee on Finance, Testimony of Mark Zandi on Using
+Unemployment Insurance to Help Americans Get Back to Work: Creating
+Opportunities and Overcoming Challenges,Cong., 111th Congress, 2nd
+session sess., 2010.; Lawrence H. Summers, ``Reflections on Fiscal
+Policy and Economic Strategy, ``Remarks at the John Hopkins University,
+May 2010;
+ \25\ Testimony before Committee on the Budget, U.S. Senate http://
+www.federalreserve.gov/newsevents/testimony/bernanke20110107a.htm
+ \26\ Carmen Reinhart and Kenneth Rogoff, ``The Aftermath of
+Financial Crises,'' American Economic Review (Papers and Proceedings)
+99 (2) (2009): 466-72.
+ \27\ Boushey, Heather. ``Keep the Money Flowing.'' The New York
+Times, (June 24, 2010).
+ \28\ Blinder and Zandi, ``How the Great Recession Was Brought to an
+End''.
+ \29\ Michael Linden, ``Breaking Down the Deficit'' (Washington, DC:
+Center for American Progress, 2009).
+ \30\ Ibid.
+ \31\ American Society of Civil Engineers. ``America's
+Infrastructure Report Card.'' (March 25, 2009).
+ \32\ As Paul Krugman wrote in a recent column: ``If you want a
+trade policy that helps employment, it has to be a policy that induces
+other countries to run bigger deficits or smaller surpluses. A
+countervailing duty on Chinese exports would be job-creating; a deal
+with South Korea, not.'' Paul Krugman, ``Trade Does Not Equal Jobs,''
+The New York Times, Dec. 6, 2010.
+ \33\ David H. Autor, David Dorn, and Gordon H. Hanson, ``The China
+Syndrome: Local Labor Market Effects of Import Competition in the
+U.S.'' Working Paper Cambridge, MA: UCSD and NBER, 2010).
+ \34\ Ibid.
+ \35\ U.S. International Trade Commission. ``U.S.-Korea Free Trade
+Agreement: Potential Economy-wide and Selected Sectoral Effects.''
+USITC Publication 3949. September 2007, Corrected printing March 2010,
+at 2-14, Table 2.3, Available at: http://www.usitc.gov/publications/
+332/pub3949.pdf
+ \36\ Cooper, Michael and Mary Williams Walsh. ``U.S. Bills States
+$1.3 Billion in Interest Amid Tight Budgets.'' The New York Times. pg.
+A1 (January 15, 2011).
+ \37\ U.S. Department of Labor
+ \38\ Wayne Vroman, ``The Role of Unemployment Insurance as an
+Automatic Stabilizer During a Recession'' (Washington, DC: U.S.
+Department of Labor, 2010).
+ ______
+
+ Chairman Kline. Dr. Holtz-Eakin.
+
+ STATEMENT OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION
+ FORUM
+
+ Mr. Holtz-Eakin. Thank you Chairman Kline, Ranking Member
+Miller, and Mr. Andrews and members of the committee, it is a
+great honor to be here today.
+ In my written testimony I emphasized four points. First,
+that the distress of the American workforce is very real and
+easy to document.
+ The second, that the most imperative thing at the moment is
+to concentrate on pro-growth policies and at every juncture,
+when faced with a policy decision, ask will this or will this
+not make it easier for an employer to put one more person on
+the payroll. With about 6 million employers, if everyone hired
+1 person, we would take care of three-quarters of the
+unemployment problem very fast.
+ The third is that many of the policies in which we are
+currently engaged are at odds with that requirement for pro-
+growth imperatives.
+ And then the last is that over the longer term, when it is
+the return to full employment, our workforce will be best
+served by being better skilled, more flexible and better able
+to compete internationally, and that this committee is well
+situated to discuss the K-12 and higher education reforms that
+would be necessary to pursue that.
+ Given the limited time that I have, I am going to go very
+light on number one--not because it is unimportant, the
+distress is real--and number four, not because it is
+unimportant, but you already know everything about it and I
+have nothing really to add here.
+ I want to focus on the need for pro-growth policies and
+some of the things that I see on the landscape right now. Pro-
+growth policies are different than countersystemic cyclical
+policies, or stimulus in the political parlance. Stimulus is
+appropriate when the economy is falling, and we can debate the
+effectiveness of the American Recovery Act, and probably will,
+as an economics profession, for a long long time.
+ But that is not the situation in which we find ourselves.
+We have been growing since the third quarter, a year ago. We
+are growing far too slowly. It is a growth rate that is
+consistent with the trajectory of the economy's postfinancial
+crisis. All the evidence is, there are slow and long recoveries
+from financial crisis. That places an imperative on raising the
+growth rate to the maximum amount possible during that
+trajectory to get people back to work.
+ Where will that growth come from? It won't be from
+households. Households have seen their net worth badly damaged.
+Their pensions aren't worth what they used to be. They are
+badly in debt. Their homes are underwater in some case. They
+are not going to spend this economy to prosperity. And if we
+write them checks, it will be--there is no way to do that to
+replace their lost wealth. It is a strategy that will fail.
+ The same is true for governments. Our governments are on
+red ink everywhere. I applaud Governor McDonnell for avoiding
+such distress in Virginia, but if you look across the
+landscape, State and local governments are in deep financial
+trouble. They cannot be counted on to spend their way to
+prosperity.
+ The Federal Government budget is something I am happy to
+expand on but, put simply, if we pursue the path that is laid
+out, for example, in last year's administration budget or
+something that looks like the CBO report released earlier
+today, we will be downgraded as a sovereign borrower within
+this decade. And we cannot pretend that we can spend as a
+sustained mechanism to recover.
+ That leaves, by process of elimination, the business
+community and then exports, both of which have to be given
+every opportunity to power this economy going forward.
+ What is on the landscape at the moment in that area? Well,
+we have the fiscal outlook, which is in and of itself a threat
+to expansion. It is a promise of either higher taxes or higher
+interest rates in the financial classes in years to come, and
+the sooner Congress closes that debt by reducing the growth of
+spending, the better off the business environment will be.
+ We have on the agenda the administration's commitment to
+higher taxes. We heard last night about corporate tax reform. I
+am happy to give a sermon on the virtues of internationally
+competitive tax policies. But we also have the promise to raise
+taxes in 2013, including those on small businesses, which are
+the engines of job creation in the United States. That is a
+negative from the point of view of the jobs outlook.
+ The recently passed Patient Protection and Affordable Care
+Act is riddled with bad economic policy from the point of view
+of growth. There are $700 billion worth of new taxes in that
+act. Those taxes, by any measure, will be passed along to
+workers in the form of lower wages or fewer jobs. And even the
+research of Christy Roemer, who was the former chairwoman of
+the President's Council of Economic Advisors, suggests that
+discretionary tax increases have the single most powerful
+negative impact on economic recovery. It is the wrong time to
+be doing that. There are higher mandates. Employers are going
+to have to pay the cost of those mandates by again cutting
+wages or jobs, and higher premiums.
+ The law, as I lay out in my written testimony, is a recipe
+for higher insurance premiums, which in the end will hurt
+employers as they try to hire people.
+ And the last, which has been mentioned before, is the
+regulatory environment. 2010 was a banner year for regulators
+and saw an 18 percent increase in Federal Register pages
+devoted to regulation. The cost of that regulation ranged from
+$20 billion, as Governor McDonnell mentioned, to 40 billion by
+some of our estimates. We can do better in providing an
+environment in which employers can put workers on the payroll
+and those workers can receive higher pay as we move forward.
+ So I thank you for the opportunity to be here today and
+look forward to answering your questions.
+ [The statement of Mr. Holtz-Eakin follows:]
+
+
+
+ ------
+
+ Chairman Kline. Thank you all for your testimony. We will
+move now to questions from the members. We will be abiding by
+the 5-minute rule here. I don't have the same reservations
+about the gavel for my colleagues as I might for the witnesses.
+And we will try to get as many questions in as we can. And,
+again, I am mindful of the fact that members are having to
+leave as they look at their flight schedules shifting. You may
+see people taking a look at their BlackBerries and discovering
+that they have to leave even sooner. And so to give members a
+maximum opportunity, I am going to delay my own questioning and
+turn on my side to Dr. Bucshon.
+ Mr. Bucshon. Thank you, Chairman. I am going to direct this
+question to Governor McDonnell. Thank you all for coming. We
+appreciate it. I am from Indiana and the Daniel's
+administration has estimated that the expansion of the Medicaid
+program, if 100 percent of the people sign up, may cost the
+State as much as $3.6 billion. I am going to make a few
+comments about Medicaid and what it does to access to health
+care, and then I will ask you a question about what your
+options are, what you see as the State's options if we can't
+get around that type of a mandate.
+ As a physician, the Medicaid programs in many States
+already are severely strapped for funds. In fact, a neighboring
+State of mine, they run out of money in September or October
+every year. And from a provider's standpoint, from a hospital
+or a physician, you basically have to re-bill the State later
+on, of which a good portion of that is further written off.
+What this has done across the country is it severely limits
+access to health care for Medicaid patients because providers
+won't take them or they limit the amount of time that they have
+available in their day to see these patients. So at a time when
+we are trying to expand health care coverage for Americans, the
+Medicaid program, in my view, will expand coverage; but if you
+don't have anybody to take care of you or that will accept what
+you have, then that doesn't really help you very much.
+ The other thing I would like to comment on is our strapped
+emergency rooms. Across the country already, as everyone knows,
+emergency rooms already are overcrowded with long wait times,
+and statistically this population of folks are the highest
+utilizers of emergency room services. So if you see that in
+your public hospitals in your States, a massive expansion of ER
+utilization at a time when we are trying to control health care
+costs, we are going to have the opposite effect.
+ So my question, Governor, is from your State's standpoint,
+what do you see as the options for the States if they have to
+come up with this extra money? What do they do with their
+public hospitals for funding? How will it affect your overall
+budget at your State? Will it cause tax increases at your
+State? And just give me kind of a general overall view of what
+you see this particular portion of the health care bill will
+affect you.
+ Governor McDonnell. Well, thank you Congressman Bucshon. We
+have looked at that and, of course, while my State is in
+litigation, we still know that with the clock ticking to 2014,
+we still have to take the prudent steps to build exchanges and
+do the things to implement the law.
+ Let me give you a pre-health-care reform view of Medicaid
+in my State, and this is across the board with other Governors
+as well. Medicaid spending in Virginia has gone from--it has
+increased 1,600 percent in the last 27 years. It has gone from
+consuming 5 percent of the budget to now 20 percent. Other
+States are already in the high 20s, 27, 28.
+ We are a relatively low-coverage State, and so with the
+impact of the Federal health care reform, we will have a
+precipitous increase in the Medicaid population in our State,
+such that we estimate by over the next 10 years it will--
+Medicaid spending in Virginia will go up even that much more
+and consume close to 30 percent of the budget. And that is
+about $2 billion of increased spending for Medicaid, unfunded
+from the Federal Government, by the year 2022.
+ So we are looking at ways now to implement these
+requirements from the Federal law in a way that is least
+bureaucratic and most efficient. I have got initiatives before
+our general assembly this year to look at far more use of
+managed care across the spectrum for all health services,
+including mental health, more generics, co-pays, but also more
+education.
+ You mentioned the issue of the overuse of the emergency
+room, which is the most expensive place to get medical care by
+this population, so education is obviously a part of it. But
+there is a tremendous budget-busting concern, I believe, of
+every Governor in the country about the growth in Medicaid on
+its own, plus the Federal mandate, with the new legislation
+growth and what it is going to do. So we are struggling to find
+ways to reduce Medicaid spending in a way that still keeps a
+healthy, quality, safety net but doesn't break the bank on
+spending and force cuts in other areas or pressure more tax
+increases.
+ It is a timely question. We don't yet have the answer and,
+ultimately, depending on what the courts decide on this
+measure, and what we can implement in our legislatures for
+reductions, that will make a difference.
+ The one last thing I would say, Mr. Chairman, is I know you
+have gotten letters from a number of us Governors asking you
+for some consideration on flexibility with the MOE
+requirements. For us to be innovators in our State governments
+and to find ways to implement this law and also to keep the
+costs of Medicaid as low as possible, we have got to have some
+relief from some of the mandates, from some of the MOE
+requirements, more flexibility.
+ I talked to Governor Daniels, in fact, yesterday about this
+issue. I think we will probably have another letter to you
+coming on this exact subject to say, Please, as long as this is
+the law, at least provide us more flexibility on how we can
+implement creative cost-cutting measures in Medicaid so that we
+can control our populations and our costs a little better.
+ Chairman Kline. Thank you, Governor. The gentleman's time
+has expired. Mr. Andrews.
+ Mr. Andrews. Thank you, Mr. Chairman. Thank the ladies and
+gentlemen of the panel for excellent testimony.
+ The President said last night, and I think we should all
+embrace the goal you have reiterated of working together to
+foster an environment where entrepreneurs and businesses can
+create jobs for the people of our county.
+ And Mr. Messinger, I wanted to thank you for taking time
+away from your family and your business. You are a very
+effective advocate for your beliefs as a small manufacturer.
+And I wanted to ask you just retrospectively for a minute, do
+you think that Congress did the right thing when we passed the
+TARP bill?
+ Mr. Messinger. I happen to think that the TARP legislation
+was excellent. A quick story: I happened to go see Congressman
+Coble who had voted initially against it, and requested that he
+please vote for it. And I don't know if it was just my showing
+up, but others too on the telephone, I think it stabilized our
+country.
+ Mr. Andrews. I appreciate your advocacy efforts. I agree
+with you. And I think it was an important step forward and I
+appreciate you saying that, both previously and now.
+ Governor, welcome. It is not an easy time to be Governor. I
+sure do know that. And I wanted to ask you about an initiative
+that you have launched that sounds a lot like some of what we
+have heard the last few days around here, which I understand is
+a $4 billion transportation investment program for the
+Commonwealth of Virginia. And if I understand it correctly, you
+are expediting some bonds the Commonwealth already issued, I
+think to the tune of like 1.8 billion or so. And then you are
+proposing to borrow 1.1 billion and support that debt service
+with Federal payments from the transportation trust fund.
+ Two questions. One is, you know, there is consideration of
+reduction of discretionary domestic spending by 25 percent.
+Would you ever want to see us exempt the transportation trust
+fund from that 25 percent, or would you want to see us do the
+25 percent cut?
+ Governor McDonnell. Obviously, that policy is very similar
+to yours. What I can say is that I think infrastructure
+investment in Virginia and America is one of our top
+priorities, especially for us in Virginia. You have probably
+driven around the southern part of the Beltway and understand
+what congestion does to the quality of life.
+ Mr. Andrews. I was actually parked on the southern part of
+the Beltway.
+ Governor McDonnell. I increased the speed limit to 70 miles
+an hour last year. Some in Northern Virginia said, We would be
+happy going 30.
+ Mr. Andrews. Seventy miles a day would be pretty good in
+Northern Virginia.
+ Governor McDonnell. But I would say to you that
+infrastructure investment is critical. I honestly think it was
+a lost opportunity to the degree that the stimulus policy was
+the right thing to do, there was very little money in there.
+Only about 6 percent of your total spending was there. That
+would have been nice. But I do think that, given the posture we
+are in, for us to use debt responsibly for the mortgage-like
+infrastructure is prudent, and I think we are going to get that
+done.
+ Mr. Andrews. I agree. I do think that is one of the areas
+we should avoid, that 25 percent. And I want to square that
+comment with Mr. Holtz-Eakin's testimony. And please forgive me
+if I mischaracterize what you say, or misunderstood, Mr. Holtz-
+Eakin, but I think you said that further stimulus at this time
+is ill-advised. And it seems to me the kind of transportation
+investment the Governor is supporting in Virginia, using
+Federal funds, is that kind of stimulus. Do you disagree with
+him about that point?
+ Mr. Holtz-Eakin. Infrastructure can be a central part of
+the supply-side economics where you get good long-term growth
+as part of the productivity of the Nation. What I would urge
+you to not do is judge it by construction jobs created. If we
+look back and somehow judge the construction of the interstate
+highway system by the construction jobs created, we would have
+missed its economic importance completely.
+ Mr. Andrews. Using that litmus test, what would you think
+about the expansion of high-speed rail, like the President
+proposed last night?
+ Mr. Holtz-Eakin. The thing I would most urge you to do is
+before you start looking at the dollars, you start looking at
+the quality of the programs. I participated for the past 3
+years in something known as the Bipartisan Policy Center's
+national transportation policy project. And I won't belabor you
+with the findings. It is a bipartisan project. We have a bigger
+report called Performance Driven, all of which suggests that
+before you spend a dollar, you have to take the hundred or so
+programs in the Department of Transportation and turn them into
+something that generally has a Federal rationale and is
+motivated on economic growth.
+ Mr. Andrews. What about high-speed rail? Do you think it
+fits that litmus test or not? Do you agree with the President
+or disagree?
+ Mr. Holtz-Eakin. I would probably disagree at this point
+because the notion that you should pick a mode--we should not,
+you should not care how it gets done. You should care what gets
+done.
+ Mr. Andrews. What do you think would have a higher
+priority, then? Which program would be better?
+ Mr. Holtz-Eakin. That which from a national perspective
+most improved national connectivity. Whether it is from a port
+to a rail or from a port to a passenger will differ in parts of
+the country, and to pick a single mode, high-speed rail, is to
+actually get the formulation of the policy wrong.
+ Mr. Andrews. So transportation investment based on economic
+productivity is something you support.
+ Mr. Holtz-Eakin. Yes.
+ Mr. Andrews. Thank you very much. I yield back.
+ Chairman Kline. I thank the gentleman. Dr. Heck, you are
+recognized for 5 minutes.
+ Mr. Heck. Thank you, Mr. Chairman. And also I would like to
+thank the panelists for braving the elements and taking the
+time to be with us this afternoon.
+ My question is for the Governor. I represent southern
+Nevada which has the dubious honor of having the highest
+unemployment rate in the Nation right now with 14.9 percent,
+estimated that actual unemployment is about 22 percent. But I
+am intrigued by Virginia's ability to be the fourth best in job
+creation and having an unemployment rate that is, you know, at
+ninth in the country, showing that there is still opportunity
+for success even in these tough economic times. I realize the
+demographics between Virginia and Nevada are very different.
+ But Governor, if you were to pick one or two policies or
+programs that you could state had a significant effect on your
+unemployment rate and lowering it and creating jobs, what would
+those be? And likewise, were there any policies or programs you
+tried which you found were not successful?
+ Governor McDonnell. I guess I would like to answer in part
+where I started with my remarks is there are certain
+fundamentals to economy and job creation and recruitment of
+entrepreneurs and innovation for small business that I think
+are universal, and that is keeping an environment where taxes
+and regulation and litigation are low. And the President
+frankly commented on all of those last night: that he wanted to
+see spending reform; keep taxes low; discretionary spending
+freezes; regulatory reform; medical malpractice reform. I mean,
+he said a lot of the right things last night that, if you all
+will work on that, I think are going to do some good things.
+ We have tried to do that. For instance last year, we were
+faced with a $4.2 billion budget deficit. Some had proposed
+halving that with a tax increase of $2 billion, the largest in
+Virginia history. We said no. We made the tough decisions. We
+have cut spending $4.2 billion and now we have got 5 percent-
+plus revenue growth, robust job creation numbers, and we have a
+$400 million surplus. I think those kind of physical principles
+is what I would say is the foundation.
+ And then secondly is, you have got to be aggressive. The
+American dream is still well and alive, but you have got to be
+able to reach out to the entrepreneur and the small business
+person in particular and show them why coming to your State is
+going to make a difference for them; 71 or so percent of all
+the jobs in America are still created by that small business
+person, under 250 jobs or so, and they have unique challenges;
+and a lot of them are the tax policies and the regulatory
+policies that inhibit them from getting started and then
+staying in business. Sixty percent fail within the first 5
+years, and the number one reason is bad management. The number
+two reason is government interference, taxes, regulation,
+litigation, et cetera.
+ So I think those fundamentals are universal and we have
+found a way for a while, frankly, with Democrat and Republican
+Governors to keep that formula in place and it is working.
+ Mr. Heck. Mr. Chair, if I may. Were there any programs or
+policies that you put into place that you found might have been
+detrimental to your job creation and job growth, things that
+you would advise others to avoid?
+ Governor McDonnell. Well, of course, I would say the flip
+side is the tax increases. We had our largest tax increase back
+in 04 and we didn't fare too well after that. Of course, some
+of that was the global economic downturn.
+ But I would say that the programs that are used--and we
+have created some--and my response to Mr. Andrews earlier, we
+have created some that are targeted at things like mega sites
+and corporate tax credits to come to Virginia, particularly in
+the tech and manufacturing sectors. And I have an opportunity
+fund of essentially flexible money for me to make offers for
+businesses to come here, as most States do, and frankly, a lot
+of foreign countries, particularly the Pacific Rim has now. So
+that is part of the market right now.
+ But if it is just corporate giveaways without targeted ROI
+analysis aimed at your core strengths, then I think you will
+waste money, and we have probably done a little bit of that
+over the years. So I think that is the key--strategic, targeted
+investments in those things that are going to grow on your core
+competencies in your State, and then be aggressive telling your
+story.
+ Mr. Heck. Thank you, Governor. Thank you, Mr. Chair. I
+yield back.
+ Chairman Kline. Thank you. Mr. Scott.
+ Mr. Scott. Thank you, Mr. Chairman. And Governor, as a
+resident of Hampton Roads, spending a lot of time up here in
+Northern Virginia, I am looking forward to those transportation
+improvements.
+ You referred to your Top Jobs of the 21st Century
+Initiative. And the President talked last night about there is
+a close correlation between education and jobs. Can you tell me
+what it is going to take to create 100,000 new degrees over the
+next 15 years, a total of 6,000 a year. That is a lot of
+students. How are we going to do that?
+ Governor McDonnell. First, we have got to be able to get
+the universities to grow the pie and expand the number of
+degrees that they offer. UVA has been the first taker; 1,400
+new degrees they are going to offer over the next couple of
+years. Right now, only 38 percent of the kids in Virginia can
+actually go to a Virginia university. So we have got enormous
+physical plant--only 38 percent of Virginians that are applying
+to college can actually go to a Virginia college. That is the
+limits on our capacity. About 42 percent have a college degree,
+but 4 percent or so of those earn those out of State. But we
+have to be able to use the enormous physical plant at our
+universities, weekends, summers, et cetera, to expand the
+opportunities.
+ Secondly, there is enormous potential with the Internet for
+distance education, having partnerships between multiple
+universities, which we now see in Virginia, to use virtual
+learning experiences. And they have to focus, Congressman, I
+believe on the STEM areas.
+ The President mentioned that last night. I think he is
+absolutely right. That is where our future competitive
+disadvantages will occur compared to the Pacific Rim countries
+and other emerging countries that get that and are graduating
+more engineers and scientists per capita than we are. But I
+think we have to realize, then, that universities can't be all
+things to all people. We may not need 43 different degrees in,
+let's say, philosophy. But we need a lot more in science and
+medical schools and engineering.
+ So what it is going to cost in Virginia, I am investing
+about $75 million by cutting other things out of the budget and
+reinvesting it in these core priorities of transportation and
+higher education. But it is going to take a sustained
+investment to create about 1,000 new degrees over a year.
+ Mr. Scott. Now, the President mentioned education past the
+high school level. All of that won't be 4-year degrees. Are you
+focussing also on vocational educational opportunities?
+ Governor McDonnell. Yeah. I think that is exactly right.
+There are a number of great paying jobs, not only in Virginia
+but around the country, that a 2-year certificate in welding or
+firefighting or a 2-year associate's degree will earn you. And
+that is why I think the focus on workforce development is
+critically important. It is probably the number one or two
+thing people ask for when they want to come to Virginia: What
+kind of educational establishment do you have? How well trained
+are your workers? Because in the long term, that is what is
+going to be able to sustain their growth.
+ Mr. Scott. From a jobs perspective, you faced, as all
+States did, significant budgetary challenges last year. Can you
+indicate what the revenue sharing part of the stimulus package
+did to your budget and how many fewer people you had to lay off
+because you got money from the stimulus package?
+ Governor McDonnell. Well, I think certainly the components
+dealing with education and the Medicaid funding certainly were
+helping us in plugging some of the holes that we had, although,
+you know what? If I didn't have it, I would have asked for more
+cuts. We cut $4.2 billion. Another billion, we would have found
+a way to do it, but it certainly lessened the blow in the short
+run.
+ Mr. Scott. Well, if you had cut a billion dollars out of
+the State budget, that would have had employment implications,
+would it not?
+ Governor McDonnell. It would. But I tell you what,
+virtually all the claims that were made were vastly overblown.
+We did some cuts to education. Your money that you provided
+last year helped to plug some of that. But the estimates were
+laying off 30,000 teachers. In essence, it really came out to
+be less than 1,000. And I will tell you why. When you give
+people less resources and you tell them to do more with less,
+our dedicated employees at the State and Federal level will do
+it. They will be more entrepreneurial, they will be more
+innovative, they will be more efficient.
+ And that is what happened in Virginia, Congressman, is we
+didn't have nearly those kind of layoffs. And of the job
+creation--maybe this will help answer your question. Of the job
+creation numbers that I have mentioned, about 60,000 net new
+jobs created over the last year in Virginia, only about 15
+percent of those were public sector jobs.
+ Governor McDonnell. The rest of them were all private
+sector jobs.
+ Mr. Scott. Do you count government contracts like a road
+project as a private job or a public job? Although it is paid
+for----
+ Governor McDonnell. No, I don't know how they are counted.
+I assume they are counted probably as private sector jobs
+because they would contract those out.
+ Mr. Scott. Mr. Holtz-Eakin, you know in the 1990s we had
+great budget surpluses being developed and many jobs. In the
+2000s we had a bad budget and bad jobs. Was that a coincidence?
+ Mr. Holtz-Eakin. I think that there are many more
+complicated explanations of that. We also had a dot-com bubble
+in the late 1990s, early 2000s, that drove Federal receipts and
+probably the primary factor on top of some severe budgetary
+stringency in the late '90s that drove the budget to surplus.
+2000 was littered with some bad economic shocks that. Attacks
+on the U.S. directly, Sarbanes-Oxley, scandals, Enron,
+WorldCom. We have had a number of impacts both on the up and
+the downside over that period, and there is no simple
+explanation for the performance.
+ Chairman Kline. The gentleman's time has expired. Mrs.
+Roby.
+ Mrs. Roby. Thank you, Mr. Chairman. My question is for
+Governor McDonnell. Being from another right-to-work State,
+could you explain more about how it has either helped or
+hindered the economic growth in increasing jobs during a
+recession? And are there any specific lessons or insights that
+you could share with the committee as it relates to that?
+ Governor McDonnell. Of course there is another 22 right-to-
+work States, and I have the privilege of being Governor of one
+of them. And it just obviously makes the opportunities and the
+flexibility for management that much greater in how they
+control their workforce.
+ It is one of the top selling points that I use when I ask
+companies to come to Virginia. We recently had Northrop Grumman
+moving their corporate headquarters to Fairfax County. The
+largest data center in Microsoft's history I believe is coming
+to Mecklenburg County this year. And one of the things that I
+tell them about why they ought to come here is because they
+will be able to have maximum flexibility under our law to
+control their workforce, set their policies.
+ And so I think that is a critical selling point. I
+mentioned the card check bill. We were strongly opposed to that
+in Virginia, almost unanimously. Almost every business
+organization in Virginia sent letters and lobbied against that
+when you considered that in a last couple of years because we
+thought that would be a significant undermining of a key asset
+for our State and yours, Congresswoman, as well for expanding
+jobs and creating opportunities that reduce costs.
+ Mrs. Roby. Thank you. I yield back.
+ Chairman Kline. Thank the gentlelady for setting that
+example.
+ Ms. Hirono, you are recognized.
+ Ms. Hirono. Thank you, Mr. Chairman. My first question is
+for Governor McDonnell. I completely agree with you that more
+of the stimulus money should have gone for infrastructure
+support for our States and counties. It is good that you have
+that perspective.
+ Would you support the Federal Government putting more money
+into supporting infrastructure development for our States and
+counties?
+ Governor McDonnell. Not if it adds a penny to the debt or
+the deficit. That is the overriding concern that I hear from
+people in my State. And you have to understand it is a foreign
+concept, honestly, for a Governor. I think all but--49 States
+have a balanced budget amendment. We do not understand deficit
+spending very well because we are not allowed to do that under
+our Constitution.
+ So I would say if you would reset the priorities and make
+some of the tough choices even in entitlements. Essentially
+that is what we did in Virginia last year with health care and
+education and things that are quasi-entitlements in our State.
+We cut, and it worked out pretty well. People did more with
+less, with smart decisions. If you retargeted that into
+infrastructure, I think that would be a good thing. That is
+real new jobs.
+ The Federal Government has estimated that $100 million in
+transportation construction supports about 3,000 jobs. That is
+a significant return, not only in getting something done but
+also in job creation.
+ Ms. Hirono. So as long as it does not add to the deficit,
+then you would be all for it? Is that a view that is shared by
+your fellow Governors of the other 49 States?
+ Governor McDonnell. I think we do believe that to the
+degree that you discern in Article I, section 8 that it is the
+responsibility of Congress at all to get into transportation.
+Perhaps under the general welfare clause.
+ Ms. Hirono. The jurisdiction of this committee.
+ Governor McDonnell. If you deem that to be a proper role of
+the government, then I would say that these infrastructure
+investments in partnership with the State governments are
+something that is a top need for States and for our Nation. You
+have heard the stories obviously about roads, bridges, other
+infrastructure crumbling, 60, 70 years old. Something that I am
+focusing on, as I said to Mr. Andrews earlier here.
+ Ms. Hirono. It is clear in our country that we are
+trillions of dollars behind in supporting our infrastructure.
+ You noted in your testimony that one of the areas that you
+would like Congress to focus on is the burden of regulation and
+you cite to the Heritage Foundation report that focused on 43
+significant new rules. And I have a copy of that report. It is
+called Red Tape Rising. And one of the regulations that was
+focused on by the Heritage Foundation is one that has to do
+with crane and derrick safety standards to prevent cranes from
+falling into buildings and killing people, which is what was
+going on. If you read the regulation, the Heritage Foundation
+focused on the cost of the regulation, which it is true about
+150 million, but when you look at the benefit side of the
+equation it actually saved 209 million.
+ So if you were just doing a simple cost-benefit analysis
+then the savings or the benefits would exceed the costs. But
+you know when you are talking about saving lives, I would say
+that that should have been even heavier on the side of the
+benefit side.
+ So my question is are you aware whether the Heritage
+Foundation took the offsetting of the benefits into account
+when they cited to these 43 rules and the costs of those rules?
+ Governor McDonnell. I can't tell you. Under your analysis I
+think there are qualitative aspects after you do the cost-
+benefit analysis just on dollars, then there has to be some
+good management judgment applied. So perhaps in your analysis
+or your example that might not be one we might all embrace. But
+the macro point is that if this is the largest number of major
+new rules at 43 that has promulgated since 1981, there is a
+problem. And I have the same problem in Virginia. When I was
+Attorney General we did a regulatory reform task force for 2
+years and we had a similar standard that is what President
+Obama just put in his executive order. And that is that if
+there is a better way to do it that respects the free market,
+that reduces cost, then we ought to look at a different way of
+doing it and we got rid of about 350 pages of regulations. I
+have got 24,000 pages left.
+ Ms. Hirono. I agree with you. I am not a big fan of
+unnecessary regulations either. But there is also a danger when
+you do the cost-benefit analysis that we really have the full
+package.
+ Going on to Mr. Messinger, did you say that you thought the
+stimulus bill was a good thing? Did I hear you correctly?
+ Mr. Messinger. I think the question was on TARP.
+ Ms. Hirono. What did you think of the stimulus?
+ Mr. Messinger. I think parts of it were very helpful. I
+will give you an example. Our customers are highway contractors
+and they, and I think the rest of the country, expected more
+infrastructure money to come out of the stimulus.
+ Ms. Hirono. I am with you on that.
+ Mr. Messinger. Okay. And as a result our customers put off
+purchases of new equipment because they didn't see any
+certainty to what was going on. So we didn't see a huge benefit
+for our business out of the stimulus.
+ Chairman Kline. The gentlewoman's time has expired.
+ Ms. Hirono. I am so sorry. Thank you very much.
+ Chairman Kline. Mr. Thompson, you are recognized.
+ Mr. Thompson. Thank you, Mr. Chairman. Thanks to the panel
+for being here and lending your expertise today.
+ Governor McDonnell, my question has do with workforce in an
+area that we haven't touched on specific to your State;
+concerns offshore oil and gas development off of Virginia's
+coast. As I understand it, the President announced that
+Virginia's lease sale 220 would be included in the current
+2007-2012 5-year plan and then following the Deep Water Horizon
+accident the administration withdrew the sale. Did Virginia
+play a role in making that decision not to move forward?
+ Governor McDonnell. No, we didn't. I will say with respect
+to the administration we did play a role in the initial
+decision that the President made in March to authorize Virginia
+lease sale 220 to go forward. We were delighted and we thought
+the President made the right decision. I had a number of
+conversations with Secretary Salazar and meetings with him in
+advance, and I was delighted with the administration's decision
+to allow us to go forward as the first State on the East Coast
+to drill for oil and natural gas.
+ The Secretary did call me shortly about an hour before the
+President made the decision that he was pulling the plug,
+frankly indefinitely, on offshore exploration. I told the
+Secretary that I appreciated the call but it was short-sighted
+and reflected no confidence in the Federal Government to be
+able to properly react to this disaster in the Gulf and no
+confidence in the ability of American industry to create the
+new technology that was necessary to react. And I didn't think
+we ought to give up and write off an entire industry that could
+create tremendous capital investment and jobs at this time in
+America and that I was very disappointed.
+ Mr. Thompson. Given that sounds like a unilateral decision
+on the part of the administration, have you made any estimates
+as to the economic impact exploration might have for the State
+or frankly the potential job growth that could be associated
+with the industry?
+ Governor McDonnell. Congressman Thompson, there were
+several estimates by various groups that have been made over
+the last couple of years. Some of the problems dealt with the
+fact that because the ban had been in place for so long that
+the seismic studies were largely outdated and so there is so
+much better technology to know better what is out there. And I
+would say that a couple of the more reputable estimates
+indicated about 1,900 to 2,600 jobs over the next 10 years,
+about $10 billion in capital investment, and about $250 million
+in revenue sharing. And that would assume that Congress would
+allow offshore drilling off the Atlantic Coast to have the same
+revenue sharing deal that the Gulf States have, which is about
+37.5 percent. If we got something like that sharing it with
+Virginia, it would be significant new revenue.
+ In fact, I had a bill passed the last session of the
+general assembly approving offshore drilling and dedicating 80
+percent of that new revenue from offshore drilling to
+transportation infrastructure. So we were ready to go with the
+President's announcement. Unfortunately, now that is not the
+case.
+ But what we do know is that it is an extraordinary
+opportunity. We don't have great beaches just like they do on
+the Gulf Coast. I don't want to drop a well on those beaches.
+We understand the need to be slow and prudent, but not to pull
+the plug indefinitely as I understand where we are now where
+Virginia really does not have a shot for an indefinite period
+of time.
+ Mr. Thompson. You mentioned the beautiful beaches in
+Virginia. Do you believe that the oil and natural gas
+exploration in the Atlantic could coexist not just with the
+beautiful beaches, but obviously the presence of the Navy in
+that area?
+ Governor McDonnell. We do. And I think national security
+ought to take the first priority. We have got the greatest
+naval base in the world in Norfolk, Virginia. It is a great
+source of pride for us in Virginia. We have had some
+discussions with some of the leaders down there about their
+operations to discuss what areas might need to be off limits
+and what areas could still be used for offshore exploration of
+gas, oil, or wind without affecting naval operations. We have
+the same issue with Wallops Island, the spaceport off of the
+Virginia-Maryland coast. But I believe those industries can
+coexist very well with offshore energy exploration.
+ Some areas would have to be off limits, but some can still
+be used and I think that is just a matter of logistics. My
+concern is writing off the industry indefinitely because of
+clearly a disaster of significant proportions. But when you
+have 4,000 oil rigs that have been working reasonably well for
+40 years and then to throw in the towel on the industry, that
+does not seem like the American way. We are better than that.
+And that is what I expressed to the Secretary, and I hope
+Congress would consider taking some action maybe to move this
+along a little bit quicker.
+ Thank you.
+ Mr. Thompson. Thank you, Chairman.
+ Chairman Kline. The gentleman's time has expired. Mrs.
+McCarthy, you are recognized.
+ Mrs. McCarthy. Thank you, Mr. Chairman. Ms. Boushey,
+listening to the testimony, one of the things I think is
+missing is we are hearing everybody saying the job killing
+effects of Federal regulation. And yet when you look at this
+chart, the brown area is basically during the Bush years and
+they had deregulation. During Obama's 2 years we had
+regulation, yet we had job growth.
+ Can you explain the difference between the regulation and
+deregulation and why we have job growth during those years?
+ Ms. Boushey. Thank you. That is an excellent question, and
+it does underscore that that can't necessarily be the answer to
+what was going on with jobs necessarily. Two things that I
+would point out on the regulatory front. First of all, the
+Recovery Act was not necessarily a bunch of new regulations but
+was a bunch of spending designed to spur economic growth and to
+spur job creation, which clearly it did. It has been
+significantly effective.
+ And I very much enjoyed some of the conversation on this
+panel talking about how we should have spent more of that money
+on infrastructure. My understanding of the political process
+was that a lot of--about a third of that money went towards tax
+cuts that did not have the biggest bang for the buck that those
+infrastructure dollars would have had. So that is something the
+next time this comes around I hope this conversation comes back
+up and we can spend all of that money on infrastructure.
+ But the second piece that we need to note when we are
+thinking about regulation is of course when we are talking
+about regulation it is a wide array of different sorts of
+themes and different things that the government is doing. One
+piece--and again I would point to the report that came out
+yesterday from the commission that studied the financial
+markets and what happened. It was the lack of regulation that
+actually caused this whole crisis to begin with.
+ And so when we are talking about this as if it was some
+sort of monolith, I would like us to just focus for a moment.
+The reason we saw these massive job losses was because we
+weren't doing our job regulating the financial markets, and
+that is something that looks like is going to come up again in
+this Congress, whether or not we are going to make sure that
+the money is there to fund the agencies to do that regulation,
+to hire that staff to do that.
+ One thing that I always sort of note when you look at the
+fantastic people that do government service, those folks who
+are doing the regulating in those agencies are folks like you
+that are not making the big bonuses trying to regulate this
+very large industry with a lot of money at its disposal. But we
+need to make sure that those agencies are fully funded.
+ I hope that answers at least part of your question.
+ Mrs. McCarthy. Last night the President talked about the
+infrastructure of this country and many of us, probably many of
+us sitting here and in certainly some of the other committees,
+happen to think of putting more money into the stimulus for
+infrastructure. I can talk about the great State of New York.
+You know, our bridges, roads, basically are falling apart.
+States don't have the money to do it. The high unemployment
+rate with our union contractors and our union laborers. So I
+happen to think that is where we are going with it.
+ On the financial, I think people are starting to forget
+because the economy is coming back now. The Dow went over
+12,000 today, and that is something that everybody has been
+looking for. But with that being said, we had a slow economy as
+far as getting people back to work because people were still
+holding their money. And as far as saying there are too many
+regulations out there, when you think of all the tax cuts we
+gave to those particular corporations to be able to buy
+equipment, to be able to have a tax write-off going down 5
+years on equipment that they bought, I don't think people
+actually understand what we have been doing. And if you have
+any answers to that, that would be great.
+ Ms. Boushey. I would like to comment on infrastructure and
+needing to do more. Where I live here in the District of
+Columbia I have seen a small business owner across the street
+from me have to deal with three different water main breaks
+that has closed down his business for a number of days at a
+time. One of the things that we haven't heard enough about in
+this infrastructure conversation is how important these
+investments are, especially for small- and medium-sized
+businesses who can't relocate as easy as the big multinational
+can to a State with a better infrastructure to deal with it.
+But the traffic, the kinds of things that we were joking about
+earlier, that has a real impact on economic growth.
+ And so making those investments will certainly boost jobs
+and boost employment, but it is also good for small business,
+even if it is not directly employment. It is helping them to do
+their business better.
+ Mrs. McCarthy. Extremely important for small businesses. I
+live in Mineola, Nassau County, Long Island, New York. Most of
+our villages are 50 to 100 years old and the pipes are all 50
+to 100 years old and we have already had reports of many of the
+mains breaking. They have no money and they can't even do the
+roads because there is no sense doing the roads until the mains
+are fixed. So it has been a round robin. That hurts our small
+businesses and that hurts downtown. And those revenues
+basically go into the villages to keep up the upkeep as far as
+they can. So I agree with you on that.
+ And I guess what I would say, too, also, if right-to-work
+States--I happen to think it is a problem mainly because one of
+the things when you talk about OSHA, they haven't been
+aggressive enough to make sure that our people aren't getting
+injured. The amount of injuries and the amount of deaths in
+this country because of workplace violations, shall we say, and
+we have seen those statistics and yet in my opinion it does not
+matter what administration has been there, they have not
+enforced the laws that are already on the books.
+ Chairman Kline. The gentlelady's time has expired. I am
+going to take this opportunity to ask--take a little bit of
+time and ask some questions.
+ Mr. Holtz-Eakin. Mr. Chairman?
+ Chairman Kline. Yes.
+ Mr. Holtz-Eakin. With all due respect, I want to make the
+record to correct----
+ Chairman Kline. I am going to start with you. We have
+multiple competing things here. Let me go to you, Dr. Holtz-
+Eakin, because I know that you wanted to say something about
+the regulatory issues.
+ Mr. Holtz-Eakin. I wish mostly to make sure the record
+correctly reflects that I am a sitting member of the Financial
+Crisis Inquiry Commission. I have served for nearly 2 years and
+I appreciate the honor of the appointment. The commission will
+not report until tomorrow at 10 a.m. So anything that Ms.
+Boushey may believe about the findings of that commission are
+premature. There is no public release of the document. I don't
+know what she is referring to. I would ask members to read the
+complete report and the additional views by all members before
+drawing any conclusions.
+ Chairman Kline. Thank you. I am going to continue to ask
+questions. I will yield just a moment for a unanimous consent
+request.
+ Mr. Andrews. I ask unanimous consent to include the
+statement of Congressman Kucinich in the record.
+ Chairman Kline. Hearing no objection, so ordered.
+ [The statement of Mr. Kucinich follows:]
+
+ Statement and Questions Submitted From Hon. Dennis J. Kucinich,
+ a Representative in Congress From the State of Ohio
+
+ I thank the Chairman for holding this important hearing on the
+state of the American workforce.
+ We know from our constituents that they are hurting. In my home
+state of Ohio, the unemployment rate is at 9.6%. In October of 2010,
+there were 588,000 individuals in the State of Ohio who were forced to
+rely on unemployment insurance benefits to keep their heads and their
+families' heads above water. And nationwide, according to the
+Department of Labor, nearly 8.3 million Americans were receiving
+unemployment compensation as of early November. The recession has
+pushed America's middle class to the brink. Families across America are
+hanging on by their fingertips.
+ Many are blaming the dire state of America's workforce on small
+businesses regulations, unions, pension obligations, the health care
+bill, and even China. In my home state of Ohio, there is a movement to
+eliminate collective bargaining rights for home health care and child
+care workers, and to restrict the bargaining rights of police officers
+and fire fighters. I want to say clearly: targeting the right of
+workers to organize is no solution to our continuing economic crisis.
+ Placing the blame on workers or on regulations ignores one of the
+main reasons for job loss in the United States: free trade policies. We
+have actively pursued policies that have shipped American jobs overseas
+and left our domestic manufacturing sector in shambles. We are here
+because we all agree we must do more to ensure that American
+industries, as a foundational part of our economy, remain strong.
+ Some of the witnesses today have spoken about the effect of
+regulations on small business. Yet they neglected to mention the free
+trade policies that give the same U.S. business incentives to close
+local factories and ship their production and jobs overseas for cheap
+labor.
+ Question: In your testimony, Ms. Boushey, you make a very important
+point that I would like to highlight to the other members of this
+Committee. As you know, the President is urging Congress to approve a
+free trade agreement with South Korea that the Administration recently
+negotiated. You state in your testimony:
+
+ There is also not strong evidence that the Korea Free Trade
+ Agreement will generate economically meaningful job gains.
+
+ Ohio's economy was already struggling long before the current
+recession hit. According to the Bureau of Labor Statistics, Ohio lost
+approximately 430,000 manufacturing jobs from 1990 through July of
+2010.
+ So it seems that the ``free trade'' is actually a complex class war
+in which US CEOs who move their manufacturing to other countries are
+among the winners, and US workers are among the losers.
+ Question: Ms. Boushey, would it be correct to say that one of the
+main effects of free trade policies is to incentivize US corporations
+into taking advantage of cheaper foreign labor by moving jobs to those
+other countries?
+ So would you agree that the evidence is that free trade policies do
+not automatically increase employment, as some claim?
+ Second Question: Ms. Boushey: I am particularly concerned with the
+bleak budget situation faced by state and local governments, who are
+the backbone of service to Americans. When our constituents turn to
+help from their government, they are most often using a state or local
+government service. In your testimony, you sound the alarm that funds
+from the President's Economic Stimulus program (the American Recovery
+and Reinvestment Act) has prevented the employment level of women from
+dropping, and that this support is running out. You state in your
+testimony that last year, local governments in this country cut 259,000
+workers, of which 225,000 were women, offsetting some modest statewide
+government increases in employment of women. You state in your
+testimony that we need policies that create jobs and measures to
+increase aggregate demand and lay the foundations for economic growth.
+And I know that this means, among other efforts, a big movement to
+repair and replace infrastructure in this country. It is correct to say
+that in the area of infrastructure investment, it is not that the
+private sector does not want to invest in massive infrastructure
+projects but that they simply do not have the resources to do so?
+ ______
+
+ Chairman Kline. Put me on the clock. I am going to try to
+mind my own regulations here. It is a little bit of a challenge
+sometime.
+ I want to continue with you, Dr. Holtz-Eakin, for just a
+minute. You mentioned trade, and I think the Governor may have
+as well. What impact do you think that the year after year
+delay of enacting the free trade agreements that have been
+sitting in front of us has had on economic growth and job
+creation?
+ Mr. Holtz-Eakin. I think they are unambiguously bad. If you
+look at the Colombia free trade agreement, for example, it is
+already the case that Colombian companies have free access to
+American markets. The only thing that signing that agreement
+would do would be to allow U.S. workers through American
+companies to have the same access to Colombian markets, and we
+are sitting on the sidelines giving up the opportunity to sell
+these products abroad and create jobs in America.
+ It also sends the signal to our international competitors
+that we will not be at the table and we are not an important
+country to negotiate with and we get bypassed in other
+opportunities to expand our access to trade. 95 percent of the
+world's consumers are outside of our borders. Those are the
+markets our children will sell into and each day that we are on
+the sidelines we harm our future.
+ Chairman Kline. What about, we talk about regulations. What
+about other regulations that may exist that are getting in the
+way or causing U.S. jobs to go overseas in this regulatory
+environment?
+ Mr. Holtz-Eakin. Every business location decision is a
+weighing of the value of the business proposition: What do I
+get in the way of a skilled labor force, the capacity to
+produce, and low taxes, low regulation, low litigation. We have
+at the moment a range of regulatory initiatives that are quite
+threatening to the business community. The EPA has five
+separate rulemakings at the moment ranging from the mercury
+rule to greenhouse gases under the Clean Air Act, intake for
+clean water; all are estimated to be quite expensive. Some will
+have dramatic impacts on particularly the electricity
+generation industry and that affects the manufacturing. So this
+is not in and of itself an explanation of anything but it is
+another piece of a puzzle that says if you want to create jobs
+do not create barriers over which businesses have to leap.
+ Chairman Kline. Okay. One more question. We have voted a
+number of times in this Congress to extend unemployment
+benefits, as we have had historically high unemployment
+continually month after month. And we hear an argument that Dr.
+Boushey mentioned and others have said that continuing these
+unemployment benefits is good for the economy. Fills the gap, I
+think. I am trying not to put words in her mouth. Do you have
+some observation on the effects of extending these unemployment
+benefits?
+ Mr. Holtz-Eakin. It is a complicated issue. The first thing
+is to recognize what dominates anything is getting a job. And
+so the premium should be put on all the factors that create
+pro-growth policy environment.
+ The second would be that at some point you no longer are
+doing unemployment benefits. This is not a temporary bridge
+between jobs. You need to have effective education programs for
+workers to move into new industries, because they are not
+temporarily unemployed and we should recognize that.
+ The third is that the extension is not unambiguously a good
+thing. Economics is in the end a calculus of benefits versus
+cost and there are costs to extensions of unemployment
+insurance, including harm to the worker's skills themselves.
+Lots of evidence suggest that the longer someone is on a UI
+program the less likely they are to be employed and when
+employed at lower wages. And so in the research literature you
+find unemployment insurance extensions associated with
+continued high unemployment. Reduced extensions actually do
+lower the unemployment rate. And in some cases that is a
+benefit to the worker by getting them back into the labor force
+before their skills deteriorate.
+ Chairman Kline. I was going to move to the Governor but I
+can see that I am going to run out of time. I think an
+important message there is that we have workers now who are
+simply never going to go back to the job, maybe even the
+industry where they were employed. And so worker training and
+education is going to be an important part of what we look at.
+ Thank you. I see I am about to run out of time. And Ms.
+Woolsey.
+ Ms. Woolsey. Thank you, Mr. Chairman. I am concerned that
+because of this new found fever to cut regulations we might
+have an open season on any regulations a Member of Congress or
+the business community doesn't like regardless of its merits.
+So let's be very careful that that is not where we go with all
+of this. The everything-on-the-table approach is quite
+worrisome because it has the potential to undermine rules meant
+to protect workers, rules that took decades to achieve.
+ So as the President stated in his speech last night, we
+have to keep common sense regulations that protect people, even
+as we do away with rules that may in some way hinder job
+growth. The fact of the matter is that if more regulations had
+been on the books and government regulators had done their
+jobs, we may have averted the housing crisis that jump-started
+the recession in the first place. It should be clear to all of
+us that some areas of the economy need to be highly regulated.
+Complying with regulations should not be an excuse for failing
+to create jobs. And as the President pointed out last night,
+corporate profits are at record highs. Corporate profits are at
+record highs and the stock market is booming. United States
+businesses are sitting on nearly $2 trillion in cash. They need
+to start spending some of that money and making investments
+necessary to get our economy moving again.
+ So this brings me to questions to you, Dr. Boushey. You are
+quoted and you have said in your statement that we need to find
+and fill the demand gap, that women--which I am assuming means
+that women and minorities have to be trained and educated and
+prepared for the jobs that we have available in our country now
+and jobs of the future.
+ But what we are finding out and we do find out that most
+women are already working outside of the home and their
+families and they are struggling. Not only finding a job that
+pays a livable wage--not only finding a job but finding one
+that pays a livable wage but also affording to work in the
+first place, including child care.
+ So what would be your recommendation that this--how can
+they contribute to balancing work and family--not just for
+women but for all workers--with these profits they are sitting
+on? What would you do to ensure a better workplace?
+ Ms. Boushey. Thank you, Congresswoman. I appreciate the
+question. There is a couple of things. Certainly first and
+foremost there is a lot of the great companies out there that
+are already doing a lot for their employees in terms of their
+families and in terms of workplace flexibility. There is a lot
+of opportunity for other companies to learn from that and to do
+more and the White House has had an initiative this year and
+they are going out to places around the country and talking
+about flexibility and what companies can do and doing some
+community forums. I think that is number one.
+ Number two, as we have seen the budget crisis play out in
+the States, we have seen a lot of things that help them keep
+their jobs be some of the first things on the chopping block.
+Child care assistance, home health aides, after school
+programs. These are things that not only disproportionately
+employ women but also help families and provide the care they
+need and do their jobs. And one of the tragedies--there are so
+many tragedies of this great recession, but one of them is that
+as we have seen job losses at State level and a quarter of
+million job losses at the local level over the past year, that
+has disproportionately affected women workers. So making sure
+that that those items are not always the first on the chopping
+block is something that we can think about.
+ If I may just digress for just one moment, I did want to
+add one thing about the unemployment insurance system, which is
+that we do know that it is not from the conversation earlier, a
+lot of the economics, the bulk of the economics research shows
+that people who get these benefits, they need them and this has
+had the biggest bang for the buck relative to almost any other
+program we have. A recent report from the DLS shows that it has
+been about $2 into the economy for every $1 spent on those
+programs. I would just venture to say that we do need to
+continue these benefits until the unemployment rate comes down
+and not have them be sacrificed in the name of short-term
+deficit cutting. But I will let you continue your questions.
+ Ms. Woolsey. Well, thank you very much. I have just a short
+question if I have time for the Governor. You mentioned
+regulations and the importance of the oil industry in the Gulf
+Coast area. There were regulations that are safety regulations
+that were ignored that had something to do, of course, with the
+deaths and the destruction that occurred. Would that cost jobs
+if those regulations had been in place or do you think there
+are some regulations we should be stricter with and about?
+ Governor McDonnell. Yes, ma'am, absolutely. I don't think
+anybody is advocating some arbitrary 30 percent across-the-
+board reduction. There should be a targeted strategy. We
+mentioned some of them. The President did in his executive
+order; That is, essentially does the cost of compliance and the
+cost of enforcement, does it far exceed whatever the benefit is
+from a public safety or consumer protection standpoint? Is
+there a better way to do it with less bureaucracy? And those
+ought to be the test.
+ And in your example not only should those regulations have
+been in place, they should have been enforced better than what
+we are hearing now. That certainly is not the type of
+regulation we are talking about. It is the ones--we all know
+that regulations are such that businesses don't pay taxes, nor
+do they really pay for the cost of regulations. They
+incorporate it in their price of goods and services and pass it
+on to you and me.
+ So that is, I think, the concern that I have. Those that
+don't pass that kind of test, that increase the cost of goods
+and services, is the ones that we ought to get rid of.
+ Chairman Kline. Thank you. The gentlewoman's time has
+expired.
+ Mr. Rokita.
+ Mr. Rokita. Thank you, Mr. Chairman. And I thank the
+panelists for your time. Following up on that a little bit,
+Governor, I appreciate the test that you just proposed but it
+is also true, isn't it, that we can develop a regulation or a
+thousand that protects everyone? We could do things to make
+sure that no one gets killed and watch every single job that is
+left in this country go to China. So there is a balance test
+here. It is intangible. And the fact of the matter is in a free
+society and a free public, if we are going to keep it,
+sometimes bad things happen to very good people. And it can't
+be the mission of the Federal Government at every turn to try
+to stop it because it will fail.
+ Governor, another point to you. You mentioned the word
+``latitude'' at the very beginning of your remarks when you
+said if the Federal Government or this Congress would allow the
+States more latitude. I imagine you said that because you are a
+gentleman. That is all I have known from Virginia. But as a
+former statewide official and knowing a little bit of your
+history, I also understand that you are a constitutionalist.
+And it seems to me that we ought to be recognizing the fact
+that it is not for us to decide what latitude to give to the
+States. It is for the States and the people to decide under the
+enumeration clause what latitude to give us. And I have only
+been here 19 or so days, but I can already say that the last
+thing that this Federal Government needs or anyone even up here
+on the dais needs is more latitude to control, run, and
+otherwise dictate the lives of the people.
+ I would ask you then, and the question is to you: Would you
+help us? There are some of us here who would like to see that
+turned around. Would you help us, with Governor Daniels,
+Governor Christie, others, to see the enumeration clause
+empowered again?
+ Governor McDonnell. It is a very good question and you are
+correct. Philosophically I agree 100 percent with what you
+said. Many of us Governors in both parties talk about the 10th
+amendment as the forgotten amendment and that is the by-product
+of both Republican and Democrat congressional actions probably
+over the last 70 or 80 years.
+ And so most Governors, while we appreciate certain Federal
+help and actions, especially if it is consistent with Article
+I, section 8, which is pretty much the founder's mission for
+you, we do believe that most of the rest of those things to the
+maximum extent possible should be left to the States and the
+people respectively. That is the charter.
+ So I think that is a great prescription for success in a
+new system of federalism for all of us going forward because
+when the Federal Government is not doing things that it
+shouldn't be doing, one, you save money. And two, you allow the
+States, the laboratories of democracy closer to the people, to
+do some of the things that they ought to do. And we got an
+example of that I think just yesterday where we had a
+bipartisan letter from both Governor Gregory and Governor
+Heinemann, the Chairman and Vice Chairman of the National
+Governors' Association, saying please don't pass a law letting
+States file bankruptcy. One, you will take accountability away
+from us, and, two, we don't need that kind of help. What we do
+need to do is make sure that we are governing ourselves
+accordingly in the States.
+ I do think that you are going to hear more from the
+Nation's Governors, and we appreciate the invitations like
+today for us to come and speak on these issues, to help us to
+discuss--have a robust dialogue about the rebirth of federalism
+and maybe a little bit different balance in State-Federal power
+because of the 10th amendment. I think you are right.
+ Mr. Rokita. Thank you, Governor. I yield, sir.
+ Chairman Kline. I thank the gentleman.
+ Mr. Payne.
+ Mr. Payne. Thank you very much to the panel. Governor, I
+was interested in your comment that you like a program if it
+doesn't add to the debt. I recall years ago, in the 50s and
+60s, I used to travel in Virginia a lot and there was just
+Route 1. Many, many years later I came to Congress and met a
+late Congressman, Norm Sisisky. Norm was very effective. I know
+that many of the new Members do not like programs called by
+earmark, but Norm Sisisky actually added to the national debt
+because he built that highway system that brought Home Depot
+and all those great businesses into Virginia.
+ Now, if he took your notion--of course, it did add to the
+Federal debt. Of course I think it has been paid back many
+times, at least to the State of Virginia. So I am trying to
+reconcile if you say it is a penny into debt, even though
+outward years it is going to be beneficial. Could you go
+through that again very briefly? Because Virginia wouldn't be
+in the great position it is in today as a hub for Home Depot
+and those roads that were built through Norm Sisisky from
+Virginia getting the money to Virginia, adding to the debt. But
+it is helping your State in a robust way.
+ Governor McDonnell. Congressman Sisisky was a very
+effective Congressman and we are fortunate to have a lot of
+effective Congressmen from the Great Commonwealth. What I would
+say, Congressman, is I think what I have heard from a lot of
+Virginians and on both sides of the political spectrum is that
+they are tremendously concerned about the future of this
+country if we stay on this trail of debt now at $14 trillion,
+the deficit going up a trillion over the last couple of years,
+and frankly billions, hundreds of billions before that under
+Republican administrations. So it is a bipartisan problem.
+ When I as a Governor have to balance the budget every year,
+we borrow up to 5 percent of our total revenues solely for
+capital projects. What we don't do is what people are concerned
+about Congress doing, and that is borrowing for the hot dogs,
+diapers, pencils, and cigarettes, the daily operations of
+government. That is a concern.
+ So these targeted investments in infrastructure that are
+made by the Congress to invest in the States and claiming that
+as a priority without increasing spending in other areas, I
+think that is something a lot of people embrace. But if it
+continues to add to the price tag that my kids and your kids
+and our grandchildren have to pay back, that is what you are
+hearing from citizens far and wide that they are rejecting.
+ Mr. Payne. Another--thank you for that clarification. You
+mention in your testimony that to post a workplace notice to
+employees outlining their rights under the NLRA that it is
+counterproductive, detrimental to the message that you are
+trying to send in Virginia. So I am just wondering how is
+informing a worker of their rights to you detrimental to the
+State of Virginia?
+ Governor McDonnell. That may have been a little harsh.
+ Mr. Payne. It is your testimony. You said it.
+ Governor McDonnell. I know. I said it. But what I believe
+we don't need to do in a right-to-work State is advertise how
+to create more labor unions. It has been a hallmark of
+Virginia's success. That is why we are ranked number one in
+Forbes and CNBC and every other periodical in the last 5 years
+as a place that business wants to relocate because of the tax
+regulatory litigation climate, the right-to-work laws, and our
+education system. Those are the fundamentals that build that.
+ My point in that, while not stated as best as I could, my
+point is that a right-to-work State if we are advertising how
+to create more unions it is the opposite message that we are
+trying to send to create jobs and opportunity.
+ Mr. Payne. Just very quickly, talking about right-to-work
+States, out of the three worst unemployment problems in the
+country, two are right-to-work States, including the worst in
+the Nation, Nevada, right-to-work, 14.5; California is a free
+bargaining State, 12.5; Florida, right-to-work State, 12
+percent.
+ So I think a lot is being played into the right to work and
+not right to work. It does not seem that much of an impact. As
+a matter of fact, out of the 10 or highest unemployment, five
+are right-to-work, five are not.
+ But just before my time expires, on the drilling we are
+happy about the President's order to hold back. The companies
+did know what was right and wrong, but we had the big spill
+because they took a shortcut. And I think America is great, as
+you mentioned, and we ought to be able to get over these
+problems. However--and we don't have time for an answer--but
+business seems that enough profit is not enough. So there is no
+ceiling. The question is how do you get people to know that
+that cap was not sufficient to prevent that blowup in the Gulf?
+ Chairman Kline. The gentleman's time has expired. I am
+eager to keep my commitment to close this hearing at 4 o'clock,
+but I would like to yield a couple of minutes to Mr. Barletta,
+who has been waiting patiently.
+ Mr. Barletta. My question is to Mr. Messinger. As a former
+business owner, I understand what a business looks for when
+making decisions for investment for the long-term. Uncertainty
+in the business environment today is handcuffing businesses in
+deciding whether to expand or invest or start a new business.
+ We all can agree that we would like to save whatever
+manufacturing jobs we have left here in America, and I believe
+you had mentioned in your testimony that 70 percent of American
+manufacturers are subchapter S corporations. My question to you
+is do you believe that the current health care bill and the
+extension of the current tax rates for only 2 years is
+contributing to that uncertainty?
+ Mr. Messinger. Absolutely, Congressman. I am going through
+a renewal process right now in our health insurance, and while
+we don't have a final rate they are telling us in the 15
+percent range. And clearly that is on top of prior years of
+multiple rate increases employing. The private insurers are
+unsure of what is going on and how they are going to be
+effected. So yes, on health insurance for sure.
+ While I applauded many things the President said last
+night, especially concerning jobs in this country, I was
+concerned that he laid out his own cap for taxes, saying that
+they should be increased. Now is not the time for us to be
+worrying about what tax rates should be in 2 years. We should
+be worried about job creation today. And I think in my
+testimony, I have laid out some of the things that I feel are
+important there.
+ Mr. Barletta. Thank you.
+ Chairman Kline. I thank the gentleman. We are rapidly
+approaching 4 o'clock. I would like to certainly thank the
+witnesses and yield to Mr. Andrews for any closing remarks he
+might have.
+ Mr. Andrews. I would also like to thank the witnesses for
+their preparation and their time. I have a unanimous consent
+request that a letter prepared by 250 economists supporting the
+health care bill be entered into the record.
+ Chairman Kline. Without objection.
+ [The information follows:]
+
+ January 26, 2011.
+Hon. John Kline, Chairman; Hon. George Miller, Ranking Member,
+U.S. House of Representatives, Education and the Workforce Committee,
+ Washington, DC 20515.
+ Dear Chairman Kline and Representative Miller: Congress this week
+is holding hearings on the economic impact of health care reform. We
+write to convey our strong conclusion that leaving in place the Patient
+Protection and Affordable Care Act of 2010 will significantly
+strengthen our nation's economy over the long haul and promote more
+rapid economic recovery in the immediate years ahead. Repealing the
+Affordable Care Act would cause needless economic harm and would set
+back efforts to create a more disciplined and more effective health
+care system.
+ Our conclusion is based on two economic principles. First, high
+medical spending harms our nation's workers, new job creation, and
+overall economic growth. Many studies demonstrate that employers
+respond to rising health insurance costs by reducing wages, hiring
+fewer workers, or some combination of the two. Lack of universal
+coverage impairs job mobility as well because many workers pass up
+opportunities for self-employment or positions working for small firms
+because they fear losing their health insurance or facing higher
+premiums.
+ Second, the Affordable Care Act contains essentially every cost-
+containment provision policy analysts have considered effective in
+reducing the rate of medical spending. These provisions include:
+ Payment innovations such as greater reimbursement for
+patient-centered primary care; bundled payments for hospital care,
+physician care, and other medical services provided for a single
+episode of care; shared savings approaches or capitation payments that
+reward accountable provider groups that assume responsibility for the
+continuum of a patient's care; and pay-for-performance incentives for
+Medicare providers.
+ An Independent Payment Advisory Board with authority to
+make recommendations to reduce cost growth and improve quality within
+both Medicare and the health system as a whole
+ A new Innovation Center within the Centers for Medicare
+and Medicaid Services charged with streamlining the testing of
+demonstration and pilot projects in Medicare and rapidly expanding
+successful models across the program
+ Measures to inform patients and payers about the quality
+of medical care providers, which provide relatively low-quality, high-
+cost providers financial incentives to improve their care
+ Increased funding for comparative effectiveness research
+ Increased emphasis on wellness and prevention
+ Taken together, these provisions are likely to reduce employer
+spending on health insurance. Estimates suggest spending reductions
+ranging from tens of billions of dollars to hundreds of billions of
+dollars. Because repealing our nation's new health reform law would
+eliminate the above provisions, it would increase business spending on
+health insurance, and hence reduce employment.
+ One study concludes that repealing the Affordable Care Act would
+produce job reductions of 250,000 to 400,000 annually over the next
+decade. Worker mobility would be impaired as well, as people remain
+locked into less productive jobs just to get health insurance.
+ The budgetary impact of repeal also would be severe. The
+Congressional Budget Office concludes that repealing the Affordable
+Care Act would increase the cumulative federal deficit by $230 billion
+over the next decade, and would further increase the deficit in later
+years. Other studies suggest that the budgetary impact of repeal is
+even greater. State and local governments would face even more serious
+fiscal challenges if the Affordable Care Act were repealed, as they
+would lose substantial resources provided under the new law while
+facing the burdens of caring for 32 million more uninsured people.
+Repeal, in short, would thus make a difficult budget situation even
+worse.
+ Rather than undermining health reform, Congress needs to make the
+Affordable Care Act as successful as it can be. This would be as good
+for our economy as it would be for the health of our citizens.
+ Sincerely,
+
+Henry J. Aaron, Senior Fellow, The Brookings Institution
+Jean Marie Abraham, Assistant Professor, University of Minnesota School
+ of Public Health
+Randy Albelda, Professor of Economics, University of Massachusetts,
+ Boston
+Sylvia A. Allegretto, Economist, University of California, Berkeley
+Stuart Altman, Sol C. Chaikin Professor of National Health Policy,
+ Brandeis University
+Elizabeth Oltmans Anant, Assistant Professor of Public Policy and
+ Economics, Duke University
+Rania Antonopoulos, Director, Gender Equality and the Economy Program,
+ Levy Economics Institute
+Kenneth J. Arrow, Professor of Economics Emeritus, Stanford University
+Michael Ash, Associate Professor of Economics and Public Policy,
+ University of Massachusetts, Amherst
+David Autor, Professor and Associate Head, Department of Economics,
+ Massachusetts Institute of Technology
+Susan L. Averett, Charles A. Dana Professor of Economics, Lafayette
+ College
+Christopher Avery, Roy E. Larsen Professor of Public Policy, Harvard
+ University, Kennedy School of Government
+Rojhat B. Avsar, Assistant Professor of Economics, Columbia College
+M.V. Lee Badgett, Professor of Economics, University of Massachusetts,
+ Amherst
+El-hadj Bah, Lecturer, University of Auckland
+Ron Baiman, Director of Budget and Policy Analysis Center for Tax and
+ Budget Accountability
+Asatar Bair, Professor of Economics, City College of San Francisco
+Dean Baker, Co-Director Center for Economic and Policy Research
+Radhika Balakrishnan, Professor, Women's and Gender Studies, Rutgers,
+ The State University of New Jersey
+Nesecan Balkan, Department of Economics, Hamilton College
+Erol Balkan, Professor of Economics, Hamilton College
+Steve Balkin, Professor of Economics, Roosevelt University
+Nina Banks, Associate Professor of Economics, Bucknell University
+William Barclay, Adjunct Professor, University of Illinois at Chicago
+Drucilla K. Barker, Professor and Director, Women's and Gender Studies,
+ University of South Carolina
+David Barkin, Profesor de Economia, Universidad Autonoma Metropolitana-
+ Xochimilco
+Anirban Basu, Associate Professor, Department of Health Services,
+ University of Washington
+Francis M. Bator, Lucius N. Littauer Professor of Political Economy
+ Emeritus, Harvard University, Kennedy School of Government
+Charles M. Becker, Associate Chair and Research Professor, Department
+ of Economics, Duke University
+Marc F. Bellemare, Assistant Professor, Duke University
+Gunseli Berik, Professor of Economics, University of Utah
+Carole Biewener, Professor of Economics, Simmons College
+Cyrus Bina, Distinguished Research Professor of Economics, University
+ of Minnesota
+Christine E. Bishop, Atran Professor of Labor Economics, Brandeis
+ University
+Josh Bivens, Economist, Economic Policy Institute
+Heather Boushey, Senior Economist, Center for American Progress
+Roger Even Bove, Department of Economics & Finance (retired), West
+ Chester University
+James K. Boyce, Professor of Economics, University of Massachusetts,
+ Amherst
+Elissa Braunstein, Associate Professor, Colorado State University
+Clair Brown, Professor of Economics, University of California, Berkeley
+Thomas Buchmueller, Waldo O. Hildebrand Professor of Risk Management
+ and Insurance, Ross School of Business, University of Michigan
+Colin Cameron, Professor of Economics, University of California, Davis
+Jim Campen, Professor of Emeritus, Economics University of
+ Massachusetts, Boston
+Kathleen Carey, Associate Professor, Boston University School of Public
+ Health
+Ann M. Carlos, Professor, Department of Economics, University of
+ Colorado
+Frank Chaloupka, Distiguished Professor of Economics and Director,
+ Health Policy Center, University of Illinois at Chicago
+Richard Chapman, Professor of Economics, Westminster College
+John Dennis Chasse, Professor Emeritus, State University of New York,
+ Brockport
+Howard Chernick, Professor of Economics, Hunter College and the
+ Graduate Center, City University of New York
+Raj Chetty, Professor of Economics, Harvard University
+Kimberly Christensen, Joanne Woodward Chair of Public Policy, Sarah
+ Lawarence College
+Betsy Jane Clary, Professor of Economics, College of Charleston
+Paul D. Cleary, Dean of Public Health, Yale School of Public Health
+Jonathan Conning, Associate Professor of Economics, Hunter College and
+ the Graduate Center, City University of New York
+Karen Smith Conway, Professor of Economics, University of New Hampshire
+Philip J. Cook, ITT/Sanford Professor of Public Policy, Duke University
+Paul Cooney, Associate Professor, Federal University of Para, Brazil
+Richard R. Cornwall, Professor of Economics, Emeritus, Middlebury
+ College
+J. Kevin Crocker, Undergraduate Program Director, University of
+ Massachusetts, Amherst
+David Cutler, Otto Eckstein Professor of Applied Economics, Harvard
+ University
+Rada K. Dagher, Assistant Professor, University of Maryland
+Anita Dancs, Assistant Professor, Department of Economics, Western New
+ England College
+Charles Davis, Professor, Labor Studies, Indiana University
+Susan M. Davis, Associate Professor, Department of Economics and
+ Finance, Buffalo State College
+Partha Deb, Professor of Economics, Hunter College and the Graduate
+ Center, City University of New York
+Gregory E. DeFreitas, Professor of Economics, Hofstra University
+Brad DeLong, Professor of Economics, University of California, Berkeley
+Timothy M. Diette, Assistant Professor of Economics, Washington and Lee
+ University
+Marisa Elena Domino, Associate Professor of Health Economics, The
+ University of North Carolina
+David E. Dowall, Professor, University of California, Berkeley
+Arindraijit Dube, Assistant Professor, Department of Economics,
+ University of Massachusetts, Amherst
+Niev Duffy, President, Eastern Economic Research
+Mark Duggan, Professor of Economics, University of Maryland
+Randall P. Ellis, Professor of Economics, Boston University
+Elizabeth Elmore, Professor of Economics, Richard Stockton College of
+ New Jersey
+Christopher L. Erickson, Professor, UCLA Anderson School of Management
+Jose Escarce, Professor of Medicine, David Geffen School of Medicine at
+ UCLA
+Loretta Fairchild, Professor of Economics, Nebraska Wesleyan University
+Sasan Fayazmanesh, Professor Emeritus of Economics, California State
+ University, Fresno
+Steven Fazzari, Professor of Economics, Washington University
+Judy Feder, Professor of Public Policy, Georgetown University
+Susan Feiner, Professor of Economics, University of Southern Maine
+Deborah M. Figart, Professor of Education and Economics, Richard
+ Stockton College of New Jersey
+Kade Finhoff, Assistant Professor of Economics, University of
+ Massachusetts, Boston
+Jason Fletcher, Assistant Professor of Public Health, Yale University
+Nancy Folbre, Professor of Economics, University of Massachusetts,
+ Amherst
+Austin Frakt, Assistant Professor of Health Policy and Management,
+ Boston University School of Public Health
+Jeffrey Frankel, Harpel Professor of Capital Formation and Growth,
+ Harvard University
+Gerald Friedman, Professor of Economics, University of Massachusetts,
+ Amherst
+Bianca Frogner, Assistant Professor, The George Washington University
+Bill Ganley, Professor of Economics and Finance, Buffalo State College
+Lorenzo Garbo, Professor of Economics, University of Redlands
+Irwin Garfinkel, Mitchell I. Ginsberg Professor of Contemporary Urban
+ Problems, Columbia University School of Social Work
+Paul J Gertler, Li Ka Shing Professor of Health Policy and Management,
+ University of California, Berkeley
+Mwangi wa Githinji, Assistant Professor of Economics, University of
+ Massachusetts, Amherst
+Devra L. Golbe, Professor of Economics, Hunter College and the Graduate
+ Center, City University of New York
+Heather Taffet Gold, Associate Professor of Public Health, Weill
+ Cornell Medical College
+Claudia Goldin, Henry Lee Professor of Economics, Harvard University
+Don Goldstein, Professor of Economics, Allegheny College
+Jose A. Gomez-Ibanez, Derek C. Bok Professor of Urban Planning and
+ Public Policy, Harvard University, Kennedy School of Government
+Joshua Goodman, Assistant Professor of Public Policy, Harvard
+ University, Kennedy School of Government
+Neva Goodwin, Co-Director, Global Environment and Environment
+ Institute, Tufts University
+Elise Gould, Economist, Economic Policy Institute
+Ulla Grapard, Associate Professor of Economics and Women's Studies,
+ Colgate University
+Daphne Greenwood, Professor of Economics and Director, Colorado Center
+ for Policy Studies, University of Colorado, Colorado Springs
+Tai Gross, Assistant Professor, Department of Health Policy and
+ Management, Mailman School of Public Health, Columbia
+ University
+Michael Grossman, Distinguished Professor of Economics, City University
+ of New York Graduate Center
+Jonathan Gruber, Professor of Economics, Massachusetts Institute of
+ Technology
+Kwabena Gyimah-Brempong, Professor and Chair, Department of Economics,
+ University of Souh Florida
+Jack Hadley, Professor and Senior Health Services Researcher, George
+ Mason University
+Paul Hancock, Professor of Economics, Green Mountain College
+Jeffrey S. Harman, University of Florida Research Foundation Professor,
+ University of Florida
+Oliver Hart, Professor of Economics, Harvard University
+John T. Havey, Professor of Economics, Texas Christian University
+Gillian Hewitson, Department of Political Economy, University of Sydney
+Richard Hirth, Professor of Health Management and Policy, University of
+ Michigan School of Public Health
+Vivian Ho, Baker Institute Chair of Health Economics and Professor,
+ Rice University
+Joan Hoffman, Professor and Chair, Department of Economics, John Jay
+ College of Criminal Justice, City University of New York
+Ann M. Holmes, Associate Professor, Indiana University-Purdue
+ University, Indianapolis
+Barbara Hopkins, Associate Professor of Economics, Wright State
+ University
+Jill R. Horwitz, Professor of Law, Co-Director, Program on Law and
+ Economics, University of Michigan Law School
+Candace Howes, Professor of Economics, Connecticut College
+Hilary Hoynes, Professor of Economics, University of California, Davis
+Dorene Isenberg, Professor and Chair, Department of Economics,
+ University of Redlands
+Ken Jacobs, Chair, Labor Center University of California, Berkeley
+Joyce P. Jacobsen, Andrews Professor of Economics, Wesleyan University
+Sanford M. Jacoby, Professor of Management and Public Policy,
+ University of California, Los Angeles
+Habib Jam, Associate Professor of Economics, Rowan University
+Russell A. Janis, Senior Lecturer in Economics, University of
+ Massachusetts, Amherst
+Arjun Jayadev, Assistant Professor of Economics, University of
+ Massachusetts, Boston
+Neil Jordan, Assistant Professor and Director, Health Economics Center,
+ Feinberg School of Medicine, Northwestern University
+Ted Joyce, Professor of Economics and Finance, Baruch College, City
+ University of New York
+Geoffrey Joyce, Director of Health Policy, Schaeffer Center for Health
+ Policy & Economics, University of Southern California
+Kyoungrae Jung, Assistant Professor, Health Policy and Administration,
+ Pennsylvania State University
+Daniel Kahneman, Professor of Public Affairs, Emeritus, Princeton
+ University
+Rajani Kanth, Professor of Economics (Visiting), Loras College &
+ Washington College
+Ethan Kaplan, Visiting Professor of Economics, Columbia University
+Lawrence Katz, Allison Professor of Economics, Harvard University
+Donald Katzner, Professor of Economics, University of Massachusetts,
+ Amherst
+Paula M. Kazi, Assistant Professor, Bucknell University
+Valerie K. Kepner, Assistant Professor of Economics, King's College
+Farida Khan, Professor of Economics, University of Wisconsin-Parkside
+Marlene Kim, Associate Professor, Department of Economics, University
+ of Massachusetts, Boston
+Steven J. Klees, Professor of Education and Economic Development,
+ University of Maryland
+Andrew I. Kohen, Professor Emeritus of Economics, James Madison
+ University
+Brent Kramer, City University of New York
+Brent Kreider, Professor of Economics, Iowa State University
+Jill Kriesky, Economist, West Virginia Center on Budget and Policy
+Karl Kronebusch, Associate Professor, City University of New York
+Alan Krueger, Professor of Economics, Princeton University
+David Laibman, Professor (retired), Deparment of Economics, City
+ University of New York
+Melaku Lakew, Professor of Economics, Richard Stockton College of New
+ Jersey
+Thomas Lambert, Economics Lecturer, Indiana University Southeast
+Robert Lawrence, Albert L. Williams Professor of Trade and Investment,
+ Harvard University, Kennedy School of Government
+Arleen A. Leibowitz, Professor, School of Public Affairs, University of
+ California, Los Angeles
+David I. Levine, Trefethen Professor of Business Administration, Haas
+ School of Business, University of California, Berkeley
+Frank Levy, Rose Professor of Urban Economics, Massachusetts Institute
+ of Technology
+Peter M. Lichtenstein, Emeritus Professor of Economics, Boise State
+ University
+Jeffrey B. Liebman, Malcolm Wiener Professor of Public Policy, Harvard
+ University, Kennedy School of Government
+Peter H. Lindert, Distinguished Research Professor of Economics,
+ University of California, Davis
+Richard C. Lindrooth, Associate Professor, Colorado School of Public
+ Health, University of Colorado
+Victor D. Lippit, Professor of Economics, University of California,
+ Riverside
+Linda Loubert, Assistant Professor, Economics Department, Morgan State
+ University
+Harold S. Luft, University of California, San Francisco
+Catherine Lynde, Associate Professor, Economics, University of
+ Massachusetts, Amherst
+Sean P. MacDonald, Assistant Professor of Economics, City University of
+ New York
+Diane J. Macunovich, Department of Economics, University of Redlands
+Mark Maier, Professor of Economics, Glendale College
+Ann Markusen, Professor, Humphrey School of Public Affairs, University
+ of Minnesota
+Eric S. Maskin, A.O. Hirschman Professor of Social Science, Institute
+ for Advanced Study
+Thomas Masterson, Research Scholar, Levy Economics Institute of Bard
+ College
+Julie Matthaei, Professor of Economics, Wellesley College
+Peter Hans Matthews, James Jermain Professor of Political Economy,
+ Department of Economics, Middlebury College
+Kathleen McAfee, Associate Professor, Political Economy and
+ International Relations, San Francisco State University
+Elaine McCrate, Associate Professor, Economic and Women's and Gender
+ Studies, University of Vermont
+Thomas G. McGuire, Professor of Health Economics, Harvard Medical
+ School
+Ellen Meara, Associate Professor, Darmouth Institute for Health Policy
+ and Clinical Practice
+Michael Meeropol, Visiting Professor, Economics, John Jay College of
+ Criminal Justice, City University of New York
+Martin Melkonian, Adjunct Associate Professor, Economics, Hofstra
+ University
+David Meltzer, Associate Professor, Department of Medicine and
+ Associated Faculty Member, Department of Economics, University
+ of Chicago
+Peter B. Meyer, Professor Emeritus of Urban Policy and Economics,
+ University of Louisville
+Marcelo Milan, Assistant Professor of Economics, University of
+ Wisconsin-Parkside
+Lawrence Mishel, President, Economic Policy Institute
+Alan C. Monheit, Professor of Health Economics, School of Public
+ Health, University of Medicine and Dentistry of New Jersey
+Taryn Morrissey, Assistant Professor of Public Administration and
+ Policy, American University
+Karoline Mortensen, Assistant Professor of Health Services
+ Administration, University of Maryland
+Tracy Mott, Associate Professor and Department Chair, Department of
+ Economics, University of Denver
+Alicia H. Munnell, Peter F. Drucker Professor, Carroll School of
+ Management, Boston College
+Richard J. Murnane, Professor, Harvard University
+Jason Burke Murphy, Department of Philosophy, Elms College
+Ellen Mutari, Professor of Economics, Richard Stockton College of New
+ Jersey
+Reynold F. Nesiba, Associate Professor of Economics, Augustana College
+David Neumark, Professor of Economics and Director of Graduate Studies,
+ University of California, Irvine
+Len M. Nichols, Director of the Center for Health Policy Research and
+ Ethnics, Professor of Health Policy, George Mason University
+Laurie Nisonoff, Professor of Economics, Hampshire College
+Brendan O'Flaherty, Professor of Economics, Columbia University
+Albert A. Okunade, Professor of Health Economics, University of Memphis
+Oladele Omosegbon, Professor of Economics, Indiana Wesleyan University
+Shaianne T. Osterreich, Associate Professor, Economics, Ithaca College
+Zhaochang Peng, Department of Economics, Rollins College
+George Perry, Senior Fellow, The Brookings Institution
+Mark A. Peterson, Professor of Public Policy and Political Science,
+ UCLA School of Public Affairs
+Karl Petrick, Assistant Professor of Economics, Western New England
+ College
+Kathryn A. Phillips, Professor of Health Economics and Health Services
+ Research, University of California, San Francisco
+Steven D. Pizer, Associate Professor, Boston University School of
+ Public Health
+Harold Pollack, Helen Ross Professor of Social Service Administration,
+ University of Chicago
+Daniel Polsky, Professor of Medicine, University of Pennsylvania
+Paddy Quick, Professor of Economics, St. Francis College
+Matthew Rabin, Professor of Economics, University of California,
+ Berkeley
+Sarah Reber, Assistant Professor of Public Policy, University of
+ California, Los Angeles
+Jim Rebitzer, Professor of Management, Economics and Public Policy,
+ Boston University School of Management
+Michael Reich, Professor of Economics, University of California,
+ Berkeley
+Uwe Reinhardt, James Madison Professor of Political Economy, Princeton
+ University
+Dahlia Remler, Professor, School of Public Affairs, Baruch College,
+ City University of New York
+Alice M. Rivlin, Senior Fellow, The Brookings Institution
+Charles P. Rock, Professor of Economics, Rollins College
+Christina D. Romer, Class of 1957, Professor of Economics, University
+ of California, Berkeley
+Samuel Rosenberg, Acting Vice Provost for Faculty and Academic
+ Administration, Roosevelt University
+Meredith Rosenthal, Associate Professor of Health Economics, Harvard
+ University School of Public Health
+Roy J. Rotheim, Professor of Economics, Skidmore College
+Anne Beeson Royalty, Associate Professor of Economics, Indiana
+ University, Purdue University, Indianapolis
+Cristopher J. Ruhm, Professor of Public Policy and Economics,
+ University of Virginia
+Emmanuel Saez, E. Morris Cox Professor of Economics, University of
+ California, Berkeley
+Harwood D. Schaffer, Research Assistant Professor, University of
+ Tennessee
+John Schmitt, Senior Economist, Center for Economic and Policy Research
+Charles L. Schultze, Senior Fellow Emeritus, Economic Studies, The
+ Brookings Institution
+Eric A. Schutz, Professor, Economics, Rollins College
+Joseph M. Schwartz, Professor of Political Science, Temple University
+Charles R. Sebuharara, Visiting Assistant Professor of Finance, Pamplin
+ College of Business, Virginia Tech
+Eric Seiber, Assistant Professor of Health Services Management and
+ Policy, The Ohio State University
+Janet Seiz, Associate Professor of Economics, Grinnell College
+Bisakha Sen, Associate Professor, Department of Healthcare Organization
+ and Policy, University of Alabama, Birmingham
+Mark Setterfield, Professor of Economics, Trinity College
+Anwar Shaikh, Professor of Economics, New School for Social Research
+Nina Shapiro, Professor of Economics, Saint Peter's College
+Judith Shinogle, Senior Research Scientist, Maryland Institute for
+ Policy Analysis
+Peter Skott, Professor of Economics, University of Massachusetts,
+ Amherst
+Timothy Smeeding, Arts and Sciences Distinguished Professor for Public
+ Affairs, University of Wisconsin-Madison
+Eugene Smolensky, Professor of the Graduate School, University of
+ California, Berkeley
+Bryan Snyder, Department of Economics, Bentley University
+Eswaran Somanathan, Visiting Professor, Princeton University
+Paula H. Song, Assistant Professor, Health Services Management &
+ Policy, The Ohio State University
+Neeraj Sood, Associate Professor, Schaeffer Center for Health Policy
+ and Economics, University of Southern California
+Janet Spitz, Associate Professor of Business, College of Saint Rose
+James Ronald Stanfield, Emeritus Professor of Economics, Colorado State
+ University
+Sally C. Stearns, Professor of Health Economics, University of North
+ Carolina at Chapel Hill
+Bruce Stuart, Professor, University of Maryland School of Pharmacy
+Paul Swanson, Professor of Economics, William Paterson University
+Katherine Swartz, Professor of Health Economics and Policy, Harvard
+ University School of Public Health
+Donald H. Taylor, Jr., Associate Professor of Public Policy, Duke
+ University
+Mark Thoma, Professor of Economics, University of Oregon
+Chris Tilly, Professor and Director of the Institute for Research and
+ Employment, University of California, Los Angeles
+Mariano Torras, Professor of Economics, Adelphi University
+Pravin K. Trivedia, J.H. Rudy Professor of Economics, Indiana
+ University-Bloomington
+Jennifer Troyer, Associate Professor of Economics, University of North
+ Carolina at Charlotte
+Laura Tyson, S.K. and Angela Chan Chair in Global Management, Haas
+ School of Business, University of California, Berkeley
+Robert Otto Valdez, Robert Wood Johnson Foundation Professor, Family &
+ Community Medicine and Economics, University of New Mexico
+Paul N. Van de Water, Senior Fellow, Center on Budget and Policy
+ Priorities
+Courtney Harold Van Houtven, Associate Professor, Duke University
+Lane Vanderslice, Editor, Hunger Notes, worldhunger.org
+Elizabeth Richardson Vigdor, Research Scholar, Duke University
+Anca Voicu, Assistant Professor of Economics, Rollins College
+Mark E. Votruba, Associate Professor of Economics and Medicine, Case
+ Western Reserve University
+Geetha Waehrer, Research Scientist, Pacific Institute for Research and
+ Evaluation
+Jane Waldfogel, Professor of Social Work and Public Affairs, Columbia
+ University
+Kenneth E. Warner, Avedis Donebedian Distinguished University Professor
+ of Public Health, University of Michigan
+David Warner, Wilbur Cohen Professor of Public Affairs, LBJ School of
+ Public Affairs, University of Texas at Austin
+Mark Weisbrot, Co-Director Center for Economic and Policy Research
+Thomas E. Weisskopf, Professor Emeritus of Economics, University of
+ Michigan
+Charles K. Wilber, Emeritus Professor of Economics, University of Notre
+ Dame
+Michael Wilson, Instructor, Harvard Medical School
+Cecilia Ann Winters, Associate Professor of Economics, Manhattanville
+ College
+Jon D. Wisman, Professor of Economics, American University
+Barbara Wolfe, Professor, Economics and Political Science, University
+ of Wisconsin-Madison
+Justin Wolfers, Associate Professor of Business and Public Policy, The
+ Wharton School, University of Pennsylvania
+Robert S. Woodward, Professor of Health Economics, University of New
+ Hampshire
+Vivian Wu, Assistant Professor, University of Southern California
+David Zalewski, Professor of Finance, Providence College
+Joshua Graff Zivin, Associate Professor of Economics, University of
+ California, San Diego
+ ______
+
+ Mr. Andrews. Finally, thank you for conducting this hearing
+so fairly. We would like to move to working together on good
+legislation that will help create jobs in our country. Thank
+you.
+ Chairman Kline. I thank the gentleman. I will close by
+saying thanks to my colleagues. Thank you very much to our
+witnesses--what a terrific panel--for enduring the weather and
+the voting and all of those things. Thank you very much. And
+thanks to my colleagues. Have a good safe trip.
+ The committee is adjourned.
+ [Additional submission of Mr. Messinger follows:]
+
+
+
+ ------
+
+ [Ms. Boushey's responses to questions submitted by Mr.
+Kucinich follow:]
+
+ Dear Congressman Kucinich: Thank you for your interest in my
+testimony before the Committee on Education and Workforces' hearing
+entitled ``State of the American Workforce,'' on January 27, 2011. My
+answers for the record to your questions are:
+
+ Question 1. You ask whether it would be correct to say that one of
+the main effects of free trade policies is to incentivize U.S.
+corporations into taking advantage of cheaper foreign labor by moving
+jobs to those other countries? Would you agree that the evidence is
+that free trade policies do not automatically increase employment, as
+some claim?
+
+ Answer: Let's start with what free trade agreements are supposed to
+do. The U.S. interest in these agreements is to promote trade, both
+imports and exports, with other countries. These agreements do not
+typically lower tariffs only in one direction but rather lower tariffs
+in both directions. Our economy's total demand for goods and services
+is defined as consumption, plus investment, plus government spending,
+plus net exports, exports minus imports. Trade agreements typically
+lower tariffs for both U.S. exports and imports from other countries
+and should therefore raise both exports and imports. Given this, a
+pirori, there's no reason to think they will increase U.S. jobs, unless
+we sign agreements heavily weighted in favor of U.S. exports.
+ In the case of the Korea free trade agreement, the U.S.
+International Trade Commission, the independent federal body that
+analyzes potential effects of trade pacts for Congress and the
+executive branch, has estimated that while the Korea FTA would increase
+exports, it would increase imports even more. As a result, the U.S. ITC
+estimates that the Korea FTA will lead to an increase in the total U.S.
+goods trade deficit of between $308 million and $416 million.\1\ The
+largest estimated increases in the trade deficit would be in motor
+vehicles, electronic equipment, ``other transportation equipment,''
+iron, metal products, textiles, and apparel.
+---------------------------------------------------------------------------
+ \1\ U.S. International Trade Commission. ``U.S.-Korea Free Trade
+Agreement: Potential Economy-wide and Selected Sectoral Effects.''
+USITC Publication 3949. September 2007, Corrected printing March 2010,
+at 2-14, Table 2.3, Available at: http://www.usitc.gov/publications/
+332/pub3949.pdf
+
+ Question 2: You ask, is it correct to say that in the area of
+infrastructure investment, it is not that the private sector does not
+want to invest in massive infrastructure projects but that they simply
+---------------------------------------------------------------------------
+do not have the resources to do so?
+
+ Answer: As daunting as it seems, the level of capital investment
+needed in our nation's infrastructure must grow. American businesses
+have the funds and access to credit markets to make investments. From
+December 2008 to September 2010, profits in the nonfinancial corporate
+sector rose in inflation-adjusted terms by 92.0 percent before taxes
+and 93.3 percent after taxes. In September 2010, profits were at their
+highest point since at least September 2007, several months before the
+start of the Great Recession.\2\
+---------------------------------------------------------------------------
+ \2\ Christian Weller, ``Economic Snapshot for January 2011,''
+Center for American Progress, January 31, 2011, available at http://
+www.americanprogress.org/issues/2011/01/econsnap0111.html.
+---------------------------------------------------------------------------
+ But, even with strong profits, much of the infrastructure
+investment we need to do is in repairing our crumbling basic
+infrastructure. The American Society of Civil Engineers estimates that
+we need to spend at least $2.2 trillion over the next five years just
+to make repairs.\3\ This includes projects like replacing aging water
+facilities that are near the end of their useful life, repairing aging
+and deficient dams, and quarter of our nation's bridges that are either
+structurally deficient or functionally obsolete.
+---------------------------------------------------------------------------
+ \3\ American Society of Civil Engineers, ``America's Infrastructure
+Report Card'' (2009), available at http://
+www.infrastructurereportcard.org/sites/default/files/
+RC2009_full_report.pdf.
+---------------------------------------------------------------------------
+ Roads, bridges, broadband, water and sewer lines, and a host of
+other goods require large-scale investments. For any one company it may
+be too expensive, but moreover, the public has an interest in creating
+widespread access to these goods. Businesses large and small and
+employees all benefit from infrastructure investments that they are
+able to make use of. If every bridge were private, then the toll costs
+and time wasted stopping for tolls might be prohibitively expensive and
+inefficient. Programs like Build America Bonds, which provides
+municipalities with subsidies to float bonds for long-term
+infrastructure projects, could help increase the capital available for
+these kinds of projects.
+ ______
+
+ [Whereupon, at 4:00 p.m., the committee was adjourned.]
+
+
+
+