Mr. Speaker, there has been a great deal of happy talk lately from the Bush administration and its supporters about the state of the American economy. To hear them tell it, you would think that some kind of supply-side miracle has taken…
Mr. Speaker, there has been a great deal of happy talk lately from the Bush administration and its supporters about the state of the American economy. To hear them tell it, you would think that some kind of supply-side miracle has taken place in the past few months and that the economy is now performing so well that jobs are plentiful, workers are well paid, that the budget deficit is being slashed in half, and that the trade deficit, which happens to be the largest in history, is nothing to worry about.
Of course nothing could be further from the truth, and all we have to do is go out and talk to our constituents to know that. Tonight my colleagues and I want to set the record straight on the economic policies of the Bush administration.
We want to look at the real record of job creation, the continued presence of unemployment, the failure of wages to keep up with inflation, and the widening disparity between the haves and the have- nots which is tremendously troubling. We will document how ordinary workers have been shortchanged in this economy, which has gone through the most protracted job slump since the Great Depression.
This chart summarizes the point well. The Bush administration has the worst job creation record of any administration back to Herbert Hoover. This chart shows the average rate of job creation by this administration. For most of his term, President Bush was the only President since President Hoover to actually lose jobs. Now he is at least in positive territory, but with a very anemic job growth of just 0.2 percent per year. Compare that with the 2.4 percent annual job growth under President Clinton, which is more than 10 times greater. Compare this from the Clinton administration back to the Hoover administration.
The Bush administration and its supporters will not take responsibility for the failure of their policies. Instead they keep saying the same thing over and over again: tax cuts. But the Bush administration's economic program has not created an economy that works for America's ordinary citizens, and they have mortgaged our future.
Responsible analysts have shown that the Bush tax cuts were poorly designed for generating jobs and putting people back to work in the wake of the 2001 recession. They had very low ``bang for the buck'' in terms of job stimulus in the short run, but they were so massive, they created a legacy of large budget deficits and mounting debt that will be a drag on the economy in the long run.
President Bush has squandered the hard-won fiscal discipline achieved in the 1990s. He inherited a 10-year budget surplus of $5.6 trillion and turned it into a stream of deficits. This chart shows what has happened so far. This chart shows that when President Bush took office, the Congressional Budget Office was projecting that the budget surplus of $236 billion in 2000 would grow to over $433 billion in 2005. In fact, the latest projection from the administration is that the budget will have a deficit of $333 billion this year.
In their mid-session review, the administration proclaimed this a major improvement because they had projected an even larger deficit in their January budget. But $333 billion is still the third largest deficit in the history of our country and a far cry from the $435 billion surplus that was being projected at the start of the Bush administration.
The administration is portraying a future of declining deficits over the next few years, but that is not what responsible analysts say. They observe instead that special factors were probably the reason for the jump in revenue this year, and they point out how much is left out of the budget projections, including the ongoing cost of the war in Iraq and Afghanistan and a fix for the alternative minimum tax.
We have become a Nation of debtors, relying on the rest of the world to finance our budget deficits and the rest of our excessive spending.
Last year we had to finance a record current account deficit of $668 billion, and that deficit was even larger at an annual rate in the first quarter reaching 6.4 percent of our gross national product.
Foreign governments are holding large quantities of our public debt, putting us at risk of a major international financial crisis if they should decide that the benefits of holding dollars are no longer worth the risk.
Mr. Speaker, our future prosperity depends on increasing our national savings and making wise investments. It depends on being ready for the retirement of the baby boom generation and the pressure we know that will be put on the budget. But how is the Bush administration preparing us for this future? With more deficits and more debt. They want to make the tax cuts that have gotten us into part of this mess permanent, and they have a plan for privatizing Social Security that would cut benefits substantially and add even more to our debt. We need a better plan.
Mr. Speaker, in the remainder of our time, we will look more closely at the realities of this economy and the failures of the current economic policies, including the weak labor market that continues to be a major characteristic of the Bush administration economy.
Mr. Speaker, I yield to the gentlewoman from California (Ms. Loretta Sanchez), an economist by training.
I thank the gentlewoman for her comments.
The great American jobs machine, which created over 20 million net new jobs under President Clinton, has been sputtering under President Bush. We are only just emerging from the most protracted job slump since the 1930s. Job creation is still sluggish. There continues to be substantial hidden unemployment. Wages are not keeping up with inflation, and there is a widening gulf between the haves and the have- nots. The benefits of the economic recovery are showing up in the bottom line of companies, but not in the paychecks of American workers.
Let us look at job creation. Last month there were 1.1 million more jobs on nonfarm payrolls than there were when President Bush took office in January of 2001. That is a paltry pace of job creation of just 20,000 jobs per month, 2/10 of 1 percent per year. That is the slowest pace of job creation under any President in over 70 years.
Leaving aside job creation in the government sector, there were just 161,000 more private sector jobs on U.S. payrolls last month than there were when President Bush took office. Within the private sector, manufacturing was particularly hard hit, with payrolls declining by 2.8 million manufacturing jobs between 2001 and 2005. That is 2.8 million manufacturing jobs lost. The job slump associated with the recession that began in March 2001 has been the most protracted job slump since at least the end of World War II. We only have consistent data back that far. But, in fact, one would have to go back to the 1930s to find a worse job slump.
As you can see in this chart, which focuses on the period after the end of World War II and shows the percentage change in employment after the start of a recession, job losses typically stop about a year after the onset of a recession, and employment begins to increase after about 15 months. Within 2 years, employment surpasses its prerecession level and is expanding at a healthy pace.
The most recent job slump has been dramatically different from that pattern and even more protracted than the so-called ``jobless recovery'' following the 1990-1991 recession. In the latest recession, which began in March 2001, job losses continued until May 2003, more than 2 years after the start of the recession. It was not until January 2005, nearly 4 years later, that payroll employment finally climbed out of the hole created by the recession.
The administration seems to think that it is evidence of a strong economic recovery that payroll employment has increased in every month since May 2003, but the pace of job creation over that period has been just 148,000 jobs per month. This is not the kind of job creation that you would expect in a strong economic recovery. In fact, it is only a little bit faster than the amount of job creation that is needed just to keep pace with normal growth in the labor force. We have to have between 125,000 to 150,000 new jobs created to just keep pace with the number of workers going into the labor force.
Compare this experience with the 1990s the long economic expansion of the 1990s under President Clinton, it was common to see job gains of 200,000 to 300,000 and, in some cases, 400,000 jobs per month. But months with job gains of 200,000 or more have been few and far between in this business cycle recovery. In May, 104,000 jobs were added and in June, 146,000 were added. These are not strong numbers because, as I said, we have to create between 125,000 and 150,000 new jobs just to keep pace with the new young workers moving into the job market.
The expansion of the 1990s started slowly, but the jobless recovery following the 1990-1991 recession pales in comparison with the prolonged job slump we experienced after the 2001 recession. At this point in the recovery from the 1990-1991 recession, the economy had created over 4 million more jobs than we have seen in this recovery.
Contrary to administration claims about the success of their policies in stimulating the economy and producing jobs, the facts tell a very different story about the Bush economic record on job creation. President Bush has the worst job creation record of any President since Herbert Hoover, and the economy under President Bush has struggled to escape from what has been by far the most prolonged job slump in the postwar period.
I yield to the distinguished gentlewoman from California for further comments on this issue.
Mr. Speaker, reclaiming my time, I thank my colleague for her comments. And one of the things that we have talked about that is very troubling to her and me besides the sluggish job growth and the hidden unemployment which she talked about, the third most disturbing development in the labor market is the widening disparity in earnings between the haves and the have-nots. It is fundamentally unfair, and democracy works better when there are not huge differences between our people. And as Chairman Greenspan has testified before Congress many times his concern
about this widening distance, he has argued that it tears at the very social fabric of our Nation.
And let me illustrate this with a few facts. The Bureau of Labor Statistics publishes data on the usual weekly earnings of full-time workers at different points on the wage ladder, and the chart shows that after adjusting for inflation, the usual weekly earnings at the exact middle of the distribution, real median usual weekly earnings, grew a paltry .2 percent per year from the fourth quarter of 2000 to the fourth quarter of 2004. That contrasts with the healthy 1.7 percent per year in the previous 4 years under President Clinton. In other words, the typical worker, whose earnings grew substantially faster than inflation in the late 1990s, has seen the earnings growth grind to a halt during the first 4 years of the Bush administration. The typical worker's earnings barely kept up with inflation.
Worse than the overall stagnation in earnings is the widening disparity of earnings between high earners and low earners. If we look at those same data on usual weekly earnings of full-time workers, but instead of just looking at the middle, we look at the top and bottom as well, we see a disturbing pattern. In this chart, the blue bars show growth in the Clinton years. Yes. There was very good growth at the very top of the distribution, but there was likewise substantial growth in the middle and at the bottom as well.
Compare that with the red bars showing the changes during the first 4 years of the Bush administration. Real earnings at the bottom of the distribution, the 10th percentile, actually fell at an average annual rate of .3 percent per year in President Bush's first term, while those at the top, the 90th percentile, rose the most, almost 1 percent per year. In other words, the earnings that lagged farthest behind for inflation under President Bush were those people with the lowest earnings to begin with, while the earnings that grew the fastest, faster even than inflation, were those for people at the highest earnings to begin with.
Finally, we come to the most disturbing trend of all. Things have been getting worse, not better, recently. During the period when the economy has finally started creating jobs, earnings have not been keeping up with inflation. In the past year, the only earnings that grew faster than inflation were those of people at the very top. Everyone else saw their cost of living grow faster than their earnings. And when we look at the facts of what is happening to most workers, it is hard to accept the President's argument that his tax cuts have worked to create better jobs and higher wages. That is not what we see when we look at this data.
It is very troubling to the people, and it is very troubling, I would say, to the future of this country. It is not good for anyone, whether they are at the top or bottom, to have this wage gap growing and this disparity growing in our Nation. It is an extremely troubling trend.
I yield to the gentlewoman from California.
Mr. Speaker, reclaiming my time, the gentlewoman has pointed out a good fact there.
But let us talk a little bit now about the American jobs machine, which brought the unemployment rate down under President Clinton.
Mr. Speaker, the great American jobs machine, which brought the unemployment rate down under President Clinton from 7.5 percent in 1992 to 4 percent in 2000, has been sputtering under President Bush. We are only just emerging from really the worst job slump since the 1903s, and job creation is still sluggish. There continues to be substantial hidden unemployment. Wages are not keeping up with inflation, and there is a widening disparity, as we talked about, in wages and incomes.
The benefits of the economic recovery are showing up in the bottom line of companies, but it is not showing up in the pocketbooks of American workers.
Let us look at hidden unemployment. The good news is that the official unemployment rate has come down from its high of 6.3 percent in June of 2003 to 5 percent this last month. The very bad news is that a 5 percent unemployment rate is still nearly a percentage point higher than it was when President Bush took office.
But, it is worse than that, because there is an additional hidden unemployment. People have not come back into the labor force the way they usually do in an economic recovery. Last month, 7.5 million people were officially counted as unemployed, 1.5 million more people than were unemployed when President Bush took office in January of 2001.
To be counted as unemployed, a person must be actively looking for work,
but in a weak labor market, there can be considerable hidden unemployment and underemployment if people who want to work have been discouraged from looking for work, and if people who want to work full- time can only find a part-time job. In a typical business cycle recovery, people come back into the labor force as the prospects of finding a job improve but, this time, the labor force participation rate has remained depressed, compared with what it was in the start of the recession.
Last month, 5.2 million people who were not in the labor force said they wanted a job. About 1.6 million of these are considered ``marginally attached'' to the labor force because they have searched for work in the past year and are available for work, but they are not counted in the official unemployment rate, because they did not search for work recently enough. In addition to people who are not in the labor force but say they want a job, 4.5 million people were working part-time in June because of the weak economy. They wanted full-time work, but they were not able to find it.
The official unemployment rate was 5 percent in June. The Bureau of Labor Statistics estimates that if marginally attached workers were included, the unemployment rate would have been 6 percent, and if those working part-time for economic reasons were also included, it would have been 9 percent. A new study by Katherine Bradbury of the Federal Reserve of Boston reaches similar conclusions: labor force participation has not rebounded in this recovery the way it usually does, and the unemployment rate would be 1 to 3 percentage points higher if those missing participants were in the labor force.
Mr. Speaker, the President and his supporters seem to think that a 5 percent unemployment rate shows the success of their economic policies in creating jobs, but the facts tell a very different story. Employers are not hiring as though they believe the economy is strong, and potential workers are staying out of the labor force. The unemployment rate is still almost a percentage point higher than it was when President Bush took office, and there is considerable hidden unemployment. Employers are not hiring as though they believe the economy is strong, and potential workers are staying out of the labor force.
So these numbers are not strong, and I ask my colleague if she would like to elaborate.
Mr. Speaker, I really want to point out that the President and his supporters are trying to make the case that the economy is thriving and that their policies are responsible. But when we look at the facts that we have pointed out tonight, we see instead that American workers are still waiting to see the benefits of the economic recovery in their paychecks, and that we have large and unsustainable budgets and trade deficits.
In fact, this administration has set a number of records, only the problem is, they are the wrong records. They have raised the debt ceiling 3 times so that now, we have a staggering debt of over $7.6 trillion. This is the largest debt in the history of our country, and that breaks down to each American's share being over $26,000. That is what we are giving to our children and our grandchildren.
And, as was said earlier, the trade deficit is again another record, only the wrong kind of record; another record of over $619 billion, the largest in the history of this country, and growing. And, we have a staggering deficit of over $333 billion.
I remember when I ran for office back in 1992, the country had a deficit of $250 billion, and everybody said it was the worst they have ever seen. If I had told them, ``vote for me, I am going to go to Congress, I am going to work with the democratic Congress to pay off that deficit, and in a number of years you are going to see a huge surplus,'' they would have said, well, she is a nice little girl, but she does not know what she is talking about.
But that is exactly what we did. We came to Congress with President Clinton, we paid down that deficit, and he left office with a surplus, a huge surplus. That is what the Bush administration inherited. And what have they given us? They have given us a staggering deficit, a staggering trade deficit, and the largest debt in the history of our Nation. What kind of legacy is that?
Mr. Speaker, I say to my colleagues that on top of this burden that they are putting on our children and our grandchildren, they now plan to privatize part of Social Security that would also add to the debt without increasing our national savings. And, according to Chairman Greenspan, this privatization that they proposed for Social Security would not do one inch of help to help the solvency of the Social Security plan. It does not help the solvency; it just adds to the staggering debt.
And on top of this, they proposed cuts to traditional Social Security benefits that would undermine the economic security of future retirees. And I say to my colleagues, this is not the legacy that I want to leave to my children or to my grandchildren. It is a burden that will have a huge impact on their quality of life.
That concludes my remarks.
Well, I thank the gentlewoman for her comments. And I would just like to conclude by noting that this Monday was President Clinton's birthday. And I authored a resolution congratulating him on his birthday, which emphasized his strong economic program for this country.
Although many of my colleagues or some of my colleagues may not agree with all of his policies, the facts speak for themselves. He inherited a deficit; he left office with a surplus. And while he was putting our economic house in order, we balanced our budget, and we invested also in child care, in health care, in education and helped the people in our country.
During the Clinton years there was a very important economic factor, that the distance between the haves and the have-nots came closer together. In other words, everyone prospered, which is good for the Nation. It is not good for only one segment to prosper and others to fall behind. That really could destroy the social fabric of this country. It is very disturbing to me.
So I wish that we would return to really the financial policies that we had under President Clinton where we balanced our budget, we invested in our people, in education, and health care, and we had a surplus. Yet under this administration the surplus is gone, and we have a staggering debt, the largest in our history. This is not the legacy that I want to leave to my children.