Gephardt Offers Plan for Economic Growth and Opportunity

10/15/2002

From: Erik Smith or Kori Bernards, 202-225-0100, both of the Office of House Democratic Leader Gephardt; http://democraticleader.house.gov/

WASHINGTON, Oct. 15 -- The following was released today by the office of House Democratic Leader Richard A. Gephardt:

In a speech today to the Economic Policy Institute in Washington D.C., House Democratic Leader Richard Gephardt offered a plan for promoting both short- and long-term economic growth and opportunity.

"We need policies devoted to one central purpose: creating economic growth with more jobs and higher wages for Americans," Gephardt said. "If we do that, then we are truly working in the interests of all Americans."

Gephardt argued that the GOP's single-minded devotion to special interests and failure to craft a long-term strategy has contributed to the economic slowdown. He also argued that neither the Republican-run House nor President Bush has offered any effective proposals to get our economy back on the right footing.

"Today, I am offering a five-point plan to restore economic growth, both in the short-run and over the long-term," Gephardt said. "If we can gain control of the House of Representatives, I believe this could be the foundation of a New Economic Agenda for a New House. An economic strategy devoted to restoring growth and jobs to our economy."

The Gephardt five-point plan includes:

-- Short-Term Stimulus: $125 billion in school construction, domestic anti-terrorism infrastructure and health care assistance; $75 billion in one-time rebates and tax cuts immediately to working families and company investments.

-- Long-Term Fiscal Responsibility Plan: Long-term corporate welfare cuts of $100 billion as outlined in a proposal with Senator McCain, a ban on sham foreign incorporations and elimination of overseas tax loopholes. Bipartisan summit agreement to impose triggers, caps or other mechanisms to ensure long-term fiscal responsibility and balanced budgets.

-- Corporate Responsibility Measures: Requires CEO stocks to have the same limitations as employees. Mandates CEO "golden parachutes" be treated in the same manner as employee pensions when companies face financial difficulties.

-- Pension Reform: Institutes immediate portability of pensions for employees who move from one employer to another. Recommends long-term implementation of universal pension system.

-- Minimum Wage Increase and Extension of Unemployment Insurance: Raises minimum wage to $6.65 an hour by January 2004. Extends unemployment insurance for those who have lost their jobs.

------ Following is the text of Gephardt's remarks, "A Plan for Promoting Economic Growth" as prepared for delivery to the Economic Policy Institute, Washington D.C.

"I want to speak to you today about the severe problems Americans face because of our sinking economy, and to lay out some fresh ideas to get us out of this economic mess.

"These are not normal times -- our economy has been hit from all directions including 9/11, scandals on Wall Street, job losses on Main Street and the threat of future conflict in Iraq.

"Yet the administration proceeds along serenely as if everything is fine -- playing politics with the economy and denying the disastrous consequences of their actions.

"Last week Congress acted in a non-ideological way to protect America's security from threats abroad. This President was happy for my support in that effort.

"But when the threat is to our economic security, to the jobs and livelihoods of working Americans, the administration has no time for bipartisanship. I have said we should have an economic summit many times, and the administration has so far refused.

"If I sound disappointed, I am. The President should not ask for bipartisanship on Iraq and then turn his back on bipartisan efforts to promote jobs and economic growth.

"The fact is America faces a clear and present danger to the economic life of working families. But all this President and the Republican House have offered is an extremist ideology of trickle-down economics and ineffective gimmicks.

"Sham measures and promises of tax cuts in 2011 are not a strategy for economic growth. The new times we are in demand new thinking, and strong action.

"We need policies devoted to one central purpose: creating economic growth with more jobs and higher wages for Americans. If we do that, then we are truly working in the interests of all Americans.

"Great nations succeed when they are prepared for threats from both abroad and at home.

"This administration has done a lot of planning for how to defend ourselves from Iraq, but they have done no planning to bring economic growth to America. Getting our economy moving again is a crucial part of strengthening our national security.

"We must be able to take strong action now to fix our economy and meet the threat from Iraq. Leadership is being able to do both.

"Today, I want to talk about the facts of our economic problems, outline the weaknesses of the administration's approach, and propose a plan that moves beyond rigid left-right thinking to promote economic growth as soon as possible.

"For the last two years the administration has embraced a three-part strategy of pushing tax cuts for the wealthiest Americans, assuring our citizens that everything was either the fault of the last administration or that the economy is doing well, and paying no attention to growing budget deficits. The Republican economic strategy has become an amalgam of patronage for the wealthy, passivity, and denial.

"As scholars have noted, including important work here at EPI, the fundamentals of our economy have been weakened in crucial ways. Consumer debt is very high, fixed investment has been in decline for almost two years, and we cannot count on state or local government spending to spur growth because it is being cut dramatically from coast to coast.

"The specific results of the administration's policies are now being felt by millions of Americans. We are in the weakest period of economic growth in 40 years. Consumer confidence is still plunging lower -- this is the same consumer confidence that is counted on by some to be the 'solid leg' of the economy that will bring us back to growth.

"We had record surpluses of $236 billion under President Clinton that have been turned almost overnight into deficits of $165 billion under President Bush.

"Unemployment is going up. Since President Bush took office more than 1.6 million Americans have lost their jobs. "Savings rates are low. The stock market is in turmoil. Investors lost over $4.5 trillion in the stock market since the President instituted his policies.

"Since the Bush Administration took office, there are 1.3 million more poor people in America. And the median household income fell more than 2% last year.

"The Bush tenure has seen 1.4 million more Americans lose their health insurance.

"Finally, the President's budgets divert $2 trillion from the Social Security trust fund.

"Facts are hard things. But by the facts, this administration's economic record is as bad as any President in the last 70 years -- it does not look to get better unless he and his administration pay more attention to it.

"That is tough to say, and I am sure it is tough for him to hear. But facts are facts. I say these things because now is the time to work together, recognize our situation, and take action.

"We all know that 9/11 posed a special challenge to the economy of our nation - but no serious economist says it explains most of our current problems. And even if it did, we would still need a game plan to get us out of this mess.

"I appreciate the President's concern with foreign affairs -- we try to work together on it -- but his work on the economy so far has been an abdication of leadership.

"I am most disturbed not by the poor track record of the last two years, but that the President and his economic team still don't recognize the magnitude of the problem. They are happy with what many economists are calling a jobless recovery, and ignoring evidence that warns of a double-dip recession.

"The Commerce Secretary just put out a nine-page memo saying everything is going well.

"Secretary O'Neil went on national TV to say '... if people count as a recession one-quarter of negative growth -- and the National Bureau of Economic Research says that's a recession -- God bless them, I don't care.'

"The Treasury Secretary responded to criticism by saying he could 'always be on a yacht somewhere.'

"Well, he should care, and for most Americans getting on a yacht is not an option. I will keep working with this administration on fighting the threat from terrorism, but I say again, we cannot afford to wait to get the economy moving.

"In the vacuum of Republican inaction on the economy, Democrats must lead. Today, I am offering a five-point plan to restore economic growth, both in the short-run and over the long-term. If we can gain control of the House of Representatives, I believe this could be the foundation of a New Economic Agenda for a New House. An economic strategy devoted to restoring growth and jobs to our economy.

"First, I believe the nation would benefit from immediate targeted assistance -- a $125 billion stimulus -- in vital areas. In addition, I support short-term tax cuts of $75 billion to help working families and encourage company investment in the near term.

"The spending areas I identify in my plan are school construction, investing in anti-terrorism measures here at home, and supporting Americans as they deal with the health care crisis.

"My plan calls for a $25 billion investment in school construction. We should be repairing buildings that are in terrible condition and we should be building new facilities to keep up with our growing school population. We can use bonds to leverage this money to maximum effect and we should give states and local school districts the flexibility to decide whether to build or repair, without creating new federal bureaucracies.

"A solid investment in school construction now would be good news for our children who need safe and well-designed places to learn, and it would be good for our economy at the same time.

"I suggest we spend an additional $25 billion to help states protect their infrastructure from terrorism. That money could go to local police, fire fighters, public health workers -- and it could help secure our water resources, our power plants, and our telecommunications lines from terrorist attack.

"I propose we use $75 billion to help with the health crisis facing Americans all across the country. We should immediately help employees who have lost their jobs so they can keep their health insurance; increase the federal contribution to our federal-state healthcare partnership -- Medicaid -- so states can continue to provide health care for the poor; and we should provide funding for the hiring of nurses, doctors, and other health care providers in our hospitals, nursing homes, and local health centers.

"This is not all we need to do about our health care crisis, but we shouldn't wait to do more when we could do something very needed now.

"In the short-term, let us do what many economists have suggested and prime the pump so more money goes into the economy.

"We could support our short-term stimulus effort by instituting a one-time immediate tax cut for working families and companies. This could come in the form of $75 billion in rebates or credits for working families and one-time tax incentives for company investments.

"These spending and tax cut stimulus measures together would amount to $200 billion to help bring economic growth right away. They are, in my view, overdue. But these steps will be futile if we do nothing to bring a return to fiscal responsibility and balanced budgets over the long-term. Balanced budgets and more accountability in spending are among the best things we can do to keep interest rates low, consumer confidence high, and most importantly, spur economic growth.

"The second step I propose, therefore, is a framework for a comprehensive plan to balance our budget as soon as our economy recovers.

"When a family can see problems ahead in making ends meet, they sit down at the kitchen table and figure out a new approach. The federal government should do no less. So while we craft a strategy that promotes growth and jobs now, we must also plan for the obvious deficit problems that loom ahead of us this decade.

"I suggest we adopt a pragmatic approach to promote economic growth and jobs that uses the best of our short-term tools but imposes long-term cuts and tightens the economic reins as soon as possible.

"We all know there are plenty of opportunities for spending cuts in our budgets. Not too long ago a Time magazine cover story based on 18 months of investigations detailed more than $100 billion of corporate welfare and waste in the federal budget. We could easily implement some of those cuts, and I have a proposal with Senator John McCain for a commission similar to the base closing commission to do just that.

"In addition, I propose that we get rid of the tax loopholes that encourage corporations to go overseas and laws that allow phony re-incorporations abroad by American based companies. We should be able to agree that these are not America's spending priorities, and that American companies should pay taxes in America.

"Identifying a way to institute spending cuts would be a good start for a long-term plan, but we can also agree to controls like triggers or caps that will bring the government's budgets back into balance. These controls would require the government to meet its obligations to fiscal responsibility and give greater long-term confidence to the markets.

"These two steps - making specific budget cuts and agreeing to controls that restore balanced budgets - could be the basis of a bipartisan framework for progress on the economy.

"Let me be clear. We would aid states and citizens in areas such as school construction, infrastructure and health care so they don't have to make cuts to vital social services. We should consider short-term tax cuts for working families and companies. We should simultaneously agree to a long-run fiscal discipline plan as our economy recovers. That could be in the form of spending cuts and triggers or caps geared to disciplining our future budgets if the budgets aren't balanced.

"I believe such a plan would work.

"The most frustrating thing is that we have a strategy for economic growth that we know works: throughout the 1990s we worked in the long term to balance the budget and free up investment capital to spur growth. In the short-term we invested in our people, education, and research to keep the economy growing

"Unfortunately, so far the administration refuses to negotiate at all. All they will discuss are tax cuts for the year 2011, when we need help now.

"I didn't vote for the tax and budget program that the President urged upon the nation. I didn't think it would spur growth. I thought it would create large deficits. I also thought it wasn't fair to working people. Unfortunately, history has proven my side of the argument correct.

"I have my own ideas for long-term tax reform that make it simpler to fill out your forms, leaves in the tax code the incentives we want for families to get homes, education, and health care, and is fairer to working families.

"We could just face off with Republicans and not ever reach a compromise. But I will tell you right now, the economy is too important for us to simply go sit in our corners and do nothing. We should act now together.

"There are other steps beyond taxes and spending we can take right now to help get the economy growing again.

"The third step I propose is to do much more to restore confidence in our markets -- making them fairer for employees and small investors. As an immediate step, we should come together and pass a strong legislative package to make sure CEOs follow the same restrictions that they place on their employees for buying and selling company stock.

"In the past, when CEOs got great deals with company stock while their employees were boxed in with no way out -- that was wrong. When it keeps going on -- and Congress doesn't fix it -- that is not just wrong, it is a scandal. And we should go further so when a CEO runs a company into bankruptcy, the CEOs' 'golden parachute' isn't specially protected -- if an employee's pension is going to suffer, so should the CEOs. That is only fair.

"The bottom line is that we shouldn't have one set of special protections for CEOs and another for employees, and that our markets should have rules that are fair for everyone.

"These last weeks have seen more evidence that Republicans have a problem breaking their custom of protecting special interests. We all have watched amazed as Harvey Pitt has continued to protect his former clients in the accounting industry. This patronage is having serious consequences on Americans' confidence in the markets.

"Protecting special interests is what Republicans have been doing since Tom DeLay said the purpose of the Contract With America was to eliminate all regulations on business. It should end now.

"Fourth, let us help workers who are at sea in this difficult economy by giving them greater confidence in their pensions. With the average person already facing the prospect of having to look for many jobs in their lifetime -- let's once and for all fix the nation's pension system so that every working person is able to take their pension with them when they move from one job to another.

"As some of you know, I've proposed a plan to go much further and create a single, universal pension system that will protect all Americans and do away with the confusing current system that has more than a dozen conflicting programs. I continue to support that plan -- but let us do what we can do right away. Providing complete portability of pensions is something we should be able to come together on now.

"Finally, let us help working people who are struggling to make ends meet. I suggest we raise the minimum wage over the next three years. I agree with economists who say $6.65 an hour is a reasonable goal to shoot for by January 2004. And we should extend unemployment insurance for those hardest hit by the recession. Let's help the working poor and those who have lost their jobs care for their families, and stimulate the demand side of the economy as well.

"If we do these things -- work together in a bipartisan way, invest in our schools, infrastructure and heath care, find places in the budget where we can cut and agree on a long-term fiscally responsible approach, make rules fairer on CEO investments, reform our pension laws, and raise the minimum wage for the working poor -- I believe we can turn our economy around.

"We can do all this -- great nations accomplish what they put their minds to. Unfortunately, I am not confident that this administration will become more engaged in the problems of our economy.

"After months of calling for a summit meeting and action, we have heard nothing from the administration and seen no action.

"My Republican colleagues in the House have gone along for the ride with the administration's economic strategy - or lack of one.

"Instead of taking up the business of the nation, the Republican leadership has devoted itself to passing legislation that does nothing to help our economy grow.

"Under Republican leadership, the House has spent time on hundreds of ceremonial bills, such as 'Supporting the Goals of the Year of the Rose,' providing for the 'Continuity for the Design of the 5-cent Coin' and this year passing the resolution 'Honoring the Invention of Modern Air Conditioning.'

"The last one, at least, is fitting.

"Harry Truman complained about the 'do-nothing' Congress. This Republican Congress should be remembered as the 'air-conditioned Congress' -- happy inside its chamber, but not in touch with the conditions out in our country.

"The American people have a chance this year to pick a new team for Congress and make the economy a higher priority. I hope they will.

"More than nine months ago, I began calling for an economic summit at the Democratic Leadership Council and laying out some of our large-scale ideas to spur economic growth -- including an Apollo Project to jumpstart our renewable energy industry. I'm not going to stop.

"I will meet anyplace, anytime, to try to get this economy back on track -- it can be before this election or after -- but the sooner the better.

"This administration so far refuses to talk or plan for the reality that is all around us. Every president I've worked with, including Ronald Reagan, Bill Clinton, even this President's father, has sat down with the opposing party when the economy wasn't working to come up with a new plan. Not this administration. Refusing to negotiate didn't work for Newt Gingrich when he tried the government shutdown. It won't work for this President when he tries to shut out opposing voices with differing views.

"In closing I want to say, promoting economic growth is not all we have to do domestically as a nation. We must protect our seniors from those who want to privatize Social Security, create a meaningful prescription drug benefit, dramatically improve our public schools, and extend quality health care to every citizen. But without a sound economy, almost none of our goals can be met.

"Forty years ago, John F. Kennedy worked for economic growth because, as he said, 'a rising tide lifts all boats.' Ten years ago, a Democratic President promised to focus like a laser beam on the economy, and I am proud my party came together around a plan that produced the most robust economic growth in history -- growth that benefited the rich and the poor alike. Now, let us again focus like a laser beam on the economy -- and once again get our economy moving forward.

"Thank you, and God bless America."