foundation for growth
TRANSCRIPT
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1TableofContents
TableofContents
TableofContents................................................................................................................................... 1
ALetterFromSenateBudgetCommitteeChairmanPattyMurray...................................... 4
FoundationforGrowth:RestoringthePromiseofAmericanOpportunity...................... 7
ALookBack:ThePathtoTodaysChallenges........................................................................... 10Budgetdeficitsintheearly90s:WetackledthischallengeresponsiblyduringtheClintonyearswhilecreatingmillionsofnewjobs.........................................................................................................................................................................................12
Thosegainswerereversedoverthefollowingeightyears............................................................................................................13
Fouryearsfightingtoturntheeconomyaround................................................................................................................................14
Wehavemadeprogress,butmiddleclassfamiliescontinuetostruggle..................................................................................15
Investinginjobs,longtermeconomicgrowth,nationalcompetitiveness,andprosperitybuiltfrom
themiddleout...................................................................................................................................... 17Oureconomictheory:Prosperityiscreatedfromthemiddleout...............................................................................................19
Replacingsequestrationinabalancedandresponsibleway.........................................................................................................21
Puttingtheeconomyfirstwithatargetedinfrastructureandjobspackage...........................................................................23
Investinginourfamilies,workers,andsmallbusinessowners...................................................................................................25
Investingineducationandaskilledworkforce........................................................................................................................................................25
Investinginsmallbusinessowners................................................................................................................................................................................34
Investinginmiddleclassfamiliestryingtobuyahome.......................................................................................................................................36
Investinginourinfrastructuretolaydownastrongfoundationforlongtermgrowth....................................................39
Investingintransportationinfrastructure.................................................................................................................................................................39
Investinginbroadband.......................................................................................................................................................................................................44
Investinginourpowergridandnationalenergyinfrastructure.....................................................................................................................46
Investinginourwaterandcommunityinfrastructure.........................................................................................................................................47
Investinginresearch,innovation,healthcare,andkeyindustriesthatwillgrowandcreatejobs...............................49
Universityresearch................................................................................................................................................................................................................49
InvestinginscienceR&D.....................................................................................................................................................................................................50
Investinginlifescienceresearch.....................................................................................................................................................................................50
InvestinginR&DattheDepartmentofDefenseandtheVA...............................................................................................................................51
Investingincleanenergyjobsand21stcenturyenergyproduction...............................................................................................................52
Investingindomesticbridgeenergyresources........................................................................................................................................................53
Investingin21stcenturymanufacturing.....................................................................................................................................................................53
Investinginexportsandinternationalcompetitiveness......................................................................................................................................54
Investinginthemiddleclassthroughtargetedandefficienttaxcuts...........................................................................................................55
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2TableofContents
Tacklingourdeficitanddebtresponsibly................................................................................. 56Bipartisanagreementondeficitreductiongoal:$4trillion............................................................................................................58
TheGoal:$4trillionindeficitreductionoverthenexttenyears.....................................................................................................................58
Whatwehavedoneinthelasttwoyears:$2.4trillion,mostlyfromspendingcuts................................................................................58
Responsibledeficitreductiontocrediblystabilizethedebtasashareoftheeconomy........................................................................60
Reducingthedeficitwhileincreasingthefairnessandefficiencyofthetaxcode.................................................................61
Whythe
revenue
discussion
is
not
over
........................................................................................................................................................................
62
Theneedfortaxreform.......................................................................................................................................................................................................64
Spendingindisguise..........................................................................................................................................................................................................64
Inefficienttaxexpendituresareadragoneconomicgrowth............................................................................................................................65
TaxexpendituresdisproportionatelybenefitthewealthiestAmericans......................................................................................................65
Reducing the deficit by limiting or reforming unfair tax breaks for the wealthy..........................................................................................66
Reducingthedeficitbyeliminatingwastefulbusinesstaxloopholes.............................................................................................................66
TaxreformprinciplesintheSenateBudget...............................................................................................................................................................67
Additionalresponsiblesavingsacrossthefederalbudget..............................................................................................................69
Reducinghealth
care
costs
responsibly
while
preserving
and
protecting
programs
for
seniors
and
families
............................
69
Reducingdefensespendingresponsibly.......................................................................................................................................................................72
Responsiblespendingcutsacrossthefederalbudget............................................................................................................................................77
Keepingthepromisesmadetoourseniors,families,andcommunities......................... 80Keepingthehealthcarepromisesmadetoseniorsandfamilies.................................................................................................81
PreservingandprotectingMedicareforseniorstodayandinthefuture....................................................................................................81
EnsuringAmericansofallageshaveaccesstoaffordablehealthinsurancecoverageandcomprehensivehealthcareservices........................................................................................................................................................................................................................................82
Womenshealthcareandeconomicopportunity...............................................................................................................................86
Womens
health
care
............................................................................................................................................................................................................
86ViolenceAgainstWomenAct(VAWA)..........................................................................................................................................................................86
Equalpayforequalwork...................................................................................................................................................................................................87
Protectingthemostvulnerablefamilies.................................................................................................................................................88
Spendingonlowincomeprogramsisdeclining......................................................................................................................................................88
Antipovertyprogramsareprotectedinbipartisandeficitreductionproposals.....................................................................................89
SNAPfundingpreventshungerformillionsofAmericansstruckbyhardtimes......................................................................................90
NutritionformotherswithyoungchildrensupportschilddevelopmentandprovidesfutureSavings..........................................91
Heatingassistanceprovidescriticalsupporttolowincomefamiliesandseniors...................................................................................91
Housingforlowincomefamilies.....................................................................................................................................................................................92
Keepingthepromisesmadetoourveterans........................................................................................................................................94
Keepingthepromiseofasecureretirement.........................................................................................................................................97
ProtectingmiddleclassfamiliesfromWallStreetrisktakingandpredatorybehavior....................................................99
Avoidingthemistakesofthepastandprotectingmiddleclassfamilies....................................................................................................100
Republicanshaveadifferentvisionforthepathforward................................................................................................................................101
TheSenateBudgetwillprotectmiddleclassfamiliesandcommunities...................................................................................................101
Maintainingourcommitmenttodomesticsecuritywhilesupportingfamilycenteredcomprehensiveimmigrationreform......................................................................................................................................................................................103
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3TableofContents
Comprehensiveimmigrationreform..........................................................................................................................................................................103
Federaleffortstoprotectandenhancethesecurityofourcommunities..................................................................................................104
Keepingpromisestofuturegenerationsbyprotectingtheenvironmentandaddressingclimatechange.............105
Protectingtheenvironment:endangeredspeciesandopenspace...............................................................................................................106
Protectingtheenvironment:cleanair,cleanwater,andrestoringimpairedresources....................................................................107
Preparingfortheimpactsofclimatechange.........................................................................................................................................................108
KeepingourpromisestoAmericasruralcommunities................................................................................................................110
Conservation..........................................................................................................................................................................................................................110
AgricultureResearch.........................................................................................................................................................................................................110
Energy......................................................................................................................................................................................................................................110
FarmBill..................................................................................................................................................................................................................................110
Supportingworkerswhiletheyfighttogetbackonthejob.......................................................................................................112
KeepingourpromisestoAmericanIndiansandAlaskaNatives...............................................................................................113
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4ALetterFromSenateBudgetCommitteeChairmanPattyMurray
ALetterFromSenateBudgetCommittee
ChairmanPattyMurrayFouryearsafterthegreatesteconomiccrisissincetheGreatDepression,thereisaseriousdivision
betweenthetwomajorpoliticalpartiesinAmericaaboutwhatgovernmentshouldbedoingtokeepoureconomyandournationalfinancesmovingintherightdirection.Oneapproach,urgedbyleadersintheRepublicanParty,wouldtakeusbacktothefailedeconomicandfiscalpoliciesthatledtotheGreatRecession.Thisisthepathoftaxcutsfortherich,deregulationofWallStreet,increasedcostsofhealthcare,moreinstabilityanduncertaintyformiddleclassfamilies,andthebreakingofpromiseswevemadetoourseniorsandfamilies.Itisanapproachpushedbythosewhobelievethatgovernmenthasnobusinesssupportingournationalcompetitivenessandbythosewhothinkthatthehighestpriorityshouldberadicallyshrinkinggovernment,notimprovingit.
TheotherapproachistheoneurgedbythevastmajorityoftheAmericanpeoplewhobelievethatweneedtobemovingforward,notbackwards.Thisistheapproachthatsaysweshouldlearnfromhistorysowearenotdoomedtorepeatit.Itisanapproachthatprioritizesfairness,opportunityforthemiddleclass,andareturntotheresponsiblefiscalandeconomicpoliciesthathaveworkedforourcountrybefore.Itisanapproachthatmaintainsthatgovernmentcantsolveeveryproblem,butthatitcanandshouldworktocreatejobs,supportthemiddleclass,andofferahanduptofamiliesthatneedsomesupportwhiletheyworktogetbackontheirfeet.TheSenateBudgetreflectsthevalues,priorities,andgoalsofthosewhosupportthissecondapproach.ItreflectsthepromiddleclassagendathattheAmericanpeoplewenttothepollsinsupportoflastelection
AndIbelieveitisastrongandresponsiblevisionforbuildingafoundationforgrowthandrestoringthepromiseofAmericanopportunity.ThehighestpriorityoftheSenateBudgetistocreatetheconditionsforjobcreation,economicgrowth,andprosperitybuiltfromthemiddleout,notthetopdown.Thisiswhatpeopleacrossthecountrysaytheywantfirstandforemost,andthisbudgetdeliversonit.Atatimewhentoomanymiddleclassfamiliesacrossthecountryarestillstruggling,andfartoomanyworkerscontinuefightingtogetbackonthejob,thelastthingoureconomyneedsrightnowisforpoliticaldysfunctionorextremeandirresponsiblebudgetpoliciestothreatenourfragilerecovery.Thisbudgetreplacessequestrationresponsiblyandinvestsinjobcreationtohelpfamiliesandtheeconomyrightaway.Ittacklesourgrowingnationaldeficitsineducation,infrastructure,andinnovationtomakesurewearelayingdownastrongfoundationforbroadbasedeconomicgrowthforyearstocome.AnditabsolutelyrejectsareturntothefailedtrickledowneconomicpoliciesthatdevastatedthemiddleclassandledustotheGreatRecession.TheSenateBudgettacklesourdeficitanddebtthewaytheAmericanpeoplehavetoldustheywantitdone:withabalancedmixofresponsiblespendingcutsandnewrevenuefromthewealthiestAmericansandbiggestcorporations.
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5ALetterFromSenateBudgetCommitteeChairmanPattyMurray
Tome,thisisjustcommonsense.Wehaveaseriousdeficitanddebtproblemthatweneedtotackleandwecertainlydontwanttoleaveourchildrenandgrandchildrenwithanunmanageablepileofourbills.SoIthinkthatmeansweshouldbeexaminingeverypartofthefederalbudgetforsmartandresponsiblesavings:fromhealthcarespending,todefensespending,totheloopholesanddeductionsinthetaxcodethatbenefitthewealthiestAmericansandbiggestcorporations,andmore.Democratshavebeenveryclearaboutthis;wethinkeverythingshouldbeonthetable,andwebelieve
thateveryoneshouldbeaskedtocontributetothesolution.LikethevastmajorityoftheAmericanpeople,wedontthinkdeficitreductionshouldbedonethroughspendingcutsalone,andwedontthinkitshouldcomeonlyfromnewrevenue.Itshouldbeabalancedandresponsiblemixofboth.Unfortunately,manyRepublicansinCongressdontsharethisview.Theybelievethatweshouldmakemassivecutstoeducation,healthcare,andotherinvestmentsthatbenefitthemiddleclass,seniors,andthemostvulnerablefamilies.ButtheythinkthewealthiestAmericansandbiggestcorporationsshouldntbeaskedtopaytheirfairshare.Infact,recentRepublicanproposalshaveactuallycuttaxesfortherichandaskedmiddleclassfamiliestopickupthetab,apolicypositionthatisfaroutsidethemainstreamofhowtheAmericanpeoplebelieveweshouldapproachthis.In2010,thebipartisanSimpsonBowlesCommissionlaidoutagoalofreducingthedeficitby$4trillionovertenyearsandDemocratsandRepublicansembracedthisasreasonableandresponsible.OtherbipartisangroupsincludingtheSenatesGangofSixagreed.Sincethattime,Congresshasworkedtoreducethedeficitby$2.4trillion,withmostofthatcomingfromspendingcuts.TheSenateBudgetbuildsonthissavingswithanadditional$1.85trillionindeficitreduction,foratotalof$4.25trillionindeficitreductionsincetheSimpsonBowlesCommissionreport.ThenewdeficitreductioninthisbudgetcomesfromanequalmixofresponsiblespendingcutsmadeacrossthefederalbudgetandnewrevenueraisedbyclosingloopholesandendingwastefulspendinginthetaxcodethatbenefitsthewealthiestAmericansandbiggestcorporations.Andbecausewebelievethatitmakessensetoreducethedeficitthewaywediditinthe90s,bygrowingtheeconomyandcreatingmillionsofmiddleclassjobs,thisbudgetincludesa$100billionjobsandinvestmentpackagetogetworkersbackonthejobandbeginfixingtheworstofthecrumblinginfrastructurethatisholdingbackeconomicgrowth.Inadditiontoinvestinginjobsandeconomicgrowthandtacklingourdeficitanddebtresponsibly,theSenateBudgetkeepsthepromiseswevemadetoseniors,families,veteransandcommunities.Andimportantly,itrejectsattemptsbyRepublicanstodismantleorprivatizeMedicareforourseniors,
andinsteadworkstopreserve,protect,andstrengthenthiscriticalprogram.Thisbudgetmakestheinvestmentsweneedtokeepournationsecureandkeepthepromiseswevemadetoourveterans.Anditprotectsthestrongsafetynetthathashelpedmillionsoffamiliesgetbackontheirfeetwhentheywerestruggling.WhenmydaddevelopedMultipleSclerosisandhadtostopworking,IknowthatmysixsiblingsandIwouldneverhavemadeitifwedidnthaveagovernmentthatwastheretohelpusputfoodonthetable,helpmymomgetthetrainingsheneededtogetbacktowork,andhelpusallgotocollegewithfederalstudentloansandtuitionsupport.Weareanationthatcomestogethertohelpfamilieslikemine,andtheSenateBudgetwouldmakesurethatcontinues.
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6ALetterFromSenateBudgetCommitteeChairmanPattyMurray
MiddleclassfamiliesacrossAmericaaresickandtiredofthegridlockthathasparalyzedthebudgetprocessinWashington,D.C.Theyarelookingtotheirelectedofficialstoendtheconstantartificialcrisesandpoliticalbrinksmanshipthatisthreateningourfragileeconomicrecovery,andtoworktogethertoresponsiblytackletheseriouseconomicandfiscalchallengeswefaceasanation.IbelievetheSenateBudgetoffersapathforwardtoaccomplishthis.AndIamproudoftheworktheSenateBudgetCommitteehasdonetoputthisbudgettogetherwithalotofinputfromourcolleagues
outsidetheCommitteeandmembersofthepublicacrossthecountry.Iamconfidentthatourcountrycanmovebeyondthisdivisionandworktogethertotackleourfiscalandeconomicproblemsfairlyandresponsibly.Ournationhasfacedfargreaterchallengesinourhistory,andtimeandagaintheAmericanpeoplehavecometogetherwithouruniquebrandofingenuity,diversity,andcompassiontodotherightthing.IamhopefulthattheHouseofRepresentativeswilljointheSenateatthebargainingtableandwecanworktogethertowardtheresponsibleandbipartisanbudgetdealtheAmericanpeopleexpectanddeserve.Sincerely,
SenatorPattyMurray(DWA)ChairmanoftheSenateBudgetCommitteeMarch13,2013
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7FoundationforGrowth:RestoringthePromiseofAmericanOpportunity
FoundationforGrowth:Restoringthe
PromiseofAmericanOpportunityTheFiscalYear2014SenateBudgetbuildsontheworkdoneoverthelasttwoyearstocreatejobs,invest
inbroadbasedeconomicgrowth,andtackleourdeficitanddebtresponsibly.ThisbudgettakesthebalancedandresponsibleapproachtoourfiscalchallengesthateverybipartisangrouphasendorsedandthattheAmericanpeoplesupport.Itincludesresponsiblespendingcutsmadeacrossthefederalbudget,aswellassignificantnewsavingsachievedbyeliminatingloopholesandcuttingwastefulspendinginthetaxcodethatbenefitsthewealthiestAmericansandbiggestcorporations.TheSenateBudgetisgroundedintheunderstandingthatourcountryslongtermfiscalandeconomicgoalswillonlybemetwithpoliciesthatsupportastrongandgrowingmiddleclass.Anditkeepsthepromiseswehavemadetoourseniors,ourfamilies,andourcommunities.
TheAmericanpeoplearesickandtiredofwatchingtheirgovernmentlurchfromcrisistocrisis.TheSenateBudgetoffersaseriousandcrediblepathawayfromthisgridlockanddysfunctionandtowardalongtermplantocreatejobs,laydownastrongfoundationforbroadbasedeconomicgrowth,replacesequestration,andtackleourdeficitanddebtresponsiblyandcredibly.ThisbudgetreflectsthevaluesofadiverseSenateservingadiversenation,anditisguidedbytheprinciplesandprioritiesthatarestronglysupportedbytheconstituentswewereelectedtorepresent.
ThehighestpriorityoftheSenateBudgetistocreatetheconditionsforjobcreation,
economicgrowth,andprosperitybuiltfromthemiddleout,notthetopdown.TheSenateBudgettakesthepositionthattrickledowneconomicshasfailedasaneconomicpolicyandthattruenationalprosperitycomesfromthemiddleout,notthetopdown.Webelievethatdeficitreductionattheexpenseofeconomicgrowthisdoomedtofailure,andpoliciesthatpromoteastrongmiddleclassareessentialtotacklingourlongtermdeficitanddebtchallenges.ThepoliciesPresidentBarackObamaandCongressputinplaceinresponsetotheGreatRecessionpulledoureconomybackfromthebrinkandhelpedtoaddbackjobs.Butwithanunemploymentratethatremainsstubbornlyhigh,andamiddleclassthathasseentheirwagesstagnateforfartoolong,wesimplycannotaffordanythreatstoourfragilerecovery.Therefore,theSenateBudget:
Fullyreplacestheharmfulcutsfromsequestrationwithsmart,balanced,andresponsibledeficit
reduction,whichwouldsavehundredsofthousandsofjobswhileprotectingfamilies,communities,andthefragileeconomicrecovery.
Investsinlongtermeconomicgrowthandnationalcompetitivenessbytacklingourseriousdeficitsininfrastructure,education,jobtraining,andinnovationtocreatejobsnowandlaydownastrongfoundationforbroadbasedgrowth.
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8FoundationforGrowth:RestoringthePromiseofAmericanOpportunity
Includesa$100billiontargetedjobsandinfrastructurepackagethatwouldstartcreatingnewjobsquickly,beginrepairingtheworstofourcrumblingroadsandbridges,andhelptrainourworkerstofill21stcenturyjobs.ThisjobsinvestmentpackageisfullypaidforbyeliminatingloopholesandcuttingwastefulspendinginthetaxcodethatbenefitsthewealthiestAmericansandbiggestcorporations.
Protectsandcontinuestaxcutsforthemiddleclassandlowincomeworkingfamilies.
TheSenateBudgetbuildsontheworkwehavedoneoverthelasttwoyearsto
tackleourdeficitanddebtresponsibly.Attheendof2010,thebipartisanSimpsonBowlesCommissionreportlaidoutaresponsiblegoalofreducingourdeficitby$4trillionovertenyears.Sincethattime,Congressandtheadministrationhaveimplemented$2.4trillionindeficitreduction,with$1.8trillioncomingfromspendingcutsand$600billioncomingfromnewrevenuefromthewealthiestAmericans.TheSenateBudget:
Surpassesthebipartisangoalof$4trillionin10yeardeficitreductionandputsourdeficitanddebtonadownward,sustainable,andresponsiblepath.
Buildsonthe$2.4trillionindeficitreductionalreadydonewithanadditional$1.85trillioninnewdeficitreductionforatotalof$4.25trillionindeficitreductionsincetheSimpsonBowlesreport.
Includesanequalmixofresponsiblespendingcutsandnewrevenueraisedbyclosingloopholesandendingwastefulspendinginthetaxcode.
Achieves$975billionindeficitreductionthroughresponsiblespendingcutsmadeacrossthefederalbudget:
o $493billionsavedonthedomesticspendingside,including$275billioninhealthcaresavingsmadeinawaythatdoesnotharmseniorsorfamilies.
o $240billionsavedbycarefullyandresponsiblycuttingdefensespendingtoalignwiththedrawdownoftroopsinouroverseasoperations.
o $242billionsavedinreducedinterestpayments.
Achieves$975billionindeficitreductionbyclosingloopholesandeliminatingwastefulspendinginthetaxcodethatbenefitsthewealthiestAmericansandbiggestcorporations.
Includesreconciliationinstructions,afasttrackprocessthatmakessurethatthenewrevenuefromthewealthiestAmericansandbiggestcorporationscannotbefilibusteredintheSenate.
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9FoundationforGrowth:RestoringthePromiseofAmericanOpportunity
TheSenateBudgetkeepsthepromiseswehavemadetoourseniors,families,
veterans,andcommunities.TheSenateBudgettakesthepositionthatthepromiseswemadetoourseniors,families,veterans,andcommunitiesoughttobefulfilled.Thisbudget:
PreservesandprotectsMedicaresothatitisstrongforseniorstodayandwillbethereforourchildrenandgrandchildren.
Rejectscallstodismantle,privatize,orvoucherizeMedicare.
BuildsontheresponsiblechangesmadeintheAffordableCareActtocontinuereducinghealthcarecostswhileprotectingpatients.
Protectstheexpansionofhealthinsurancetonearly30millionAmericansandensuresthefederalstatepartnershiponMedicaidispreserved.
Rejectseffortstosimplyshifthealthcarecoststostatesormakecutsthatharmseniorsandthemostvulnerablefamilies.
Maintainsthekeyprinciplethatdeficitreductionshouldnotbedoneonthebacksofthemostvulnerablefamiliesandcommunities.
Continuestomaketheinvestmentsweneedinnationaldefense,homelandsecurity,andlawenforcementtokeepourcountryandourcommunitiesstrongandsecure.
Keepsthepromisewehavemadetoourveteransthattheircountrywillbethereforthemandprovidetheresourcesandsupporttheyneedwhentheycomehome.
TheHouseRepublicanapproachwouldhurtmiddleclassfamiliesandtheeconomy
andbreakthepromiseswehavemadetoourseniors.TheSenateBudgetoffersaverydifferentvisionthantheapproachtakenbyHouseRepublicans.Theirproposalswouldcutthelegsoutfromunderourfragileeconomicrecoveryandthreatenmillionsofjobs.Theywouldslashtheinvestmentsininfrastructure,education,andinnovationthatweneedtolaydownastrongfoundationforbroadbasedgrowthandthatwouldpositionustocompeteandwininthe21stcenturyglobaleconomy.
HouseRepublicanswoulddismantleMedicareandcutoffprogramsthatsupportthemiddleclassandmostvulnerablefamilies.AndtheywoulddoallthatwhilerefusingtoaskthewealthiestAmericansandbiggestcorporationstocontributetheirfairshare.WebelievethattheAmericanpeoplestronglysupporttheprogrowth,promiddleclassapproachtakenintheSenateBudget.Andwelookforwardtoengagingwithfamiliesandseniorsacrossthecountryasweworktopasstheresponsible,fair,andbipartisanbudgetdealtheAmericanpeopleexpectanddeserve.
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10ALookBack:ThePathtoTodaysChallenges
ALook
Back:
The
Path
to
Todays
Challenges
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11ALookBack:ThePathtoTodaysChallenges
Whilewehavemadesignificantprogressoverthelastfewyears,ourcountrycontinuestofaceseriousbutsurmountablechallengesasweworktogrowtheeconomyandtackleourdeficitanddebtresponsibly.Andasweconfrontthechallengesaheadofus,itisimportanttokeepinmindthepaththatbroughtustothispoint.Theworkdoneinthe1990shelpedgrowtheeconomy,createjobs,balancethebudget,andputourgovernmentontracktoeliminatethenationaldebt.Thatwasallreversedbetween2001and2008.From
2009untiltodaywehavefoughttopulloureconomybackfromtheprecipice,movefrommonthlyjoblossestoslowbutsteadyjobgains,andbeginthehardworkofreducingourdeficitanddebtresponsibly. FollowingPresidentClintons1993taxdealthatbroughtinnewrevenuefromthewealthiest
Americansandthebipartisanresponsiblespendingcuts,ourcountrycreated22millionnewjobsandachievedabalancedbudget.PresidentClintonstaxpolicieswerenottheonlydriverofeconomicgrowth,butourleadersabilitytoagreeonafiscallysustainableandeconomicallysoundpathprovidedvaluablecertaintyforAmericanfamiliesandbusinesses.
Between2001and2008wefacedacombinationoftaxcutsweightedtowardthewealthiest
Americans,costlyandunpaidforwarsinIraqandAfghanistan,andirresponsiblederegulationofWallStreet.Thesedecisionsreversedthefiscalandeconomicprogressmadeintheprioreightyears,devastatedworkersandtheeconomy,andturnedabudgetsurplusintoagrowingdeficit.
PresidentObamaenteredofficefacingthegreatesteconomiccrisissincetheGreatDepression,as
millionsofAmericanslosttheirjobsandexperiencedthepainofforeclosure.ThePresidentworkedwithCongresstoturntheeconomyaround,andwhileoureconomicrecoveryremainsfragileandmoreworkneedstogetdone,wearemovingintherightdirection.
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12ALookBack:ThePathtoTodaysChallenges
Budgetdeficitsintheearly90s:WetackledthischallengeresponsiblyduringtheClintonyearswhilecreatingmillionsofnewjobsThiscountrysrecenthistoryshowsthatournationisstrongestwhenourpoliciesaredesignedtoencourageprosperitybuiltfromthemiddleout,ratherthanthetopdown.Andthatwhileitisabsolutelycriticaltoaddressourdeficitanddebtchallenges,attemptingtodosoattheexpenseofjobsandbroad
basedeconomicgrowthisnotonlyunfair,itjustwillnotwork.PresidentBillClintonenteredofficein1993atatimewhenthecountrywasfacingseriousdeficitanddebtproblems.Theyearbefore,thefederalgovernmentwastakinginrevenueequal17.5percentofGDP,butspendingwas22.1percentoftheeconomyadeficitof4.7percent.1Hisproposaltoraisethetopincometaxrateto39.6percentpassedtheSenateandHousewithoutasingleRepublicanvote.Atthetime,Republicanleadersclaimedtheproposalwoulddevastatetheeconomyandcausemassivejobslosses.RepublicanSenatorPhilGramm(RTX)predictedthatthisprogramisgoingtomaketheeconomyweak.Ibelievehundredsofthousandsofpeoplearegoingtolosetheirjobs.2
Asweknow,theoppositehappened.Theunemploymentratewentfrom7percentatthebeginningof1993to3.9percentattheendof2000.3Between1993and2001,oureconomygainedmorethan22millionjobs4andexperiencedthelongesteconomicexpansioninourhistory.5AsAmericansgainedjobsandoureconomycontinuedtogrow,revenueincreasedfrom17.5percentto20.6percentofGDP.DespitefearsfromRepublicansthatmorerevenuewouldcausespendingtogoup,federalspending
droppedfrom22.1percentofGDPto18.2percentofGDP.6Ourbudgetreachedbalanceandournationwasontracktocompletelyeliminatethefederaldebtoverthenextdecade.7WhilePresidentClintonstaxchangeswerenottheonlydriverofoureconomicgrowth,theabilityofelectedofficialstocometogetherandagreeonafiscallysustainablepathplayedaroleinkeeping
1OfficeofManagementandBudget,HistoricalTables,Table1.2.accessed3/8/12.
2TheBudgetStruggle;ClintonWinsApprovalOfHisBudgetPlanAsGoreVotesToBreakSenateDeadlock,NewYorkTimes,
8/7/93.3U.S.DepartmentofLabor,BureauofLaborStatistics,CivilianUnemploymentRate,accessed3/8/13.
4AllEmployees:TotalNonfarm, U.S.DepartmentofLabor,BureauofLaborStatistics,accessed3/8/13,
5USBusinessCycleExpansionsandContractions,NationalBureauofEconomicResearch,accessed3/8/13.
6OfficeofManagementandBudget,HistoricalTables,Table1.2,accessed3/8/12.
7CongressionalBudgetOffice,BudgetandEconomicOutlook:FiscalYears20022011,January2001.
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13ALookBack:ThePathtoTodaysChallenges
interestrateslowandgivingmarketsandsmallbusinessestheconfidencetheyneededtoexpandandcreatejobs.ThosegainswerereversedoverthefollowingeightyearsIn2001,Democratssawthesurplusasanopportunitytofreeourselvesfromdebtandinvestinnationalpriorities.UndertheleadershipofPresidentGeorgeW.Bush,however,ourcountrysfiscalcoursetookadramaticturnfortheworse.Costlytaxcutsweightedtowardthewealthy,warsinIraqandAfghanistanthatwerenotpaidfor,andotherfiscallydisastrouspolicydecisionserodedthesurplusinheritedfromthepreviousadministration.Thiswasnotasurprise,ofcourse.FormerSenatorPaulSarbanes(DMD)predictedthesetaxcutswouldputusontheglidepathtodissipatethishardearnedfiscalrestraint.8AndPresidentBushsownTreasurySecretary,PaulONeill,alsotriedtowarnthatcuttingthetaxratesoncapitalgainsanddividendswouldblastaholeinthedeficit.ButVicePresidentDickCheneyinformedhimthatdeficitsdonotmatter.9By2008,federalrevenueshaddeclinedto17.6percentofGDP,whilespendingincreasedto20.8percentadeficitof3.2percent.10OurcountrywasonapathtowardrecorddeficitsasthelegacyoftheBushadministrationspolicieslivedbeyondthePresidentstimeinoffice.Anddespitetherosyfiscalprojectionsattheturnofthecentury,thedecadewasmarkedbyanalmostdoublingofthefederaldebt.11
DeregulationandirresponsibilityonWallStreetonlymadethingsworse.Theyprecipitatedadevastatingfinancialcrisis,leadingtothedeepestrecessionsincetheGreatDepression,beginninginDecember2007.Theeconomicturmoilandinstabilitythatfollowedtouchedallcornersofourcountry.Throughnofaultoftheirown,Americanssawtheirretirementaccountsthathadtakenyearstoaccumulate
losevaluealmostovernight.Millionsofworkerslosttheirjobs,andcountlessfamilieslosttheirhomesorhadtoscrambletokeepupwiththeirmortgages.Thiseconomicdownturn,togetherwiththefiscalpoliciesoftheBushadministration,generatedasignificantportionoftodaysdebt.12Theyalsohelpexplainthedecadeofmiddleclassstagnation,withtheaverageAmericanfamilyearninglessinPresident
Bushslastyearinofficethantheydidduringhisfirst.13Andimportantly,insteadoflaying
8GreenspanSeesRoomforTaxCut,ABCNews,1/25/01.
9ConfessionsofaWhiteHouseInsider,TIMEMagazine,1/10/04.
10OfficeofManagementandBudget,HistoricalTables,Table1.2,accessed3/8/12.
11OfficeofManagementandBudget,HistoricalTables,Table7.1,accessed3/8/12.
12CenteronBudgetandPolicyPriorities,EconomicDownturnandLegacyofBushPoliciesContinuetoDriveLargeDeficits,
2/28/13.13
CensusBureau,TableH6,accessed2/28/13.
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thefoundationforlongtermmiddleclassgrowth,theBushAdministrationleftuswithcrumblinginfrastructureandaneconomythatincreasinglyworkedforonlythewealthiest.FouryearsfightingtoturntheeconomyaroundWhenPresidentObamatookofficeinJanuary2009,ourcountryfacedchallengesofhistoricproportions.Morethan700,000Americanswerelosingtheirjobseachmonth,14andarecordnumberofmortgageswereinforeclosureorunderwater.15Bankswerecollapsingorteeteringonthevergeofcollapseandthreateningevenfurtherdevastation.Andmanufacturersandotheremployerswereunabletofinanceinvestmentsoroperationsandriskedbeingforcedtoclosetheirdoors.WorkingwithDemocratsinCongress,PresidentObamaactedquicklytopassapackageoftaxcutsformillionsofAmericanfamilies,reliefforthosehardesthitbytherecession,andinitiativestosupporteconomicgrowth.16
Thisresponse,incombinationwiththeactionstakenbytheFederalReserve,producedadramaticturnaround.Beforetheendof2009,positivegrowthhadreturned.17Theunemploymentratebegantodeclineshortlyafter,18andintheyearssincewehavecontinuedtomakeprogressonbothmeasures.Yet,theeconomyisstillstruggling,millionsofworkersarelookingfortoofewjobs,andaggregatedemandisstillfarbelowitspotential.
14
U.S.DepartmentofLabor,BureauofLaborStatistics,AllEmployees:TotalNonfarm,accessed3/8/13,15
ForeclosuresUpARecord81%in2008,CNNMoney,1/15/09.16
Recovery.gov,accessed3/8/13.17
NationalBureauofEconomicResearch,USBusinessCycleExpansionsandContractions,accessed3/8/13.18
U.S.DepartmentofLabor,BureauofLaborStatistics,CivilianUnemploymentRate,accessed3/8/13.
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Wehavemadeprogress,butmiddleclassfamiliescontinuetostruggleTheslowpaceoftherecoverymeansthattoomanyAmericanworkersandfamiliesarestrugglingtokeepup.Incomeinequalityisgrowing,whileeconomicmobilityandopportunityarenot.TherearestillmanyAmericanswhowonderwhetherwecanleaveastrongercountry,withgreateropportunity,forthenextgeneration.Wehaveseenanincreasinggapbetweenthewealthyandeveryoneelse,atrendthathinderseconomicgrowth,underminesconfidenceinourinstitutions,andgoesagainstafundamentalpromiseofourcountrythathardwork,notwhereyoubegininlife,shoulddetermineyoursuccessandabilitytoleaveabetterfutureforyourchildrenandgrandchildren.Buildingastrongmiddleclassisthekeytoreducingourdeficitanddebtandensuringthatwecompeteandwininthe21stcenturyeconomy.Maintainingourleadershipintheworlddependsonourabilitytoreversethetrendsofthelastseveraldecadesandgrowtheeconomyfromthemiddleout.TheSenateBudgetwillmoveusawayfromthecrisistocrisisstyleofgoverningwehaveseenfartoomuchofinrecentyearsandtowardsolutionsthat
workformiddleclassfamilies.Typicalmiddleclassfamilieshaveseentheirincomesdeclineoverthelastdecade.In2011,medianhouseholdincomewasjustover$50,000,nearly$5,000belowthe2000level,andlowerthanithadbeenatanytimesince1995.19Thisstagnationmakesithardertobuyahouse,financeacollegeeducation,andtaketherisksthathaveallowedthiscountrytobehometosomeoftheworldsmostinnovativeandproductiveenterprises.Andwhilewomensawmeaningfulwagegrowthinthe1980sand1990s,thatgrowthleveledoffinthelastdecade.Today,womencontinuetoearnsubstantiallylessthanmenawomanworkingfulltimeyearroundin2011couldexpecttoearnjustthreequartersofhermalecounterparts.20
Atthesametime,therichhavebeengettingmuchricher.Thetoponepercentofhouseholdshasseentheirincomesmorethandoublesincethe1970s.21
19
CensusBureau,TableH6,accessed2/28/13.20
CensusBureau,TableP40,accessed2/28/13.21
CBO,SupplementalDataTable3,7/10/12.
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Forthoseattheverytop,thetrendisevenmorepronounced.By2007,the400highestincometaxpayershadseentheirincomerisefivefoldsincejustthemid1990s.22Andwhenyouconsidermeasuresbeyondincome,the
imbalanceisevengreater.Today,thetoponepercentofhouseholdsownmorethan35percentofallofthenationswealthand38percentofallfinancialassets.23Thewealthiest400individualsholdmorewealththanthe150millionpeoplethatcomprisethebottom50percentowealthholders.24
Ourcountrycanrestorethepromisethatifsomeoneworkshard,theywillhaveeveryopportunitytheydeservetoleaveabetterfuturefortheirchildrenandgrandchildren.Doingsorequiresinvestinginjobs,longtermeconomicgrowth,andnationalcompetitiveness.Thisapproachwillallowustobuildprosperityfromthemiddleout,tackleourdeficitsanddebtresponsibly,andkeepthepromiseswehavemadetoourseniors,families,andcommunitiesforgenerationstocome.
22
IRS,The400IndividualIncomeTaxReturnsReportingtheLargestAdjustedGrossIncomesEachYear,19922009,2012.23
TheMythofLivingBeyondOurMeans,RobertReich,Truthdig,1/29/2013.24
TheWreckingBall,SylviaAllegretto,theBerkleyBlog,7/16/12.
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Investing
in
jobs,
long
term
economic
growth,nationalcompetitiveness,and
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ThehighestpriorityoftheSenateBudgetistocreatetheconditionsforjobcreation,economicgrowth,andprosperitybuiltfromthemiddleout,notthetopdown.Ourcountryhasseriousdeficitanddebtchallenges,butwealsofaceequallysignificantdeficitsinjobs,education,workerskills,infrastructure,andinnovation.TheSenateBudgettacklesthesechallengesby:
Fullyreplacingsequestrationinabalancedandresponsiblewaytosavejobsandsupportourfragileeconomicrecovery.
Includingatargetedjobsandinfrastructurepackagethatwillstartcreatingnewjobsquickly,makemuchneededrepairstoourroadsandbridges,andhelptrainourworkersforjobsinhighdemandindustries.
Investinginourpeoplebymakingsurestudentsandworkersacrossthecountrycanaccesshighqualityeducationandtraining,expandingtheiropportunitiesandstrengtheningoureconomyforthelongterm.
Investinginrebuildingourcrumblinginfrastructureandmakingsurewearelayingdownastrong
foundationforlongtermeconomicgrowth.
Investinginresearchandinnovationsowecancontinuetocompeteintheglobaleconomyandgrowourmiddleclass.
Theseinvestmentswillcreatejobsandhelpthemiddleclassrightnow,theywillhelplaydownastrongfoundationforlongtermandbroadbasedeconomicgrowth,andtheywillallowourcountrytocompeteandwininthe21stcenturyglobaleconomy.
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Oureconomictheory:ProsperityiscreatedfromthemiddleoutTheSenateBudgettakesthepositionthataresilientmiddleclassandarobusteconomyreinforceoneanother.Oureconomicpolicyisthereforebuiltonthevaluesandprinciplesthatbuildabroadmiddleclass,supportstrongandstabledemand,andinvestinandencouragetheingenuityandinnovationthatleadstojobcreationandtruebroadbasedprosperity.Fortheeconomytogrow,demandforthegoodsandservicesourbusinessesproducemustbestrong.Abroadmiddleclassthatisdoingwellprovidesthemarketwiththeconsumersnecessarytopurchaseproducts.Thatcreatesstability,whichinturnencouragesfirmsandentrepreneurstopursueproductivityenhancinginvestmentsthatgrowtheeconomyandfosternewenterprises,expandingemploymentopportunitiesevenfurther.NickHanauer,whorunsaventurecapitalfirmandwasaninitialinvestorinAmazon.com,Inc.,putitthisway:[O]nlyconsumerscansetinmotionavirtuouscyclethatallowscompaniestosurviveandthriveandbusinessownerstohire.AnordinarymiddleclassconsumerisfarmoreofajobcreatorthanIeverhavebeenoreverwillbe.25 Asstrongdemandspurseconomicgrowthandjobcreation,awelltrainedandflexibleworkforceisnecessarytomaintainthesegains.CultivatingadiversesetofskillsfurthersupportsthestabilityoftheAmericaneconomy.Bypreparingourpeopletocontributeinabroadrangeofestablishedandgrowingindustries,wewillmakesureourworkershavetheskillsandtrainingtheyneedtocompeteandwininthe21stcenturyglobaleconomy.ThemiddleoutapproachtakenintheSenateBudgetoffersanalternativetothetheoryoftrickledowneconomics.Trickledowneconomicsassertsthatgrowthandprosperityhappenfromthetopdown.Accordingtothistheory,thebestwaytocreatejobsandgrowtheeconomyistocuttaxesforthewealthiestAmericansandexpecttheirspendingtobenefiteveryoneelse.
ItisthistheorythathasledRepublicanstoadvocatefortaxcutsfortherichasaneconomicpolicy.Butrecenteconomichistoryhasshownthatthistheorysimplydoesntwork.Itsafailedideology,notaneconomicpolicy.Weightingtaxcutstowardthewealthyratherthanthemiddleclassexacerbatesinequality.Andasinequalityincreases,themiddleclasscannolongerparticipateintheeconomyasconsumersandentrepreneurs.Businessescreatefewerjobsasdemandfortheirproductsdeclines.Andasaccesstoskillenhancingtrainingsuffers,moreandmoreworkersfindtheyareillpreparedtofillthejobsthatdoremain.
Republicanswanttotakeusbacktofailedpolicies,buttheSenateBudgetbuildsonwhatisworkingtomoveusforwardtowardprosperitybuiltfromthemiddleout.InrecentyearsCongressandtheadministrationhavetakensignificantactiontoconfrontsomeofournationsbiggestchallenges.WallStreetReformwaspassedtoreigninthemostegregiouspracticesonWallStreetandprotectoureconomyfromthekindoffinancialcrisisthatcausedtheGreatRecession.
25
RaiseTaxesonRichtoRewardTrueJobCreators,NickHanauer,Bloomberg,11/20/11.
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AndtheAffordableCareActwaspassedsothatallAmericanscanaccessaffordable,highqualityhealthcare.DemocratswanttobuildonthisprogressandtheSenateBudgetwoulddoexactlythat.Republicans,however,wouldtakeusbacktothefailedpoliciesofthepast.HouseRepublicanswouldrollbackhealthcarereform,protectthewealthiestfrompayingtheirfairshare,andplacetheentireburdenofdeficitreductiononthebacksofthemiddleclass,seniors,andmostvulnerableAmericans.Undertheirplans,
theinvestmentsthathavethegreatestbenefitforfuturegenerations,likeeducation,infrastructure,andresearchandinnovation,wouldbeslashed.Ratherthanrevertingtoafailedtrickledownideology,thisbudgettakesthepositionthatweshouldbuildonwhatisworkingtosecuremiddleclassgrowthandprosperity.Byfocusingoncreatingjobsnowandmakingsmartinvestmentsinlongtermandbroadbasedeconomicgrowth,theSenateBudgetpresentsaresponsibleplantodoexactlythis.
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Replacingsequestrationinabalancedandresponsibleway
Intendedasamechanismtoforceaction,theimpositionofthesequesterwouldundercutkeyresponsibilitiesofthefederalgovernment.26
HouseBudgetCommitteeChairmanPaulRyan
ThedamagingcutsfromsequestrationthatwereincludedinthebipartisanBudgetControlActwere
neverintendedtobeimplemented,buttheynowthreatenhundredsofthousandsofjobs,governmentservicesthatfamiliesandcommunitiesdependon,nationalsecurity,andourfragileeconomicrecovery.Sincethehighestpriorityofthisbudgetiscreatingjobsandboostingtheeconomy,replacingsequestrationinabalancedwayisakeycomponentofitsapproachtotacklingourfiscalandeconomicchallengesresponsibly.TheSenateBudgetthereforeincludes$1.85trillionintotaldeficitreduction,$960billionofwhichconsistsofafullandbalancedreplacementofthecutsfromsequestration.ThisbudgetreplacessequestrationusingthefollowingequalmixofresponsiblespendingcutsandnewrevenuefromthewealthiestAmericans,whichbuildsontheprecedentsetinthebipartisanyearenddeal:
$480billioninnewrevenueraisedbyclosingloopholesandendingwastefuldeductionsthatbenefitthewealthiestAmericansandbiggestcorporations;
$240billioninresponsiblesavingsacrossdomesticspending;and $240billionfromreductionstodefensespendingthatcoincidewiththedrawdownoftroopsfrom
AfghanistanandthatcanbeimplementedresponsiblybythePentagon.TheSenateBudgetlaysoutacredibleandresponsibleframeworktoreplacesequestrationinabalanced
andbipartisanway.SinceabudgetresolutionisnotpermittedtochangetheBudgetControlActthatcreatedsequestration,thisbudgetcallsforadditionallegislationthatwouldmakethetechnicalchangestothelawusingtheframeworklaidoutinthisbudgetofanequalmixofresponsiblespendingcutsandnewrevenuefromthewealthiestAmericansandbiggestcorporations.SenateRepublicanshaveconsistentlyfilibusteredlegislationthatincludedanynewrevenuefromthewealthiestAmericans,sotheSenateBudgetincludesreconciliationinstructionstocreateafasttrackprocesstopreventafilibusterofthenewrevenueraisedtoreplacesequestrationandforadditionaldeficitreduction,whichwouldthenbecombinedwithadditionalresponsiblespendingcuts.
SinceDemocratshavebeenclearthatsequestrationshouldbereplacedwithresponsiblespendingcutsinadditiontothenewrevenuefromthewealthiestAmericans,thisbudgetcallsforanyadditionallegislationchangingtheBCAtoreplacesequestrationwithanequalmixofresponsiblespendingcutstomatchthenewrevenueraisedthroughreconciliationorothermeans.
26
HouseBudgetCommitteeChairmanPaulRyan,Website,accessed1/25/13.
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Thegoalofsequestrationwastobringbothsidestothetabletoreducethedeficitinabalancedandresponsibleway.ButwhileDemocratshavebeenveryclearthatwearewillingtomakethetoughconcessionsabalancedandbipartisandealrequires,RepublicanshavebeensofocusedonprotectingthewealthiestAmericansandbiggestcorporationsfrompayingtheirfairsharethattheyverefusedtomoveoutoftheirpartisancornerandworkwithustogetadeal.Whilewehaventbeenabletogetabipartisandealyet,theSenateBudgetoffersaresponsibleand
crediblepathforward.
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PuttingtheeconomyfirstwithatargetedinfrastructureandjobspackageAlthoughtheissueoffiscalsustainabilitymusturgentlybeaddressed,fiscalpolicymakersshouldnot,asaconsequence,disregardthefragilityofthecurrenteconomicrecovery.
Fortunately,thetwogoalsofachievingfiscalsustainabilitywhichistheresultofresponsiblepoliciessetinplaceforthelongertermandavoidingthecreationoffiscalheadwindsforthecurrentrecoveryarenotincompatible.
Actingnowtoputinplaceacredibleplanforreducingfuturedeficitsoverthelongerterm,whilebeingattentivetotheimplicationsoffiscalchoicesfortherecoveryinthenearterm,canhelpservebothobjectives.27FederalReserveChairmanBenBernanke,August2011Sinceexpertsandeconomistsacrossthepoliticalspectrumagreethatitmakessensetoboosttheeconomyintheshorttermwhiletacklingourdeficitanddebtresponsiblyoverthemediumandlongterm,theSenateBudgetincludesa$100billiontargetedjobsandinfrastructurepackagethatwouldstartcreatingnewjobsquickly,beginrepairingtheworstofourcrumblingroads,bridges,andschools,andhelptrainourworkerstofillopenjobs.
$50billiontoputworkersbackonthejobrepairingournationshighestprioritydeterioratingtransportationinfrastructure.Fixingthesecrumblingroads,bridges,andairports,aswellasupdatingourmasstransit,willnotonlycreatejobsintheshortterm,itwillalsoreducethetimefamilieshavetositintraffic,helpsmallbusinessesdelivergoodstotheircustomersquickerandcheaper,andlaydownastrongfoundationforlongtermeconomicgrowthincommunitiesacrossthecountry.
$10billiontocreatejobsfixingournationsmajordamsanddredgingandmaintainingeconomicallycriticalports.Thiswillmoveworkersintojobswheretheywillhelplocaleconomiesandsmallbusinessesbymakingsurekeyportsremainopenandcompetitive,anditwillprotectfamiliesbymakingsurecriticalwatersuppliesremainsafeanduncontaminated.
$10billiontocreateaninfrastructurebankthatwillleverageinvestmentfromtheprivatesectororothersourcesoffundingtoprovidedirectloansandloanguaranteesforsignificantinfrastructureprojectslikeroadsandbridges,railandtransitsystems,portandwaterinfrastructure,orothercriticalinvestmentsthatwouldhelptheeconomy.
$20billiontojumpstartrepairsandtechnologyinfrastructureinvestmentsinschoolsacrossAmerica
thatarecrumblingorlackcriticaleducationaltoolslikebroadbandaccessthatarerequiredinthe21st
centuryeconomy.Thiswillhelpengineersandconstructionworkersgetbackonthejob,anditisaninvestmentinourstudentsthatwillpayoffdowntheline.
27
ChairmanBenBernankespeechattheFederalReserveBankofKansasCityEconomicSymposium,JacksonHole,Wyoming,August
26,2011
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$10billiontoinvestinworkertrainingprogramsforyoungpeopleandadultstoexpandtheirskillsandallowthemtomoveintooneoftheapproximately3.6millionjobopeningsthatbusinessesacrossthecountryarestrugglingtofill.28Thisinvestmentwillgotowardtargetedprogramsthathavedocumentedoutcomesandreturnsforemployersandemployees,andthatarespecificallydesignedtomeettheneedsofemployersinfieldsthatareindemandnow,andthatareexpectedtobeinstrongdemandforyearstocome.
TheSenateBudgetincludestheseinvestmentsandurgestheappropriateCongressionalcommitteestomovequicklytopasslegislationthatwillmeetthesegoalsandstartcreatingjobstodaywhileinvestinginlongtermeconomicgrowth.
28
BureauofLaborStatistics,JOLTSTable1,02/12/13
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Investinginourfamilies,workers,andsmallbusinessownersOurfamilies,workersandsmallbusinessownerscurrentandfutureareournationsgreatestresource.Wecannotexpecttoleadthewayinthe21stcenturyunlessourworkforceisskilled,oursmallbusinessownershavethesupporttheyneedtosucceed,andourfamiliesaresecure.TheSenateBudgetthereforeprioritizeseducationandtrainingfromearlychildhoodthroughcareer,expandingopportunityforjobcreatingsmallbusinesses,andmakingitpossibleforfamiliestoachievethedreamofhomeownership.Thebudget:
Protectsinvestmentsineducationandjobtraining,includingexpansionofinnovativeearlylearningprograms,keepingstudentloansaffordable,andimplementingprovenjobtrainingmodelstailoredtomatchemployerdemand;
Makessupportforsmallbusinessaprioritybymaintainingeffectivepublicprivatepartnershipsthatprovidegrowthcapitaltostartups,andcontinuingSmallBusinessAdministration(SBA)smallbusinessloanprograms;and
Helpsputhomeownershipwithinthereachofresponsible,hardworkingmiddleclassAmericansbyensuringthemarketisaffordable,accessible,andstable.
Anapproachthatdrasticallycutstheseinvestments,aspastHouseRepublicanbudgetshave,wouldnotonlymakeitharderformanystudentsandfamiliestoreachtheirgoals,butitwouldalsoseriouslyunderminethefundamentalstrengthbehindoureconomicleadership:theskill,drive,andinnovativespiritoftheAmericanpeople.
InvestingineducationandaskilledworkforceWhilethisbudgetseekstoaddressthelongtermdeficitanddebtchallengesourcountryfaces,italso
providestheframeworknecessarytoaddressothergrowingchallenges,includingournationsskillsandeducationdeficits.Failingtoinvestinschools,studentaid,andworkertrainingincreasestheskillsgap,furthersincomeinequality,andfailstofullytapthepotentialofourgreatestresourcetheAmericanpeople.Thisisabadoutcomeforourstudents,workers,andbusinesses,anditisdevastatingforoureconomyoverthelongterm.Investmentsineducation,fromearlychildhoodprogramsthroughcollege,aresomeofthesmartestandmostimportantthefederalgovernmentcanmake.EconomistshavelongstudiedthereturnstoeducationandhaveproducedestimatesindicatingthateachadditionalyearofschoolingappearstoraiseearningsbyabouttenpercentintheU.S.,29withstrongevidenceofreturnstoeducationatalllevelsandanincreasedreturnforhigherlevelsofeducationinrecentdecades.30Accordingtoastudydoneatthe
UniversityofChicagobyNobelPrizewinnerDr.JamesHeckman,eachdollarinvestedinhighqualityearlychildhoodeducationprogramshasa14percentrateofreturnthroughbettereducationaloutcomes.31
29
Krueger,AlanandLindahl,Mikael,EducationforGrowth:WhyandForWhom?December2001.30
Autor,David,ThePolarizationofJobOpportunitiesintheU.S.LaborMarket,ImplicationsforEmploymentandEarnings,April
2010.31
Heckman,James,Moon,SeongHyeok,Pinto,Rodrigo,Savelyev,Peter,andYavitz,Adam,TheRateofReturntotheHigh/Scope
PerryPreschoolProgram,November2009.
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FederalReserveChairmanBenBernankehasacknowledgedtheimportanceoftheseprograms,saying,[o]necriticalmeansoffosteringhealthyeconomicgrowthisbyensuringanadequateinvestmentinhumancapitalthatis,intheknowledgeandskillsofourpeople.Noeconomycansucceedwithoutahighqualityworkforce,particularlyinanageofglobalizationandtechnicalchange.32TheSenateBudgettakesthepositionthatinvestmentsineducationandtrainingarecriticaltoournationslongtermprosperityandcompetitivenessandoughttobeprotected.
Wesimplycannotexpectoureconomytogrowinawaythatcreatesbroadbasedprosperityifwecontinueallowingourskillsandeducationdeficitstoincrease.Ourbusinessesaregoingtobecreating21stcenturyjobsandweneedourstudentsandworkerstobereadytomeettheirneeds.Thisisespeciallyimportantwhenitcomestomakingsurelowincomecommunitieshavethesupporttheyneedtosucceed.Althougheducationisprimarilyastateandlocalresponsibility,federalfundingmakesacriticalcontributiontoschoolsandcommunitiesacrossthecountry.TheSenateBudgetinvestsineducation,reflectingourcommitmenttoreachatriskandlowincomestudents,closetheachievementgap,andpromoteeducationalequity.
Earlylearning
Toremaincompetitiveinaglobaleconomy,ournationmustprovideourstudentswithaworldclasseducationthatputsthemonthepathtocollegeandcareerreadiness.Researchshowsthatachildsearlyyearsareacriticaldevelopmentstage,andearlychildhoodeducationoffersbenefitsextendingthroughthefirstyearsofschoolandbeyondintermsofbothcognitiveandnoncognitiveskills.33Childrenwhoattendhighqualityprekindergartenprogramsarelesslikelytobeheldbackinschool,requireremedialeducation,engageincriminalactivity,orusesocialsafetynetprogramslaterinlife.Theyarealsomorelikelytograduatefromhighschoolandhavehigherearningsasadults.Infact,therateofreturnforeachdollarinvestedinhighqualityearlylearningprogramsis$60$300overthelifetimeofthechild.34Investmentsinearlylearningaresomeofthesmartestthefederalgovernmentcanmake.TheSenateBudgetrecognizesthathighqualityinvestmentsinearlychildhoodeducationprogramsresultinbetterhealth,learning,andeconomicoutcomeslaterinlife.WhiletheHouseRepublicanapproachwouldrequiredrasticcutstoinvestmentsinearlychildhoodeducation,thisbudgetreflectstheimportanceofhelpingourchildrengetastrongstarttotheiracademicandprofessionalcareers.
TheSenateBudgetincludesstrongsupportforHeadStartandEarlyHeadStart.Thesecorecommitmentscurrentlyservealmostonemillionlowincomechildrennationwide,enhancingtheircognitive,social,andemotionaldevelopment.
TheSenateBudgetalsoinvestsintheChildCareDevelopmentandBlockGrant(CCDBG),whichprovidesvitalsupportforworkingfamiliesandassistsinclosingtheachievementgapforlow
32
SpeechbyFederalReserveChairmanBenBernankeatthe2011AnnualAwardsDinneroftheCitizensBudgetCommission,
3/2/2011.33
Heckman,James,SkillFormationandtheEconomicsofInvestinginDisadvantagedChildren,6/30/06andHeckman,James,The
CaseforInvestinginDisadvantagedYoungChildren,accessed03/09/13.34
Heckman,James,LettertotheJointSelectCommitteeonDeficitReduction,9/21/11.
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incomechildren.Researchhasshownthatparentsreceivingchildcaresubsidiesaremorelikelytobeemployed,workmorehours,sustainemployment,andearnhigherwagesthantheirpeers.35
TheSenateBudgetalsoreflectsimportantnewinvestmentstoensurethatmorechildrenhaveaccesstovoluntarypublicpreschoolprogramsthroughfederalstatepartnerships.Thisexpansionofhighqualityprekindergartenwillhelpallowmorechildrenarriveatkindergartenreadytosucceed.
Sinceparentsaretheirchildsfirstandmostinfluentialteacher,theSenateBudgetsupports
expansionoftheexistingMaternal,Infant,andEarlyChildhoodHomeVisiting(MIECHV)Program,whichwasenactedintheAffordableCareAct.Thisprogramimprovesmaternalandchildhealthandincreasesschoolreadinessinvulnerablepopulationsbydeliveringvoluntaryparenteducationandfamilysupportservicesdirectlytoparentswithyoungchildren.Thehomevisitingprogramfundseffective,researchbased,andcostefficientearlylearningopportunities,andshouldbeextendedandexpanded.
ThesevitalinvestmentsstandinsharpcontrasttoHouseRepublicanproposals,which,combinedwithsequestration,wouldcutalmost200,000vulnerablechildrenfromHeadStartinFiscalYear2014alone36andwouldslashCCDBGdiscretionaryfundingby19percent.Whilethislackofinvestmentwouldleavethousandsofchildrenbehindthecurveofkindergartenreadiness,itwouldalsohaveanimmediateeffectonemployment,directlycuttingthousandsofHeadStartpositionsandreducingsupportforworkingparentswhowouldstruggletostayemployedwithoutchildcare.Investmentsinearlychildhoodeducationhavebeenwidelyrecognizedasvaluablebyawiderangeofstakeholders,includingbusinessleaders,lawenforcement,andscholars.Inarecentopinionpiece,JohnEPepper,Jr.,theformerchairmanandchiefexecutiveoftheProcter&GambleCompanyandaformerchairmanofTheWaltDisneyCompany,andJamesM.Zimmerman,aformerchairmanandchiefexecutiveofMacys,Inc.wrote:Wehavespentmostofourcareersinbusinessandhavecometosupportquality
prekindergartenforallchildren,especiallythosewhosefamiliescannotaffordit,becauseweknowtheseprogramswork.Theonlyquestionishowtobringthemtoahugescale.Ournationsfuturedemandsit.37
ElementaryandsecondaryeducationThenationseconomicfutureisdependentonastrong,educatedworkforce.Today,however,manyschoolsarestrugglingtoprepareouryoungpeopleforsuccessinschoolandwork.Morethan20percentofstudentsdonotgraduateontime,ifatall.Theachievementgapbetweenwhitestudentsandminoritystudentscontinuestobeapervasiveproblem,andonethatdeservesfederalattentionandresources.Forstudentsofcolor,approximatelyonethirddonotgraduateontime,ifatall.38AndHispanicandAfricanAmericanstudentscontinuetolagbehindtheirwhitepeersinmathematicsandreadingachievement.39
35
Schaefer,Stephanie,Kreader,J.Lee,andLawrence,Sharmila,ParentEmploymentandtheUseofChildCareSubsidies,2006.36
NationalEducationAssociation,HouseFY2013BudgetResolutionImpactonHeadStart,3/26/12.37
CapitalistsforPreschool,Pepper,John.E.Jr.,Zimmerman,James,NewYorkTimes,3/1/13.38
DepartmentofEducation,NationalCenterforEducationStatistics,PublicSchoolGraduatesandDropouts:SchoolYear2009
2010,January2013.39
NationalCenterforEducationStatistics,HowHispanicandWhiteStudentsinPublicSchoolsPerforminMathematicsandReading
ontheNationalAssessmentofEducationalProgress,June2011andNationalCenterforEducationStatistics,HowBlackandWhite
StudentsinPublicSchoolsPerforminMathematicsandReadingontheNationalAssessmentofEducationalProgress,July2009.
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ThefailuretofullytapthepotentialofallyoungAmericanshasdirectanddamagingeconomicconsequences.Studentswhodonotcompletehighschoolearnabout$260,000lessovertheirlifetimesthantheirpeerswhograduate.40Thosewithahighschooldiplomaorlessaremorelikelytobeunemployed41,andtobeamongthelongtermunemployed.42Ifthecountrys23millionhighschooldropoutshadinsteadgoneontograduate,thecountrywouldgarner$50billionannuallyinincreasedfederalandstateincometaxes.43
Aswearestrugglingtoprepareourstudents,othercountriesaregainingasignificantandlastingadvantage.Today,internationalcomparisonsshowthatinliteracy,andparticularlyinmathematics,andscience,U.S.studentslagbehindmanyoftheirpeersinourbiggestglobalcompetitorcountries.44TheSenateBudgetreflectstheneedtoinvestinournationsyoungpeople.Itstronglysupportselementaryandsecondaryeducationfundingtostatesanddistricts,includingprogramslikeTitleI,toimprovetheeducationoflowincomechildren,andIDEA,whichprovidesearlyinterventionandspecial
educationservicestochildrenwithdisabilities.Additionally,continuedinvestmentsinliteracy,STEM,andcareerandtechnicaleducationprogramswillhelpensurestudentsareonapathtocollegeandcareerreadinessbyhighschoolgraduation.WhiletheSenateBudgetprovidesvitalsupportforK12educationprograms,HouseRepublicanswouldcutprogramsthatsupportstudents,leavingourchildrenunpreparedtocompeteinthe21stcenturyglobaleconomy.TheRepublicanplanwouldcutIDEAby19percent,whichwouldshiftthecostofprovidingspecialeducationservicesforover1million
childrentostatesandschooldistricts,renegingonthefederalgovernmentsalreadywoefullyneglectedpromisetocover40percentofthecostofIDEA.45Additionally,theHouseRepublicanplanwouldslash$2.76billionfromTitleI,reducingoreliminatingmuchneededsupportiveservicesforover4millionlowincomechildreninfiscalyear2014alone.46
Thesecutswouldcontinueadisturbingtrendwheretheshortfallinfederaleducationfundinghasgrownlargerandlargereachyear.
40
TeachersCollegeSymposiumonEducationalEquity,TheSocialCostsofInadequateEducation,10/26/05.41
BureauofLaborStatistics,TheEmploymentSituationFebruary2013,03/08/13.42
JointEconomicCommittee,AddressingLongTermUnemploymentAfterTheGreatRecession:TheCrucialRoleofWorkforce
Training,August2011.43
TeachersCollegeSymposiumonEducationalEquity,TheSocialCostsofInadequateEducation,10/26/05.44
NationalCenterforEducationStatistics,HighlightsfromPISA2009,December2010.45
NationalEducationAssociation,HouseFY2013BudgetResolutionImpactonSpecialEducationGrantstoStates,3/26/12.46
NationalEducationAssociation,HouseFY2013BudgetResolutionImpactonGrantstoLocalEducationalAgencies,3/26/12.
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PostsecondaryeducationandtrainingTowintheglobalraceontalent,ournationmustprovidestrongeducationalopportunitiesfrompreschooltocareer.Thisrequiresmaintainingthesuperiorityofourcollegesanduniversitiesandhelpingstudentsaffordtuition.Butwemustalsoconfrontthegrowingneedforpostbaccalaureatedegreesandcredentialsthatcanhelpfillgapsinspecificskillstodaysemployersdemand.TheSenate
Budgetmovesusforwardoneachofthesecrucialpriorities.Inthe2011reportTheCollegePayoff,expertsverifythatacollegedegreeiskeytoeconomicopportunity.47Theearningsadvantagetoattendingcollegehasgrownenormouslyinrecentdecades,48andaworkerwithamastersdegreeearnsnearlytwiceasmuchasapersonwithahighschooldegree.Highereducationprovidesanimportantpathwaytothemiddleclass;studentsfromthebottomincomequintilearemoreupwardlymobilethantheirparentswhentheyhaveadegree.4950Asacountry,weneedtoprepareourstudentstocompeteforhighskill,highwageorhighdemandjobs.Increasingly,theseoccupationsrequirepostsecondarycredentialsordegrees.Forexample,duringtheGreatRecession,fouroutoffivejobslostwereheldbyAmericanswithahighschooleducationorless.Bycomparison,Americanswithabachelorsdegreeorhighersteadilygainedjobsduringtherecessionandhaveseenanincreaseofmorethan2millionjobsduringtherecovery.BringingdownthecostsofhighereducationDespitethebenefitsofhighereducationforindividualsandoureconomyasawhole,recenttrendsindicatethattherearebarrierstobothaccessandcompletion.Nearlyhalfofallcollegestudentsdonotcompletetheirdegreewithinsixyears,51cumulativestudentloandebtisnow$1trillion,52andstudentloandefaultratesarerising.53Inaddition,collegeisincreasinglyunaffordable.Tuitionandfeesaregrowingatratesaboveinflationandcollegecostsarebeingshiftedtostudentsandtheirfamiliesintwokeyways.First,stateshavereducedtheirsupportforhighereducation.Andwithadditionalfederalspendingcutsfromsequestration,statebudgetaregoingtofacefurtherfiscalchallenges.54
47
CenteronEducationandtheWorkforce,TheCollegePayoff:Education,Occupations,LifetimeEarnings,8/5/2011.48
Autor,David,ThePolarizationofJobOpportunitiesintheU.S.LaborMarketImplicationsforEmploymentandEarnings,April
2010.49
EconomicMobilityProject,GettingAheadorLosingGround:EconomicMobilityinAmerica,02/26/2013.50
DepartmentoftheTreasury,TheEconomicCaseforHigherEducation,2012.51
HCMStrategies,AmericanDream2.0,03/08/13.52
NewYorkFederalReserve,QuarterlyReportonHouseholdDebtandCredit,February2013.53
DepartmentofEducation,FirstOfficialThreeYearStudentLoanDefaultRatesPublished,09/28/12.54
PewCenterontheStates,TheImpactoftheFiscalCliffontheStates,03/08/13.
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Evenwhileacollegeeducationhasbecomemorenecessary,collegecostshaveaccelerateddramatically.Thisistrueevenatpublicuniversitiesbecausestategovernmentshavehadtocutbackconsiderablyonsupport.Students
areincreasinglybearingagreatershareofcollegecosts.55
Butgiventhecurrentfiscalenvironment,taxpayerscannolongeraffordtokeepsubsidizingescalatingtuitioncosts.Wemustaskstatesandcollegestobepartofthesolution.Tothatend,theSenateBudgetassumesCongress
willenactproposalstoreducecollegecostswhileexpandingcollegeaccessandcompletion.
SecuringPellgrantsThePellgrantprogram,establishedin1972,hasservedmorethan60millionstudents56andcurrentlyhelpsoverninemillionlowincomestudentsaccesshighereducation.57WhiletheHouseRepublicanapproachwouldseverelyreduceourabilitytomakecollegeaffordableformillionsofstudentsthroughPellgrants,theSenate
Budgetreflectsthebeliefthatexpandingcollegeaccessisapriorityandmaintainsastrongcommitmenttothisprogram.Pellgrantsarecriticaltoexpandingaccesstohighereducationforlowincomestudents.Unlikealoan,Pellgrantsdonothavetoberepaid.Inthecurrentacademicyear,themaximumPellawardis$5,550.Thiscoversaboutonethirdoftuitionandfeesatapublicfouryearuniversity.ThePellgrantprogramhasbeenrunningshortfallsformanyyears.EligibilitychangesandtheeconomicrecessionexpandedPellenrollments,58whichincreasedthecostsoftheprogram.Congresslimitedstudentaideligibilityandbenefits59onanadhocbasisinordertoreducePellcostsandaddressthe
55
USDepartmentofTreasury,TheEconomicsofHigherEducation,December2012.56
DepartmentofEducation,StatementbyArneDuncan,06/22/12.57
DepartmentofEducation,20102011FederalPellGrantEndofYearReport,03/08/13.58
DepartmentofEducation,FY12BudgetJustifications,StudentFinancialAid,02/14/11.59
CommitteeforEducationFunding,TheBudgetResponseforFiscalYear2013,03/02/13.
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shortfall.Aftermanyyearsoflargeshortfalls,enrollmentsestimateshavebeenrevisedandthePellgrantprogramhasasurplusoffundsforthecurrentfiscalyear(academicyear20132014).60WhileDemocratsarecommittedtoexpandingaccesstohighereducationforallAmericans,RepublicanproposalswouldhaveeliminatedtheinflationadjustmenttoPellgrants,cuttingamillionstudentsoutoftheprogram,reducingthemaximumPellawardandincreasingcollegecostsforstudentsandtheirfamilies.61
KeepingstudentloansaffordableCreatedinthe1960s,thestudentloanprogramprovidesavitalsupportsystemthathashelpedmillionsofAmericansaccesspostsecondaryeducation,pavingthewayforbetterjobsecurity,moreearningspotential,andincreasedupwardmobility.In2010,Congresseliminatedtheduplicativebankbasedstudentloanprogramandusedthesavingstoinvestinourstudentsandreducethedeficit.Today,taxpayerssavebillionsofdollarsbylendingdirectlytostudentsthroughtheDepartmentofEducation.Thesefederalstudentloanshavebeneficialprotections:interestratesarefixedandoftenlowerthanprivatestudentloans,thereareopportunitiesforrepaymentreliefthroughdeferment,forbearance,loanconsolidationandincomebasedrepayment,andthereareseveralloanforgivenessprograms.Thefederalgovernmentprovidesover$110billionannuallyforstudentloans.CongressionalBudgetOffice(CBO)datashowsthatoveraquarteroftheseloansaresubsidizedloans62forlowandmiddleincomestudents.63Whentheaveragecostofoneyearofattendanceatafouryearpubliccollegeisover$17,000,64andmorethantwicethatamountatprivatenonprofitandforprofitcolleges,65theseloansarecriticaltoexpandingcollegeaccess.TheSenateBudgeteliminatesthestudentloanfeeincreasesfromsequestration,keepsstudentloansaffordablebyretainingsubsidizedloansandimportantrepaymentprograms,andfacilitatespassageoflegislationtoensurestudentloaninterestratesremainaffordablegiventhechallengingeconomicclimate.Jobtraining
TheSenateBudgetsupportsinvestmentsinprovenstrategiestobuildskills,facilitatematchesbetweenemployersandemployees,andeliminatefrictionsthatkeepwillingworkersfromparticipatinginthelabormarket.Whiletherehavebeensignsofgrowingeconomicactivityduringtherecovery,therehavealsobeensignsthatemployersarehavingahardtimefillingjobs.Indeed,numeroussurveysandreportsdocumentsignificantskillgapsamongjobcandidatesthatpreventemployersfrombeingabletofilltheiropenings.66
60
CongressionalBudgetOffice,PellGrantProgramsFebruary2013Baseline,02/06/13.61
PellGrantsForPoorStudentsLose$170BillionInRyanBudget,HuffingtonPost,03/27/12.62
CongressionalBudgetOffice,StudentLoanProgramsFebruary2013Baseline,2/06/13.63
CongressionalResearchService,Table3,InterestRatesonSubsidizedStudentLoansforUndergraduateStudents,01/10/13.64
CollegeBoard,TrendsinHigherEducation,PublishedPricesNational,Table2,03/08/13.65
NationalCenterforEducationStatistics,DigestofEducationStatistics,2011,Chapter3,03/08/13.66
SocietyforHumanResourceManagement,TheIllPreparedU.S.Workforce,3/08/13,andManufacturingInstitute,Boiling
Point?TheSkillsGapinUSManufacturing,2011.
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Whileimportanteffortsareunderwaytoreformtheeducationsystemtobettermeettheneedsofemployersinthefuture,weknowthat60percentoftheworkforceourcountrywillhaveavailablein2020isalreadyintheworkforcetodaybeyondthereachofhighschoolanddependentonjobtrainingandworkforcedevelopmentsystemsinthepostsecondaryworld.Ifourworkersdonothavetheskillstheyneedtofillthejobsoftodayandtomorrow,oureconomyandbusinessespaytheprice.Amongournationsmanufacturers,67percentreportamoderatetoserious
skillsgapintheirskilledpositions,withthegapreportedasupto83percentinsomesectors.75percentsaythatthisskillsgaphasnegativelyimpactedtheirbusiness,and56percentexpectittoonlygetworse.67U.S.investmentinemploymentandtrainingprogramsisfarbelowthatofothercountries.Weinvestjust0.1percentofourGDPonactivelabormarketprograms(training,counseling,jobmatching,etc.),whileKoreainvests0.42percentofitsGDP,Germanyinvests0.9percentofitsGDP,andDenmarkinvests1.9percentofGDP,justtonameafew.68FundingforthethreemajorgrantprogramsunderTitleIoftheWorkforceInvestmentActfellroughly20percentbetween2000and2012.69Thisistrueatatimewhenourcountrysworkforceismorethan50percentlargerthanitwasin1980,70andtheeconomyasmeasuredbyGDPismorethantwiceaslarge.71Astechnologiesandmarketsevolveovertime,workersneedtobelifetimelearnersandadapttheirskillsappropriately.Thisbudgetinvestsinprovenstrategiesthattrainworkerstomeettheneedsoftodaysemployers,andsupportsasystemoflifelongskilldevelopment.Onthejobtrainingandrelatedapproachessuchascustomizedtraininginvolvesemployersdirectlyinthedesignanddeliveryoftrainingtoensurethatemployersareprovidedwiththespecificknowledge,skillsandabilitiesrequiredforfieldsthatareindemandnow,andthatareexpectedtobeinstrongdemandforyears.Inaddition,theSenateBudgetinvestsinsector,careerpathway,registeredapprenticeship,andreemploymentmodelsthathavedocumentedoutcomesandreturnsforemployersandemployees,andthatarespecificallydesignedtomeetthecommonneedsofemployersinindemandsectors.Twopopulationsthathavebeenespeciallyhardhitbytheeconomicdownturnandslowrecoveryarethelongtermunemployedandyouth,eachofwhichstandtoremaindisproportionallyimpactedifproactivestepsarenottakentosupportthem.Longtermunemploymentcausestremendoussufferingforunemployedindividuals,butitcanalsohurteconomicgrowthinthelongrun.Persistentlongtermunemploymentpromptssomeworkerstoleavetheworkforceanderodestheskillsofmanyotherworkers.Thismakesitharderforthemtofindworkinthecomingyears.Onbalance,thismeansfewerworkersworking,andthosethatareworkingwillhaveweakerskills,limitingtheeconomysabilitytoproduce.72TheCBOestimatesthatthispersistentlongtermunemploymentwillloweroutputbyaboutonehalfpercentofGDPby2023.73Theinvestmentsin
workforcedevelopmentandjobtrainingprogramswilltargetaportiontospecificallymeetingtheneedsofthelongtermunemployed.
67
Ibid.68
OECD,PublicExpenditureofLMPbyMainCategories,EmploymentOutlook,2012.69
OfficeOfManagementandBudgetFiscalYear2013,Table3.2,accessed03/11/13.70
CalculationsbasedonToossi,Mitra,Acenturyofchange:theU.S.laborforce,19502050,Table5,May2002.71
U.S.BureauofEconomicAnalysis,TableofU.S.RealGDP.NIPA 1.1.5,accessed03/09/13.72
CongressionalBudgetOffice,BudgetandEconomicOutlook:FiscalYears20132023,February2013.73
Ibid.
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Youngworkersalsofacechallengesthatcanhavesimilarlydamagingconsequencesforeconomicgrowth.YouthemploymentisatitslowestlevelsinceWorldWarII;onlyabouthalfofallyoungpeopleintheU.S.(ages16to24)heldjobsin2010.74Theissueisnotjustaboutyouthemployment.ASeptember2012reportfoundthatoneoutofeverysevenyouthages16to24aredisconnected;thatis,areneitherinschoolorworking.Thetotalcosttothecountryisestimatedtobeapproximately$94billionannually.75Inaddition,workerswhoenterthelabormarketduringadownturnmayfacelongtermconsequences.Forexample,collegegraduatesenteringtheworkforceduringarecessionmayhavelowerinitialwages
anditmaytakeyearstocatchuptosimilarworkerswhograduatedingoodtimes.76Highyouthunemploymentisparticularlydamagingbecauseearlyworkexperiencehasproventobevitaltolongtermcareersuccessandincomelevels,reducedlikelihoodofunemploymentlaterinlife,andreducedsocialcostsbornebythegovernmentandtaxpayers.TheSenateBudgetsinvestmentsinworkforcedevelopmentandjobtrainingwillalsotargetaportiontodisconnectedyouththroughonthejobtraining,summerandyearroundemployment,andtheuseofcareerpathwaystopreparethemforexistingjobsandfortheirlongtermcareersuccess.Alloftheseeffortswillfocusonfillinggoodjobsthatwillhelpgrowtheeconomyandexpandthemiddleclass.However,thenatureofworkhaschangedoverthepastseveraldecades.Asacountry,wemustfocusonpreparingourworkforceforthejobsthatareavailabletodayandwillbeopeninthefuture.Oneexampleisthefieldofnursing,whichrepresentsthelargestsegmentofthehealthcareworkforcewithmorethan3millionmembers.77Overthenexttenyears,theneedfornewnurseswillspikedramaticallyasourexperiencednursesretire.ArecentHealthAffairsarticleindicatesthattheshortfallofregisterednurseswillgrowtoabout260,000by2025.78Additionally,theAssociationofAmericanMedicalCollegesestimatesthatby2020,theU.S.willfaceashortageofmorethan90,000physiciansandby2025thatshortagewillgrowtomorethan130,000.79TheSenateBudgetcontinuestofundcriticalprogramsthatwillhelptoeducateandtrainthenextgenerationofhealthcareprovidersaspartofitstargetedinvestmentsinskillsdevelopmentandjobtraining.Further,thebudgetincludesfundingfortheNationalHealthServiceCorpstoincreasethenumberofhealthprofessionalspracticinginmedicallyunderservedareas,suchasphysicians,dentists,mentalhealthproviders,andnursepractitioners.Thesefundsareespeciallycriticalthisyearinlightofthegrowingandagingpopulationandtheupcominginsuranceexpansions.Investmentsinourhealthcareworkforcealsoboostoureconomynotonlycreatingjobs,butalsohelpingtokeeptheAmericanworkforcehealthyandproductive.Althoughworkforcetraininghasbecomemoreimportantthaneverintodayseconomy,theHouseRepublicanshaveproposeddrasticcutstoinvestmentsintheseprograms.Lastyear,HouseRepublicansproposedcuttingtheEmploymentandTrainingAdministrationsbudgetinhalf,effectivelyeliminatingall
74
Sum,Andrew,TheDeteriorationintheLaborMarketFortunesofAmericasYoungAdultsDuringtheLostDecadeof20002010,
9/29/11.75
BurdSharps,SarahandLewis,Kristin,OneinSeven:RankingYouthDisconnectioninthe25LargestMetroAreas,September
2012.76
Oreopoulos,Phillip,vonWachter,Till,andHeisz,Andrew,TheShortandLongTermCareerEffectsofGraduatinginaRecession:
HysteresisandHeterogeneityintheMarketforCollegeGraduates,2012.77
InstituteofMedicine,TheFutureofNursing:LeadingChange,AdvancingHealth,2010.78
Buerhaus,Peter,Auerbach,David,andStaiger,Douglas,TheRecentSurgeinNurseEmployment:CausesandImplications,
06/12/09.79
AmericanAssociationofMedicalColleges,PhysicianShortagestoWorsenWithoutIncreasesinResidencyTraining.
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fundingfortheadult,dislocatedworker,andyouthgrantprogramsundertheWorkforceInvestmentAct,discontinuingtheYouthBuildprogram,andcuttingJobCorpsbymorethanhalf.Basedonservicelevelsatthattime,thesedrasticcutswouldhaveeliminatedcriticalworkforcedevelopmentandjobtrainingservicestomorethan8millionjobseekersandworkerseachyear,including130,000veterans.
Investinginsmallbusinessowners
Americansmallbusinesseshavelongbeenthebackboneofoureconomy.FromhighgrowthandhightechfirmstoMainStreetstorefronts,ournationssmallbusinessesdriveentrepreneurshipandinnovation.Smallbusinessesarejobcreatorsandplayavitalroleinoureconomicrecovery.Fortwodecades,smallandnewbusinesseshaveledjobcreationintheU.S.Foreverythreenetnewjobs,twowerecreatedbysmallandnewbusinesses.Halfoftheprivatesectorworkforceisemployedbysmallbusinessesand28millionsmallfirmscurrentlyemploy60millionAmericanworkers.80SmallbusinessesdriveinnovationinAmerica.Smallbusinessesemploynearly40percentofournationsscientistsandengineersandproducemorethan14timesthenumberofpatentsthandolargebusinesses
anduniversities.81Smallbusinesseshavetimeandtimeagaindemonstratedtheyarewillingtotakeonthehighrisk,highrewardresearchthatdrivesinnovationand,byextension,ournationseconomy.82Overthepastseveralyears,thevolatilityinthemarketplacecausedbythefinancialcrisisandGreatRecession,coupledwithlackofconsumerdemandandlimitedaccesstocapital,contributedtowhatDr.MartinN.Bailey,oftheBrookingsInstitution,characterizedasabigtollonsmallbusiness.83Underthebestofcircumstances,startupsmallbusinessfirmshavehighfailurerates,withhalffailingwithinthefirstfiveyears.84Compoundingthisfailurerate,followingtheGreatRecessioncreditstandardstightened,causingmanysmallbusinessestostruggleforaccesstocapital.85Infact,becausemanyentrepreneurshistoricallylookedtohomeequityasasourceofcapital,thecollapseofthehousingmarketcontributedtoasignificantdropinthenumberofstartupfirms.86
Whilesmallbusinessesarebeginningtolaunchandhireagain,manycontinuetofeeltheeffectsoftherecession.NowmorethaneveritiscriticalthatCongressinvestinprogramsandsupportpoliciesthatwillhelpAmericansmallbusinessesrebuild.Yetlastyear,theHouseRepublicansproposedcutstosmallbusinessassistance,87andin2010,HouseRepublicansvotedagainsttheSmallBusinessJobsAct,whichincreasedcontractingopportunitiesforsmallbusinessesandalsoincreasedtheSmallBusinessAdministrationslendingcapacitytofirms.88
80
National
Economic
Council,
Moving
Americas
Small
Businesses
&
Entrepreneurs
Forward:
Creating
an
Economy
Built
to
Last,
May2012.81
Wessner,CharlesW.,NationalResearchCouncil,GovernmentProgramstoEncourageInnovationbyStartups&SMEs:TheRoleof
InnovationAwards,2009.82
Ibid.83
MartinN.Bailey,TestimonybeforetheU.S.HouseCommitteeonSmallBusiness,2/1/2012.84
Ibid.85
Ibid.86
Ibid.87
H.R.Rep.No.112421,at71(2012).88
156Cong.Rec.H4618(dailyed.June17,2010).
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WhereasRepublicanswouldcutprogramsthatsupportournationssmallbusinesses,DemocratsviewinvestmentsinsmallbusinessesasinvestmentsinAmericasfuture.SincePresidentObamatookoffice,DemocratsinCongresshaveworkedwiththeadministrationtopass18directtaxbreaksforsmallbusinesses.89Theseinclude100percentexpensingofnewinvestments,whichallowbusinessestoimmediatelydeductthefullcostofmachinery,equipment,andotherqualifyingproperty,taxbreaksforsmallbusinessesthathireunemployedveteransandthosewithserviceconnecteddisabilities,andasmallbusinesshealthcaretaxcreditcoveringupto35percentofaneligibleemployerscontributionto
employeehealthinsurancepremiums.90Thistaxcredit,createdundertheAffordableCareAct,increasesto50percentofanemployerscontributionin2014.91Smartinvestmentinournationssmallbusinessesalsomeanshelpingbusinessesgrowfromsmalltolarge.ProgramssuchastheSmallBusinessInvestmentCompaniesinitiative,andtheSmallBusinessInnovationResearchandSmallBusinessTechnologyTransferprograms,enablehighgrowthfirmstoleveragecapitalinvestments,spurringjobgrowthandinnovation.InFiscalYear2011,1,300smallbusinesses,inindustriestouchingeveryaspectofAmericanlife,benefitedfromfinancingprovidedthroughtheSmallBusinessInvestmentCompanies(SBIC)initiative.92TheSBIC,apublicprivatepartnershipsupportedbytheSmallBusinessAdministration,providesgrowthcapitaltopromisingsmallbusinessthroughoutAmerica.InFiscalYear2012,$3.13billioninfinancingwasinvestedinsmallbusinessesthroughtheSBICinitiative.Twentyninepercentofthebusinessesfinancedthatyearwereminorityorwomenownedsmallbusinesses,orwerelocatedinlowtomoderateincomeareas.93ManyofAmericasmostwellknowncompanies,includingCostco,Amgen,Apple,Intel,andSunMicrosystems,receivedcrucialfundingthroughtheSBICinitiativeassmallbusinessesintheearlyyearsoftheirdevelopment.94BecausetheSBICinitiativeisaninnovativepublicprivatepartnership,thebillionsinfinancingprovidedtosmallbusinessesthroughtheprogramcomeatnocosttothetaxpayer.95Similarly,theSmallBusinessInnovationResearch(SBIR)andSmallBusinessTechnologyTransfer(SBIT)programs,whicharethelargestfederalresearchanddevelopmentprogramsforsmallbusiness,providecriticalfundingtohighgrowthfirmsrevolutionizingthemarketplacethroughhightechinnovation.FromtheSonicarepowertoothbrush,tothewirelesscommunicationscompanyQualcomm,highgrowthandhightechsmallbusinessesbenefitfromfederalresearchanddevelopmentdollars,enablingthemtodisruptthemarketplacewithboldideasandgroundbreakingnewtechnologies.96Atthiscriticaljunctureinoureconomicrecovery,theSenateBudgetbuildsonthesesmartinvestmentsinournationsentrepreneurs,innovatorsandsmallbusinesses.ThisbudgetsupportsprovenprogramsbyrestoringnecessaryfundingtotheSBAatpresequestrationlevels.Thebudgetsupportspublicprivatepartnerships,liketheSBICinitiativeandinvestmentinhighgrowthfirmsthroughtheSBIRandSBTTprograms.Itpromotesexpandedaccesstocapitalthroughthe7(a)loanprogram97andworksto
89
NationalEconomicCouncil,MovingAmericasSmallBusinesses&EntrepreneursForward:CreatinganEconomyBuilttoLast,
May2012.90
Ibid.91
Ibid.92
SmallBusinessAdministration,FundingtheSBICProgram:AnOverview(2013),accessed3/8/1393
SmallBusinessAdministration,SBICProgramOverview(2013),accessed3/8/13.94
Ibid.95
Ibid.96
Seealso:SmallBusinessesmakeabigimpact,U.S.SenatorMaryLandrieu,Politico,3/18/11.97SmallBusinessAdministration,7(a)LoanProgram(2013),accessed3/8/13.
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harnessesthefullpotentialofournationsentrepreneursandinnovatorsbysupportingfreecounselingandtechnicalassistancethroughtheSBA.98Ofcriticalimportance,theSenateBudgetalsoprioritizeslevelingtheplayingfieldforminorityandwomenownedsmallbusinesses,manyofwhichoperateinunderservedcommunitiesandrelyuponSBAloanstoaccesscapital.ByrestoringfundingtotheSBAatpresequestrationlevels,theSenateBudgethelpstoensurethatminorityandwomenownedsmallbusinessescancontinuetoaccessthismuchneededsourceofcapital.
Further,thisbudgetsupportstheObamaAdministrationsworktoexpandfederalcontractingopportunitiesandawardfederalprimecontractstominorityandwomenownedsmallbusinesses,ensuringthatthes