Feb 26 2013
Chairman Murray Opening Statement at the Hearing on the Impact of Federal Investments on People, Communities, and Long-Term Economic Growth
“This hearing will now come to order.
“I want to thank our witnesses, who I will introduce shortly. As well as the ranking member Senator Sessions—and all of my colleagues for joining me here today.
“The Budget Committee is a place where some of the most important questions facing our nation are asked, and hopefully, where we can come together in a responsible way to answer them. Many of those questions will be about how we can tackle our debt and deficit challenges responsibly. And while this is important, it’s not all the Committee is about.
“A budget is a reflection of our values and priorities. It is a vision for what we believe creates economic success and broad-based national prosperity. It outlines our short and long term economic policies. It is where we make decisions about what kind of nation we want to be now, and where we lay down the foundation for accomplishing even more in the years ahead.
“This last point is what we will be discussing in today’s hearing: The role and impact of federal investments on people, communities, and long-term economic growth. And it is going to be a critical part of the pro-growth, pro-middle class budget resolution we are working to write.
“Because there’s no question getting our debt and deficit under control is a challenge we have to confront. But we have many other challenges we can’t ignore. We need to repair our crumbling roads, bridges and highways. We need to ensure our students receive an education that offers them the opportunities they deserve, and ensures our nation has a skilled workforce for the 21st century. And we need to fight to maintain our edge in research and innovation, because the next Apple, Microsoft or Google should be started right here in the U.S.
“These are the kinds of investments that make us stronger. And as any businessperson will tell you, when you have a budget problem, the last areas you want to cut are those that will help you grow. Slashing R&D or capital investments may allow a business to look like they are lean and efficient in the short term, but only by undermining their competitive advantages over the long run.
“The same is true for the federal government. Both parties used to understand this.
“Strong federal investments played a key role in the broad-based economic growth that carried millions of families into the middle class in the 20th century.
“The Simpson-Bowles commission report stated that one of its guiding principles and values was to ‘invest in education, infrastructure, and high-value research and development to help our economy grow, keep us globally competitive, and make it easier for businesses to create jobs.’
“But that bipartisan consensus seems to have eroded.
“Recently, more and more lawmakers here in Washington, D.C. have focused on shrinking short-term numbers, regardless of the impact on jobs and economic growth. This has led to attempts, too often successful, to choke off of the investments today that could make all the difference down the line.
“The fact is that if we slash our investments in infrastructure like roads and bridges, we aren’t really saving money at all. We are making things worse. We are weakening our basis for private investment and economic growth, we are putting public safety at risk, and congestion is taxing families’ time with painfully long commutes and health-threatening pollution.
“Roads are going to need to be fixed eventually, bridges will need to be strengthened at some point before they collapse, and waiting will only make the work more expensive when we eventually do it.
“And what will happen in the meantime?
“When a bridge deteriorates, at some point it is no longer safe for heavier traffic such as emergency vehicles or large trucks. When roads fill with potholes it makes traffic worse and driving more dangerous. So our families are less safe, our businesses can’t move their goods as quickly and all just to save money in the short term.
“It’s shortsighted and it just doesn’t make sense.
“The American Society of Civil Engineers released a Report card for America’s Infrastructure back in 2009, and our country got a D. More than 70,000 of our bridges across the country have been deemed ‘structurally deficient.’ We’re not keeping up with the repairs, and haven’t for years, much less accounting for the growth of our country’s population.
“This is an area where you see agreement from the U.S. Chamber of Commerce, major labor groups like the AFL-CIO, and economists and policy experts across the political spectrum.
“Investing in infrastructure creates jobs today, makes our families safer, and lays down a strong foundation for long-term growth.
“We are going to be hearing more about transportation infrastructure investments from one of our witnesses, the Under Secretary for Policy at the U.S. Department of Transportation, Polly Trottenberg.
“But this is a clear case where investment cuts make our short-term budget deficit look better on paper, but cost us more in the long run, and make other deficits worse, in this case, our infrastructure deficit.
“But it’s not the only one.
“When we slash investments in our schools, Pell Grants, or worker training programs, we increase our skills and education deficit. This isn’t good for our students and workers, and it is devastating for our economy over the long term. Investments in education, from early childhood programs through college, are some of the smartest the federal government can make.
“According to a study done at the University of Chicago by Nobel Prize winner Dr. James Heckman, high-quality early childhood education programs have a 7-10% rate of return through better educational outcomes. We also know that those with a high school diploma or less are more likely to be unemployed, to be among the long-term unemployed, and to earn substantially less than their counterparts. And according to the Bureau of Labor Statistics, workers with a college degree can expect to make about $1 million more over the course of their career than those with a high school diploma.
“But this isn’t just a problem for the people and families directly affected; it’s a challenge for our nation. If our workers don’t have the skills they need to fill the jobs of today and tomorrow, our economy and businesses pay the price too. Among our nation’s manufacturers, 82% report a moderate to serious skills gap in their skilled positions. 74% say that this skills gap has negatively impacted their business. And 70% expect it to only get worse.
“McKinsey Global Institute estimates that the U.S. will need to produce roughly a million more post-secondary degrees by 2020, 40% more than today, to ensure we have the skilled workers our economy needs.
“One of the witnesses we will hear from today, Tony Carnevale, the Director of the Georgetown University Center on Education and the Workforce, has estimated that by 2018 nearly two-thirds of U.S. jobs will require some education or training beyond a high school diploma.
“We know these investments pay off. In my home state of Washington, for example, a study found that the return on investment is 7-to-1 for the resources put into serving dislocated workers, 13-to-1 for post-secondary professional and technical education offered through the Perkins Act, 87-to-1 on Perkins funding at the secondary school level, and an astounding 91-to-1 on apprenticeship programs.
“We simply can’t expect our economy to grow in a way that creates broad-based prosperity if we continue allowing our skills and education deficit to increase. If our businesses are going to be creating 21st century jobs, we need our students and workers to have 21st century skills.
“Today we will also be hearing more about the role of federal investments in research and innovation from Hunter Rawlins, the President of the Association of American Universities. These investments have led to private sector growth in areas from pharmaceuticals, to the internet, to GPS, and so much more.
“They’ve led to new industries, new drugs, new inventions, and new jobs. They’ve led to private sector growth in areas such as pharmaceuticals, the internet, communication technology, products that keep our troops safe, the development of alternative energy sources and improved energy efficiencies, and so much more.
“They’ve led to new industries, new drugs, new inventions. They’ve provided jobs and expanded our economy. Today, 40% of US GDP, $6 trillion, comes from companies that did not exist 30 years ago.
“Innovation is beneficial for the economy overall, but also for families. A recent review by the Hamilton Project described how innovation improves life expectancy, makes technology affordable, and improves standards of living.
“The United States has been a leader in this area for decades and we simply can’t afford for countries that understand the value of these long-term investments to overtake us. Cutting these investments off would help our budget deficit in the short-term, but only at the expense of long-term increases in our research and innovation deficits. And that simply doesn’t make sense.
“Although the role of federal investments is an important issue for us to address in the context of the pro-growth budget resolution we are currently working to write, this conversation is especially appropriate as we head toward the March 1st sequestration deadline.
“I remain hopeful that we can find a balanced and bipartisan replacement to sequestration in the next few days, but if we can’t, investments in people, communities, and innovation would be hit hard. According to the White House: Title I education funding would be eliminated for more than 2,700 schools, cutting support for nearly 1.2 million students and putting thousands of teacher jobs at risk. Head Start would be eliminated for approximately 70,000 students. And over 7,000 special education staff would lose their jobs. The National Institutes of Health and the National Science Foundation would have to delay or end scientific projects and make hundreds fewer research awards, which would mean an estimated 200,000 fewer jobs each year across America. And the FDA’s Center for Drug Evaluation and Research would face cutbacks causing delays on new drug approval.
“This, of course, would come alongside the hundreds of thousands of jobs lost, major cuts to defense and nondefense programs, and the economic impact that could be devastating to our fragile recovery.
“Even for people who think that investments need to be cut, sequestration is just an awful and shortsighted way to do it. And I hope Republicans join us at the table soon and work with us replace it with a balanced mix of responsible spending cuts and new revenue from those who can afford it most.
“I already mentioned the three witnesses invited by the majority. And while Senator Sessions will introduce the witnesses he has invited, I want to thank David Malpass and Stephen Ferguson for taking the time to be here today.
“I am looking forward to hearing more from all of our witnesses about the role of federal investments and the impact of automatic cuts. This is going to be an important issue for us as we work on our budget resolution here in the Senate.
“We absolutely need to tackle our debt and deficit. We need to cut spending responsibly. And of course, for government investments to truly pay off, we need private industry to succeed, innovate, and create jobs.
“I believe smart federal investments will create jobs and help the middle class right now, they will help lay down a strong foundation for long-term and broad based economic growth and they will help position our country and our economy to compete and win in the 21st century global economy.
“Recent Republican budgets have moved away from these critical national investments, but I am hopeful that the bipartisan work can continue to make sure we leave our children a stronger country than the one we received. And I am looking forward to engaging the American public in this debate that is so central to their economic future.
“I will now turn it over to Senator Sessions for his opening statement.
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