Apr 01 2014
WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, delivered the following prepared remarks today at a Budget Committee hearing on opportunity, mobility, and inequality in today’s economy:
“Thank you, Chairman Murray, for holding this important discussion today. A sober review of the data reveals that the economic situation for too many Americans remains unacceptable.
Household incomes have declined each of the last five years. The number of households at lower end of the distribution grew by 1.7 percent, while the number of households in the middle income group has decreased by 0.7 percent. In other words, the middle class is shrinking. That is not the trend we want.
Our unemployment rate remains stuck around 7 percent but this statistic obscures much of the real picture. Millions of Americans have left the workforce entirely, bringing the workforce participation rate to its lowest level since 1978. We were told that the massive debts accumulated over the last five years would lead to prosperity. But we now are left with none of the prosperity and all of the debt. Growth last year was half of what the White House projected.
I agree with Dr. Stiglitz that “what matters is whether citizens see their living standards rise year after year.” A pure GDP analysis is not sufficient.
Both the President and Chairman Murray have proposed, as one remedy, to expand federal support for adults without children. However, the President’s proposal to expand the Earned Income Tax Credit—this is a real “tax subsidy”—interacts with the Obamacare subsidies in a way that surely would, contrary to expectation, penalize work. Because the EITC and Affordable Care Act phase-out schedules correspond with one another, an adult without children whose income goes from $14,700 to $17,700 would lose 75 cents in higher taxes and reduced government benefits for every dollar they earn. This creates an incentive not to earn.
To grow employment we need to affirm work rather than punish it.
It is time for compassionate reform. First, EITC would appear to be a better method of helping the poor than straight government assistance. This can be a point of bi-partisan agreement. But, it cannot be one more program that traps Americans in poverty, and we don’t have the money to create a new welfare program. Any new program must be paid for by reform of existing aid programs.
The federal government spends more than $750 billion a year on the maze-like welfare bureaucracy. This money is spread across more than 80 programs, in dozens of agencies, with little oversight and no guiding vision. Imagine how much better it would be if we combined these programs into a single credit, with strong oversight, and a greater emphasis on job training and work placement where an individual prosperity plan would be developed for each unemployed or underemployed worker to help them move to a better life financially.
We continue to hear about many of the government spending projects our friends on the other side of the aisle would like to fund. But a major reason there’s no money for these new projects is because of these huge rising interest payments on our massive debt. We have squandered our financial inheritance and are fast moving to destroy the American self-reliance and work ethic that has made our nation so dynamic.
Let’s put things in perspective. Last year, we paid out $221 billion in interest but CBO says that payment will rise in 2024 to $880 billion. That single year’s interest payment is 300 times what we spend today on our national parks. It’s 20 times what we spend today on our highways. It’s enough to fund our federal education programs for more than a decade. And, the President and many in the Senate, in a time of slow growth and low job creation, want to double the number of guest workers to take jobs that are needed for our unemployed.
If we care about economic growth, if we care about prosperity, then we must recognize that these rising interest payments threaten to drown our economy.
We need to create more growth, more jobs and better pay—without adding another dime to our dangerous debt.
Here’s how to get this economy on the right track without adding to the debt:
1. Produce more American energy, creating jobs right here in America, keeping wealth at home.
2. Eliminate all costly and non-productive regulations
3. Make the tax code simpler and more growth oriented.
4. Ensure fair trade for U.S. workers by holding our foreign trading partners accountable
5. Adopt an immigration policy that serves the national interest. Last week, House Democrats endorsed a plan that would double the flow of new immigrant workers and further reduce wages and job prospects for struggling Americans
6. Turn the welfare office into a job training center
7. Streamline the government itself to make it leaner and more accountable
8. Balance the federal budget to create confidence in our future and security for our children
All of these steps would create jobs and growth. All of these steps would create rising incomes and wages. And all of these steps would grow the middle class—not the government.”