Jul 25 2013
WASHINGTON, DC, Thursday, July 25, 2013 – U.S. Senator Richard Shelby (R-Ala.) today delivered a wide-ranging speech on jobs and the economy on the Senate floor. Shelby discussed the need to establish the conditions for job creation and economic growth by controlling spending, simplifying the tax code, and eliminating onerous regulations.
The full text of Senator Shelby’s speech is below.
Thank you, M. President.
M. President, we have a jobs crisis in America. High unemployment and weak economic growth have festered for nearly five years. American families are increasingly dependent upon government, and businesses are being suffocated by it.
I believe that our ability to emerge from this jobs crisis stronger than before depends upon government performing its proper role in the economy. In my view, that role is to establish the conditions for job creation and economic growth in the private sector.
Through stable fiscal policy, a simplified tax code, and streamlined regulation; government can create an economic environment conducive to risk taking and innovation that lead to real job creation. Unfortunately, the same toxic combination of government overreach and inaction that has failed to produce a jobs recovery thus far also threatens to prolong the jobs crisis for years to come.
Now we learn that President Obama is planning a PR blitz to gloss over his failed economic agenda. Over a series of speeches he will discuss his vision for the future, but he will offer nothing new.
According to the New York Times, his jobs plan is “largely repackaged economic proposals that the president has offered for years.”
M. President, we need a fresh, free market approach to job creation. Stale Obama policy leftovers won’t cut it.
M. President, I will preface my remarks on the fiscal, tax, regulatory, and monetary policy challenges we face with a more detailed description of the current macroeconomic conditions, starting with jobs numbers.
The official unemployment rate in the U.S. is 7.6 percent. That makes 54 straight months of unemployment above 7.5 percent.
However, as grim as those figures are, they do not tell the full story. The Bureau of Labor Statistics reports that the “real” unemployment rate, known as U-6, is 14.3 percent.
This includes those who are unemployed, those who want to work but have stopped searching for a job, and those working part-time because they cannot find full-time work.
22.6 million Americans fall under this category.
The real unemployment rate was 14.2 percent when President Obama took office in January of 2009.
It peaked at 17.1 percent in late 2009 and early 2010, but has not fallen below 13.8 percent during his time in office.
It has been a jobless presidency.
Digging further into the numbers reveals more troubling trends. The number of people working part-time because their hours were cut back or because they cannot find full-time work increased by 322,000 last month to 8.2 million.
The percentage of the unemployed who have been without work for 27 weeks or more also remains dangerously high at 36.7 percent.
An analysis by the Hamilton Project in February of this year found that we will not get back to full employment for another decade based on recent job creation numbers.
Meanwhile, economic growth remains sluggish.
The most recent figures from the Bureau of Economic Analysis indicate that U.S. real GDP grew at a tepid 1.8 percent annual rate in the first quarter of 2013.
Average annual real GDP growth was just 0.8 percent over President Obama’s first term.
M. President, we are experiencing the weakest economic recovery since the Great Depression.
As a consequence, government dependency is on the rise.
Under President Obama, the number of Americans on food stamps has increased by 47 percent to 47 million.
8.9 million Americans collect disability pay, and that number is increasing by 70,000 a month.
These are alarming figures. So, M. President, how did we get here?
The current jobs crisis is a product of the 2008 financial meltdown. No one denies that President Obama was dealt a tough hand coming into office. But the question is,What did he do about it?
President Obama’s first act in office was to ram a $787 billion stimulus package through Congress. He promised the American people that it would keep the unemployment rate from rising above eight percent.
Instead, the unemployment rate hit ten percent in October of 2009 and remained above eight percent for the next 43 consecutive months, according to the Bureau of Labor Statistics.
But President Obama’s spending binge was just getting started. According to the Congressional Budget Office, the budget deficit in 2009 was $1.413 trillion.
In 2010, an additional $1.294 trillion.
In 2011, another $1.3 trillion.
2012? $1.087 trillion more.
Although the 2013 deficit is projected to dip below $1 trillion, it will still be $183 billion higher than any pre-Obama deficit.
Looking at the big picture, the national public debt now stands at just under $17 trillion, an increase of nearly 60 percent under President Obama.
What has been the result of this spending spree, M. President? Taxpayers got more debt, but job seekers didn’t get work.
Compounding our fiscal difficulties, Social Security and Medicare remain on unstable long-term footing.
These programs already account for 38 percent of federal spending.
But over the next 25 years, CBO projects their share of GDP to increase by 40 percent.
According to the Trustees of the Social Security and Medicare trust funds, Medicare is expected to run out of money in 13 years and Social Security will go broke by 2033.
Saving these essential programs requires presidential leadership. Unfortunately, there has been none to speak of.
President Obama's spending binges have precipitated multiple budget showdowns. As a result, they have also presented many opportunities for spending and entitlement reform.
But President Obama has not risen to the occasion. Despite broad consensus that we must take action to save Social Security and Medicare, President Obama used the power of his office to campaign pre- and post-election for one thing: tax hikes.
M. President, tax hikes are not the solution to a spending problem.
Tax hikes do not create jobs.
Tax hikes will not generate growth.
Tax hikes kills jobs and allow President Obama to spend more.
PICKING UP ON OVERTAXING
M. President, we need tax reform, not tax increases.
According to the most recent data from the IRS, the top one percent of taxpayers – those making $369,691 or more - pays 37.38 percent of all income taxes.
The top 5 percent of taxpayers – those making $161,579 or more - pays 59.07 percent of all income taxes.
The top 10 percent of taxpayers – those making $116,623 or more - pays 70.62 percent of all income taxes.
The top 25 percent of taxpayers – those making $69,126 or more - pays 87.11 percent of all income taxes.
And the top 50 percent of taxpayers – those making $34,388 or more - pays 97.64 percent of all income taxes.
Meanwhile, the bottom 50 percent – those making $34,388 or less - pays 2.36 percent of all income taxes.
In addition, approximately half of U.S. households pay no income taxes.
Despite these imbalances, President Obama increased taxes on the wealthiest Americans by $617 billion in January of this year.
Still, a Heritage Foundation analysis of Treasury Department data finds that President Obama’s fiscal year 2014 budget contains and additional $1.1 trillion in proposed tax increases.
The size and complexity of the tax code adds to the tax burden on the economy. The code totals 5,600 pages. Taking into account all explanatory materials and IRS rulings, the CCH Standard Federal Tax Reporter comprises 70,000 pages.
M. President, even the “easiest” tax form, the 1040EZ, runs 46 pages.
The total cost of complying with the individual and corporate tax requirement was $168 billion last year.
And according to the IRS Taxpayer Advocate there have been approximately 4,680 changes to the tax code since 2001.
Moreover, the tax code is filled with various credits, deductions, and corporate welfare. Analysis by the Joint Committee on Taxation finds that these so-called tax expenditures total $1.3 trillion. M. President, we could drastically simplify the tax code and lower individuals’ rates by eliminating these provisions.
Unfortunately, President Obama’s approach to taxes is the same as his approach to spending: more, more, more; but no structural reforms that would help establish the conditions for job creation and economic growth.
M. President, overregulation further deteriorates the conditions necessary for job creation and economic growth.
The aggregate regulatory burden on American families and businesses is staggering. A study by the Competitive Enterprise Institute estimates that “total costs for Americans to comply with federal regulations reached $1.806 trillion in 2012.” This translates to nearly $15,000 annually per family – or 23 percent of average household income.
According to the American Action Forum, the federal government so far this year alone has published regulations that will result in $61.7 billion in compliance costs, and 80.5 million hours of paperwork burden.
Despite the failure of the stimulus package, President Obama put the unemployed on hold for more than a year while he forced government-run health care through Congress.
He promised that his plan would reduce health insurance premiums by $2,500.
Instead, premiums have already increased by that amount, according to the Kaiser Family Foundation employee health benefits survey.
A recent Wall Street Journal analysis finds that premiums could double or even triple for healthy consumers under ObamaCare.
Altogether, ObamaCare is 2,400 pages long and creates 159 new boards, commissions, and government offices.
According to CBO, the ten year spending estimate for ObamaCare is $1.88 trillion.
Analysis by the Joint Committee on Taxation shows that the law creates or raises 21 taxes totaling $1.1 trillion over the next decade.
The impact of ObamaCare on hiring is not surprising. According to the U.S. Chamber of Commerce’s second quarter 2013 Small Business Survey, “71% of small businesses say the health care law makes it harder to hire.”
The same survey finds that “one-half of small businesses say that they will either cut hours to reduce full time employees OR replace full time employees with part-time workers to avoid the mandate.”
In addition, Gallup finds that “41% of small-business owners say they have held off on hiring new employees” in response to ObamaCare.
M. President, I welcome recent news that the Obama administration will temporarily delay the employer mandate.
But in light of the evidence that ObamaCare is increasing health insurance costs and making it harder for the unemployed to find jobs, we should delay the whole law permanently for everyone.
Congress should start over and craft legislation that will actually lower health care costs and preserve high quality care without crushing businesses with unnecessary regulations.
Unfortunately, President Obama’s expansion of government did not end with ObamaCare.
In 2010 he forced through Congress his purported response to the financial meltdown: the Dodd-Frank Act.
We were told that the financial regulatory system needed to be streamlined to prevent future bailouts. Instead, Dodd-Frank created more government agencies than it eliminated.
Moreover, the law totals more than 2,300 pages and calls for nearly 400 new rules.
A study by scholars at the Mercatus Center at George Mason University estimates that Dodd-Frank had already generated 2,109 restrictions in the Code of Federal Regulations by the end of 2011.
At this rate, they project a 26 percent increase in restrictions in relevant sections of the Code once all Dodd-Frank rulemakings are finalized.
M. President, Dodd-Frank will create jobs only for regulatory compliance officers.
Earlier this year, I introduced legislation that would require regulators to perform rigorous cost-benefit analysis of new Dodd-Frank regulations.
Under the legislation, a regulation dies if its costs exceed its benefits to the economy. Unfortunately, the Democrat Majority here in the Senate has not brought this legislation up for consideration.
Some observers subscribe to the cynical view that the legislation is nothing more than an effort to undercut financial reform.
M. President, I am the only current member of the Senate who voted against both financial deregulation in 1999 and the Wall Street bailout in 2008. I subscribe to the view that regulation should protect taxpayers without harming job creators.
Now, President Obama’s regulatory zeal finds an outlet in a “war on coal.” Aware that he does not have the votes to jam his carbon tax agenda through Congress, he will direct the Environmental Protection Agency to implement it via executive fiat.
His environmentalist crusade will kill jobs.
An analysis by the Heritage Foundation estimates that drastically reducing the percentage of coal in our nation’s energy portfolio would, by 2030, kill more than 500,000 jobs and increase electricity prices 20 percent.
In stark contrast, a Wood Mackenzie study estimates that “1.4 million American jobs could be created by 2030 if the government adopted policies encouraging U.S. energy exploration and production.”
M. President, I believe that the Obama environmental agenda will do more to put family budgets in the red than it will to make the world green.
Instead of waging a war on coal jobs, President Obama should approve and expedite the Keystone XL pipeline.
This would create tens of thousands of new jobs and decrease energy bills for families and businesses.
This is the type of clear headed energy policy we should be pursuing.
In light of the existing and increasing regulatory burden, it is not surprising that the Federal Reserve estimates that manufacturers, domestic producers, and other non-financial American companies are sitting on a record $1.78 trillion stockpile of cash.
If we are to create the conditions for real job creation in this country, we must start by streamlining the regulatory burden on the economy. The rules, restrictions, and mandates facing those who wish to undertake an entrepreneurial endeavor or expand their business through investment and innovation is mind numbing.
On July 17th, Federal Reserve Chairman Ben Bernanke told members of the House Financial Services Committee, "If we were to tighten policy, the economy would tank."
He was referring to the Fed’s aggressive use of non-traditional monetary policy to prop up markets since the financial meltdown of 2008. The implied message is striking: The Fed is taking big risks through monetary policy because administration policy is not helping the economy.
The Federal Reserve’s balance sheet quantifies just how big of a risk Chairman Bernanke feels he must take with so-called monetary stimulus.
It currently stands at $3.5 trillion, and continues to grow by $85 billion a month under the Fed’s “quantitative easing” program.
Among the assets included in the Fed’s balance sheet are $2 trillion in U.S. Treasury securities and $1.2 trillion in federal agency mortgage-backed securities.
To put the acceleration of the Fed’s balance sheet into perspective, it took 95 years from the Fed’s creation in 1913 to reach $1 trillion.
The Fed then added the second trillion in just six weeks, followed by the third trillion this past January.
Under the current quantitative easing program, the Fed’s balance sheet will reach four trillion dollars in less than six months.
Where does it end? Five trillion? Six trillion? Ten trillion?
As with fiscal policy, Mr. President, we are in uncharted monetary policy waters. The Fed’s unprecedented measures carry substantial risk and uncertainty.
Should inflation increase, the Fed would have to tighten monetary policy to contain it. However, should the Fed tighten monetary policy, it risks stalling an already weak economy.
As deep as our fundamental economic challenges already are, the thought that one wrong monetary policy move by the Fed could cripple our entire economy is deeply troubling.
In conclusion, M. President, we face a serious confluence of economic challenges.
President Obama’s policies have not worked. And they will not create work.
M. President, real job creation is the result of entrepreneurship and innovation and risk in the free market.
I believe that government’s role is to establish the conditions for that to occur.
We can do this by stabilizing our nation’s finances, simplifying our tax code, and streamlining our regulatory framework.
The more President Obama clings to the tired liberal ideology that more government is always the answer, the longer this jobs crisis will persist.
Thank you, M. President. I yield the floor.