Under the 8 years of President Bush, the wealthiest 400 Americans--we talked about how they doubled their incomes; income is what happens in 1 year--under the 8 years of President Bush, the wealthiest 400 Americans increased their wealth by more than $380 billion. Four hundred families increased their wealth by $380 billion. That averages to almost $1 billion a family. Mr. President, $1 billion in 8 years. That is the average; some, obviously, more.
Collectively--I know this is not an issue we talk about too much--the 400 richest Americans have accumulated $1.27 trillion in wealth. If any of them die this year, their heirs can receive, right now, all of this money tax free because the inheritance tax has been eliminated in 2010 as part of the Bush estate tax repeal this year.
Last year, the top 25 hedge fund managers made a combined $25 billion in income--a combined $1 billion per person. OK. So if you are a hedge fund manager, you are doing pretty good. I mentioned a moment ago that we tried just the other day to get checks of $250 out for disabled vets and senior citizens on Social Security who have not had a COLA in 2 years. We could not get them that check. But last year the top 25 hedge fund managers made a combined $25 billion in income--$1 billion per person. And our Republican friends say: Oh, my word, my word, we have to lower their taxes. Last year, ExxonMobil, Bank of America, and other large profitable corporations paid no Federal income taxes.
So what you have is a tax system which is totally distorted in the sense that it allows large profitable corporations to pay, in some cases--in many cases--zero. In fact, last year--it would be funny if it really was not pathetic--as I understand it, ExxonMobil, which made $19 billion, paid nothing in taxes. Bank of America--Bank of America got a huge bailout from the American taxpayer, paying their executives all kinds of fancy, huge compensation packages--got a refund check from the IRS. That is how absurd the situation is. And people say: Oh, my word, in order to deal with our deficit, we are going to have to cut back on Medicare and Medicaid and education. We cannot afford it. I guess we can afford to allow ExxonMobil, the most profitable corporation in the history of the world, to make huge sums of money and pay nothing in taxes. We can afford to do that, but we cannot afford to protect working families and the middle class.
In the year 2005, one out of every four large corporations in the United States paid no Federal income tax on revenue of $1.1 trillion. Now, what do you think? Maybe before we start cutting Social Security and Medicare and Medicaid and veterans programs, we would want to ask some of these very large and profitable corporations to pay at least something in taxes? From 1998 to 2005, two out of every three corporations in the United States paid no Federal income taxes, according to the GAO report.
Sadly, the economic pain millions of people are experiencing did not even begin as a result of the Wall Street bailout. The middle class was collapsing long before that. It is wrong to blame Bush for all the problems. He contributed a lot to it but not all of it. That trend has been going on for many years.
As the Washington Post reported last January--let me quote from an article because, again, I want to put the economic reality facing the middle class in contrast to the economic reality facing the very rich in the broad context of this agreement signed by the President and the Republican leadership. As the Washington Post reported last January:
The past decade--
The Bush 8 years plus 2 years--
was the worst for the U.S. economy in modern times. .....
It was, according to a wide range of data, a lost decade for American workers.
``A lost decade for American workers.'' Do you know why people are furious? Do you know why they are angry at Washington and everybody else? The last decade was, according to the Washington Post, a lost decade for American workers.
There has been zero net job creation since December 1999.
Twelve years of zero job creation, which is why unemployment is so high, not only for the general population but even worse for our young people, kids getting out of high school, young people graduating college.
According to the Washington Post--this came from the Washington Post in January:
Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999. .....
In other words, the American economy has turned into a nightmare for tens of millions of families. Imagine that.
Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999--and the number is sure to have declined further during a difficult 2009.
They did not have those numbers, but because of the Wall Street collapse, that certainly is the case.
So what are we talking about? We are talking about, as I have just demonstrated, the people on top seeing a doubling of their income, while their effective tax rates are going down. You are seeing the middle class collapsing.
What this agreement says is that we are going to provide huge tax breaks for millionaires and billionaires. That is insane. Only within the beltway could an agreement such as that be negotiated.
As I mentioned earlier, in the last 3 days, we have received thousands and thousands and thousands of phone calls and e-mails to my office, and over 98 percent--I daresay 99 percent--say this is not a good agreement, do not support it.
Mr. President, I have been joined on the floor by the very distinguished Senator from the State of Louisiana. I ask unanimous consent that I be permitted to enter into a colloquy with Senator Landrieu.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. SANDERS. I thank Senator Landrieu very much for joining us here. I wondered if the Senator could give the American people her thoughts about this agreement and what has been going on.
Ms. LANDRIEU. Mr. President, I thank the Senator from Vermont for his eloquent and passionate presentation for hours this morning. He clearly has presented to this Chamber and to the American people some stark realities that are unpleasant. Some people might even find them hard to believe. But he has done his homework. He has documented what he said. In that backdrop, it does make this agreement, made between the Republican leadership and the President of the United States, even harder for some of us to understand.
I want to acknowledge, as the Senator said--I know there are pressures on all sides, and time is running out; we have to make a decision about tax cuts in a short period of time. We do not have the benefit of several months or even half a year. I understand the pressures of time. But as the Senator from Vermont pointed out, how about the pressures on the middle class? What about these pressures? What about this pain?
I was wondering, because I wanted to ask the Senator from Vermont--I was not able to follow his entire presentation this morning--did he quote from the report ``Income Inequality and the Great Recession,'' done by the U.S. Congress Joint Economic Committee, led by Charles Schumer? I ask the Senator, did you quote from this report?
Mr. SANDERS. We quoted from a number of studies, but not that one, I say to the Senator.
Ms. LANDRIEU. I would like to add in our colloquy, if the Senator is aware, according to this report that just came out in September of this year:
Income inequality has skyrocketed. Economists concur that income inequality has risen dramatically over the past three decades.
Middle-class incomes stagnated under President Bush. During the recovery of the 1990s under President Clinton, middle-class incomes grew at a healthy pace. However, during the jobless recovery of the 2000s under President Bush, that trend reversed course. Middle-class incomes continued to fall well into the recovery, and never regained their 2001 high.
The report goes on to say--which is frightening, which is why I have been raising my voice in opposition so strongly to some parts of this package--
High levels of income inequality may precipitate economic crises.
In other words, if the middle class cannot see light at the end of the tunnel and if the economy itself cannot grasp a way for the middle class to grow, I say to the Senator, this recession may never end no matter how much money you give to the very wealthy.
This is the reality we are facing at this moment--how to end this recession.
Republicans weren't completely to blame for it, Democrats weren't completely innocent, or vice versa. It is not about who to blame, it is about how to fix it. We are about to pick up a $980 billion hammer next week in an attempt to fix it. Are we hitting the nail right? We don't have many $980 billion hammers to pick up. We are borrowing this one. So let's get it right. This is an important issue before our country. I think that is what the Senator is saying.
Am I putting words into the Senator's mouth? Is this what the Senator is trying to explain?
Mr. SANDERS. Exactly. The point cannot be understated. What Senator Landrieu is saying is that if you have a collapsing middle class and people are unable to purchase anything, it impacts the entire economy. The economy can't grow. We can't grow jobs if people don't have enough money to buy products made by other people. If all or a substantial part of the wealth in this Nation accrues in the hands of a few, they get three yachts and eight airplanes, I guess, but there is a limit to what they can purchase.
Ms. LANDRIEU. And there is a limit to what they can consume.
What the Senator from Vermont is saying and what I am saying--I want to be very clear, because the Senator and I don't agree on every piece of legislation. He tends to be a little bit more liberal and progressive in his politics than I am, but on this subject we are both equally concerned about the shrinking of the middle class. From my perspective--the Senator may have a different view--I am talking about the broad middle class: incomes of $50,000 to $500,000. In my State, $500,000 of income--not net worth but income--is a huge amount of money. In fact, I brought a graph to show that 84 percent of the households in Louisiana--when I talk about middle class--84 percent of the households in Louisiana make less than $75,000. I said 84 percent. Most people in Louisiana--most--believe they are in the middle class, but 84 percent make below $75,000.
So when I use the term middle class--and we all have a different view--I am saying the broad middle class with incomes between $50,000 and $500,000. If you have $500,000 in income, you are quite wealthy in Louisiana, but I realize we are not New York, Connecticut, or California. Maybe if you make $500,000 or $400,000 in some of these places, you don't consider yourself very wealthy or rich. I think by Louisiana standards you would be, but this is a big nation. So I want to be as broad as I can possibly be here. I am not talking about the wealthy being $400,000 or $500,000. That may not be the case in California. But what we are talking about in this tax bill is borrowing $50 billion to give tax breaks to families earning over $1 million. So as the Senator from Vermont said, whether you put your mark at $250,000 or $500,000--we can disagree about how broad the middle class is, but is there anyone--anyone--anyone in this Chamber on either side of the aisle from any State who believes seriously, giving what the Senator from Vermont just outlined--which is really not debatable; these economic studies are not just from one side of the aisle or another--that we should actually next week provide $50 billion in extended benefits for the families in America who are making more than $1 million a year? Should we do that when the inequities are so great, when the needs of the middle class are so great, when there is no evidence to suggest from any I have seen that is convincing that even after this tax cut the recession will end? We are doing this for 2 years. What happens if the recession doesn't end and we have borrowed all of this money to provide the extension of these tax cuts, as well as giving $50 billion to the $1 million earners in this country? What do we do then? Go borrow another trillion and try it again? I think we have to try something different.
I don't know if the Senator has another point before I go into a few thoughts.
Mr. SANDERS. Let me ask the Senator--and I thank her very much and I agree with what she has been saying. I was mentioning earlier the calls coming in and the e-mails coming into my office are overwhelming: 99 percent against this. Are you getting similar calls?
Ms. LANDRIEU. I am getting calls, and I am getting about 50 percent for and 50 percent against. The State of Louisiana is a little different than the State of Vermont. Many of the calls coming in from around the country are against giving--well, actually, let me say this: Most of the calls coming in are absolutely against giving tax cuts to people over $1 million.
Mr. SANDERS. That is what I am talking about.
Ms. LANDRIEU. Overwhelmingly, people are calling in and saying, Is that really happening? In fact, my office told me today that actually 10 people called who had incomes over $1 million, which I found very interesting, to say they supported my position: Tell Senator Landrieu I make $1 million a year and I agree with her. So I know people are listening. I thank those callers. They make $1 million every year and they said, Please, use the money for somebody else or something else. I am doing fine. I am counting my blessings. I survived the recession. They know that 33,000 people are getting ready to run out of unemployment benefits in Louisiana alone if we don't extend it. They know middle-class families making over $75,000 in income or $200,000 in income or even $500,000--you can have $300,000 of income in Louisiana and be a strong business person and doing very well, and have eight children. The Presiding Officer has large families out in the West. We have very large families in the South. No one ever gives us credit enough, I think, for that. People work very hard, a mother and a father. Their income might be $200,000, $250,000, but with six children, that doesn't go that far these days. I grew up in a neighborhood where we routinely had 12 children in a house. How much money do you think you have to make to feed and clothe and send to college 12 children? My father sent nine of us to college. We never made anywhere near that money. I still think it was a miracle any of us ever got there.
But, nonetheless, the issue is next week we are going to debate this agreement. I wish to say I support extending tax cuts to the middle class, to the broad middle class. But there is something terribly wrong here in Denmark. Something is not right in Denmark if we are spending or borrowing $50 billion, which is about what it costs to extend income tax rates, the lower rate and the dividend rates, and the capital gains rates to people making over $1 million.
Someone on the radio today said, Well, Senator, don't you think giving tax cuts will stimulate the economy? I said, No. I am not an economist, but every economist I have read on this tax package says that is one of the least stimulative--am I correct, Senator--one of the least stimulative provisions of the bill.
I want to know next week, when we are debating this, I would like at least one Republican--just one--it could be the minority leader Mitch McConnell, it could be the budget chairman Judd Gregg, it could be just one Republican--to give a passionate argument for why they insisted this be in the package. I would like to listen to it. I would like to hear it with my own ears. What was it about it that they thought was so important that they had to have it in the package? Because I know, as angry as I am with the President right now about some matters, I know the President did not insist this be in the package. I know enough about him to know that he didn't call everybody in the room and say, Oh, we forgot something. Let's make sure this tax extension includes people making over $1 million. I know he didn't give that speech. I want to know who did. Who did give it, because your constituents should know about it. And the American people have a right to know. That is one thing about our democracy, it is open. It could be more open. We could be like Britain where they all stand up and talk at one another in one of the rooms. It is very interesting. I find it very interesting to watch sometimes. We don't do that, but at least if the people of Britain want to know what their people are saying, they can hear them.
Somebody said this. I would like to know who, and where, and when. Was it in the Oval Office? Was it in the cloakroom? Because I am going to be forced to vote--because now, I think the Senator understands, we aren't going to have any amendments, so I am going to be forced to vote and have to choose, which is going to be a very tough choice, between extending tax cuts for 84 percent of the people in my State who make less than $75,000--which of course I want to do. Even though we have to borrow the money to do it, we can't not do it. The economic circumstances are such that we have to do it. But now, in order to get them help, I have to say yes to something that I have talked about--and I want to be serious about this; I am very serious about it--that, for me, borders on moral recklessness.
I have been criticized on both sides of this debate. How can you use words like this? I don't know. I went to Catholic school. We went to mass almost every week. Every week the priest would say, Don't take more than you need. Don't be greedy. Share with others. Did I go to the wrong school? So I would like to know. Maybe those lessons were missed on the other side. I don't normally speak like this. I have been criticized for it. I am very, very torn, because I like to be part of a team.
I understand, I say to the Senator from Vermont, that we can't have every package exactly the way we believe. I understand that. I have had to vote for some things that were hard for me to stomach, and I have done it because there were other good things in the bill. That is the way the process works. But I actually cannot remember a time on either an appropriations bill of this magnitude or a tax bill of this magnitude that we have been asked to cast a vote for something that on its face is so reckless, so unnecessary, so sort of in your face to the poor, in your face to the middle class. We are going to take our money. Don't you say a word about it.
Who said that? Did Warren Buffett come down here and ask for it? Did Boone Pickens come down here and ask for it? Did the Gateses come down here and ask for it? Who asked for it? Why do you think you deserve it, and what Senator put their name on it?
I have a few more things to say. I don't want to keep the Senator from Vermont tied up.
Mr. SANDERS. Quite the contrary. The Senator from Louisiana is making some very important points. I appreciate it and I look forward to hearing what she has to say.
Ms. LANDRIEU. Thank you. I wish to say a few other things about this whole situation, because the Senator from Vermont and I agree on some things and parts of this--obviously this part--but we had a big difference. I wanted to show this from my perspective.
I voted for the original tax cuts. I am not sure the Senator from Vermont did. There were very good reasons on both sides. I wish to take a minute, because I have, as I said, critics on both sides, and I want to explain--not explain, but share some thoughts about that and make something very clear.
I was one of 12 Democrats--there are only 7 of us left--in the Chamber today who voted for the Bush tax cuts. We were for the middle class and the poor and the wealthy. Everybody got income tax relief, capital gains tax relief, dividend tax relief. Senator Lincoln and I and others worked very hard to make sure that in that package--even though I would have designed it differently if I could have done it myself, but there are no czars around here. This is a democracy. I understand that. I have been doing it for 30 years. We worked hard to shape that package the best we could to direct it and target it to the middle class. There are many critics of that who say you didn't do it well enough. You didn't send it to the middle class. You sent it to the wealthy. I disagree. I think we did as well as we could to send it to the middle class, although the higher brackets were lowered as well. But I will tell my colleagues the big difference was, it was paid for when we voted for it. There was a $128 billion annual surplus. In other words, we were spending $128 billion less than we were taking in. What a happy time that was. We were paying for our Pell grants. We were paying for education. We were paying for health care. We had surpluses in Social Security, the Senator will remember, and we had a $128 billion surplus that year alone, and surpluses as far as the eye can see. This is before 9/11.
So the 12 of us--let me speak just for myself--I thought, what a situation this is. Democrats had taken the tough vote. Not one Republican had voted for this budget reconciliation. As the Chair knows, as he was then in the House and took a tough vote with the Democrats to put us on that path, the middle class was expanding. Jobs were being created. We were creating millionaires. Yes, I love creating more millionaires. It is why I got into politics--one of the reasons. I like when people are successful. I love to hear stories about my constituents who came from poor families, whose mothers were household servants, whose fathers never went to high school--I love to hear about smart little girls from Gert Town who got straight As in school, went down the street to Xavier University, got their premed degree, and then went on to become a doctor, and now they are millionaires. I don't decry that. I celebrate it. I have fought for them to get their scholarships--not individually but generally. It is what I do. It is what Senators and House Members do.
I am so mad at people saying to me, as a Democrat, that we don't like people who are rich; that we have something against them. Nothing could be further from the truth.
I love the book, ``The Millionaire Next Door.'' It talks about how it is a myth that most millionaires in America have inherited their money. The fact is, we have created such a great country over 250 years. We have actually found the way for poor people to go from nothing to huge wealth and to create a life-changing opportunity for their children and grandchildren. We celebrate it, write movies about it, and our libraries are full of books about it. There is nothing wrong with that.
So when we had a surplus, I thought we should give tax breaks and use some of that money. But, today, we are being asked to provide tax cuts, when the deficit is--I want to get this number correct because it is shocking--10 times greater than the surplus; it is $1.294 trillion. That is what the annual deficit is this year. When we did the tax cuts, we were generating a $128 billion surplus every year--surpluses as far as the eye could see. We thought maybe we should give a third of this bounty in tax cuts, and we made investments in other things. But, today, after what the Senator from Vermont has described as the economic inequality in the country, when we have no surplus in sight, the biggest, largest, most ferocious recession since the Great Depression, and we are running an annual deficit of $1.29 trillion--someone had the nerve on the other side of the aisle to say: Wait, before you close the deal, before you shut the door, before you stop the printing press, please put in the people in America who make over $1 million.
Now, for that $50 billion, there are lots of ways that we could save if we could correct this deal. I don't think we can. But if we could, as the Senator knows, do we have men and women in the military--does he know what their COLA will be this year? I think it is only 1.4 percent.
Mr. SANDERS. That is what my understanding is. I think a lot of the folks in the military are very upset about that.
Ms. LANDRIEU. Every person in uniform is only getting a COLA this year of 1.4 percent. Did anybody over there not think about this when they raised their hand to say let's give it to millionaires? Those in the military most certainly deserve a bonus. They are coming back without eyes or legs; they are leaving some of their limbs in Iraq and Afghanistan. Did anybody over there think about that?
The senior citizens for whom the Senator has been such an advocate are not seeing the kind of COLA they normally get. Talk about stimulus, I think every dollar you give to a senior citizen--wouldn't the Senator say--gets spent right away. They have to buy food with it. They are not going out perusing a yacht or an airplane they could or could not buy. They need to eat. They go to the corner drugstore; they need to get their medicine. They spend it. Yes, we give money to the poor on the Democratic side and the middle class because it is the right thing to do. It actually happens to be also the smart thing to do for the economy and for jobs.
So when people say the Senator has flip-flopped on taxes, I don't understand how to say it differently. I voted for tax cuts when we had a surplus. I am challenged about how to address this package--I most certainly want to extend it for the middle class and to extend help for the unemployment. People are unemployed not because they are lazy, for Heaven's sake. They are unemployed because there are no jobs for them. It is some of the longest term unemployment we have had in our Nation's history.
So the other side is making us feel--they say: We gave you the unemployment, so surely you should give us the tax breaks for millionaires. Is that really an equal trade? If somebody believes that actually--I have heard commentators say it on different networks. I have been on these news programs, and they say: You got the unemployment, so that is a fair trade.
If there is a Senator who thinks that, I would love them to say that next week. I think that would be great to have on the record. So this situation is what the Louisiana families in my State are facing. Obviously, I would like to provide tax relief for these families. We have less than 1.8 percent who are making over $200,000. I am checking right now to find out how many families in Louisiana actually make over $1 million. I was told it was 3,200. That number might be too high. The Senator from West Virginia told me that in his State it is 599 people who make over $1 million a year. Yet it looks like that is the package.
We are going to be in a tough situation, without amendments, having to vote for it. I will see what my constituents are saying over the weekend. I want to say one more thing about this inequity and turn it back over to the Senator from Vermont. Besides the other things that were put into the Record about the inequality, the challenges before our country right now, I came across some data, and I would like the Senator to be on the floor to listen to this.
Mr. SANDERS. I am not going anywhere. You can take as much time as you want.
Ms. LANDRIEU. I wasn't sure what his time was. I am chair of the Small Business Committee. I have many hearings, but I had one in the last 3 months and some of the testimony was startling to me. I wanted to share this with the Senator.
It is in the 2000 census data. Someone was testifying about why this recession was taking so long to get over. They were giving figures about the status of the economy and the wealth or incomes of broad sections of the population.
They said sort of off the cuff--like, ho-hum, today is Monday.
They said: By the way, the average net worth, the median net worth of households in America, the average--median net worth--not income but net worth--of households is $67,000. That is very interesting. I thought it would be higher than that. That is taking what you own minus everything you owe, and the difference is your net worth. I thought people might have more than that in terms of equity in their homes, a couple hundred thousand. That was concerning to me.
I said: Do you have that broken down by race, by any chance?
They said: Yes, ma'am.
I said: Would you share it? And they did. I will share it with you because I have not recovered from what I heard.
The gentlemen said to me: Well, for White families in America, the average median--50 percent more, 50 percent less--is $87,000. For Hispanic families, it is $8,000. For African-American families, it is $5,000.
I want to repeat that. Fifty percent of all families in America who are Caucasian, their net worth is $67,000 or less. For Hispanic families in America, 50 percent of all Hispanic households, their net worth is $8,000. For African-American families today, in 2010--40 years after the peak of the civil rights movement and 150 years or so after the Civil War and all the things we think we have done to try to get people in a more equal position in our society--it is $5,000. That is including home equity--or home ownership, I mean. Without home ownership, that net worth for African-American families falls to $1,000.
So when people say people are in pain and suffering and anxious and they can't buy anything, you wonder why. There is no cushion in a recession like this. How brutal is a recession to people who have so little a cushion? For a middle-class family of any race, if you lose your job, you can get unemployment, you have some equity in your home, or maybe you have some savings you can fall back on. There is a cushion, and you can bounce back up. How brutal is this recession to millions of families in America who have no cushion? They are just hitting hard rock. They are hitting steel. There is no cushion there. You wonder why people are angry. You wonder why this tea party movement is festering, why people are so angry. I understand that anger. I am so angry myself, I don't know what to do.
Mr. SANDERS. If I can interrupt my good friend, she is right. It is no great secret that her politics and mine aren't the same on many issues. She is down here speaking from her heart, coming from the State of Louisiana, which is not radically different from Vermont. We have a lot of struggling families.
I want to reiterate a point. She has been talking so effectively about the stress on the middle class and working families in her State and around the country. I want to reiterate this point. I am not here to pick on George W. Bush, but during his 8 years, the wealthiest 400 Americans--pretty high up guys; that ``ain't'' the middle class no matter how broadly you define that--their income more than doubled--got that--while their income tax rate dropped almost in half.
The wealthiest 400 Americans now earn an average of $345 million a year and pay an effective tax rate of 16.6 percent, on average. That is the lowest tax rate for wealthy individuals on record.
So the point is, Senator Landrieu and I are talking about the people out in the real world who are working longer hours for lower wages. Median family income has declined. People are scared that for the first time in our modern history their kids will have a lower standard of living than they had.
Is the Senator hearing that in Louisiana?
Ms. LANDRIEU. I am.
Mr. SANDERS. Senator Landrieu is asking a simple question, and millions of people are asking the same question. The wealthiest people are becoming much richer, the middle class is declining, and poverty is increasing. Who decided? Who said billionaires need an extended tax break and a reduction in the estate tax? It is a very simple question she is asking. It is a very profound question because it speaks to what this country is all about. I didn't mean to interrupt.
Ms. LANDRIEU. I thank the Senator from Vermont. I commend to my colleagues this report entitled ``Income Inequality and the Great Recession'' from Senator Schumer and the Joint Economic Committee. I ask unanimous consent that the Executive Summary be printed in the Record.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
Income Inequality and the Great Recession
This week, the U.S. Census Bureau will release new statistics on income inequality in the United States, allowing for an assessment of the impact of the Great Recession on our nation's income distribution. In preparation for that data release, the Joint Economic Committee (JEC) analyzed income inequality in the United States in the years preceding the Great Recession, and found:
Income inequality has skyrocketed. Economists concur that income inequality has risen dramatically over the past three decades.
Middle-class incomes stagnated under President Bush. During the recovery of the 1990s under President Clinton, middle-class incomes grew at a healthy pace. However, during the jobless recovery of the 2000s under President Bush, that trend reversed course. Middle-class incomes continued to fall well into the recovery, and never regained their 2001 high. The first year of the Great Recession dealt a sharp blow to middle-class families, who had not yet recovered from the pain of the last recession.
High levels of income inequality may precipitate economic crises. Peaks in income inequality preceded both the Great Depression and the Great Recession, suggesting that high levels of income inequality may destabilize the economy as a whole.
Income inequality may be part of the root cause of the Great Recession. Stagnant incomes for all but the wealthiest Americans meant an increased demand for credit, fueling the growth of an unsustainable credit bubble. Bank deregulation allowed financial institutions to create new exotic products in which the ever-richer rich could invest. The result was a bubble-based economy that came crashing down in late 2007.
Policymakers have a great deal of leverage in mitigating income inequality in order to stabilize the macro-economy. In the decades following the Great Depression, policy decisions helped keep income inequality low while allowing for continued economic growth. In contrast, policy decisions made during the economic expansion during the Bush administration failed to keep income inequality in check, and may have exacerbated the problem. Policymakers working to rebuild the economy in the wake of the Great Recession should heed these lessons and pay particular attention to policy options that mitigate economic inequality.
Ms. LANDRIEU. Mr. President, I want to go back to a point about this so that I am not misunderstood. I guess no matter what I say critics will take it and do what they will with it, but I am not against tax cuts. I voted for them many times in my life when we had surpluses. I have even been pressured to vote for things, and have done so, when we didn't have the surpluses, but they were targeted and focused and there actually had been some rational thought attached to where we might need to borrow some money and spend it, such as in the stimulus package, because in that instance, if we didn't get some spending going, we could slip further into a recession. Even conservative economists counseled us on parts of the stimulus package.
By the way, contrary to popular myth, that was about the same size as this package. This package is actually larger. This package is going to be $900 billion. The stimulus was $800-something. It was less. But in that stimulus package about a third was tax cuts. Remember that, Mr. President? A third of that was tax cuts. It wasn't all just spending. But every economist--conservative, liberal--said the government has got to step up and spend in this economy because this place is shutting down--meaning the country--and so we did.
People will still argue on the other side that was the wrong thing to do and we shouldn't have done it. But I am here to say that without the $2.8 billion in tax cuts and spending that went to Louisiana through that stimulus package--and my State legislature is struggling to balance the budget, as I speak; they have been in the budget committee over the past couple of weeks--I don't know where we would be today. I don't know how much went to Vermont or California or how much went to Colorado, but people say it was a failure. Well, let me say that $2.8 billion went to our State and it warded off some Draconian cuts that our cities and counties and parishes would have had to make, and it warded off tax increases so that Governors didn't have to raise taxes and mayors didn't have to raise taxes all over this country. Some of them have done that, but they have tried to limit it because they know how fragile this middle class is.
I am not unmindful of the importance of providing tax cuts when we can. But when we are asked to vote on a package that has a provision such as this, that borders on moral recklessness, I have to catch my breath and ask: Whose idea was this? I wish to know.
It is going to be a long weekend. It will be a long 30 hours of debate. I am glad the Senator from Vermont is going to make sure we take every one of those 30 hours postcloture, if we even get to cloture on this bill, because I think the American people are going to be waiting around to find out whose idea was that.
Mr. SANDERS. If I can interrupt the Senator from Louisiana, because she makes a very important point, we are a democracy and it is the American people who make the decisions. I know she shares with me the belief that the American people have to become engaged in this very important debate, which has a lot to do with the future of this country.
Senator Landrieu asks a very simple question, which I would like--and I think the American people would like--an answer to: Whose brilliant idea was it--at a time when we have seen an explosion in income and wealth to the people on top, while their tax rates have already gone down--that we drive up the national debt and ask our kids to pay higher taxes to pay off that debt in order to give tax breaks to people who don't need them? That is the question Senator Landrieu is asking. I think the American people need an answer to that, and my hope is that millions of Americans will start calling their Senators to ask that question.
Ms. LANDRIEU. Was it your idea? Whose idea was it?
Mr. SANDERS. Whose idea was it?
The irony here--and I think Senator Landrieu made this point as well--is that there are plenty of millionaires out there who say: I don't need it. I am more worried about the crumbling infrastructure or our kids out there than giving me a tax break I don't need. Thanks very much. That is what Warren Buffett has said. It is what Bill Gates has said. Ben Cohen of Ben & Jerry's has said it. Many millionaires have said it. We are giving some of these guys something they do not even want.
I want to thank Senator Landrieu very much, not only for her being here today--and please continue--but for raising these important issues.
Ms. LANDRIEU. One more point, and then I will turn this back over to the Senator.
I was on the Greta Van Susteren show last night. I have said Greta is always a tough interviewer, but she is fair, so I am happy to go on her program. And it was a tough interview. But we debated these things, and I think that is important. I think it is important to debate them here, on TV, and in townhall meetings. That is what democracy is all about. But she said to me: Senator, we are so frustrated. Nobody ever hears anybody say they want to cut spending, or they want to eliminate waste, fraud, and abuse. So let me concede this point. For me, I don't think we do talk enough about eliminating the waste, eliminating the fraud, and eliminating the abuse. I think we should spend more time, and I am going to commit myself to that, because I know the American people say: Every time we ask for a tax cut, you say we can't afford it. Why don't you cut some spending, et cetera.
Let me state that I voted for tax cuts. I am for tax cuts. I have even given tax cuts to people who do make higher than the $75,000 or $100,000 or $250,000, when we had a surplus, when I thought it was the fiscally responsible thing to do. Other people can disagree, but this is the first time I am being asked to provide a tax cut for people earning over $1 million with this kind of deficit.
But I will say this: I am going to commit myself to trying to find places we can cut. I support the Federal freeze. I support it in appropriations this year. Senator Inouye is taking down on the appropriations level $8 billion below the President's budget, and if we need to go even further, perhaps we can. But we have to be careful where we cut, and I ask people to be rational about this. Do you want to cut Pell grants? I looked at this the other day, I say to the Senator from Vermont, particularly, because of Claiborne Pell. When the Pell grant went into effect, it was a grant to help kids go to school. That is still what it does. But in the 1970s, the Pell grant paid 100 percent of the average 2-year college. It only pays 50 percent of that today. I think I remember it paid almost 60 percent of a 4-year public college. It only pays like 40 percent or less than that today because we have not kept up with it.
A program such as the Pell grant is a powerful tool to lift the middle class, or lift the poor out of poverty and expand the middle class. So when we cut programs, let's be careful to cut the waste, to cut the abuse, but let's not cut the heart out of what we are arguing for--effective tools to expand the middle class--or we will never get out of this recession. Because I promise you, the few thousand people in this country--or few tens of thousands, I don't know how many who make more than $1 million a year--are not going to lift this country out of a recession. It is going to be the middle class. And if we don't help them get ahead, if we don't help them get training, this recession will go on for a long time.
Mr. SANDERS. I want to add the idea that when we think about cutting back on education--whether it is childcare, primary school, or college--we are simply cutting off our noses to spite our faces. The Senator is aware that where, at one time in this country, we used to lead the world in the number of our people who graduated college, we are now falling very significantly. How do you become a great economy if you don't have the scientists, the engineers, the teachers, the professionals out there, and many other countries around the world are having a higher percentage of their high school graduates going to college? That is something we have to address. Anyone who comes forward and says cut education is moving us in exactly the wrong direction.
Ms. LANDRIEU. Exactly. And I am for more accountability. If some of my colleagues on the other side think some of that money is being wasted or we are not getting our bang for the buck, don't come with an across-the-board cut to Pell grants, come with a plan to change it, saying these are the requirements for our universities: You have to graduate 65 percent of the kids who start or you have to have certain benchmarks before you can apply for these loans or for these grants.
This country is at a crossroads, and I know the President and his advisers understand the extraordinary challenges before this country. I hope the Members understand the economic danger, the minefield we are in here. We can't make too many mistakes here. There is no cushion left. There is no surplus left. We are down to below bottom. So when we do big things such as this--and this is a big thing, this $980 billion big package, it is almost $1 trillion--we need to do it the best way we can do it. We can't do it recklessly or frivolously. We can't do it for ideology, for gosh almighty's sakes.
I wish we could have fought harder for a better package. I have not yet decided how I am going to vote, but I have said if I vote, I am not voting quietly. I may vote yes, I may vote no, but I will vote with a loud voice about what I am concerned about, what I believe my constituents are concerned about, and I will try my best to help them, to support them, and to make the best decisions we can next week. But this has been troubling me, and so I wanted to come to the floor and speak about it, and I thank the Senator from Vermont.
I yield the floor.
Mr. SANDERS. I thank Senator Landrieu very much for coming, and I think she knows that on many issues her views and mine are different, but on this issue, I believe we are speaking for the overwhelming majority of the people, not just of Louisiana and Vermont but all over this country, who cannot understand why we give tax breaks to billionaires to drive up the deficit and the national debt at a time when the deficit and the debt are so large. I want to thank Senator Landrieu very much for her very articulate and heartfelt statements. I appreciate that very much.
Mr. President, I was mentioning a moment ago the great contrast about what is happening in our economy between the people on top and everybody else. I indicated that the top 400 families during the Bush Presidency alone saw their income more than double, at the same time, by the way, as their income tax rates dropped almost in half. So that is what is going on for the people on top, who would make out extremely well under this agreement between the President and the Republican leadership.
But I also talked about what is going on with the middle class and working families of this country. If you can believe it--and this is quite amazing--since December of 1999--and this was in a Washington Post article in January--there has been a zero net job creation--a zero net job creation. Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999, and that number is sure to have declined further in 2009.
What does that mean? It means that when you look at a 10-year period--and people work very hard--in many instances--actually, in the vast majority of instances--you will have both husbands and wives working and still not making enough money to pay the bills. In fact, they have less money than they used to have.
When I was a kid growing up, the experience was that in the middle class one person--I know young people will not believe this, but it is true--years ago in the United States, before the great global economy, before robotics, before computers, one person could work 40 hours a week and earn enough money to pay the bills for the family. One person. Today, in Vermont and throughout this country, overwhelmingly you have husbands and wives both working. And in some instances they are working very long hours. But here is the rub: Today, a two-income family has less disposable income than a one-income family did 30 years ago because wages have not kept up with inflation, and because health care costs have soared, the cost of education has soared, housing has soared, and basic necessities have soared. This is a description of a country moving in the wrong direction.
Thirty years ago, a one-income family had more disposable income than a two-income family does today. And there are a lot of reasons for that. Maybe we will touch on them a little bit later. But one of them, in my view, has to do with our disastrous unfettered free trade policy, which has resulted in the shutdown of tens of thousands of factories in this country. Under President Bush alone, we lost some 48,000 factories. We went from 19 million manufacturing jobs to 12 million manufacturing jobs, and in many instances, those were good jobs.
Where did they go?
Some shut down for a variety of reasons. But others shut down because we have trade laws that say you have to be a moron not to shut down in America because if you go to China, go to Vietnam, go to Mexico, go to a developing country, you pay workers there a fraction of what you are paying the workers in America. Why wouldn't you go? Then you bring your products right back into this country.
A couple weeks ago, my wife and I did some Christmas shopping. Frankly--we went to couple stores--it is very hard to find a product manufactured in the United States of America. You do not have to have a Ph.D. in economics to understand we are not going to have a strong economy unless we have a strong manufacturing capability, unless companies are reinvesting in Colorado or Vermont, creating good jobs here. You do not have an economic future when virtually everything you are buying is coming from China or another country.
We are not just talking about low-end products. These are not sneakers or a pair of pants. This is increasingly high-tech stuff. We are forfeiting our future as a great economic nation unless we rebuild our industrial base and unless we create millions and millions of jobs producing the goods and the products we consume. We cannot continue to just purchase products from the rest of the world.
When we talk about the collapse of the middle class, it is important to also recognize the fact, as reported in USA. Today last September, ``the incomes of the young and middle-aged--especially men--have fallen off a cliff since 2000, leaving many age groups poorer than they were even in the 1970s.'' The point being, for young workers, for example, when we had a manufacturing base in America in the 1940s, 1950s, 1960s, you could graduate high school and go out and get a job in a factory. Was it a glamorous job? No. Was it a hard job? Yes. Was it a dirty job? In some cases.
But if you worked in manufacturing, and especially if you had a union behind you, the likelihood is you earned wages to take your family into the middle class, you had decent health care coverage, and you might even have a strong pension. Where are all those jobs now? During the Bush years alone, we went from 19 million jobs in manufacturing to 12 million jobs, a horrendous loss of manufacturing jobs. If you are a kid today in Colorado or Vermont and you are not of a mind, for whatever reason, to go to college--30 or 40 years ago you could go out, get a job in factory, and make some money. Today, what are your options? You can get a minimum wage job at McDonald's or maybe at Walmart, where benefits are minimal or nonexistent. That is a significant transition of the American economy.
I wish to tell you something else, when we talk about manufacturing. It did not get a whole lot of publicity, but it is worth reporting. The good news is, we have recently seen--after the loss of many thousands of jobs in the automobile industry--we have seen the auto companies, Chrysler and others, starting to rehire. What I think has not been widely reported is, the wages of the new workers who are being hired are 50 percent of the wages of the older workers in the plant. You are going to have workers working side by side, where an older worker who has been there for years is making $25, $28 an hour, and right next to him a new hire is making $14 an hour. If you understand that the automobile industry was perhaps the gold standard for manufacturing in America, what do you think is going to happen to the wages of blue-collar workers in the future?
If all you can get with a union behind you in automobile manufacturing is $14 an hour today, what are you going to make in Colorado or in Vermont? Are you going to make $10 an hour or $11 an hour? Is that enough money on which to raise a family? Are you going to have any benefits? Unlikely.
That is what happens when your manufacturing base disappears and that, to a significant degree, in my view, is a result of a disastrous trade policy. I have to tell you--and I think in hindsight most people agree I was right--when I was in the House and all the corporations in the world were telling us how great NAFTA would be, free trade with Mexico, I did not buy it. I was right. They would say: Oh, it is going to be even better. We will have free trade with China. Think about how large China is and all the American products they are going to buy over there to create all kinds of jobs in the United States. I never believed it for a moment.
I will tell you a story. I was in China a number of years ago and as part of a congressional delegation we went to visit Walmart in China. The Walmart store, amazingly enough, looked a lot like Walmart in America--different products, but it looked like the same style. You walk up and down the aisles and you see all these American products. I remember Wilson basketballs, Procter & Gamble soap products--different products there for the Chinese, but a lot of the products were American products. They looked pretty familiar.
I asked the guy who was there with us who was, I believe, the head of Walmart Asia--the guy in charge of all the Walmarts in Asia--I asked him a simple question: Tell me, how many of these American company products are actually manufactured in the United States?
He was a little bit sheepish and a little bit hesitant and he said: Well, about 1 percent. Obviously, what everybody knew, it is a lot cheaper for the American companies to set up plants in China, hire Chinese workers at 50 cents an hour, 75 cents an hour, whatever it is, and have them build the product for the Chinese markets than it is to pay American workers $15 an hour, $20 an hour, provide health insurance, deal with the union, deal with the environment. That is not a great revelation. I think anybody could have figured that one out. But the big money interests around here pushed it and Congress and President Clinton, at that time, signed it and we were off and running.
When we look at why the middle class is in the shape it is--and it is important to make sure everybody understands it because one of the things that happens in this world, it is human nature I suppose, is that people feel very guilty and responsible if they are not taking care of their families. Right now we know, with unemployment so high--this is not just cold statistics we are throwing out. These are people who not only were earning an income that supported their families, they had a sense of worth. Every human being wants to be productive. They want to produce something. They want to be part of something. They want to go to work, earn a paycheck, bring it home. You feel good about that.
Do you know what it does to somebody's sense of human worth when suddenly you are sitting home watching the TV, you can't go out and earn a living? It destroys people. People be come alcoholic. People commit suicide. People have mental breakdowns because they are not utilizing their skills. They are no longer being a productive member of society. That is what unemployment is about.
I think one of the reasons unemployment is so high, one of the reasons the middle class is collapsing, has a lot to do with these disastrous trade policies. I have to tell you, as we have been talking about all day long, these policies, these tax breaks, all this stuff emanates from corporate leaders whose sense of responsibility is such that they want themselves to become richer, they want more and more profits for their company, but they could care less about the needs of the American people.
I remember there was one CEO of a large, one of our largest American corporations, and he said: When I look at the future of General Electric, I see China, China, China, and China. By the way, we ended up bailing out that particular corporation. He didn't look to China to get bailed out, he looked to the taxpayers of this country.
But the word has to get out to corporate America, they are going to have to start reinvesting in the United States of America. They are going to have to start building the products and the goods the American people need rather than run all over in search of cheap labor. That is an absolute imperative if we are going to turn this economy around.
According to a Boston Globe article published last year--let
me quote what they say. Again, I am trying to document here what is happening to the working class of America because I do not want individual workers, somebody who may be hearing this on the TV, the radio, to say: It is my fault. There is something wrong with me because I can't go out and get a job.
You are not alone. The entire middle class is collapsing. Our economy is shedding millions and millions of jobs. I know there are people out there trying hard to find work, but that work is just not there. That is why we have to rebuild the economy and create jobs. This is what the Boston Globe said last year: ``The recession has been more like a depression for blue-collar workers. .....''
This is an important point to be made here. When we talk about the economy we kind of lump everybody together. That is wrong. The truth is right now in the economy people on top are doing very well. The unemployment rate for upper income people is very low. They are doing OK. That as opposed, as this Boston Globe article points out, to what is happening to blue collar workers: ``The recession has been more like a depression for blue-collar workers, who are losing jobs much more quickly than the nation as a whole. .....''
This is the working class of America. `` ..... the Nation's blue-collar industries have slashed one in six jobs since 2007. .....'' Let me repeat that. It is just astronomical, a fact.
..... the nation's blue-collar industries [manufacturing] have slashed one in six jobs since 2007, compared with about one in 20 for all industries, leaving scores of the unemployed competing for the rare job opening in construction or manufacturing, with many unlikely to work in those fields again.
Up to 70 percent of up employed blue-collar workers have lost jobs permanently, meaning their old jobs won't be there when the economy recovers.
That is the Boston Globe, last year. When we talk about the economy, what we have to do is understand that blue-collar workers, middle-class, young workers are hurting very much. In the context, again, of the debate we are now having, the discussion of whether we should approve the agreement reached between the President and the Republicans on taxes, the idea of not significantly investing in our economy but, rather, giving tens of billions of dollars to the very rich in more tax breaks makes no sense to many of us.