This 1-year extension could well become a permanent extension, and if it becomes a permanent extension, you are diverting a huge amount of money from Social Security and you are weakening the entire financial structure of Social Security in this country, which I expect is exactly what some would like to do.
President Obama says: Well, not to worry. It is only 1 year. Don't worry, that 1 year is going to be covered by the Federal Government.
So for the very first time, out of the Treasury Department, money is going to come into Social Security, which has always been 100 percent dependent, as it should be, on payroll taxes. For the first time, we are breaking that. Around here you do it once and it is going to continue.
Barbara Kennelly, the President of the National Committee to Preserve Social Security and Medicare, says:
Cutting these contributions to Social Security signals the beginning of the end.
So we should be very, very, very mindful of that. We should not support this payroll tax. It is one of the more dangerous provisions in this agreement.
But let me get back now, if I might, to what Bruce Bartlett--a former top adviser for Presidents Reagan and George H.W. Bush--recently wrote:
If allowing the Bush tax cuts to expire is the biggest tax increase in history--one that Republicans claim would decimate a still fragile economy--then surely the expiration of a payroll tax holiday would also constitute a massive tax increase on the working people of America. Republicans would prefer to destroy Social Security's finances or permanently fund it with general revenues than allow a once-suspended payroll tax to be reimposed. Arch Social Security hater Peter Ferrara once told me that funding it with general revenues was part of his plan to destroy it by converting Social Security into a welfare program rather than an earned benefit.
Once again, that is a quote from Bruce Bartlett, a former adviser to President Reagan and the first President Bush. So what he is saying is--and this is maybe one of the sleeping issues in this agreement between the President and the Republican leadership--we may be taking a huge step forward in destroying the most important program in this country--which is Social Security--by diverting now $120 billion, and in the future hundreds and hundreds of billions of dollars from this program so that, in fact, it will not be there for our kids and our grandchildren.
Mr. President, the fourth point I want to make in opposition to this agreement--and one that I have made before and read a little bit about--is that while some of the business taxes in this agreement may work to create jobs, some of them won't. The more important point is that economists on both ends of the political spectrum believe the better way to spur the economy and to create the millions and millions of jobs we must create is to rebuild our crumbling infrastructure.
Just a few minutes ago I read excerpts from a very good book by a friend of mine, Arianna Huffington, entitled ``Third World America.'' The purpose of her book was to give us a warning that if we as a nation do not get our act together in a variety of ways, including our physical infrastructure, we are headed down the pike to be a Third World nation.
According to the American Society of Civil Engineers, we as a nation need to spend $2.2 trillion in the next 5 years alone in order to take care of our infrastructure needs.
Unfortunately, this agreement, signed by the President and the Republicans, doesn't put one penny into infrastructure. So if we are serious about creating jobs, if we are serious about making sure our economy can be competitive in the global economy, we have to be watching what other countries are doing, and they are investing far more than we are.
The stimulus package, by the way, will help us very much in Vermont in this area. Right now, if you were to drive around the State of Vermont--and I think in many other places in this country--and you took out your cell phone, you would find it very hard to make calls in a number of areas of the State. A few months ago, I was literally a mile and a half away from our State capital in Montpelier, near Northfield, VT. I could not make a telephone call with my cell phone. That is true in many parts of Vermont and in many areas of America. We are lagging behind many other countries in terms of the accessibility of cell phone service and broadband--and broadband.
So I am happy to say that in Vermont we received a very generous grant through the stimulus package that will help us, and other States did the same. But those are areas where we have to invest. You have to invest in broadband and make sure cell phone service is available in rural America--all over America. I talked a moment ago about our train services. There are train services today which are worse than they were 30 or 40 years ago. It takes longer to get from destination A to destination B. China is investing huge sums of money building high-speed rail at a rate that we could not even dream about.
So while in this agreement we do have money for business tax cuts, I do not think that is the best way to invest taxpayer money if we are serious about creating the jobs that we need. Corporate America already is sitting on close to $2 trillion cash on hand. I don't know that more tax breaks are going to help them very much. I think that it is a lot smarter--and I think most economists agree with me--to be investing in our infrastructure, both to create jobs now and to improve our competitiveness in years to come.
Further, Mr. President, I want to say a word on this--I mentioned this earlier today: President Obama talks about this being a compromise agreement; you can't get everything you want. I certainly understand that. But one of the aspects of the compromise he points to is an extension of unemployment benefits for 13 months. Well, let me be very clear. I think at a time when 2 million of our fellow Americans are about to lose their unemployment, at a time when unemployment is extraordinarily high--long-term unemployment is, I think, higher than at any point on record, with people looking for work month after month after month and not finding it--it would be morally unacceptable if this country did not extend unemployment benefits for those workers for 13 months. Yet the President sees this as a great sign of compromise.
I would argue the contrary. I would suggest to you that for the past 40 years, under both Democratic and Republican administrations and under Democratic and Republican leadership in the Senate or in the House, whenever the unemployment rate has been above 7.2 percent,
unemployment insurance has always been extended. In other words, this has been a bipartisan policy for 40 years. I don't want to see us seeing and accepting as a really great give on the part of Republicans--something that they are giving us as part of a compromise--when it has been bipartisan policy for 40 years under Democratic and Republican leadership. So I don't accept this as a great gift. I think the American people understand you don't turn your backs on unemployed workers--people who have been unemployed for long periods of time. You don't allow those people to lose their homes. You don't force these people out into the streets. You don't take away what shreds of dignity they have remaining. That is not what you do. That has always been Republican philosophy as well as Democratic philosophy. This is not a great gift. So I do not accept this is a compromise.
Let me be very clear. As I said earlier, I do believe there are positive parts of this agreement that must be maintained as we move forward toward a better agreement. Let me cite some of them that make a lot of sense to me and that I believe we have to retain and build on.
The obvious one, in addition to extending unemployment benefits, is we have to extend middle-class tax cuts for 98 percent of Americans. As I have been documenting over and over again today, we are looking at a situation where the middle class in this country is collapsing. Under President Bush, the median family income went down by $2,200. People are losing their health care. It would be asinine, it would be unacceptable if the middle class did not continue to receive the tax breaks that were developed in 2001 and 2003. That, to a large degree, is what this fight is about. We have to extend those tax breaks to the middle class but not tax breaks to the millionaires and billionaires.
Further, there are some other good provisions in this agreement--the earned-income tax credit for working Americans and the child and college tax credits--and they are very important. They will keep millions of our fellow Americans from slipping out of the middle class and into poverty, and they will allow millions of our fellow citizens to send their kids to college.
I just talked a moment ago about the fact that we have over 100,000 families in this country where kids graduate high school wanting to go to college but can't afford to do so. This proposal will help them do that, and that is right.
But despite the fact there are some good and important provisions in this proposal, when we look at the overall package, when we look at a $13.7 trillion national debt and a declining middle class, I think what we have to say is this package just doesn't do it. It is just not good enough.
The President says he knows how to count votes. I understand that. He says: Well, you had a couple of votes here to make sure that we would not give tax breaks to millionaires. And the President has been very clear he does not want to do that. I understand that. But he says: What choice do I have?
I think the answer is that we have to fight this issue. In my view, the solution ultimately will not be resolved inside the beltway, in the Senate or in the House. It will be resolved when millions of Americans get on their telephones, get on their computers, and let their Senators and their Members of the House of Representatives know they are profoundly outraged that at a time when the rich never had it so good, and when we have a huge national debt, this agreement contains huge tax breaks for those people who don't need it. That is how we defeat this.
I am not sure that all alone here in the debate I am going to turn any of my Republican or even some Democratic colleagues around.
But I do believe that, if people all over this country stand up and say: Wait a minute, how much do the richest people in this country want? I just documented a few moments ago that the top 400 wealthiest people in this country saw a doubling of their income under President Bush--a doubling of their income--and tax rates went down. When is enough enough? How much do they need?
I think and I would hope, by the way, that this is certainly not just a progressive issue. I am a progressive. This is a conservative issue. Year after year, I have heard our conservative friends telling us: My goodness, we just cannot continue to raise the national debt; we have to do something about this unsustainable deficit. This agreement grows, increases the national debt. What kind of honest conservative can vote to increase the national debt? And if they do, please, no more lectures here on the floor of the Senate. Your hypocrisy will be known to everybody. Don't tell us you are concerned about the national debt and give tax breaks to billionaires and raise the national debt so our kids and grandchildren in the middle class will have to pay higher taxes in order to pay off the debt that was caused by you giving tax breaks to millionaires. Please, no more lectures on that issue. Just say: OK, rich people contributed to my campaign; I have to do what they want. That will be honest. Please, no more lectures about your concern about the national debt.
Again, I want to reiterate this point. Everybody says: Don't worry, these are only 2 years. These are not, in my view, 2 years. If you do them for 2 years, the same old argument will be back 2 years from now, and we will be in the midst of a Presidential election. What our Republican friends will say, as sure as I am standing here--and I am glad we have a gentleman putting this in the Congressional Record. I want people to go back to the Congressional Record. I am sure I will be proven right that 2 years from now our Republican friends will come back and they will say: Oh, my word, if you repeal these tax breaks, you are going to be raising taxes. We can't do that.
What will make the situation even more difficult 2 years from now than today is you have President Obama--if he is the Democratic candidate 2 years from now, he will say: I don't believe in these tax breaks for the rich, and I will do my best to repeal them. But his credibility has been damaged because that is what he said in the last campaign. That is what he has been saying all along. The President does not believe in extending these tax breaks for the wealthy. I know that. Everybody knows that. But if he caves in now, who is going to believe he is not going to do the same thing 2 years from now? That is the damage.
Then I think what is even more troublesome is that once we move down the path of more tax breaks for the very wealthy, we are accepting the heart and soul of trickle-down economics, which has been, to my mind, a proven disaster, a failure. I remind the listeners and my colleagues that these tax breaks have been in existence since 2001. They were in existence throughout almost all of President Bush's tenure. The end result was that we lost 600,000 private sector jobs--lost 600,000 private sector jobs, the worst job performance record maybe in the history of this country. Trickle-down economics does not work.
Giving tax breaks to billionaires does not stimulate the economy. Helping working families and the middle class get decent jobs and tax breaks for people who need the money and are going to spend the money is what creates jobs, not giving tax breaks to billionaires who do not need it and who are not going to spend it.
Again, the point I want to make here is that if people think, oh, this is just temporary, this is just 2 years, I believe they are kidding themselves. I believe that 2 years from now, the debate will be about extending them or perhaps even making them permanent.
At a time, as I mentioned earlier, where the top 1 percent has seen a huge increase in the percentage of income they earn in this country--going from 8 percent in the 1970s to 23.5 percent now--and where the top 1 percent now earns more income than the bottom 50 percent, it is totally absurd to be giving tax breaks to people who do not need them, and it is not good economics, as well.
Here is the other irony, as I also mentioned earlier--I guess by this time, I am going to be doing a little repetition here. But as I mentioned earlier, you have a number of millionaires and some of the richest people in this country who will benefit from these tax breaks. Do you know what they are saying? Do you know what Warren Buffett is saying? Do you know what Bill Gates is saying? Do you know what Ben Cohen from Ben & Jerry's is saying? Do you know what many other wealthy people are saying? Hey, thanks very much; I don't need it. It is more important that you invest in our children. It is more important that we protect working families. We are doing just fine, thanks. Our incomes have soared, our tax rates have gone down, and we don't need it. In other words, we have this absurd situation that not only is this bad public policy, we are actually forcing tax breaks on people who don't need them and don't even want them. The richest people in this country--Bill Gates, Warren Buffett--we don't want it.
Here is something else. Here is something else that needs to be understood. What the Republicans are doing in this agreement is driving up the national debt. You may think that is not what the Republicans really believe in. They are supposed to be conservatives. They don't want a high national debt. Why would they be giving tax breaks to the rich and driving up the national debt? There is a rationale. These guys are not dumb, and I think they know what they are doing. Here is what the argument is. If you drive up the national debt and the deficit, you then come back to the floor of the Senate and you say: You know what, this national debt and deficit is unsustainable. The only way we can deal with it now is by cutting, cutting, cutting. We are already beginning to hear how some of those thoughts are going to develop.
There was, as you know, a deficit reduction commission appointed by the President. When I heard who was going to be chairing that commission and cochairing it--Alan Simpson, a very nice gentleman but a very conservative gentleman who has attacked Social Security for a very long period of time, and Erskine Bowles, a conservative Democrat--I had serious doubts about what was going to come out of that commission. The good news is, they needed 14 votes to pass their recommendations and they didn't get the 14. But a lot of the ideas that Senator Simpson and Mr. Bowles developed are going to be filtering around this institution.
What the Republicans will say is that when you have a huge debt--which they helped create--we are going to have to cut. What are we going to have to do? As you recall, that deficit reduction commission recommended a savage cut--over 20 percent--in Social Security benefits for young workers--major cuts. There was talk about raising the Social Security age up to, I think, 69. They are talking about cuts in Medicare, cuts in Medicaid, cuts in education.
Right now--I think I have documented it a dozen times--it is a horrendous situation when so many of our young people cannot afford to go to college, and the others who do go to college and graduate end up on average something like $25,000 in debt. These guys on the deficit reduction commission were recommending that the interest on that debt be accrued while students are in college.
Here we have us slipping behind the rest of the world in terms of our percentage of college graduates, and this recommendation is on young people, who do not have a lot of money, who were borrowing money, that they will have to pay more to go to college. You are going to see it.
Here is the argument--good, it is going to be in the Congressional Record. Check it out, see if I am right. The argument will be: The deficit is going up, the national debt is going up. We have to attack and cut Social Security, Medicare, Medicaid, veterans programs.
This year--Senator Landrieu from Louisiana made this point a little while ago--and I think this is roughly right--our soldiers, men and women in the Armed Forces, are going to get a 1.8-percent increase in their salaries this year, 1.8 percent for people putting their lives on the line to defend this country. A $250 check for 50-plus million seniors and disabled vets--we
couldn't pass it; too much money--$14 billion. They are going to come back and cut and cut in the name of trying to deal with the high deficit which they are now increasing. That is an issue we must be addressing.
In my view, while there are some good parts of the proposal, it is certainly one that should be significantly improved. I believe the way it can be improved is by the American people beginning to get involved in the process.
I can tell you, as I said earlier, I don't know how the calls are going today in my office because I have been here, but for the last 3 days, we have received thousands of phone calls and e-mails, and over 98 percent of them have been against this proposal. The American people believe, the people in Vermont believe we can do a lot better job in crafting a proposal that represents the middle class and our kids and not just the wealthiest people in this country.
When we talk about this proposal negotiated by the White House and Republican leadership, again, it has to be put within the broad context of what is going on in America. That context is not a pretty picture. That context requires us to understand that the middle class, which has been the backbone of this country for so very long, is in the process of disappearing. That context makes us understand that millions of families in this country are worried, parents are worried, not just about their own lives--they are prepared to work 50 or 60 hours a week; they are prepared to cut back on their own needs. I think what is hurting them more deeply is the kind of future they are contemplating for their children. They are worried that, for the first time in the modern history of America, their kids will get jobs that will pay them lower salaries than what the parents have earned. They are worried that unemployment will be much more likely for their kids than for themselves. They are worried that while they were able to scrape through--in my case, I was able to scrape through college. I borrowed some money, did some jobs, and made it like millions of other people. They are worried that with the high cost of a college education and the reduction in their real earnings, they are not going to be able to send their kids to college. I have received e-mails--and I am sure you have, Mr. President--the saddest thing in the world, where you have parents who are saying: We have saved all of our lives for the thing we wanted the most, which was to be able to send our son or daughter to college, and we can't do that now. That is the overall context this agreement has to be placed within.
The issue is, again and again, the richest people in this country do not need tax breaks. They are doing phenomenally well. They have already been given huge amounts of tax breaks. It is the middle class, it is the working families, it is the lower income people we have to be worrying about and not just the wealthy and the powerful.
When we talk about why the middle class is declining, that is a tough issue. I am not here to suggest I know all of the answers. I surely don't. It is a complicated issue. Honest people have differences of opinion. But let me touch on a few areas that I think will explain why poverty is going up and the middle class is going down. One of them deals with our trade policies.
I can remember a number of years ago I was in the House of Representatives, and I can remember the lobbyists and the big money interests coming around and saying: If you guys only pass NAFTA, this would create a whole lot of jobs in the United States because we would be able to ship products made in America to Mexico. In fact, as I recall--it seems almost humorous now--what they said is: If we pass NAFTA, it would solve the problem of illegal immigration because the economy of Mexico would be so strong that people would stay in their own country and not try to sneak across the border. That is, as we look back on it, somewhat humorous, that that issue was even discussed.
But one of the areas that, unfortunately, for a variety of reasons, we have not dealt with is our disastrous trade policy. That is NAFTA; that is permanent normal trade relations; that is trade policies which have encouraged large corporations in this country to send jobs abroad because they can find workers in other countries, in low-wage countries, who are prepared to work for pennies an hour.
I think not only have we not addressed this issue from an economic perspective the way we should, I have to tell you, I know that during campaigns, a lot of Members of Congress put their 30-second ads on the air saying how concerned they are about outsourcing and our trade policy. But somehow, the day after the election, I didn't hear that discussion resume on the floor of the House or the Senate. I want to say this is true not just of Republicans but of Democrats as well.
A lot of Democrats campaign on the need for trade reform, but it does not happen. In fact, I have been here in the Senate now for almost 4 years. I have not heard one serious--underline ``serious''--discussion to explain how in recent years we have lost millions and millions of manufacturing jobs, when those jobs were the backbone of the working class of this country, not providing only decent wages but decent benefits, decent health care, decent pensions.
There was once a time in this country when a manufacturing job was a ticket to the middle class. I have to say something because I remember not so many years ago, there were national leaders saying: Well--to the young people--you do not have to worry about that factory work anymore. You do not have to be involved in production because, you know what. All of the jobs in the future are going to be nice and clean in offices and on computers.
I think we demeaned and insulted the people who built the products we consumed. There is nothing wrong with a factory job if workers there earn a decent wage and have a decent benefit. Those are the jobs that built America. I remember, and we should never forget--and we now have celebrated the anniversary of Pearl Harbor. There was a speech that President Roosevelt gave a day after Pearl Harbor, in a joint session to the Congress, when he declared war on Japan.
I saw a video of that speech. It was a remarkable speech because, at that moment, at that moment, the United States was not only fighting Japan, and we knew the fight with Germany and Nazism was right around the corner, at that point we were having to fight a war on two fronts: in Asia and in Europe. Hitler was on the march; the Japanese were in China. The Japanese had just attacked Pearl Harbor. Here we were, just about to enter the war. How could we possibly win that war?
Yet because of the manufacturing capabilities that we had at that time, and this is an amazing story, literally in 2 1/2 years the war was essentially won, obviously not completed until 1945. But because of the incredible industrial capabilities in this country, the ability to transform our manufacturing sector from a consumer-oriented sector, from automobiles into tanks; from shirts into uniforms; from hunting rifles into machine guns, within 2 or 3 years we had essentially won that war. It was an incredible effort on the part of workers in this country who transformed our economy into an industrial force that was able to supply our soldiers with the weapons that they needed to defeat Hitler and the Japanese.
Where are we today in terms of our manufacturing capabilities? As I mentioned earlier, a couple of weeks ago, my wife and I went shopping for Christmas presents, literally, in just a plain old department store. It is literally very hard to find a product not manufactured in China. It is very hard to find a product, a gift that we could buy that was manufactured in the United States of America.
I think people understand instinctively that this country will not be a major economic player in years to come if we allow our manufacturing base to continue to decline. Again, just under Bush, we went from 17 million manufacturing jobs down to 12 million jobs, in 8 years of Bush. How do we survive as a strong industrial power if our manufacturing jobs disappear?
Today there are fewer manufacturing jobs in this country than there were in April of 1941, about 8 months before the attack on Pearl Harbor; fewer manufacturing jobs today than in April of 1941. Those manufacturing jobs that are left--that are left--in many cases pay lower wages, with fewer benefits, than they did a generation ago.
In other words, we are moving not only in a decline in our manufacturing jobs but in the wages our workers earn and the benefits they receive.
I raise all of these issues to put this agreement between the President and the Republican leadership in a broader context. Today--and this is just an incredible fact, and it is absolutely frightening to the future of the middle class in this country--today, entry level automobile workers at General Motors and Chrysler now earn half as much, half as much as their peers made just 1 year ago. Instead of making $28 an hour, a middle-class wage, they are now making $14 an hour. This is in the automobile industry which has always been the gold standard for manufacturing jobs in America. If workers with a union in the automobile industry are making $14 an hour, what do you think workers in New Mexico are going to be making without a strong union?
So what you are seeing is a dissolution of the middle class, wages are going down, and in this remarkable example, a 50-percent reduction; the older workers making good wages, new workers half the wages.
Is this the future of America? Is this what our kids have to look forward to, that they are going to be earning half the wages their fathers made, that their mothers made? Is that the future? In the midst of all of that, we run up a huge national debt, send our jobs to China, and we give tax breaks to millionaires? Is that the future these kids have to look forward to? I certainly hope not. We are going to have to be tough, and we are going to have to take on some very powerful special interests to turn this whole thing around.
Today I have devoted a lot of time to our national debt, $13.7 trillion, and to our deficit, which is $1.4 trillion. But we cannot ignore our trade deficit. In 2008, our trade deficit was nearly $700 billion. Last year our trade deficit with China alone was almost $227 billion. In other words, we are purchasing a whole lot more products than we are selling.
Sometimes I get a kick out of hearing the defenders of our trade policy talk about all of the products we are exporting. Well, yeah, we are exporting a lot, but we are importing a heck of a lot more. So I think what you have is a major economic issue. That economic issue is that we are losing millions of good-paying jobs because of our disastrous trade policy. Furthermore, the jobs we have, on those jobs, we are seeing a decline in wages and in benefits.
I think the bottom line of this is not just an economic issue, it is a moral issue as well, and that is when companies such as General Electric and all the rest--I do not mean to be picking a lot on General Electric, but I have a quote I want to make. This was a few years back. I think it is important because it applies not just to General Electric. But I want people to hear this. GE is, of course, one of our major corporations. The manufacturer's recent disclosure pointed out, the taxpayers of this country, through the Fed, provided $16 billion in bailout to General Electric during the recent crisis. This is what the head, the CEO of General Electric, Jeffrey Immelt, said in 2002, December 6:
When I am talking to GE managers, I talk China, China, China, China, China. You need to be there. You need to change the way people talk about it and how they get there. I am a nut on China. Outsourcing from China is going to grow to 5 billion. We are building a tech center in China. Every discussion today has to center on China. The cost basis is extremely attractive. You can take an 18-cubic-foot refrigerator, make it in China, land it in the United States, and land it for less than we can make an 18-cubic-foot refrigerator today ourselves.
Gee. A couple of years ago when GE had some difficult economic times, and they needed $16 billion to bail them out, I did not hear Mr. Immelt going to China, China, China, China, China. I did not hear that. I heard Mr. Immelt going to the taxpayers of the United States for his welfare check.
So I say to Mr. Immelt, and I say to all of those CEOs who have been so quick to run to China, that maybe it is time to start reinvesting in the United States of America. But it is not just Mr. Immelt. I do not mean to just pick on him. It is all of them. They all see the future in China, in Vietnam, in countries where people work for pennies an hour.
Mr. Immelt came to his decision in the footsteps of the former CEO of GE, Jack Welsh. What Jack Welsh was famously quoted as saying:
This is the guy who was head of General Electric before Immelt. He said:
Ideally, we would have every plant we own on a barge.
Do you remember that quote? He said:
Ideally, we would have every plant we own on a barge.
What did he mean by that? What he meant by that, if you are on a barge, you can move your plant to any part of the world where the labor is cheapest. So if it gets too expensive in China, and you have to pay people 75 cents an hour, you go to Vietnam. If it gets too expensive in Vietnam, maybe you can go to North Korea and have people work under marshal law. I do not know.
But what he was saying is, his goal was to make sure that GE would create jobs in those countries in the world where workers were paid the lowest possible wage.
Former GE executive vice president Frank Doyle said:
We did a lot of violence to the expectations of the American workforce. We downsized, we delayered, and we outsourced.
He was honest enough to admit that. But, again, I do not mean to just pick on Jeff Immelt or General Electric. It is a history of corporations all over America.
Let me just mention that the CEO of Cisco, John Chambers--and this is what he says. You know, we tell the young people: The future is in information technology. We want you guys to be smart. Learn how to use the computers. You are not going to work in factories.
This is what the CEO of Cisco, certainly one of the large IT companies in the United States, said:
China will become the IT center of the world. And we can have a healthy discussion about whether that's in 2020 or 2040. What we are trying to do is outline an entire strategy of becoming a Chinese company.
This was in 2004.
He says, October 15, 2004--this is Cisco:
we believe in giving something back and truly becoming a Chinese company.
Meanwhile, when Cisco needs tax breaks, they get it from the taxpayers of the United States of America. Boy, are they taking us for dummies. They outsource their jobs to China and so forth.
In the last campaign, one of the folks who ended up getting a lot more publicity than he usually does is the president and CEO of the U.S. Chamber of Commerce, a gentleman named Tom Donohue.
(Mr. UDALL of New Mexico assumed the chair.)
Mr. SANDERS. Again, my point is not to just pick on individuals. Every quote I am giving can be multiplied 50, 100 times over. This is what corporate America believes. They believe it is totally appropriate to throw American workers out on the street, move to low- wage countries, China and other countries, pay people a few cents an hour, and bring their products back into the United States.
Mr. Tom Donohue is the president and CEO of the U.S. Chamber of Commerce. He got a lot of publicity during the last election because the Chamber of Commerce became the funnel for a lot of money that went into campaigns around the country. They raised tens of millions of dollars, a lot of the money, that was undisclosed. All the rich folks and billionaires gave money to the Chamber of Commerce, and they were able to elect candidates who were sympathetic to their point of view.
Let's find out what their point of view is. This is a quote going back to 2004:
One job sent overseas, if it happens to be my job, is one too many. But the benefit of offshoring jobs outweighs the cost.
That was Tom Donohue, president and CEO of the largest business organization in America. They are in favor of offshoring American jobs. They think it is a good idea. They understand that if corporations throw American workers out on the street and go to China and pay people there pennies an hour, it will make more profits. Give them credit. They are upfront about it. We don't care about the United States of America. We don't care about young people. We don't care about the future of this country. The future of the world is in China.
Here is a quote that appeared in one of the papers:
U.S. Chamber of Commerce President and CEO Thomas Donohue urged American companies to send jobs overseas.
That was in 2004. This is an AP story.
U.S. Chamber of Commerce President and CEO Thomas Donohue--
This is the head of the largest business organization in America. That is where all these businesses come together to develop policy, to lobby us, to provide campaign contributions--
urged American companies to send jobs overseas.
That is really patriotic. That is standing up for the United States.
Donohue said Wednesday that exporting high-paid tech jobs to low-cost countries such as India, China, and Russia saves companies money. It's no surprise that Donohue, who tripled the Chamber of Commerce's lobbying team since 1997 and aggressively promotes pro-business policies, endorses offshoring. The 3 million member organization, the Chamber of Commerce, the world's largest business consortium, champions tax cuts, free trade, workers compensation reform, and more liberal trade policies with China.
What more do we need to understand why we have lost millions of good-paying manufacturing jobs, why wages are going down? What more do we need when the president of the Chamber of Commerce tells us he thinks it is good public policy to send jobs to China? I don't think there is much we have to discover. They are telling us this.
In a moment what I will be talking about is how these ideas from the big-moneyed people become implemented in policy which has to do a lot with lobbying and campaign contributions. Before I go there, I wish to give some more examples about how business leaders feel about the workers of this country and the young people.
This, again, is a quote. I apologize. It is a few years old, from 2004, January 19. This is from Alan Lacy, the CEO of Sears Roebuck and Company at the time:
There are four or five times as many smart, driven people in China than there are in the United States. And there are another four or five, three or four times as many people in India that are smarter or as smart or have more drive. And if technology is now going to basically reduce location as a barrier to competition--
I.e., you have a World Wide Web and you can do your work in China or India--
then essentially you have something like, whatever that was, seven or nine times more smart, committed people than are now competing in this marketplace against certain activities.
So we are going to see, I think, a huge incentive to ship some of these more commoditylike knowledge workers' jobs offshore.
So here we have our blue-collar jobs decimated, and we told the kids not to worry. You didn't want to work in the factory anyhow. We have good information technology, computer-based jobs for you. But then you have the heads of large corporations saying: Why do I want American young people to do this? I can have Indian young people do it who will work for a fraction of the wages. We all see this. It is nothing new. You try to get a plane reservation and you are talking to somebody in India. Please, do not hear me as being anti-Indian or anti-Chinese. That is the furthest thing I would want anyone to think. We want to work with people all over the world. But we don't have to destroy the middle class of this country to help people around the world. You don't have to be a corporate CEO to sell out your own people who built your company to run abroad. This Senator is not anti-Chinese, far from it, anti-Indian, anti-Vietnamese. I guess I plead guilty to being pro-American. Maybe that is suspect here.
The former CEO of Hewlett-Packard, Carly Fiorina, ran for Senator. This is what she said when she was the CEO of Hewlett-Packard in 2004:
There is no job that is America's God-given right anymore.
I could go on and on and on, but I think we have the point. The point is that when things get rough for corporate America, as they did recently for General Electric, they run to the taxpayers in order to be bailed out. But their overall philosophy is that their goal in life is to make as much money as they can in any way they can, and, therefore, you run to those countries where wages are low.
We are seeing it all the time. It is not just blue collar; it is increasingly white color. We have radiologists who are reading X-rays in India. People behind the computer can do work in India as well as here, and these corporate folks have taken advantage of that and sold out the young people of this country and the working class.
It is virtually impossible to find anything in a Walmart or other stores such as that that is made in America today. This is essentially true for clothing. An increasing amount of clothing comes from Bangladesh. Today, there are 4,000 garment factories in Bangladesh making clothing for Walmart, Gap, JC Penney, Levi Strauss, Tommy Hilfiger, and many others. Garment workers in Bangladesh, some 3.5 million of them--and the number is growing--are among the lowest paid workers in the world. They have difficulty buying enough food and shelter for their own needs.
The good news is the minimum wage in Bangladesh was doubled. It went from 11.5 cents an hour to 23 cents an hour. So when you buy your shirt made in Bangladesh, you have young women there coming in from the countryside who are now paid, because of a doubling of the minimum wage, 23 cents an hour. Is that something our people should be asked to compete against? Should we say to the American worker: We can get you jobs. We are prepared to invest in the United States. We are an American company. You helped make us great. Thank you for the work you have done over the years. Thank you for purchasing our products. Thank you for making go us strong. If you are prepared to work for $1 an hour, $2 an hour, $3 an hour, we will come back.
By the way, in the last campaign, what did we hear rumblings of? Abolishing the minimum wage. The minimum wage is now $7.25 an hour. There are people out there who say: Look, if I can hire somebody in China for $2 or $3 an hour and you want a job in America and I have to pay you $7.25 an hour, why would I want to do that? If we abolish the minimum wage, I may hire you.
What a wonderful prospect for our young people to think about, working for $4 or $5 an hour.
If we want to understand why the middle class is collapsing, why unemployment is high, why our manufacturing base has been decimated, why it is hard to purchase a product made in the United States, it has a lot to do with our trade policies, which were pushed by people such as Mr. Donohue of the Chamber of Commerce and many others.
But it is not just a disastrous trade policy that has brought us to where we are today. The immediate cause of this crisis is--and this gets me sick thinking about it--what the crooks on Wall Street have done to the American people. These people fought for a period of years to deregulate the banking industry. These people said to us: Well, if you just would do away with Glass-Steagall, if you will just allow financial institutions, commercial banks, investor banks, insurance companies, if you allow them to merge, do away with these walls which Glass-Steagall, since the Great Depression, established, my God, it will be just terrific. It will be good for the economy, good for the American people, good for our international competitiveness.
I remember those debates because I was at that point in the House of Representatives. I was a member of the Financial Institutions Committee at that point. I was on the committee that dealt with that. I remember all the times Alan Greenspan came before the committee and Robert Rubin. We had Republicans, Democrats coming before the committee and saying: This is what you have to do. You have to deregulate. You have to let these guys merge. Bigger is better. Against my votes. Somewhere on the Internet there is a discussion I had with Alan Greenspan when he came before our committee. I made it very clear to the people of Vermont, to him and everybody else, that I did not think deregulation was a good idea, that I thought it would lead to disaster. Someplace in this world there is a quote of mine which pretty much predicts what was going to happen. But needless to say, I was one vote. The majority of the Members in the House and Senate voted to deregulate. The rest is, unfortunately, history.
What we saw is people on Wall Street operating from a business model based on fraud, based on dishonesty, understanding that the likelihood of them ever getting caught was small, that if things got very bad, they would be bailed out by the taxpayers, understanding that they are too powerful to ever be put in jail, to be indicted, understanding that in this country when you are a CEO on Wall Street, you have so much wealth and so much power and so many lawyers and so many friends in Congress, you could do pretty much anything you want and not much is going to happen to you--and they did it. Their greed and recklessness and their illegal behavior destroyed this economy.
What they did to the American people is so horrible. Here we had a middle class which was already being battered as a result of trade agreements, loss of manufacturing jobs, health care costs going up, couldn't afford to send their children to college--that had gone on for years--and then these guys started pushing worthless and complicated financial instruments and the whole thing explodes.
And they come crying to the taxpayers of America to bail them out.
I will never forget--never forget--Hank Paulson coming before the Democratic caucus--I am an Independent and have long been serving as an Independent in Congress--saying that within a few days he needed $700 billion or the entire world's financial system would collapse. My suggestion to him at that meeting was: If you need the money, why don't you go to your friends and get the money? Why don't you go to all your banker friends and millionaire friends and billionaires friends and get some of that money, and don't go to the middle class of this country that has already been harmed.
In fact, we brought an amendment to the floor of the Senate, which was one of the first amendments I brought as a Senator, which said that the top 2 percent should pay for the bailout, not the American people. It got defeated on a voice vote.
So what happens on Wall Street is we have seen a tremendous concentration of ownership there, another issue we do not talk enough about. I know Senator Brown and Senator Kaufman and I worked on a proposal to try to break up these large financial institutions. I think we got 30-some-odd votes on that. We could not do it.
So what the American people should know now is, while we bailed out Wall Street, because they were too big to fail, three out of the four largest financial institutions--all of whom were bailed out very significantly--are now larger today than they were before the bailout.
Incredibly, since the start of the financial crisis, Wells Fargo has grown 43 percent bigger, JPMorgan Chase has grown 51 percent bigger, and Bank of America is now 138 percent larger than before the financial crisis began.
Can you imagine that? We bailed these guys out because they were too big to fail, and now three out of the four largest ones are much larger than they were. How did that happen? Well, in 2008, Bank of America--the largest commercial bank in this country--which received a $45 billion taxpayer bailout, purchased Countrywide, the largest mortgage lender in this country, and Merrill Lynch, the largest stock brokerage firm in the country. That is how Bank of America expanded. They were too big to fail. Today they are much bigger.
In 2008, JPMorgan Chase, which received a $25 billion bailout from the Bush Treasury Department and a $29 billion bridge loan from the Federal Reserve, acquired Bear Stearns and Washington Mutual, the largest savings and loan in the country. That is how JPMorgan Chase, a huge bank, became even bigger.
In 2008, the Treasury Department provided an $18 billion tax break to Wells Fargo to purchase Wachovia, allowing that bank to control 11 percent of all bank deposits in this country.
Hear this because this is quite unbelievable: When we try to understand what is going on in the economy today--the rich getting richer, the poor getting poorer, the middle class collapsing--today, after we bailed out all these large banks, three out of four of them are now much larger than they were before. Today, Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo--the four largest financial institutions in this country--hold about $7.4 trillion in assets, and that is equal to over half the Nation's estimated total output last year. Four financial institutions have assets worth more than 52 percent of our total output last year.
Instead of breaking up these folks, these large institutions, we let them get bigger. In fact, according to Simon Johnson, the former chief economist of the International Monetary Fund:
As a result of the crisis and various government rescue efforts, the largest 6 banks in our economy now have total assets in excess [he claims] of 63 percent of GDP. ..... This is a significant increase from even 2006, when the same banks' assets were around 55 percent of GDP. .....
Do you understand what this is about? Four financial institutions owning over half the assets of America. You talk about economic power, you talk about political power, that is what we are talking about.
Simon Johnson continues: This is ``a complete transformation compared with the situation in the U.S. just 15 years ago--when the 6 largest banks had combined assets of only around 17 percent of GDP.''
So 15 years ago, 17 percent, six banks; today, four banks, and, he claims, 63 percent of GDP. In other words, over the last 15 years, the largest banks in this country have more than tripled in size.
Not only are too-big-to-fail financial institutions bad for taxpayers, the enormous concentration of ownership in the financial sector has led to higher bank fees, usurious interest rates on credit cards, and fewer choices for consumers. What do you think happens when you have a few institutions, a handful of institutions, controlling mortgage lending or where people get their credit cards?
Today, these huge financial institutions have become so big that according to the Washington Post: The four largest banks in America now issue one out of every two mortgages, two out of three credit cards, and hold $4 out of every $10 in bank deposits in the entire country.
If any of these financial institutions were to get into major trouble again, taxpayers would be on the hook for another substantial bailout. We cannot allow that to happen. So the whole reason for the bailout was that if any of these financial institutions collapsed, it would take down a significant part of the economy and millions of jobs. We had to prop them up. We had to bail them out. It turns out that since we bailed them out, these handful of financial institutions are now even larger than they were before and we now know they are enjoying very strong profits and they are paying their CEOs even more in compensation than they did before the breakdown.
In my view, if we are serious about understanding why the middle class is collapsing, if we are serious about getting this economy moving again long term, we have to have the courage to do exactly what Teddy Roosevelt did back in the trust-busting days and break up these banks. The point Roosevelt was making was, it is bad for the economy when a handful of entities control industry after industry. They have a stranglehold on the economy. You have to break them up. Yet I have heard very little discussion--I know there was an amendment from Sherrod Brown and Ted Kaufman, and I introduced legislation on this issue to start breaking them up. But, frankly, their lobbyists and their money are such that it becomes very difficult to do that. But that is exactly what we should be doing.
The legislation I introduced last year, S. 2746, the Too Big to Fail, Too Big to Exist Act, would break up these large financial institutions. That legislation would require the Secretary of Treasury to identify every single financial institution and insurance company in this country that is too big to fail within 90 days; and after 1 year, the Secretary of the Treasury would be required to break up these institutions so their failure would not lead to the collapse of the U.S. or global economies.
I think that is pretty obvious. We passed a financial reform bill, which I supported and got a major provision in there asking for disclosure at the Fed, an investigation of conflicts of interest at the Fed, and an audit of the Fed during the financial crisis. But overall, I, by no means, think that legislation went anywhere near far enough. I think that is a modest piece of legislation and an issue we have to revisit.
I worry very much about the future because I have a feeling in my stomach that day is going to come around again, when these huge financial institutions are tottering, when they are going to go running to Washington, and they are going to say: Hey, you have to bail us out. In my view, if an institution is too big to fail, it is too big to exist. Let us break them up so we do not have to go through another bailout of Wall Street.
Furthermore, I believe when you have that kind of concentration of ownership--when you have four large financial institutions holding half the mortgages in this country, controlling two-thirds of the credit cards, and
amassing 40 percent of all deposits--this is not good for a competitive economy.
We are supposed to be living in free market capitalism, real competition. This is not free market competition. This is a huge concentration of ownership, where a few people have enormous power over the economy, and with their wealth, the political life of this country.
No single financial institution should be so large that its failure would cause catastrophic risk to millions of American jobs or to our Nation's economic well-being. No single financial institution should have holdings so extensive that its failure could send the world's economy into crisis. We were there 2 years ago, and in many ways, despite the passage of the financial reform bill, we are even more there now. The big, huge financial institutions we bailed out are bigger, more huge today.
Interestingly enough, on that issue, it is not just progressives such as myself who hold that view. There are some pretty conservative folks who are honest conservatives. The concentration of ownership in a handful of entities; is that a conservative proposition? Not in terms of my understanding of what conservatives are about. I do not think so.
You have at least three Federal Reserve Bank presidents who support breaking up too-big-to-fail banks. James Bullard, president and chief executive of the Federal Reserve Bank of Saint Louis; Kansas City Fed president Thomas M. Hoenig; and Dallas Fed president Richard W. Fisher--these guys do not have my political views. I am a proud progressive. My guess is they are conservatives. But anybody with an ounce of brains in their head understands that four large financial institutions that have assets that are more than half the GDP of the United States of America places us, A, in a very dangerous position in terms of too big to fail, and, B, it is just bad for a competitive economy.
Is there any wonder why people are paying 25 percent or 30 percent interest rates on their credit cards? That is because these guys issue two-thirds of the credit cards in America. Is there any reason why they were issuing fraudulent mortgage packages to people? Because there is not the kind of competition that should be there.
But this is not just Bernie Sanders' point of view. Here is what Kansas City Fed President Hoenig said. I am sorry I do not have a date on that, but I think it was fairly recently--last year. This is Kansas City Fed President Hoenig:
I think they should be broken up. I think there's no reason why as we've done in other instances of [sic] finding the right mechanism to break them into their components. .....
And in doing so, I think you'll make the financial system itself more stable. I think you will make it more competitive, and I think you will have long-run benefits over our current system, [which] mixes it and therefore leads to bailouts when crises occur.
This is Thomas Hoenig, the head of the Kansas City Fed. A very simple statement. He is absolutely right. But--and I am going to get to the reason why in a little while--we have not been able to do this. We have not been able to do this because Wall Street sends their lobbyists down here in droves and Wall Street provides zillions of dollars in campaign contributions and Wall Street fights like the dickens to make sure that any strong provisions that some of us might bring up are defeated. Here is what the President of the Dallas Fed, Mr. Fisher, said:
[B]ased on my experience at the Fed ..... the marginal costs of too-big-to-fail financial institutions easily dwarf their purported social and macroeconomic benefits.
The risk posed by coddling too big to fail banks is simply too great.
Winston Churchill said that. He is quoting Mr. Churchill:
In finance, everything that is agreeable is unsound and everything that is sound is disagreeable.
That is from Churchill.
Mr. Fisher continues:
I think the disagreeable but sound thing to do regarding institutions that are too big to fail is to dismantle them over time into institutions that can be prudently managed and regulated across borders. This should be done before the next financial crisis because we now know it surely cannot be done in the middle of a crisis.
That is Dallas Fed president Mr. Fisher.
They are already in the process of breaking up big banks in England. According to the Washington Post:
The British government announced Tuesday--
Not this Tuesday, way back last year--
that it will break up parts of major financial institutions bailed out by taxpayers. The British government, spurred on by European regulators, is forcing the Royal Bank of Scotland, Lloyds Banking Group, and Northern Rock to sell off parts of their operations. Europeans are calling for more and smaller banks to increase competition and to eliminate banks so large that they must be rescued by taxpayers, no matter how they conducted their business, in order to avoid damaging the global financial system.