"A New Deal for a New Economy"
14 January 2008
John, Thank you. As I said upstairs when a couple of us met, John is the Chair of a one-man-caucus, Republicans for Emanuel. So, the bylaws are simple. And after that introduction, John, with all your Republican friends, my recommendation is to go into the Witness Protection Plan.
Though I, actually, I’d want to know the date of when you speak, because I’d actually like to come back to that one. I think some of the people here would actually prefer you first and me second.
One thing John mentioned, the office, you should all know there is an office in the Capitol I have, I don’t have, I use. It was actually Dan Rostenkowski’s office, when he was the Chairman of the Ways and Means Committee. So it has, for a short Jewish kid from Chicago, a lot of history in it, in a great sense. It has a dead-on view of the Washington Monument. And there is nothing as beautiful and powerful in the morning, when I’m sitting there looking at the sunrise, and watching the Washington Monument.
I’m going to try to get through this speech and then we’ll do some questions-and-answers, or as Henry Kissinger used to say, “Does anybody have any questions for my answers?” He was serious, and I’m joking, obviously. And I want to thank John for those kind words. Its moments like that you wish your parents were here. Because you know your mother would be proud, and your father would be amazed at those words.
One side note before I speak, my brother’s in-laws are here. So if you could all just be respectful, some members of the family are here, when you’re asking questions. They’re just here to figure out what kind of family the got themselves involved in.
Let me start with a few things. We just went through an election, 2006, just a year ago, and we’re about to go into a Presidential election. Most significant election since 1952 in this sense; neither Party has a presumptive nominee. And that’s why I think the American people, as you can see to-date, and we’ll see tomorrow also in Michigan, are in record numbers, voting. They know this is a big election.
[The] 2006 election was a “change” election. Every decade the American people have a big election; ’46, ’58, ’74, ’82, ’94, ‘2006. Every decade the American people have a big election. What’s historical, and we talked about this a little upstairs, is that usually after the election there is a pull-back. And, in fact, it is a “change” election more now than in 2006.
In 2006, out of the 30 seats we won, 16 were in the suburbs. And I said after the election, and the good news is a year later I still believe what I said, is that it was a “new suburban populism” emerging in the country.
We won 16 seats, a little over half, in the suburbs from New York all the way to the West Coast. The ads we ran, and the debates we had on economic issues, you would have associated with what had been, in the 1980’s and parts of early 90’s, with more rural, industrial districts, than you would have with people populated from office parks.
Now look, in our Party, trade and globalization is the division inside our Party. In the Republican Party, its immigration. Both touching the same vein of insecurity. Both touching that vein.
Now, in the last twenty years, and I don’t have to say it in this room, but at least its sounds smart maybe when you listen in relation to the rest of the speech, so I’ll say it: the economy has doubled in size. The American economy has doubled in size, when there has been a massive integration in globalization. You, as business people would ask yourselves, if something is this successful, and the customer is that negative about it, why? And that’s what I’m going to try to pose today in this speech.
People are this negative about something that is done so well, you would ask, if your consumers and customers rejected it this much; if it’s that good, why do they reject it?
And so I think you have to take a step back. And my own view on this, is that, and I really fundamentally believe is that I we need a New Deal for the New Economy. And if you don’t put a human face on globalization, the American people are going to put a halt to it.
And I know that there is a lot of discussion in the Press and Washington, about a stimulus, and I’ll address that subject in the Q&A, but I want to take a slightly longer-term view about dealing with what I think the challenges are over the horizon. That regardless of who we elect for President, I think are going to be facing those, the next President, the next Congress, and the next Senate, and its dealing with what I call “The New Deal for the New Economy.”
Everybody knows that we have 47 million who go without insurance. In the last six years, health care costs have gone up 78 percent. But I want to take it, not from the health care perspective, but from the political perspective. Four Presidents have tried universal health care, four have failed: Truman, Johnson, Nixon, and Clinton. Three of them, Truman, Johnson, and Clinton, all had their own parties controlling Congress. And all three failed.
Now, I believe in universal health care. I believe it’s essential not just for the uninsured people, not just for the controlling of cost. I think most importantly, [the lack of insurance is] a threat to one of the most central parts of our economy, and that is the mobility of our workforce. People do not need jobs, because of fear of losing healthcare. Six years ago, 66% of the people got their health care through their employer. Today, it’s a 60%, and it’s continually dropping.
There are two roads to health care; reform and universal. One is to try “big,” which I think the next President will try. And as you can already see, I happen to see that the next President will be a Democrat. I happen to believe, they’ll go big. I believe, though, that if you look at the history of the politics of health care reform, we have failed at universal health care, but we have succeeded at universalizing health care for populations; Medicare, Medicaid, veterans, children’s health insurance.
The political system has failed to deal with the universal health care plan that has succeeded in universalizing health care for population segments. I think the next President should try “big,” but the next thing I would do is kids’ health care, complete that project, we’re not going to get that done, hopefully with this President, but I don’t think we will.
And the second is, bring Medicare down to early-retirees who are 58-64. It’s the fastest growing group of working uninsured in this country. Medicare delivers health care more efficiently and on a more cost effective basis than any other insurance company in the country. And you should not stop at 65. And I’ve had people who are 58-64 pay a higher premium based on market rates, etc. You could deal with chronic illnesses and other illnesses where it’d be cost effective. But Medicare should be brought down from 65 to 58 and allow people to buy in at a much higher premium.
It would deal with the uninsured basis; it would help stabilize Medicare’s cost for the long term. It would also take off costs from a lot of private employers. I mean, I’ll just give you one example. I talked to Ford executives, it’d save them 17 billion dollars a year if they didn’t have these early retirees’ health care costs on their bottom line. And the combination of dealing with children’s health care, dealing with early retirees, plus caring for chronic illnesses, heart disease, diabetes, etc., you could ring out close to 700 billions dollars in health care costs.
And there will be two roads open to the next President; go universal or have a back-up plan that takes a segment of the population and universalizes their health care. But we have got to get health care costs under control. And that is the way to do it.
Second, is savings. And I have a piece I handed out here, a piece I wrote in the Wall Street Journal about retirement. Seventy-five million workers in the United States have no employer-based retirement. None. Social Security is all they have. Which is why I always say, everybody, they’re crazy to say our big crisis is Social Security. No, our big crisis is savings.
We have a negative savings rate in this country for the first time since the Great Depression. In the last thirty-two years the Congress has put in place close to sixteen separate tax deductions or credits encouraging savings, and at every point, the savings rate has gone down. So whatever we’ve done, stop doing it. It’s not working.
I happen to believe, and what I propose, is targeted towards the 75 million people who don’t participate in any employer-based savings. I sponsored the automatic enrollment in 401(k)’s. That was my bill that passed. I believe that since you can’t force people to save, that at 1% above Social Security people should be automatically enrolled in a thrift-savings-like plan that Federal Employees have. They’d manage all the costs and all the fees. Fidelity and Vanguard competes for all the employees. They have five plans to pick from, if you don’t have a plan, you go into a life-cycle account. It’s all worked through for you. And one of the things we know from automatic enrollment is if you take the complexity out of it, enrollment and participation increases.
We will not, from a political system, solve Social Security if 75 million people get their only retirement security from Social Security. I represent a little over 30,000 flight attendants, and people who work in airlines. That’s why I have a great district by the way. I represent a lot of people in the airline industry. If I told them what I was going to do to their Social Security what has happened under a private plan, they’d run me out on a rail. I don’t care how Democratic that district is. You will not take the political system and fix Social Security if you’ve got 75 million workers without a retirement or some type of savings agenda. And we’ve got to get those 75 million participating in a savings plan.
Automatically enrolled, 1% above Social Security, if they choose not to be in it, that’s fine, managed by the thrift-savings plan that has the federal employees, and it would be open to all companies who don’t have an existing plan.
Just so you know, Martin Feldstein, after I wrote that piece, came to see me and said “the White House is very interested in doing this if you are interested.” And I said “I’m very interested in doing this.” And one of the things we are going to try to get done this Congress is, a savings plan, post what happened on Social Security, that targets this area.
My colleague Rich Neal from Boston, has an automatic enrollment IRA, I have an automatic enrollment, because I believe you have to make a 401(k) universal in the workplace.
The third area is energy, and energy independence. Now, I believe, new technologies, and John and I were just talking about this, but new technologies and energy can be for the economy what the internet, computer, and technology was for the last twenty years.
Now, it used to be that new technologies came through the economy, operated for about twenty five years, through the economy, worked their way through. Now the cycle is about 7 years. We need to make an investment as a country in the area of energy technology and energy conservation.
It is the next frontier from, not only a technological place, but an economic place. Now we’ve made a lot of progress. I read an article over the break, and some other pieces on this, but in 2005, without much effort, the United States economy saved more energy than the European Union used. There are entities like the Rocky Mountain Institute, using the technology that Boeing has used for the Dreamliner, created an SUV that gets 67 miles to the gallon.
All of this is doable and accessible, but if we don’t start investing in this type of technology, and start making this a national effort here, we’re going to miss an opportunity of historic importance.
And then lastly, education. The two most significant events, in my view, of the last hundred years, economically, have been the G.I. Bill, and High School Education. You could not have the Industrial Revolution without the High School Education. And the G.I. Bill was essential for the “American Century” to be known as the “American Century,” and for the growth we’ve had.
But we have not done anything differently as a country, on training our workforce, since the G.I. Bill, of significance. We know you earn what you learn, in today’s economy.
We know that in the next twenty years, three quarters of the jobs will require a minimum of two years of college education. And we know for a fact that only one out four workers is getting a post high school education. So, we have a natural mismatch between what the workplace requires and what the workforce is producing.
And I believe you have to make a one-year post high school education universal, and required, just like the high school education was required. I don’t care if you go become an apprentice at the IBEW. I don’t care if you go to the community college and do computer science. And I don’t care whether you go to a four-year institute. But you have to have a workforce that has the skills and capacity to compete and win.
And what you have to require people to do - we have too much invested as a country in you - is you have to go post your high school education to some other institution for one-year. I’d like to make it more.
Now if you give folks in this country a workforce with strength, a retirement plan, a healthcare security, and an stronger economy overall with investment in new energy and technology, you’ll be giving not only the American people, but the American economy, the ability compete and win in a globalized economy. And the security, where they see, in a global economy, that it has more opportunities associated with it, than costs associated it.
When we passed NAFTA in the White House in 1994, we passed it with about a thirty vote margin. When the President of the United States, with a Republican House and Senate passed CAFTA, which deals with Nicaragua, Honduras, and Guatemala, no where the economic activity or value of NAFTA, it had a lot more political importance to the country than economic importance. And for those countries, it had a lot more economic importance than political importance. They passed CAFTA by a one vote margin in a Republican House.
President Clinton passed NAFTA with a thirty vote margin, and had a lot more economic activity. And then you tie that to what I just said about what happened in the 2006 elections. If you believe in the importance of globalization, and you believe in the importance of the further integration of the American economy, and the only way to get there is through the Doha Round and other trade deals. Unless, over the next twenty years, we put a human face on globalization, give people a sense that this is not a gun at their head, but an opportunity to advance themselves economically, unless you do that the American people are going to get a halt to globalization. Full stop. It will take political suicide to get a trade deal through the United States Congress and Senate.
And I’m not only advocating a universal post-high school education, a universal retirement, health care security at the place of employment, and a major investment in energy technology, just as a way for people to deal with their anxieties; I think you have to make that type of New Deal for a New Economy, because it’s the right thing to do to succeed in the same way the New Deal was the right as answer to what was going on, and the transformation that was going on, at the time of the Depression.
And it's not - don’t get me wrong - I do think it will address anxieties, but I am not proposing these things to address anxieties. I am proposing these things because I believe it’s the only way we can succeed.
The truth is, in the last thirty or forty years we got away because we were big, we were bad, and we could afford to. With China, India, Brazil, to name a few countries coming on, with that type of work force, with that type of skill training, our ability to get away with what we got away with in the last thirty years is over. That deal is done. And we need to have a new economic and political paradigm to deal with the changing world. And if we don’t do it, our economic position and leadership is going to alter fundamentally.
And so I believe, and I also think, as I’ve always said – that politics is not far from my mind - the first party that figures out to put a human face on globalization will have a political dominance in the same way that Roosevelt Coalition, and the Roosevelt Agenda, had a dominance in this country for about thirty or forty years. It has that much significance politically. And all the discussion you are going to hear in 2008, is going to be like the discussion you heard in 2006. It’s going to be dealing with people’s fears on the economic side.
And one closing comment, when you talk to people about trade. And I do. I’m kind of crazy, I still do my office hours at grocery stores. So whoever wants to come talk to me, can come talk to me. A lot of people don’t want to come talk to me, they want to go get their groceries and go on, which is usually my family members.
When people talk about trade, they are never talking about trade. They are never talking about trade. They are talking about their health care, their incomes, and their retirement security. You go to a John Deere plant, here in Illinois, everyone of these workers know that one out of three of their tractors are destined for an overseas market, so their job is tied to trade. Yet, it’s the most vehemently opposed workforce to globalization. Why?
If you talk to them, just listen. They are worried about losing their health care. They are worried about losing their good paying job. And they are worried about losing their retirement security. It’s not about trade, it’s about everything else that trade affects, that every trade discussion is about. And that’s why we have to come up - for those of us who believe that globalization has been a net positive -we have to come up with an agenda, that deals with and helps advance the ability of globalization to continue down the path of success.
Because in twenty years, the fact that we doubled the size of the economy, I think if we do what’s right, we can do that again. And we have the full potential to do it. And our greatest unmarked resources and capacity, and our greatest markets are right here at home. So we have to invest in the American people so they feel they have an opportunity to do as well in this globalized economy, as a number of people sitting in the room have done.
If we do that we have a great chance at a great decade again. If we don’t, the American people are going to have a full stop on what’s going on as it relates to the last twenty years.
So with that, I want to thank you…