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Mr. Chairman, under the Full Employment and Balanced Growth Act of 1978, the Joint Economic Committee provides analysis and recommendations about the goals and policies set forth in the economic report of the President, and this is to assist the House in its consideration of the budget resolution.
During the next hour, the members of the Joint Economic Committee will answer two questions: Why has this economic recovery been so weak when compared with past recoveries? And secondly, how would a gradual reduction of Federal spending, relative to the size of America's economy, as envisioned in the House Republican budget resolution, how would this help hard-working Americans by accelerating economic growth, job creation, and real wage increases?
Regrettably, our economy remains stuck in second gear. Last year, real GDP--in other words, apples-to-apples economy--grew by a mere 2.37 percent. That is an imperceptible increase over the average annual growth rate of 2.33 percent during the entire recovery.
Although conditions have improved, the Obama recovery remains the weakest, or near the bottom, in terms of every major measurement of economic performance, compared with other recoveries over the past half century.
The Joint Economic Committee describes the difference in economic performance in this recovery and with the average of other recoveries since 1960 as the ``growth gap''--and this growth gap is real.
Since the recession ended, the economy has grown by 13.5 percent, compared with the average growth of 24.1 percent during other recoveries. This growth gap means our economy is currently missing $1.5 trillion, a hole comparable in size to the economy of Australia or Mexico or Spain.
Since the recession ended, private sector payrolls--that is, Main Street jobs--increased by 10 percent, but over the average of other recoveries, it was more than 15 percent. Thus, from the end of the recession, the growth gap in Main Street jobs is a staggering 5.5 million jobs. America is missing 5.5 million jobs, enough to hire everyone looking for work in 45 States.
Not surprisingly, hard-working American families have felt the adverse effects of slow growth and lagging job creation in their pocketbook. Since the recession ended, real after-tax income per person has increased by a total of merely 7 percent--7.1 percent, to be exact. In other recoveries, it was over 15 percent. Thus, the growth gap in real after-tax income equates to nearly $3,000 per person. It is $2,915. So what that means for a family of four in America is that they are missing $11,000 a year from their family budget.
Ironically, for a President that obsesses about income inequality and promotes ``middle class economics,'' the White House has presided over a disappointing recovery that has bestowed most of its benefits to the wealthy and the well-connected. While families and businesses on Main Street continue to suffer from a very disappointing recovery, the S&P Total Return Index, adjusted for inflation--meaning Wall Street--has increased by 125.4 percent since the end of the recession. So Wall Street is roaring; Main Street and hard-working taxpayers are suffering.
Closing the growth gap in the economy and jobs and paychecks will be very hard for this President to achieve with his current slow-growth policies.
While the economy has improved month after month, in truth, it has gone so slow. It is like bragging that your car has run for 63 straight months, but it only is running at 5 miles an hour. Well, that is what our economy is doing. And to catch up from these slow-growth policies, we need to break even with the average performance of other recoveries. By the time President Obama leaves the White House:
Our economy will have to grow at an annual rate of 7.4 percent in each of the next eight quarters. This is triple the growth rate in the Obama recovery.
Private sector jobs--Main Street jobs, in effect--would have to generate 403,000 jobs every month for the next 22 months. So this is well above the average of the disappointing Obama recovery of 285,000 jobs, especially in the last 6 months.
Real after-tax income for every person in America--that is, what their real disposable income is--would have to grow at an annual rate of 6.3 percent through the rest of President Obama's term. This is more than four times faster than what it has been doing during the Obama recovery.
So why has our economy been so weak? Why has the Obama recovery been nearly dead last in all of these areas?
First, Federal spending is out of control.
Albert Einstein defined insanity as doing the same thing over and over again yet expecting different results. Is this not the perfect description of President Obama's budget? His budget reflects his dogmatic commitment to failed Keynesian economic policies--notwithstanding the overwhelming evidence that we are mired in the worst economic recovery of the last 50 years, creating this large and persistent growth gap. From the failed stimulus through ObamaCare to demands for more Federal infrastructure projects, President Obama's thirst for new spending has never slackened.
Like a basketball team that cannot make halftime adjustments, this President refuses to learn from his failures. His budget would increase Federal spending next year by another $74 billion and by another $300-plus billion over the next 5 years. This, as this President is taking more in tax dollars from every American than almost at any time in history.
We don't have a revenue problem; we have a spending problem. If you look at this chart, you can see where per person revenue in America through the Federal Government nearly the highest it has been, frankly, in the last 30 to 40 years. Fortunately, a Republican House has successfully applied the brakes to this spending, preventing a far worse economic mess.
Second, our tax system is broken.
For businesses, America has the highest corporate income tax rate among developed countries. And we are the only one in our global competitors with a system that taxes you here, taxes you abroad, and punishes you if you bring your profits back to invest in America. This puts American companies and the workers at a huge disadvantage with foreign competitors.
For individuals here in America, our income tax system is so complex that 90 percent of taxpayers need to use a paid preparer or tax software, and families can't possibly keep up with the 4,000 changes in the tax law that occurred over the last decade. That is one new tax change every day of the year.
And third, President Obama has greatly expanded the regulatory burden--red tape--on American businesses and families during and after a severe recession. For example, the Affordable Care Act has imposed enormous new burdens on America's families, on our local businesses and health care providers.
Mr. Chairman, 4.5 years after enactment of financial regulations, regulators still haven't completed writing more than 40 percent of the new rules required under the Dodd-Frank Act; meanwhile, our local bankers and local businesses have not been able to finance growth in their communities as a result of these regulations.
President Obama has slow-walked the development of oil and natural gas on Federal lands and waters and stubbornly vetoed the job-creating Keystone XL pipeline.
Most recently, President Obama's Federal Communications Commission went back in time and imposed a 1930s-style regulation designed to control the telephone monopoly and now applied to the highly competitive Internet.
Fourth, President Obama greatly expanded social welfare benefits during and after the severe recession. During the 1960s, Democratic Presidents John Kennedy and Lyndon Johnson knew that America's economy needed to be strong in order to afford the Medicare, Medicaid, and food stamp programs they favored. Both Presidents insisted that Congress enact an investment tax credit, an across-the-board reduction in income tax rates, to put our economy into high gear before enacting new entitlement programs.
Instead, President Obama did the opposite. He rammed ObamaCare through in a divided and controversial late-night maneuver, rammed through a large expansion of food stamps, extended unemployment benefits through a Democrat-controlled Congress before our economy had fully recovered. His entitlement expansions reduced the labor force participation. In other words, it has held back those who want to be in the workforce.
According to University of Chicago economist Casey Mulligan, ObamaCare alone will, by 2017, cause roughly a 3 percent reduction in weekly employment, 3 percent fewer total hours worked, and a 2 percent reduction in labor income--so less jobs, less hours worked, less in your paycheck.
Taken together, President Obama's economic policies have increased the cost of doing business now and heightened uncertainty about their future. This is the opposite of what economically successful Presidents such as John F. Kennedy and Ronald Reagan did.
The Republican budget recognizes the Obama recovery is disappointing for Republicans, for Democrats, for Independents, for college graduates, for middle class, hard-working Americans. The Republican budget, which is a balanced budget for a stronger America, will give us a healthier economy.
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The message we hear today from my Democrat friends is the economy is great. This is really historical. We are adding just millions of new jobs. But that is not the real story. That is not the real economy.
The truth is millions of Americans have become so discouraged they have just dropped out of looking for work. Four out of 10 college graduates, they can't find a job, or they can't find a job that needs a college degree, so they are working behind a cash register.
We have got the fewest number of adults percentagewise in the workforce today since the recovery began. So we have actually, since things are supposed to be so great, fewer adults then ever since that period. We are about flat. In some cases, we have gone backwards.
And the unemployment rate, while it is lowered to 5.5 percent in real terms, if our number of workers had stayed in the workforce, the true rate is closer to 9.7 percent.
If we want to stay with this second-rate disappointing recovery, stay the course. But if we want a stronger, healthier economy, we need to change direction. The Republican budget under Chairman Tom Price changes the trajectory and the momentum of America's economy, balancing it without raising taxes. The Federal Reserve said one of the drags on our economy are the tax increases from President Obama's fiscal cliff. We have so much more work to do to help our families, young people, and those looking for a job, we can't settle for second rate.
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Look, I don't blame Democrats for not understanding this budget. They could never pass one. In fact, there hasn't been a budget for this great country since 2009, when they were in charge. In fact, it is the Republicans who have consistently in the House passed a budget only to have a Democrat Senate do nothing.
Now, for the first time, the American public has said: we have had enough of this, enough of the deficits, enough of this struggling economy, enough of this out-of-control spending; we want a real budget.
This step takes place today with Chairman Price's balanced budget for a stronger economy. I would point out that the American public knows exactly the Democratic policies that have brought them the weakest recovery in 50 years, and it is why, 5 years after the recovery began, most Americans still think they are in a recession. They think their families and their communities are still in a recession. We are not going to settle for this second-rate economy.
I would point out, while I am pleased there has been some job creation over the last 60 months, compare it to the average. If this were just a C-grade recovery--just the middle of the pack, nothing to brag about--we would be creating 403,000 new jobs every month, not 200,000-plus. It would be almost double that. If you look at the Reagan recovery, which had higher unemployment, there were 750,000 jobs more a month.
That chart does show positive growth, but it is so weak and so disappointing, and it is accompanied by stagnant paychecks and college graduates who are working behind cash registers. If we want to stick with that, no problem, we know exactly what to do; but if we want to change course as a country, if we want to stop growing Washington's economy and grow our local economies, we are going to have to change course.
The weakness of this recovery can be captured in three numbers. We are missing $1.5 trillion out of today's economy, and people are suffering. We are missing 5.5 million jobs, which is enough to put everyone looking for work in 45 States back to work, and we are missing $11,000 a year out of a family of four's family budget.
Can you imagine what $11,000 could do in paying for tuition and fuel and college costs? This growth gap will persist unless we change course.
Firstly, the budget resolution gradually addresses these issues by gradually bringing Federal spending back into line, allowing Washington to balance the budget and grow the economy.
Secondly, the budget resolution builds on the success of the welfare reform of the 1990s when Democrat President Bill Clinton and a Republican Congress worked together to give block grants to the States so they could develop programs to help able-bodied, working poor people find jobs, and it succeeded.
In employing this successful model, the budget resolution envisions converting Medicaid and food stamp programs into block grants that would allow States to tailor these programs to the needs of their States, to experiment and to find more innovative ways to get people out of work and into a career and a lifetime that they have envisioned.
Thirdly, the budget envisions the repeal of the unpopular and unworkable monstrosity known as ObamaCare.
Fourthly, the budget resolution envisions saving Medicare once and for all, putting in place the reforms that would actually keep this important program for seniors and for generations to come.
Finally, the budget resolution envisions progrowth tax reform--built for growth--to get America back to work and American companies competing and winning around the world.
There is so much more we must do in reforming the Tax Code and balancing regulation and creating a sound dollar and creating sales agreements around the world so our companies can compete, but we can't do that until this government has a budget that is built for America's growth, not for the government's growth.
I strongly commend the work of Chairman Price and of the other Republican members of the Budget Committee. I urge the House to vote for this budget resolution. We need to change course in this country so we can get hard-working taxpayers, young people, and families back to work and living the American Dream.
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