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STATE OF THE 

AMERICAN WORKFORCE 

HEARING 

BEFORE THE

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, JANUARY 26, 2011 

Serial No. 112–1 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

http://www.gpoaccess.gov/congress/house/education/index.html 

or 

Committee address: http://edworkforce.house.gov 
(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Scott DesJarlais, Tennessee 

Richard L. Hanna, New York 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Kristi L. Noem, South Dakota 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Dennis A. Ross, Florida 

Mike Kelly, Pennsylvania 

[Vacant] 

George Miller, California, 

Senior Democratic Member 

Dale E. Kildee, Michigan 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Dennis J. Kucinich, Ohio 

David Wu, Oregon 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Mazie K. Hirono, Hawaii 

Barrett Karr, Staff Director 

Mark Zuckerman, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

Hearing held on January 26, 2011 ......................................................................... 1 

Statement of Members: 

Andrews, Hon. Robert E., a Representative in Congress from the State 

of New Jersey, letter, dated January 26, 2011, from 250 economists 

in support of the Patient Protection and Affordable Care Act of 2010 ..... 66 

Kline, Hon. John, Chairman, Committee on Education and the Workforce 1 

Prepared statement of ............................................................................... 3 

Kucinich, Hon. Dennis J., a Representative in Congress from the State 

of Ohio, prepared statement and questions submitted .............................. 58 

Miller, Hon. George, senior Democratic member, Committee on Education 

and the Workforce ......................................................................................... 4 

Prepared statement of ............................................................................... 6 

Roby, Hon. Martha, a Representative in Congress from the State of 

Alabama, prepared statement of ................................................................. 7 

Statement of Witnesses: 

Boushey, Heather, senior economist, Center for American Progress Action 

Fund ............................................................................................................... 17 

Prepared statement of ............................................................................... 18 

Responses to questions submitted by Mr. Kucinich ............................... 84 

Holtz-Eakin, Douglas, president, American Action Forum ........................... 29 

Prepared statement of ............................................................................... 32 

McDonnell, Hon. Bob, Governor, Commonwealth of Virginia ...................... 9 

Prepared statement of ............................................................................... 11 

Messinger, Dyke, president and CEO, Power Curbers, Inc., on behalf 

of the National Association of Manufacturers ............................................ 12 

Prepared statement of ............................................................................... 14 

Additional submission: ‘‘Manufacturing Strategy for Jobs and a Competitive America,’’ dated January 2011 ............................................... 74 

(1) 

STATE OF THE AMERICAN WORKFORCE 

Wednesday, January 26, 2011 

U.S. House of Representatives 

Committee on Education and the Workforce 

Washington, DC 

The committee met, pursuant to call, at 2:10 p.m., in room 2175, 

Rayburn House Office Building, Hon. John Kline [chairman of the 

committee] presiding. 

Present: Representatives Kline, Petri, Biggert, Platts, Wilson, 

Foxx, Hunter, Roe, Thompson, Walberg, DesJarlais, Hanna, Rokita, 

Bucshon, Gowdy, Barletta, Noem, Roby, Heck, Kelly, Miller, Payne, 

Andrews, Scott, Woolsey, McCarthy, Kucinich, Davis, and Hirono. 

Staff Present: James Bergeron, Director of Education and 

Human Services Policy; Kirk Boyle, General Counsel; Casey 

Buboltz, Coalitions and Member Services Coordinator; Ed Gilroy, 

Director of Workforce Policy, Marvin Kaplan, Professional Staff 

Member; Barrett Karr, Staff Director; Ryan Kearney, Legislative 

Assistant; Brian Melnyk, Staff Assistant; Brian Newell, Press Secretary; Molly McLaughlin Salmi, Deputy Director of Workforce Policy; Mandy Schaumburg, Education Policy Counsel; Ken Serafin, 

Workforce Policy Counsel; Linda Stevens, Chief Clerk/Assistant to 

the General Counsel; Joseph Wheeler, Professional Staff Member; 

Aaron Albright, Minority Press Secretary; Tylease Alli, Minority 

Hearing Clerk; Jody Calemine, Minority General Counsel; Jose 

Garza, Minority Deputy General Counsel; Brian Levin, Minority 

New Media Press Assistant; Jerrica Mathis, Minority Legislative 

Fellow, Labor; Celine McNicholas, Minority Associate Labor Counsel; Richard Miller, Minority Senior Labor Policy Advisor; Megan 

O’Reilly, Minority Labor Counsel; Julie Peller, Minority Deputy Director of Policy and Planning; Meredith Regine, Minority Policy Associate, Labor; Melissa Salmanowitz, Minority Press Secretary; 

Michele Varnhagen, Minority Labor Policy Director; and Mark 

Zuckerman, Minority Staff Director. 

Chairman KLINE. A quorum being present, the committee will 

come to order. I want to make a couple of administrative announcements to our guests and to our panel and to my colleagues here on 

the committee. The weather, as all here know, has turned a little 

tough out there. Planes are being canceled, flights are being canceled and rescheduled and moved, and the roads are slippery, and 

I am advised that the Office of Personnel Management is encouraging Federal employees to leave at 4:00. While that doesn’t directly apply to us, the conditions that will create out there does. 
2 

So I am going to announce to all that we will have a hard stop at 

4:00 out of respect to all. 

I think, I want to, I am going to make an opening statement 

briefly and turn to Mr. Miller in a minute. But I want to thank 

members for coming and I know that Members of Congress will be 

leaving as the flight schedules direct. So when you need to go, 

when the plane is ready to roll, we understand you will be departing. All right. 

Well, good afternoon and welcome to our first hearing of the 

112th Congress. I appreciate the time our witnesses have spared 

to be with us today. Whether you are a Governor, a small manufacturer, an economist, your time is valuable and we are grateful for 

your participation today, all of us. 

It is no secret the American workforce faces significant challenges. Over 20 consecutive months’ unemployment has remained 

at 9 percent or higher. During that same period of time, more than 

14 million Americans have been unemployed and searching for 

work. Roughly 1.3 million unemployed workers have become so discouraged by searching and coming up empty that they have given 

up hope and abandoned the labor force entirely. 

Despite some unprecedented attempts, perhaps best reflected in 

the failed $814 billion stimulus bill passed in the early hours of the 

last Congress, the Federal Government cannot legislate or regulate 

its way to job creation in our country. It can, however, provide 

some sense of certainty that will give the young entrepreneur and 

small business owner the confidence he or she needs to go forward 

and invest in their new idea or company. 

Unfortunately, over the last 2 years we have seen the Federal 

Government move in a disturbingly different direction, one that 

creates economic uncertainty felt by businesses both large and 

small. A number of policies and proposals have caused many business owners to think twice before expanding their operations or 

hiring additional workers. 

At the center of this uncertainty is the recent health care law. 

We have all heard the story of a small business owner already 

struggling to make payroll, who now faces a penalty for failing to 

provide government-approved health care. Despite promises health 

care reform would lower costs, the chief actuary at the Centers for 

Medicare and Medicaid Services reports national health care 

spending will increase by some $311 billion over the next 10 years. 

This health care law has forced business owners to choose between 

higher health care costs or government penalties. To suggest this 

doesn’t discourage job creation in this country is to ignore, I believe, reality. 

The President has suggested a willingness to fix what is broken 

in the law. I would suggest the employer mandate is the place to 

start. While one arm of the Federal bureaucracy transforms our 

health care economy, another is considering sweeping changes to 

the law governing the relationship between employers and labor 

unions. 

The National Labor Relations Board is supposed to safeguard the 

rights of workers against the illegal actions of both employers and 

unions. Today there are conversations taking place at the NLRB 

that will have profound consequences for America’s workers. Many 
3 

of the discussions going on behind closed doors should be debated 

here in this committee, on the floor of this Congress and in the 

public, in full view of the American people. No Federal agency or 

board should rewrite the rules of the game to favor any special interest over the interest of all Americans. 

Despite these challenges, I am happy to see the administration 

reconsider various proposals that would have made it more difficult 

for businesses to plan and invest in the future. Recently the administration withdrew its proposal to re-interpret the noise feasibility 

standards, a proposal that would have imposed significant costs on 

businesses without any real justification. And yesterday the administration announced it is reconsidering proposed changes to employer injury and illness laws that would have created a significant 

paperwork burden for employers. While I welcome these actions by 

the President, more needs to be done. 

Well, that is why we are here today. We want to learn about the 

policies that may be standing in the way of job creation and find 

better solutions to protect the rights, safety and prosperity of the 

country’s workers. 

And I am now pleased to yield to our senior Democratic member, 

the ranking member, Mr. Miller, for an opening statement. 

[The statement of Chairman Kline follows:] 

Prepared Statement of Hon. John Kline, Chairman, 

Committee on Education and the Workforce 

Good afternoon and welcome to our first hearing of the 112th Congress. I appreciate the time our witnesses have spared to be with us today. Whether you are a 

governor, a small manufacturer, or an economist, your time is valuable and we are 

grateful for your participation today. 

It is no secret the American workforce faces significant challenges. For 20 consecutive months unemployment has remained at 9 percent or higher. During that 

same period of time, more than 14 million Americans have been unemployed and 

searching for work. Roughly 1.3 million unemployed workers have become so discouraged by searching and coming up empty that they have given up hope and 

abandoned the labor force entirely. Despite some unprecedented attempts, perhaps best reflected in a failed $814 billion stimulus bill passed in the early hours of the last Congress, the federal government cannot legislate or regulate its way to job creation in our country. It can, however, provide some sense of certainty that will give the young entrepreneur or small 

business owner the confidence he or she needs to go forward and invest in their new 

idea or company. 

Unfortunately, over the last two years, we have seen the federal government move 

in a disturbingly different direction—one that creates economic uncertainty felt by 

businesses both large and small. A number of policies and proposals have caused 

many business owners to think twice before expanding their operations or hiring additional workers. 

At the center of this uncertainty is the recent health care law. We have all heard 

the story of a small business owner already struggling to make payroll who now 

faces a penalty for failing to provide government-approved health care. Despite 

promises health care reform would lower costs, the chief actuary at the Centers for 

Medicare and Medicaid Services reports national health care spending will increase 

by $311 billion over the next 10 years. ObamaCare has forced business owners to 

choose between higher health care costs or government penalties. To suggest this 

doesn’t discourage job creation in this country is to ignore reality. 

The president has suggested a willingness to fix what’s broken in the law. I would 

suggest the employer mandate is the place to start. 

While one arm of the federal bureaucracy transforms our health care economy, 

another is considering sweeping changes to the law governing the relationship between employers and labor unions. The NLRB is supposed to safeguard the rights 

of workers against the illegal actions of both employers and unions. Today there are 

conversations taking place at the NLRB that will have profound consequences for 

America’s workers. Many of the discussions going on behind closed doors should be 
4 

debated here in this committee, on the floor of this Congress, and in the public— 

in full view of the American people. No federal agency or board should rewrite the 

rules of the game to favor special interests over the interest of all Americans. 

Despite these challenges, I am happy to see the administration reconsider various 

proposals that would have made it more difficult for businesses to plan and invest 

in the future. Recently, the administration withdrew its proposal to reinterpret the 

noise feasibility standards, a proposal that would have imposed significant costs on 

businesses without any real justification. And yesterday, the administration announced it is reconsidering proposed changes to employer injury and illness logs 

that would have created a significant paperwork burden for employers. While I welcome these actions by the President, more needs to be done. 

As we look to these recent decisions by the administration, we will be guided by 

President Reagan’s aged wisdom—trust but verify. We will trust the president when 

he says he wants to review the regulatory structure’s affect on jobs, but we will 

verify that promise against the actions his administration takes over the next two 

years. 

That is why we are here today. We want to learn about the policies that may be 

standing in the way of job creation, and find better solutions to protect the rights, 

safety, and prosperity of the country’s workers. 

I am pleased to yield now to our senior Democratic member, 

Mr. Miller, for an opening statement. 

Mr. MILLER. Thank you very much, Mr. Chairman. And I want 

to also thank our witnesses for joining us this afternoon. 

Today’s hearing on where our Nation’s workers stand is a timely 

and an important topic to explore. For most of the 20th century, 

America’s working families and middle class made our democracy 

strong. The promise was that if you worked hard, played by the 

rules, you could save something for your kids’ education, have 

enough left over to save for a comfortable retirement. 

Unfortunately this promise is being broken for working families. 

For 30 years workers have been hit by stagnant pay, skyrocketing 

health costs, rising tuition and a loss of retirement security. In lieu 

of fair pay increases, Americans turned to credit to maintain their 

middle-class standards. With certain Federal policies making income inequality worse, wealth chased after the next bubble, leading to the Wall Street scandals. The economy became over-leveraged, and debt exploded to levels not seen since just before the 

Great Depression. 

The bill came due in the fall of 2007. Since then more than 8 million Americans lost their jobs, further fueling the foreclosure and 

the debt crisis. Swift and decisive action was needed to avoid the 

total economic catastrophe. Congress and the Obama administration came together and made immediate investments to save the 

economy. The Recovery Act was the first step, and we see the result today: Over 4.7 million jobs have been created or saved, according to the CBO, as a direct result of the Recovery Act. 

The broad range of experts disagree, including private economists across the political spectrum and the nonprofit Congressional 

Budget Office. In official government statistics, our actions saved 

the economy from slipping into deeper crisis. 

While there is much more work to be done to dig our country out 

of this mess, the private sector job growth has increased by 1.34 

million jobs last year. That means that the Obama policies created 

more jobs in less than 2 years, than the entire 8 years under the 

Bush administration. 

Even the manufacturing sector is seeing growth for the first time 

since 1997. Private economists are predicting a gain this year of 
5 

330,000 manufacturing jobs, a dramatic change from every year in 

recent memory. Ford announced its plan to add 7,000 jobs over the 

next 2 years. Whirlpool, Dow Chemical and Caterpillar have all 

cannoned that they are going to keep jobs in America and even expand operations. 

Also, corporate profits are back to their highest point since before 

the recession began, and the stock market is also up. 

The non-farm, non-financial business sector is holding more than 

$1.9 trillion in cash, the highest level since 1959. 

Policies to stimulate the economy are not, by themselves, enough. 

We must also begin to rebuild the foundations of a strong middle 

class. By doing, so we ensure that the recovery is fair and that it 

is sustainable. 

On that front, Democrats in Congress, working with the Obama 

administration, took critical action to grow and strengthen our Nation’s middle class. Today, all Americans will have access to quality, affordable health coverage, no matter if their employer provides 

it or if they change jobs or they lose their job. 

Today, college students have access to critical financial assistance they need to go to college and to stay in college and to earn 

the critical skills to keep America competitive. Today, businesses 

have powerful new tax incentives for businesses to hire the unemployed Americans and expand their businesses. Today, workers 

have the Department of Labor that puts worker safety first, all of 

which has helped reduce workplace injuries and makes businesses 

more efficient. Today, workers have a fair minimum wage, a rate 

that was increased by Democrats after Republicans blocked an increase for a decade, shamefully allowing the value of the rate to 

drop to a 50-year low. Today, small businesses have more access 

to credit necessary to start and continue or expand their businesses. And today, we have a revitalized supervision of our Nation’s financial institutions to avoid another meltdown in our financial system. 

There is more to be done to heal our economy. We need to move 

forward on key investments to help unleash our Nation’s competitiveness and innovation. One area that this committee can work on 

is the rewrite of the Elementary Secondary Education Act so that 

our Nation’s school children can be successful in the classroom and 

beyond. 

Every initiative that goes through this committee must be judged 

by whether or not it will grow and strengthen the middle class. We 

cannot double down on go-go bubble economics and trickle-down 

tax policy. All across the Nation, communities are confronting the 

lack of high-skilled workers, even as unemployment is high. In my 

own communities, business, labor, and community colleges have 

come together with a new urgency to tackle this problem. 

We must support these local efforts to create jobs, to stay competitive, to act decisively, nationally, to build and to maintain a 

higher skilled workforce. Falling behind is not in America’s DNA. 

It never has been and it never will be. We have the hardest-working people in the world, and as the President pointed out last 

night, the most productive workers in the world, and I hope that 

we can look forward to solutions that help grow and strengthen 

America’s middle class. 
6 

And I thank you very much for having this most timely hearing. 

And I just want to apologize to the witnesses. I am one of those 

who is trying to catch the last flight tonight out of Dulles. So I love 

your testimony. I am not flying with you. 

[The statement of Mr. Miller follows:] 

Prepared Statement of Hon. George Miller, Senior Democratic Member, 

Committee on Education and the Workforce 

Good afternoon, Mr. Chairman. 

Today’s hearing on where our nation’s workers stand is a timely and important 

t topic to explore. 

For most of the 20th century, America’s working families and middle class made 

e our democracy strong. The promise was that if y you work hard, play by the rules, 

you could save e something for your kids’ education and have enough left over to 

save for a comfortable retirement. 

Unfortunately, this promise is being broken for working families. For thirty years, 

workers have been hit by stagnant pay, skyrocketing health costs, rising tuition and 

loss of retirement security. In lieu of fair pay increases, Americans turned to credit 

to maintain their middle class standard of living. 

With certain federal policies making income inequality worse, wealth chased after 

the next bubble, leading to the Wall Street scandals. The economy became over-leverage ed. Debt exploded to levels not seen since e just before the Great Depression. 

The bill came due in the fall of 2 2007. Since then, more than 8 million Americans 

s lost their jobs, further fueling the foreclosure and debt crisis. Swift and decisive 

action was needed to avoid total economic catastrophe. 

Congress and the Obama administration came together and made immediate investments to save the economy. The Recovery Act t was the first step and we see 

the results today. 

Over 4.7 million jobs have been created and saved according to the CBO as the 

direct result of the Recovery Act. 

A broad range of experts agree—including private economists across the political 

spectrum, the nonpartisan Congressional Budget Office, and official government statistics—our actions saved the economy from slipping into a deeper crisis. 

While there is much more work to be done to dig our country out of this mess, 

private sector job growth has increased by 1.3 million jobs last year. That means 

that the Obama policies created more jobs in less than two years then the entire 

eight years of the Bush administration. 

Even the manufacturing sector has seen growth for the first time since 1997. Private economists are predicting a gain this year of 330,000 manufacturing jobs—a 

dramatic change from every year in recent memory. 

Ford announced that it planned to add 7,000 jobs over the next two years. Whirlpool, Dow Chemicals and Caterpillar all have announced that they are going to keep 

jobs in America and even expand operations. 

Also, corporate profits are back to their highest point since before the recession 

began, and the stock market is up. The nonfarm, nonfinancial business sector is 

holding more than $1.9 trillion in cash, the highest level since 1959. 

Policies to stimulate the economy are not, by themselves, enough. We must also 

begin to rebuild the foundations of a strong middle class. By doing so, we ensure 

that the recovery is fair and sustainable. 

On that front, Democrats in Congress working with the Obama Administration 

took critical actions to grow and strengthen our nation’s middle class. 

• Today, all Americans will have access to quality, affordable health coverage no 

matter if their employer provides it, or if they change jobs 

• Today, college students have access to critical financial assistance they need to 

go to college, and stay in college—and earn the critical skills to keep America competitive. 

• Today, businesses have powerful new tax incentives for businesses to hire unemployed Americans and expand their businesses 

• Today, workers have a Department of Labor that puts worker safety first—all 

which helps reduce workplace injuries and makes business more efficient. 

• Today, workers have a fairer minimum wage rate—a rate that was increased 

by Democrats after Republicans blocked an increase for a decade—shamefully allowing the value of the rate to drop to a 50 year low. 

• Today, small businesses have more access to credit necessary to start, continue, 

or expand their business. 
7 

• And today, we have a revitalized supervision of our nation’s financial institutions to avoid another meltdown of our financial system. 

There is more to be done to heal our economy. We need to move forward on key 

investments to help unleash our nation’s competitiveness and innovation. 

One area this committee can work on is to rewrite the Elementary and Secondary 

Education Act so that nation’s schoolchildren can be successful in the classroom and 

beyond. 

Every initiative that goes through this committee must be judged on whether it 

will help to grow and strengthen the middle class. We cannot double-down on gogo bubble economics and trickle down tax policy. 

All across the nation, communities are confronting a lack of highly skilled workers, even as unemployment is high. In my own communities, business, labor, and 

community colleges have come together with a new urgency to tackle this problem. 

We must support these local efforts to create jobs, stay competitive, and act decisively nationally to build and maintain a highly skilled workforce. Falling behind 

is not in America’s DNA—it never has, and never will be. 

We have the hardest working people in the world and I hope we can look forward 

to solutions to help grow and strengthen America’s middle class. 

I yield back. 

Chairman KLINE. I thank the gentleman. And we all understand. 

There will be a Le Mans start for the airport here pretty quick, I 

am sure. I thank the gentleman for his statement and for the cooperation that he has shown over the years when he was the chair 

of this committee. 

Pursuant to committee rule 7(c), all members will be permitted 

to submit written statements to be included in the permanent 

hearing record. 

[The statement of Mrs. Roby follows:] 

Prepared Statement of Hon. Martha Roby, a Representative in Congress 

From the State of Alabama 

Thank you Mr. Chairman. This being my first hearing of the Education and 

Workforce, I want to take a moment to express know how much I look forward to 

working with you over the next two years. I look forward to an open debate on reforming health care, ensuring our children have the resources to reach their full potential, and innovative ways for job creation. The hearing today is the first step toward this in regards to the state of our workforce. I want to thank the witnesses 

for appearing today at our first full committee hearing. 

The Administration administered an $814 billion ‘‘stimulus’’ package in 2009 that 

has done nothing to stimulate the economy—instead—resulting in a loss of 2.1 million jobs. During the Great Depression of the 1930s, the New Deal was designed 

to address the ‘‘3 Rs’’—relief, recovery and reform. Out of the New Deal, this country became stronger with improved infrastructures like the Hoover Dam, improved 

national transportation system and a more secured financial system. Unfortunately, 

the Obama’s Stimulus Package did not provide similar results. This nation is still 

left with an aging infrastructure, high unemployment, high levels of uncertainty in 

business, and an out-of-control federal debt. 

During my travels around the district, I hear from so many constituents on about 

the negative impact that the recent efforts by the federal government are having 

on their businesses and jobs. I specifically hear about the opposition to the Patient 

Protection and Affordable Care Act signed into law last year. Last week, the House 

voted to repeal the law that created significant uncertainty for businesses-particularly for small business where job growth is so critical in turning around this recession. I recently spoke with one of my constituents from Headland, Alabama, who 

owns a Pizza Hut. He told me that he will most likely have to shut down his business due to the added cost from Obama Health Care. I heard from another constituent, who owns several pharmacies in the southeast, that he had the ability to 

create four new jobs bust has not due to the uncertainty of what the federal government will place on him next. 

I look forward to the testimony today from our witnesses on their observations 

of these and other factors that have been roadblocks to America’s recovery. Only last 

month it was reported that December was the 20th month that unemployment was 

still above 9 percent nationally. In my home state of Alabama, unemployment rose 
8 

slightly to 9.1 percent, which represents 195,000 unemployed workers in the state. 

This Committee must move forward in legislation that will take away the obstacles 

to growth for small businesses to help turn around this recession. The answer to 

economic growth is not a national answer, but one on every Main Street and farm 

of this nation-for small business to operate and build upon innovation. Once again 

thank you Mr. Chairman for holding this hearing. 

Chairman KLINE. It is now my pleasure to introduce our distinguished panel of witnesses. Governor Bob McDonnell is the 71st 

Governor of Virginia. Prior to assuming office, the Governor served 

as the 44th Attorney General of Virginia from 2005 to 2009, and 

was a member of the Virginia House of Delegates from 1992 to 

2006. Governor McDonnell also served in the U.S. Army, both Active Duty and Reserve, retiring as a lieutenant colonel in 1997. In 

addition to his long and distinguished public and military service, 

the Governor also has experience in the private sector, having 

worked for American Hospital Supply Corporation, a Fortune 500 

company, for a number of years. He holds master’s degrees in business administration and public policy, as well as a law degree. Welcome, Governor. 

Our next witness, Mr. Dyke Messinger, is the President and CEO 

of Power Curbers, Incorporated in Salisbury, North Carolina. 

Power Curbers is a 55-year old family-owned company in Salisbury, 

North Carolina, that manufacturers paving equipment to form concrete curbs and gutters, highway safety barriers and other special 

applications. In 2007 Mr. Messinger was awarded the Manufacturing Champion Award by the Charlotte Chamber of Commerce, 

as well as the Sam Walton Business Leader Award by the Salisbury, Rowan County Chamber of Commerce. In addition to his 

service with Power Curbers, Mr. Messinger serves on the Board of 

Directors of the National Association of Manufacturers. 

Dr. Heather Boushey is a senior economist at the Center for 

American Progress. Her research focuses on employment, social 

policy, and family economic well-being. Prior to her work at the 

Center for American Progress. Dr. Boushey was an economist with 

the Joint Economic Committee of the U.S. Congress, the Center for 

Economic and Policy Research, and the Economic Policy Institute. 

Welcome. 

And Dr. Douglas Holtz-Eakin is currently the President of the 

American Action Forum. Since 2001 he has served in a variety of 

policy positions which include his service as the chief economist of 

the President’s Council of Economic Advisors and as the Director 

of the Congressional Budget Office from 2003 to 2005. 

Welcome to you all. There are little boxes in fronts of you. Those 

lights will illuminate. The system here is you get a green light at 

the start of your remarks and some 4 minutes or so into it, you get 

a little yellow light, and at the end of 5 minutes you get a red light. 

We would ask you somewhere in there to try to wrap up. I am not 

prepared at this, my first hearing, to gavel anybody down when the 

light turns red. But please try to wrap up your comments. And we 

would like to hear from all of you. And then as time allows, we 

would move into questions. So, at this time, we will start here and 

go that way, Governor. 
9 

STATEMENT OF HON. ROBERT F. McDONNELL, GOVERNOR, 

COMMONWEALTH OF VIRGINIA 

Governor MCDONNELL. Mr. Chairman. Thank you very much for 

your kind invitation to come and talk to you about this critically 

important topic of job creation and economic development. I am delighted to come from across the Potomac to your south to be with 

you. It is good to be with my friend, Congressman Scott, as well. 

I don’t think there is any more important issue facing the American public than that issue, as well as spending control, and so it 

is very timely that you make this your first topic. 

I was particularly gratified with the President’s speech last night 

and his focus on job creation and workforce development and access 

to the American dream. I think that is something that crosses all 

party lines, and the question is how do we best get there; what actually works at the state and Federal level to promote that? 

I will share just a couple of thoughts with you in three or four 

categories about some experiences I have from Virginia that are 

working and then some things we would like to ask you to consider 

up here. 

I would say that over the last year we have taken a very strong 

set of steps in Virginia to cut spending and focus on economic development. As a result of that, we have turned a deficit into a $400 

million surplus and we have been ranked this year either number 

one or number two as far as the most business-friendly State in the 

country. We are ranked fourth in total job creation, ninth lowest 

unemployment rate. So we have learned a little bit about some of 

the things that work that I wanted to share with you. 

First is what is the overall climate; what can you do in the 

States? It starts to keeping our environment where taxes and regulation and litigation are all kept to a minimum. Strong right to 

work laws. We are 1 of 22 states that have that. That is a magnet 

for business, great higher education system. 

And then thirdly, some of the intangibles: tone, saying you are 

open for business and welcoming business, not attacking business, 

which I think is critically important and I was delighted to see 

some of that last night as well in the President’s remarks. 

We have also set some big aspirational goals, I think, that are 

helpful, making Virginia the best State in America for small business, making it the energy capital of the east coast. Businesses 

have now come and are gravitating around those goals. 

The second topic that I would say is there are some things in the 

short run that both Congress and the States can do to really attract business. Some of the things we have done in Virginia would 

be creating new economic development incentives for businesses to 

come here. I look at me not competing just against Carolina, but 

against China, India, Singapore, Taiwan, and other countries and 

a global economy. 

So we have been much more aggressive in funding things like a 

Governors Opportunity Fund to provide incentives to business to 

relocate; investments in mega sites, opening up trade offices in 

India, and China; focusing on some of the core competencies that 

our State has in things like aerospace and agriculture, tourism, 

film, wine, things we are good at; and then putting more incentives 

to attract new businesses as well. And then major tax credits and 
10 

things that would create jobs and produce manufacturing jobs to 

return back to our Commonwealth. 

The third thing I would say is the long-term approach. The President touched on this a little bit last night, and that is the importance of higher education. We have a major new initiative that I 

proposed to our general assembly just a couple of weeks ago to create 100,000 new degrees in Virginia over the next 15 years. I am 

very concerned, as you are, about the future of American competitiveness if we continue to lag behind in science, technology, engineering, math and health care, and the number of degrees that we 

are producing there compared to some of the Pacific Rim countries. 

So we have got to invest and create more opportunities for our 

young people to be able to go to institutions of higher education. 

But we have got to run colleges, I think, a little bit more like a 

business so that we can keep the college tuitions low. They have 

doubled in the last 10 years in Virginia, and you price a lot of middle-class kids out if we don’t find ways collectively to increase access, reduce cost, and focus on these areas of STEM. 

The final area, Mr. Chairman, I would like to discuss with you 

are some of the things that you all here in the Federal Government 

can do to help us or to hurt us. And I want to tell you about a couple of those that I think can be impediments. And again, most Governors would say we really believe, not only under the tenth 

amendment, but the fact that we are closer to the people and therefore govern a little better, as Mr. Jefferson said, that we ought to 

have a little more latitude to be able to do these free-market things 

that we believe will work. 

Let me tell you a couple that I think don’t help. Major new regulations. I think Heritage has estimated there were 43 major new 

rules promulgated in 2010, the largest number in 30 years, at a 

cost of $26 billion to business nationally. 

The President talked last night about introducing an executive 

order to say we are going to cut down on regulations, find things 

that don’t work, inhibit entrepreneurship and small business development and free enterprise. I applaud that. I urge you to hold his 

feet to the fire and make sure you really do that to cut down on 

regulation. 

Secondly is bills like card check and cap-and-trade that you have 

proposed and considered in the past that, for me as a coal-producing State, that dramatically hike up energy costs, undermine 

our Right to Work laws. That is not good for me as the chief executive officer of a State. 

There are some rules that EPA has promulgated that are noble; 

for instance, in cleaning up the Chesapeake Bay. But the TMDLs 

will cost Virginia about $700 million in unfunded mandates in our 

State and our businesses over the next 15 years. 

Mr. Chairman, you mentioned health care. We estimate about $2 

billion in unfunded mandates on the businesses and the State of 

Virginia over the next 2 years as a result of the health care bill. 

So what I would say to you is that the things that we can do in 

the short and the long term involve more opportunity, more education—not more guarantees, keeping a lid on regulations, on 

taxes, inhibiting States like mine that have a Right to Work law 

with things like card check that get in the way. We would ask you 
11 

to restrain from doing those things so that we can continue to be 

the laboratories of innovation that I think our Constitution contemplates. 

So thank you, Mr. Chairman, I look forward to your questions. 

Chairman KLINE. Thank you, Governor. 

[The statement of Governor McDonnell follows:] 

Prepared Statement of Hon. Bob McDonnell, Governor, 

Commonwealth of Virginia 

Good afternoon, Mr. Chairman. Thank you for the kind invitation to join you all 

this morning to talk about the state of the American Workforce. 

Over 400 years ago, the Commonwealth of Virginia began as an international 

business venture—and we have a strong and proven track record of success. While 

over the past few years the economy unfortunately slowed down in Virginia, as it 

did nationally, the fervor and passion of the entrepreneurial spirit continues to remain strong in the people across the Commonwealth from Chincoteague on the 

Eastern Shore to the Cumberland Gap in the far southwest. 

When I took office just over a year ago, we set out to create a Commonwealth 

of Opportunity. 

We are the northernmost ‘‘Right to Work’’ state, we have a pro-business environment that fosters economic growth with low taxes and reduce regulations. We have 

a strong, diverse workforce prepared to meet the needs of businesses today. We have 

been recognized nationally as one of the best states in which to do business. While 

still unacceptably high with an unemployment rate of 6.7 percent, and over 280,000 

Virginians out of work, we do have the 9th lowest unemployment rate in the nation. 

We have put forth bold initiatives to get our economy moving again. I firmly believe it is the entrepreneur who makes businesses grow and prosper—not the government. Because of our trust in the men and women to determine the course of 

their business destiny—we have announced 128 new projects, over $2.2 billion in 

new investment and over 11,673 new jobs. 

Since last February 55,400 net new jobs have been created in the Commonwealth, 

the fourth highest number in the nation—trailing only Texas, Pennsylvania and 

California. 

Our accomplishments include the announcement that Northrop Grumman will 

move their headquarters from California to Virginia and Microsoft’s announcement 

that they would make the largest investment in Southern Virginia history, opening 

a $500 million state of the art data center in Mecklenburg County. 

We are committed to simultaneously attracting new employers while also 

strengthening our workforce—and I have recently announced my ‘‘Top Jobs for the 

21st Century’’ initiative that will enable our higher education institutions to issue 

an additional 100,000 degrees over the next 15 years, making Virginia one of the 

most highly educated states in the nation. Our initiative also places a greater emphasis on the high demand science, technology, engineering and math subjects 

through the formation of a public-private partnership that will engage the business 

and professional community in leveraging best practices for K-12 and higher education. 

We are encouraged by the growth we have seen—slow and steady as it may be— 

and the steps we are taking to ramp up that growth are working, but there still 

remains a lot of work to do. 

However, no matter what pro-free market and job-creation steps we take in Virginia, we cannot avoid the fact that what happens here in Washington can cancel 

much of it out and make our work that much more difficult. 

As you know, our small businesses are the backbone of our economy. Our small 

businesses continue to struggle—and when they are able to rebound we will all be 

on a more prosperous path. According to a study just released by the by the National Federation of Independent Businesses, the largest problem currently confronting small businesses nationwide is weak sales, followed by taxes and government regulations. 

A recent Heritage Foundation analysis reported federal agencies issued 43 new 

major rules increasing regulatory burdens in Fiscal Year 2010. The total costs of 

these rules—as estimated by the regulators—exceeded $26.5 billion. That’s the highest single-year cost recorded since 1981, the first year for which records are available. These increased burdens will stunt operations—especially for small businesses. 

We can see the negative impact of excessive federal regulations throughout our 

Commonwealth. 
12 

For example, the total cost of implementation of the Environmental Protection 

Agency’s mandated Chesapeake Bay Total Maximum Daily Load and the associated 

Watershed Implementation Plan for Virginia agriculture will be up to $2.5 billion. 

The Health Care Reform passed last year will increase the number of Medicaid enrollees in Virginia from 270,000 to 425,000, at a cost of $2 billion by the year 2022. 

Our business owners are concerned about how they are going to comply with the 

increased costs to provide insurance to their employees. 

I am concerned—especially as the Governor of a Right to Work state—about the 

December announcement of the National Labor Relations Board announcing its intention to publish in the Federal Register a proposed rule requiring almost all private sector employers to post in the workplace a notice to employees outlining their 

rights under the National Labor Relations Act. The poster entitled, ‘‘Employee 

Rights’’ lists seven bullet points that state employees have the right to organize, 

form or join a labor union and repetitively state they have the right to negotiate 

their wages, benefits and working conditions with their employer. This is counterproductive and detrimental to the message we are trying to send in Virginia. 

Just last week President Obama announced what he called ‘‘A 21st Century regulatory system,’’ in which his Executive Branch agencies would seek ‘‘affordable, less 

intrusive means to achieve the same ends-giving careful consideration to benefits 

and costs.’’ He issued an executive order ‘‘Improving Regulation and Regulatory Review’’—instructing agencies to begin a retrospective analysis of their existing regulations—and we hope to see burdensome regulations actually repealed as a result. 

Mr. Chairman, members of the Committee, I applaud you for bringing this panel 

together today to talk about this paramount issue: ‘‘The State of the American 

Workforce.’’ In Virginia we are working to keep taxes low, and regulation and litigation to a minimum in order to free our entrepreneurs and job creators to grow their 

businesses and create the private sector jobs our citizens need. We hope this Committee and this Congress will move aggressively and quickly to remove the obstacles 

that hinder job growth in our great Commonwealth and nation. 

Thank you and I look forward to your questions. 

Chairman KLINE. Mr. Messinger. 

STATEMENT OF DYKE MESSINGER, PRESIDENT, POWER CURBERS, INC., ON BEHALF OF THE NATIONAL ASSOCIATION OF 

MANUFACTURERS 

Mr. MESSINGER. Good morning, Chairman Kline and distinguished members of the committee. I am Dyke Messinger, President and CEO of Power Curbers, Incorporated, headquartered in 

Salisbury, North Carolina. We employ 105 people in the United 

States. We were established in 1953, and manufactured the first 

automatic curb-building machine in the world. And I have been 

leading a manufacturing company for 35 years. 

On behalf of manufacturers in the United States, I appreciate 

the opportunity to discuss impediments to job creation because, as 

we all know, manufacturing does mean jobs. Manufacturing supports an estimated 18.6 million jobs in the United States, about 

one in six private sector jobs. To put this in context, this is about 

the equivalent of the entire populations of the five largest cities in 

the United States: New York, Los Angeles, Chicago, Houston and 

Phoenix combined. 

Manufacturing also means opportunity, innovation, security and 

economic growth. In my prepared testimony, I lay out a lengthy 

and, frankly, troubling list of these impediments in such areas as 

taxation, labor policy, trade, regulation, and innovation. Fundamentally, this should be understood not just as a list of impediments to job creation, but also to U.S. competitiveness. 

We live in and operate in a global economy. Every time the Federal Government enacts a new law, tax, or regulation that makes 
13 

it harder for a U.S. manufacturer to compete with foreign companies, that is also an impediment to us hiring people. 

Change, inconsistency, uncertainty are also impediments. Employers who have no sense of what tax or regulatory policy will look 

like next year or 5 years from now are going to be cautious about 

hiring new workers. 

The NAM last year developed our manufacturing strategy for 

jobs, and to make a competitive America, proposing policies that 

would lift these impediments. I would respectfully ask that this 

document be included in my submission to the committee. 

The strategy sets three broad goals that, if completed, would 

mean that we achieve the kind of pro-manufacturing policies that 

encourage the hiring that is so important. We start with the goal 

that the U.S. will be the best country in the world to headquarter 

a company. It is critical that our national tax climate does not 

place manufacturers in the United States at a competitive disadvantage in the global marketplace. A pro-manufacturing tax policy must first acknowledge that when Congress raises taxes, it 

makes manufacturers in the U.S. less competitive. It is essential 

that Congress lower the corporate tax rate to 25 percent or lower, 

without imposing offsetting tax increases, as well as instituting 

permanent lower taxes for the over 70 percent of manufacturers 

that are S corporations and file as individuals. 

We must also recognize that one of America’s great competitive 

advantages is our dynamic labor market. Employers face growing 

uncertainty with NLRB efforts to enact the goals of the dangerous 

card-check legislation through executive action. 

Additionally, manufacturers face further regulations from OSHA. 

Health care is a pressing concern for all, of course. Above all, 

health care solutions must contain costs by building upon the existing employer-sponsored health care system without jeopardizing or 

mandating plan design. 

Our second goal is one that President Obama recognized last 

night in his State of the Union address; that the United States 

should be the best country in the world to innovate, performing the 

bulk of a company’s global research and development. The R&D tax 

credit is important to achieve this goal. It has passed and expired 

more than a dozen times. 

This point reinforces my earlier comments about certainty. Business, investors, employers, we all crave predictability and permanence. A little more permanence in all tax policy would be a good 

thing. 

And finally, our last goal is that the United States be a great 

place to manufacture, both to meet the needs of the American market, and serve as an export platform for the world. Manufacturers 

rely on overseas markets because the bulk of all U.S. goods and 

services are manufactured goods. Exports of manufactured goods 

have driven the 2009 and 2010 economic recovery. I know this well, 

as my company exports 75 percent of what we manufacture. 

Rising energy costs continue to be an impediment to growth and 

job creation. We need a comprehensive, all-of-the-above energy policy that allows access to affordable sources of energy and promotes 

reliable generation of baseload power that meets the demands of a 

growing economy. 
14 

Mr. Chairman, members of the committee, I appreciate the opportunity to testify today to provide an overview of some of the 

many challenges currently facing manufacturers. Thank you very 

much. 

Chairman KLINE. Thank you, sir. 

[The statement of Mr. Messinger follows:] 

Prepared Statement of Dyke Messinger, President and CEO, Power 

Curbers, Inc., on Behalf of the National Association of Manufacturers 

Good morning Chairman Kline, Ranking Member Miller and distinguished members of the Committee. I appreciate the opportunity to speak with you today about 

the state of the American workforce, impediments to job creation and manufacturing 

strategies for jobs and a competitive America. 

I am Dyke Messinger, president and CEO of Power Curbers, Inc. Power Curbers 

is based in Salisbury, North Carolina and employs 105 people in the United States. 

Power Curbers was established in 1953 and manufactured the first automatic curb 

machine in the world. I have been leading a manufacturing company for 35 years. 

On behalf of manufacturers in the United States, I appreciate the opportunity to 

discuss impediments to job creation because manufacturing means jobs. Manufacturing also means opportunity, innovation, security and economic growth. Our nation’s manufacturing employees are ready to preserve and build upon the greatness 

built by generations past and by those in manufacturing today. 

The United States is the world’s largest manufacturing economy, producing 21 

percent of global manufactured products. U.S. manufacturing alone makes up 11.2 

percent of our nation’s GDP. More importantly, manufacturing supports an estimated 18.6 million jobs in the U.S.—about one in six private-sector jobs. To put this 

in context, this is about the equivalent of the entire populations of the five largest 

cities in the U.S.: New York City, Los Angeles, Chicago, Houston and Phoenix combined. Nearly 12 million Americans (or 9 percent of the workforce) are employed directly in manufacturing. Manufacturing jobs are high paying jobs, too. In 2009, the 

average U.S. manufacturing worker earned $74,447 annually, including pay and 

benefits—22 percent more than the rest of the workforce. 

But today’s manufacturers face many challenges to our global competitiveness and 

job creation efforts. Proposals that increase taxes and impose new regulations will 

make business in the United States less competitive. These proposals will stifle the 

already weak recovery and destroy manufacturers’ ability to create jobs. 

Manufacturers need policymakers in Washington to embrace policies and solutions that will ensure that the United States is the greatest place in the world to 

be a manufacturer and to be a manufacturing employee, because manufacturing 

means jobs. We must focus on manufacturing strategies that have three key goals: 

• to be the best country in the world to headquarter a company; 

• to be the best country in the world to do the bulk of a company’s research and 

development; and 

• to be a great place to manufacture goods and export products. 

The U.S. Must Be the Best Country in the World to Headquarter a Company 

Manufacturing today is global and mobile. Companies often enjoy an array of attractive choices when deciding where to locate their headquarters, do their research 

or build new facilities. While the use of government incentives is commonplace 

today, a country’s or state’s business climate itself ultimately determines where a 

company will be located. 

As a springboard for future economic growth, investment and jobs, manufacturers 

believe the United States must seek to be the best country in the world in which 

to locate a manufacturing company’s headquarters. 

To do this, we need a national tax climate that does not place manufacturers in 

the United States at a competitive disadvantage in the global marketplace. A promanufacturing tax policy must first acknowledge that when Congress raises taxes, 

it makes manufacturers in the U.S. less competitive. Our tax system must promote 

fair rules for taxing active foreign income of U.S. based businesses. Congress must 

reduce the corporate tax rate to 25 percent or lower without imposing offsetting tax 

increases. Over 70 percent of American manufacturers are S-corporations that file 

taxes at the individual rate. We must institute permanent lower tax rates for individuals and small businesses. 

We must also recognize that one of America’s great competitive advantages is our 

dynamic labor market. Companies must move quickly to meet the demands of a rapidly changing marketplace, and the continuing expansion of federal mandates and 
15 

labor regulations undermines employer flexibility. In addition, increasing costs discourage the hiring of new employees. 

To encourage competitiveness, the United States should reject new federal regulations that dictate rigid work rules, wages and benefits and that introduce conflict 

into employer-employee relations. We must also support initiatives at the Occupational Safety and Health Administration (OSHA) and other oversight agencies that 

encourage employers and employees to join in cooperative efforts for safer working 

environments. Employers’ voluntary efforts to meet the needs of individual employees through flexible work schedules and benefit arrangements need to be recognized 

and promoted. 

It is important that manufacturers are able to engage in positive and fair employee-employer relations. As employers, manufacturers face growing uncertainty in 

the area of labor law—especially from case decisions and regulations from the National Labor Relations Board (NLRB). While manufacturers greatly appreciate that 

Congress has rightfully recognized the dangers of ‘‘card check’’ legislation, any effort 

to implement the goals of that misguided legislation would be a threat to job creation. We continue to urge policymakers to uphold the principles of fairness and balance on which our labor laws have been developed for over seven decades. 

Congress must also support health care reform that drives down costs. Above all, 

health care solutions must contain costs by building upon the existing employersponsored health care system without jeopardizing or mandating plan design. The 

health care law passed by Congress in 2010 must be continually assessed for its effectiveness, cost and unintended consequences. Regulations to implement this law 

must be fully transparent and must not add new employer mandates and costs. 

The U.S. Must Be the Best Country in the World to Innovate 

Innovation has long helped manufacturing in the United States maintain its global leadership. Between 2000 and 2006, manufacturing productivity increased annually by an average of 3.8 percent, primarily due to innovation and technological advances spurred by research and development (R&D). U.S. manufacturers perform 

half of all R&D in the nation, which drives more innovation than any other sector. 

To maintain this competitive advantage, tax provisions must be enacted that will 

stimulate investment and recovery, including strengthening the R&D tax credit and 

making it permanent. Manufacturers in the United States need the certainty and 

incentives provided by a permanent and robust R&D tax credit. 

The federal government must continue its focus on basic R&D that expands the 

knowledge base, spurring private-sector R&D as well as commercial development. 

Innovation is served by robust funding for federal research agencies as well as financial support for public- and private-sector research. 

To ensure that we have the skilled workforce necessary to ensure our economic 

competitiveness, manufacturers must be able to attract the best talent from here in 

the United States and from the entire world. Between 1995 and 2005, immigrants 

founded or co-founded 25 percent of all U.S. high-tech firms. Our nation’s immigration rules must allow substantial increases in the number of employer-sponsored 

visas. 

The United States Will Be a Great Place to Manufacture 

An effective manufacturing strategy promotes domestic manufacturing that serves 

the U.S. and the increasingly integrated North American markets. It also supports 

companies that export and expand abroad to serve foreign markets. Manufacturing 

shipped a record $5.8 trillion in 2008 ($1.6 trillion in value added) and provided 11 

percent of the nation’s GDP. Manufacturers rely on overseas markets because the 

bulk (57 percent) of all U.S. exports of goods and services are manufactured goods. 

Exports of manufactured goods have driven the 2009-2010 economic recovery which 

is demonstrated by the fact that 75 percent of Power Curbers product is shipped 

overseas. 

Manufacturers need a level playing field. In today’s global marketplace, we are 

no longer competing only against businesses in our state or region or even the country. We face competition from around the world. Foreign manufacturers often must 

comply with fewer regulations and have governments that use every tool at their 

disposal to give those companies a competitive edge, frequently at the expense of 

manufacturers in the United States. 

The solution is to increase access to foreign markets through trade agreements 

and ensure the regulatory environment in the U.S does not put manufacturers at 

a disadvantage. 

To do this, manufacturers need a progressive international trade policy that opens 

global markets, reduces regulatory and tariff barriers and reduces distortions due 

to currency exchange rates, ownership restrictions and various ‘‘national champion 
16 

strategies.’’ Congress must enact pending trade agreements and the Administration 

must negotiate additional agreements in the Pacific area and elsewhere. Trade 

agreements reduce the barriers to U.S. exports and create jobs. 

In addition to leveling the playing field on trade, policies must help small and medium-sized manufacturers through expanded programs to help drive U.S. exports. 

Manufacturers also need a comprehensive energy strategy that embraces an ‘‘all 

of the above’’ approach to energy independence that will allow access to affordable 

energy. Such a policy should encourage production of baseload electricity—the dependable power that is critical to manufacturing processes—including traditional 

coal, hydropower and natural gas, nuclear and renewable and alternative fuels. Reducing our dependence on foreign energy by increasing domestic supply will help 

achieve this goal. Congress should allow expanded production of oil and natural gas 

by lifting the moratorium on Outer Continental Shelf development, and encourage 

development of shale gas. 

Regulatory Environment 

Employers across the U.S., especially manufacturers, face considerable uncertainty that stifles economic growth and prevents job creation. Burdensome regulations and government mandates do little to address this uncertainty. A regulatory 

environment needs to allow economic growth. For laws that affect manufacturers, 

there are often scores of regulations that impose substantial compliance costs—burdens often never anticipated by the lawmakers who passed the legislation. 

The Small Business Administration recently estimated that the annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008. 

The portion of these regulatory costs that falls initially on businesses was $8,086 

per employee in 2008. This study represents the best research available to identify 

the disproportionate burden placed on small business by regulation, and it is 36 percent higher than larger firms. Manufacturers bear the heaviest burden from environmental regulation, while facing similar or more stringent regulations in workplace safety, health, transportation, financial, trade, tax administration, homeland 

security and export controls. 

This Administration is in the midst of proposing or implementing numerous regulations. If they are not substantially changed from their present form, they could 

cost millions of jobs and weaken an economy in a still fragile recovery. 

Based on data from the Government Accountability Office, 43 major new regulations were imposed over the previous two years. Collectively, the cost of these rules 

topped $26.5 billion. Manufacturers appreciate President Obama’s recent executive 

order to review federal regulations harming economic growth. Growing overregulation from Washington harms job creation and stifles economic growth. This call for 

a government-wide review of regulations and rules is an opportunity for the President to demonstrate results by eliminating unnecessary regulations already in the 

pipeline or delaying poorly thought-out proposals that are costing jobs. 

Some of the most concerning regulatory proposals stem from the Environmental 

Protection Agency (EPA). At the beginning of this year, the EPA began regulating 

greenhouse gas (GHG) emissions from stationary sources under the Clean Air Act. 

While only the largest facilities will be regulated at first, this action sets the stage 

for future regulation of much smaller sources. Manufacturers are also concerned 

that states are unprepared for the new permitting requirements, which will cause 

significant delays. This permitting gridlock will discourage manufacturers from 

building new facilities or expanding their current facilities, hurting competitiveness 

and discouraging job creation. Furthermore, additional facilities—including hospitals, agricultural establishments and even the smallest businesses—will be phased 

into the onerous permitting requirements in the near future. 

While we are pleased that OSHA has announced that it intends to withdraw its 

proposed changes to noise control requirements, manufacturers still face many burdens from this agency. Specifically, manufacturers are concerned with OSHA’s plans 

to make it more difficult for employers to work cooperatively with the agency to 

comply with workplace safety standards. Through a series of both proposed regulations and sub-regulatory administrative actions, OSHA is in the process of gutting 

key components of compliance assistance programs that have been proven to help 

employers make their workplaces safer while allowing the agency to focus its resources more effectively. 

Conclusion 

I appreciate the opportunity to testify before the Committee today to provide an 

overview of some of the many challenges currently facing manufacturers. It is my 

hope that Congress can embrace strategies that enhance our competitiveness and 

foster job creation. I respectfully request permission to submit a plan created by the 
17 

National Association of Manufacturers in June 2010—the Manufacturing Strategy 

for Jobs and a Competitive America. 

Chairman KLINE. Dr. Boushey. 

STATEMENT OF HEATHER BOUSHEY, SENIOR ECONOMIST, 

CENTER FOR AMERICAN PROGRESS 

Ms. BOUSHEY. Thank you, Chairman Kline, Ranking Member 

Miller, Representative Andrews, and everyone on this committee 

today for inviting me here to speak. My name is Heather Boushey 

and I am the senior economist with the Center for American 

Progress Action Fund, and I am glad to be here to discuss the state 

of the American workforce. Until we fill the demand gap, we will 

have continued high unemployment which, in turn, will continue to 

drag our economy down. 

Today’s high unemployment was caused by the mismanagement 

of the economy in the 2000s, a financial sector not focused on fostering productive investments and a housing bubble. 

We must address these root causes. Creating jobs now means 

making investments that not only boost employment in the short 

term, but lay the foundation for long-term economic growth. Jobs 

will not be created by limiting regulation, repealing the Affordable 

Care Act or focusing exclusively on the short-term deficit. 

Now, the private sector has been adding jobs every month for a 

full year and at a faster rate than during the 2000 economic recovery. Even with the success of the Recovery Act in boosting job 

growth, however, at this pace we will not reach 5 percent unemployment for decades. Unemployment has stood at or above 9 percent for a record 20 months, and there is growing evidence that 

workers may not again find jobs at their prior pay rates. Job losses 

have been widespread and not only concentrated in the sectors 

hardest hit by the bursting of the housing bubble. 

This directly contradicts the notion that the jobs crisis is a structural program. The continuing slow pace of the jobs recovery stems 

from insufficient aggregate demand in the overall economy. Gross 

domestic product has grown for five quarters now, and it is likely 

we will find out on Friday it has grown again. Much of this growth 

has been due to the Recovery Act and other policies aimed at addressing the fallout from the financial crisis. Yet our economy continues to have a gap between what our economy currently produces 

and what it would be producing if workers and the economy’s productive assets were to be used at full employment. 

About a third of this total output gap is due to the lost wages 

of the unemployed. Unemployment insurance fills that gap, and 

that is why it is critical to sustaining the economic recovery and 

that is why we can’t just fill the gap with tax cuts. 

Now, investment is the key to creating jobs now and building the 

foundation for a high productivity future. Even though corporate 

America is flush with cash, investment is at its lowest level in 

more than five decades. Yet the cost of capital continues to be at 

lows not seen since the 1960s, and small businesses continue to 

point to the problem as being the lack of customers. A lack of demand is their key problem. 
18 

Now, we know that we need to spend at least $2.2 trillion over 

the next 5 years just to repair our crumbling infrastructure. This 

doesn’t even include things like high-speed rail, mass transit, and 

renewable energy investments, many of the things that the President talked about last night that we need to do to free ourselves 

from foreign oil and climate change. 

Infrastructure investments have traditionally been a bipartisan 

issue and one that hopefully this Congress can build a bridge 

across the aisle to address. We should not, however, repeat the 

mistakes of the Great Depression, or, as it now seems, the conservatives have done in the U.K. with austerity policies that will not 

create jobs. 

The most important reason for the rise in the deficit is rising unemployment and falling incomes. Economists Allen Blind and Mark 

Zandi have estimated that had Congress done nothing to address 

the fallout of the financial crisis, the deficit would have ballooned 

to more than 21⁄2 times as large as it is currently projected to grow. 

Moving forward, policymakers like yourselves must continue to 

ensure that financial markets are focused on their real purpose: 

making funds available to promote investment in America, not just 

speculation and greater profits for those in the financial services 

industry. 

Yesterday the Financial Crisis Inquiry Commission clearly 

placed blame for the crisis on the lack of oversight and regulation 

of the financial sector. The agencies that oversee the financial markets must be fully staffed and allowed to do their job. 

We also need to make sure that if a goal of our trade policy is 

job creation, then we need to evaluate whether or not these policies 

that we are pursuing will actually reduce our trade deficit and, on 

net, create jobs. We know from economic research that local labor 

markets that have increased exposure to Chinese exports have had 

high unemployment, lower labor force participation, and reduced 

wages. And there is not good empirical evidence that shows that 

the Korea free trade agreement would generate economically meaningful job gains. We need jobs now and we need the kind of investments that will transform our economy and renew long-run prosperity. 

Thank you very much. 

Chairman KLINE. Thank you. 

[The statement of Ms. Boushey follows:] 

Prepared Statement of Heather Boushey, Senior Economist, 

Center for American Progress Action Fund 

Thank you, Chairman Kline and Ranking Member Miller for inviting me here 

today to testify on the state of the American workforce. My name is Heather 

Boushey and I’m a senior economist with the Center for American Progress Action 

Fund. 

The challenges workers are as great as they’ve been in generations. The Great 

Recession has wrought havoc in the lives of millions of families. The policies that 

will create jobs are those that will increase aggregate demand by making investments that will not only boost employment in the short-term, but lay the foundations for long-term economic growth. 

Until we fill the demand gap, we will have continued unemployment, which in 

turn will continue to drag down economic growth. Unemployment—the ultimate unused capacity—is a terrible thing. Allowing it to fester when you have tools at your 

disposal to alleviate it sends a message that our government not only doesn’t care 
19 

about the very real hardships families are facing, but that they don’t recognize the 

enormous waste of human potential. 

The real question is whether policymakers will focus on not repeating the mistakes of the Great Depression and, rather, continue to focus on boosting investment 

until the recovery solidly takes hold.1 While the immediate imperative is to address 

in the short-term high unemployment, we must also simultaneously begin to address the deep structural challenges to long-term growth and job creation. 

Jobs will not, however, be created by limiting regulation or repealing the Affordable Care Act, nor by creating by cutting spending or focusing on the short-term 

deficit. And, I would caution you on focusing too much on the short-term deficit. 

That deficit is not due the result of overspending, but rather due to the failed economic policies and two unfunded wars of the Bush Administration, and the higher 

costs and lower tax revenues caused by the Great Recession. 

The issues facing workers 

Today’s high unemployment is a function of the reality that there simply aren’t 

enough jobs to go around because there is not sufficient demand in our economy. 

While the economy has been growing for at least five quarters now, businesses have 

not yet begun to ramp up hiring. While unemployment creates significant hardships 

for individual families, it also threatens the nascent economic recovery: the unemployed can’t spend what they don’t earn and spending is what keeps our economy 

humming. Thus, there is a direct link between lack of hiring and future economic 

growth. 

High unemployment threatens economic stability of millions of American families 

While the recession ended in June 2009, for everyday Americans, there’s been no 

recovery. The private sector has been adding jobs every month for a full year and 

averaged 128,000 jobs per month over the past three months.2 This is a faster pace 

than in the 2000s economic recovery, but at this rate, we won’t reach 5 percent unemployment for decades (Figure 1).3 To get to 5 percent unemployment by November 2012, we’d need to add more than four times the number of jobs that our economy is adding now—551,000 jobs each month. 

Unemployment has stood at or above 9 percent for a record 20 months and economists predict it will remain this high at least through 2011. Nearly half of those 

unemployed have been job searching for at least six months.4 The odds of finding 

work continue to look rather grim. For every five people searching for a job, there 

is only one job available. It’s like a sad game of musical chairs: one chair, five seeking a seat. We all know how that game ends. 

High unemployment has long-term consequences for workers and their families, 

as well as our economy overall. The more than 6 million unemployed workers who 

have been searching for a new job for at least six months are unable to make use 

of their skills or contribute to our nation’s productive capacity. Consider these facts: 

Average mature workers who lose a stable job will see their earnings fall by 20 percent over 15 years to 20 years,5 and the labor market consequences of graduating 

from college in a bad economy are large, negative, and persistent.6

Many workers may never find jobs at the level of the job they lost during this 

Great Recession. Recent data from the Bureau of Labor Statistics has found that 

as of last year at this time among those who were displaced from their job—permanently losing their job or laid off because their employer’s plant closed or business 

failed—between 2007 and 2009, just half (49 percent) were reemployed. This is lowest reemployment rate on record for the series, which began in 1984. Of those reemployed in full-time work, more than half (55 percent) were earning less than they 

did prior to displacement.7
20 

FIGURE 1

The continuing slow pace of the jobs recovery stems from one factor: Insufficient aggregate demand in the overall economy 

Gross domestic product, or GDP, grew at an annual rate of 2.6 percent in the 

third quarter of 2010, the fifth quarter of positive growth in a row.8 Much of this 

growth would not have happened without the American Recovery and Reinvestment 

Act and other policies aimed at addressing the fallout from the financial crisis. 

Yet, our economy continues to have what economists call ‘‘excess capacity,’’ which 

means there is not enough demand for all the goods and services we have the capacity to produce, and thus not enough demand for more workers. As of December 

2010, capacity utilization was 76 percent, 4.6 percent below its average from 1972 

to 2009.9 Excess capacity is a technical term that economists use to describe what 

Americans are currently seeing everyday around them—excruciatingly high unemployment, especially long-term unemployment, and the devastation it causes families and communities all around our nation. 

Another way to measure excess capacity is the ‘‘output gap,’’ the gap between 

what our economy currently produces and what it would be producing if workers 

and the economy’s productive assets were to be used at full employment. Currently, 

the output gap is equal to over 6 percent of our total gross domestic product (Figure 

2). This is down from 7.5 percent when growth was at its nadir and just before the 

American Recovery and Reinvestment Act was passed and signed into law.10
21 

FIGURE 2

Currently, about a third of the total output gap is due to the lost wages of the 

unemployed.11 To put some back of the envelope numbers on this, think of it this 

way: the typical worker brings home about $40,000 annually and about 15 million 

are out of work, leaving our economy about $600 billion smaller this year due to 

unemployment.12 It’s that gap that unemployment insurance fills and why it’s critical to sustaining the economic recovery. And, why we can’t just fill the output gap 

with tax cuts. 

And, we are now in another jobless recovery, while profits soar. From December 

2008 to September 2010, profits in the nonfinancial corporate sector rose in inflation-adjusted terms by 92.0 percent before taxes and 93.3 percent after taxes. In 

September 2010, profits were at their highest point since at least September 2007, 

before the recession started. The nonfarm nonfinancial business sector is holding 

more than $1.9 trillion in cash, totaling 7.4 percent of total corporate assets in the 

third quarter of 2010—the highest level since the fourth quarter of 1959.13

Even though corporate America is flush with cash, investment is at the lowest 

level in more than five decades. So far in this business cycle, from December 2007 

to September 2010, business investment has averaged 9.8 percent of gross domestic 

product, the lowest average for any business cycle since the late 1950s (Figure 3). 

This low level of investment is not because of the cost or availability of capital, 

which continues to be at lows not seen since the 1960s.14

Without investment, our resources—the American people—languish in unemployment. A key challenge for policymakers is sorting out how to encourage investment. 
22 

FIGURE 3

This jobs crisis is not a structural problem 

In May of 2007, the unemployment rate was 4.5 percent. Just over a year and 

a half later, the private sector was shedding 700,000 to 800,000 jobs per month and 

unemployment continues to linger above 9 percent. For the unemployment problem 

to be structural, it would have to be the case that our nation’s workers and employers all of a sudden become mismatched due to some new set of technological advances that made one in 10 workers instantaneously obsolete. There is no evidence 

that this has been the case in the years since 2007. 

If today’s high unemployment were largely about shifting workers out of the sectors hardest hit by the bursting of the housing bubble—primarily construction—job 

losses would have to be concentrated there. But, this has not been the case. In fact, 

the Great Recession has seen fairly broad, widespread job losses across industry, 

which contradicts the idea that there’s one or two sectors that U.S. workers need 

to transition out of (Figure 4). Manufacturing, professional and business services, 

transportation and warehousing, financial activities, leisure and hospitality, and information services have all lost a larger share of jobs than construction. 

Further, if unemployment was structural, the money pumped into the economy 

through monetary and fiscal policy would lead to higher prices. If more money were 

chasing a limited pool or workers or capacity, then prices should go up. Yet, in fact 

what we’ve seen is the opposite. Over the past year, prices have risen by just half 

a percent, just barely above deflation. 
23 

FIGURE 4

If the problem with unemployment were structural, the primary policy lever to 

address this is education and training. There are many reasons for policymakers to 

be concerned about the skills of the U.S. labor force: American students are consistently behind their academic peers internationally. According the U.S. Department 

of Education, out of 30 peer countries, students in the United States were ranked 

30th for math, 23rd for science, and 17th for reading.15 However, even if unemployment was a structural problem and training and education could solve it, this is not 

a solution that can address our immediate high unemployment. Setting up those 

programs, getting workers the skills they need will take time and our economy will 

not see the fruits of those endeavors for years. Investing in education is critical for 

our economy, but it cannot solve our current unemployment problem. 

In thinking about the challenges facing workers and their families, we also need 

to remain cognizant of the difference in employment patterns for specific demographic groups. Workers of color continue to experience higher unemployment than 

white workers and the trends in employment continue to play out differently by gender. Between December 2007 and June 2009, the official timeframe for the recession 

according to the National Bureau of Economic Research, jobs held by men accounted 

for more than 70 percent of all the jobs lost. In ten of the past 12 months of job 

gains, the growth in jobs for men outpaced the growth for women and last summer, 

women actually lost jobs while men saw small increases. Over 2010, men gained 

just more than a million jobs, while women gained a paltry 149,000 (Figure 5). 

The biggest gains for men have been in professional business services, where men 

gained 278,000 jobs, compared to 103,000 for women; trade, transportation, and utilities, where men have gained 245,000 jobs, while women lost 74,000; and administrative and waste services, where men gained 231,000 and women gained 137,000. 

One of the biggest gender gaps in employment trends is in government employment 

The aid to the states as a part of the ARRA helped sustain women’s employment 

through the Great Recession, but with the state budget crisis lingering, this could 

continue to bring down women’s employment.16 Women make up the majority of 

state and local government employees. Last year, local governments shed 259,000 

workers, of whom 225,000 were women. At the state level, women have gained 

55,000 jobs and men lost 43,000, but these gains for women were not enough to offset the local layoffs. 
24 

FIGURE 5

How did we get here? 

Mismanagement of the economy in the 2000s, a financial sector only in service 

of its own profit rather than fostering productive investments, and a housing bubble 

all led to the economic disaster in front of us. 

The failed economic policies of the 2000s 

We now know that the perception of prosperity in the 2000s was in many ways 

a mirage. The housing bubble and financial innovations and the Great Recession 

masked deeper structural problems. The housing bubble, rapid growth of the real 

estate and financial sectors, and debt-fueled growth during the Bush era masked 

what were otherwise largely negative trends for American workers. 

While the economy was growing, American workers were living through a lost 

decade. The 2000s saw no income gains for the typical American family 17 and saw 

the weakest employment gains and weakest growth in business investment of any 

economic cycle in the post-World War II era.18 For most Americans, wages were 

stagnant, even though productivity rose.19 Moreover, over the past two decades, 

we’ve seen two ‘‘jobless’’ economic recoveries and, with the exception of a few years 

in the late 1990s, widening wage and income inequality.20

Our labor market has become bifurcated, with fewer and fewer good jobs paying 

good wages and benefits and growth in employment at the high and low ends, leaving out the middle.21 This is not a recipe for a strong middle class, restoring economic opportunity, or long-term economic competitiveness. Beyond the Great Recession and its global consequences, this is the great economic policy challenge of our 

time. 

Most women now work outside the home and families have no one available to 

provide full-time care for children or ailing family members. Coupled with declining 

prospects for future job growth, this analysis gives a whole new meaning to middleclass squeeze. 

The Recovery and Reinvestment Act 

Congress has taken important steps to encourage private sector job creation. The 

Congressional Budget Office credits the American Recovery and Reinvestment Act, 

or ARRA, signed into law in February 2009 with saving or creating 1.4 to 3.6 million jobs and they estimate that 2.6 million jobs will be saved or created by in 

2011.22 Last summer, economists Alan Blinder and Mark Zandi estimated that the 

American Recovery and Reinvestment Act and other fiscal policies have saved or 

created 2.7 million jobs and without them, unemployment would stand at 11 percent 

and job losses would have totaled 10 million. On top of this, they estimate that if 

nothing had been done to address the financial crisis—no Troubled Asset Relief Program, no bailouts of American International Group Inc, and no investment in the 
25 

auto industry—our economy would have 5 million fewer jobs than we do today and 

unemployment would be sharply higher, at 12.5 percent.23

The ARRA kept teachers in schools and police officers on their beats, even as tax 

revenues fell. It kept money flowing into the pockets of the long-term unemployed, 

which in turn has not only helped those individual families hardest hit by the Great 

Recession, but also helped keep dollars flowing their local communities. It helped 

unemployed workers access health care, undoubtedly mitigating the well-documented negative health effects of unemployment. 

Even with the success of the Recovery Act, there have been clear indications since 

2009 that in order to fill in the output gap and lower unemployment, Congress will 

need to focus on policies that raise, not lower, aggregate demand.24 As Federal Reserve Chairman Ben Bernanke noted this month in testimony: 

Our nation’s fiscal position has deteriorated appreciably since the onset of the financial crisis and the recession. To a significant extent, this deterioration is the result of the effects of the weak economy on revenues and outlays, along with the actions that were taken to ease the recession and steady financial markets. In their 

planning for the near term, fiscal policymakers will need to continue to take into 

account the low level of economic activity and the still-fragile nature of the economic 

recovery (emphasis added).25

In this Great Recession, sustained government spending until the recovery hits 

its full stride is the best—and only—option to push the unemployment rate down. 

Because the Great Recession was preceded by a massive financial crisis, we knew 

from day one that it was likely to be deeper and more protracted than more recent 

recessions.26 We’ve also known for two years now that the Federal Reserve has no 

more room to lower interest rates to boost demand.27

In other recent recessions, lowering interest rates was sufficient to push the economy toward sustainable growth, but this time it’s not possible. The last recession 

that brought us double-digit unemployment, in the 1980s, was caused by tightening 

of monetary policy by the Federal Reserve under Chairman Paul Volcker as they 

were trying to address rampant inflation. The Federal Funds Rate hit nearly 20 percent in the 1981, which stopped inflation, but then also gave the Federal Reserve 

a great deal of room to lower rates to encourage economic activity. To boost growth, 

the Fed has pursued quantitative easing, using the proceeds from the central bank’s 

mortgage bond portfolio to buy long-term government debt. That is, they are using 

unorthodox methods of pumping money into an economy and working to lower interest rates that central bankers do not usually control. Their effect is the same as 

printing money in vast quantities, but without ever turning on the printing presses. 

Yet there is a rising chorus of voices singing the praises of deficit reduction over 

the benefits of saving our economy through expansionary fiscal policies. Once our 

economy recovers, of course, the deficit must be addressed, but until unemployment 

begins to fall and the economic recovery is firmly in train, these voices push us in 

the wrong direction. Their rhetoric argues that we not burden the next generation 

with unsustainable debts, but the reality is this: by not boosting demand for goods 

and services by helping existing excess capacity—the nearly 15 million unemployed 

workers in our country today—millions of workers will find no means of support 

today and will see their economic future grows dimmer by the week. 

It is important to remember that by taking actions to avert greater unemployment, we averted a bigger federal deficit. The steps taken to shore up our economy 

have ended up being a better investment for jobs and for the deficit than doing 

nothing at all (Figure 6). Economists Blinder and Zandi estimated that had Congress done nothing, the deficit would have ballooned to more than 2.5 times as large 

as it did, hitting more than $2 trillion by the end of the 2010 fiscal year, $2.6 trillion in fiscal year 2011, and $2.25 trillion in fiscal year 2012. In actuality, they estimate that by the end of the 2010 fiscal year, the federal budget deficit will be $1.4 

trillion and it will fall to $1.15 trillion in fiscal year 2011 and $900 billion in fiscal 

year 2012.28
26 

FIGURE 6

The most important reason for the rise in the deficit is rising unemployment and 

falling incomes.29 In 2009, federal receipts were $419 billion below 2008 levels, a 

17 percent drop, which was the largest decline from one year to the next in more 

than 70 years. Individual income tax receipts decreased by 20 percent, and corporate income tax revenues plummeted by more than 54 percent, which means corporations paid less than half in taxes than they paid the year before.30

To fix the jobs problem, fix the aggregate demand problem 

Unlike any point in the decades since before World War II, the challenge of laying 

the foundation for a strong economy lies with you and this body of government. 

These are unusual times because it continues to be the case that fiscal policy is the 

primary lever that the federal government has at its disposal to spur economic 

growth. I urge you to consider that these extraordinary times call for extraordinary 

action—continued spending to aid to the long-term unemployed. The sense of imminent collapse of our financial sector, thankfully, now appears behind us, but the fallout for our economy remains and it is just as dramatic and continues to require bold 

steps. 

Let’s be clear: An overgrown financial sector, bloated on the real estate bubble it 

helped create, threw our economy into crisis. Moving forward, policymakers must 

continue to ensure that financial markets are focused on making funds available to 

promote investment in America, not just speculation and dividends for those in the 

financial services industry. We need vibrant capital markets so that innovative companies can access funds to invest; we do not need innovative financial products to 

allow Wall Street to siphon off these funds for its own gain. 

Investment is the key to creating jobs now and building the foundation for a highproductivity future. The American Society of Civil Engineers estimates that we need 

to spend at least $2.2 trillion over the next five years just to repair our crumbling 

infrastructure.31 This doesn’t even include things like high-speed rail, mass transit, 

and renewable energy investments we need to free ourselves from foreign oil and 

climate change. 

The Obama administration has proposed a $50 billion fund, which is a good start, 

but we need to invest more to both address today’s jobs problem and lay the foundation for long-term economic growth. Infrastructure has been a traditionally bipartisan issue and one that hopefully this Congress can build a bridge across the aisle 

to address. 

We also need to make sure that if a goal of our trade policy is job creation, then 

we need to evaluate whether these policies reduces our trade deficit and, on net, 

create jobs.32 Economists estimate that local labor markets that have had increased 

exposure to Chinese imports have had higher unemployment, lower labor force participation, and reduced wages relative to local labor markets that have not had such 

exposure. What is notable is that although employment decline is concentrated in 
27 

manufacturing, the declines in wages occur across the local labor market and are 

actually most pronounced outside of manufacturing.33 The authors note that: 

Growing import exposure spurs a substantial increase in transfer payments to individuals and households in the form of unemployment insurance benefits, disability 

benefits, income support payments, and in-kind medical benefits. These transfer 

payments are two orders of magnitude larger than the corresponding rise in Trade 

Adjustment Assistance benefits. Nevertheless, transfers fall far short of offsetting 

the large decline in average household incomes found in local labor markets that 

are most heavily exposed to China trade.34

There is also not strong evidence that the Korea Free Trade Agreement will generate economically meaningful job gains. The U.S. International Trade Commission, 

the independent federal body that analyzes potential effects of trade pacts for Congress and the executive branch, estimate that while the Korea FTA would increase 

exports, it would increase imports even more and result in an increase in the total 

U.S. goods trade deficit of between $308 million and $416 million.35 The largest estimated increases in the trade deficit would be in motor vehicles, electronic equipment, ‘‘other transportation equipment,’’ iron, metal products, textiles, and apparel. 

The unemployment insurance system and other automatic stabilizers must remain in working order. Filling the gap in demand will require continued attention 

to one of the key sources of demand: high unemployment. Most of the state’s unemployment insurance trust funds are insolvent, however, with 30 states’ owing a total 

of $41 billion, a debt that could rise to $80 billion.36 The loans from the federal government will require that in 2011, 25 states must pay an extra $2 billion in federal 

unemployment taxes levied on employers, an increase of 30 percent over 2010.37

We all have an interest in not seeing the cost of hiring workers rise as firms 

struggle to ramp up hiring, but we also need to make sure that the unemployment 

insurance system has the integrity to continue to act as an important automatic stabilizer. Recent analysis shows that this system generated significant positive economic effects and kept unemployment from rising to more than 11 percent.38

With a mess like this, creating jobs isn’t simple, but there couldn’t be a better 

time to invest in America. Interest rates are low. Wages are low. We need jobs now 

and we need the kind of investments that will transform our economy and renew 

long-run prosperity. 

Thank you. 

REFERENCES

Autor, David H., David Dorn, and Gordon H. Hanson. 2010. ‘‘The China Syndrome: 

Local Labor Market Effects of Import Competition in the U.S.’’ Working Paper 

UCSD and NBER. 

Blinder, Alan, and Mark Zandi. 2010. ‘‘How the Great Recession Was Brought to 

an End.’’ Washington, DC: Economy.com. 

Bureau of Labor Statistics, 2010. Employment Status of the Civilian Population by 

Sex and Age U.S. Department of Labor. 

Bureau of Labor Statistics. 2010. ‘‘Worker Displacement: 2007-2009.’’ U.S. Department of Labor (http://www.bls.gov/news.release/disp.nr0.htm) 

David H. Autor, Lawrence F. Katz, and Melissa S. Kearney. 2008 ‘‘Trends in U.S. 

Wage Inequality: Revising the Revisionists.’’The Review of Economics and Statistics 90 (2): 300-23. 

Farber, Henry. 2005 ‘‘What Do We Know About Job Loss in the United States? Evidence from the Displaced Workers Survey, 1984-2004.’’Federal Reserve Bank of 

Chicago: Economic Perspectives 2 ( 

Heather Boushey, Karen Davenport, Joy Moses, Melissa Boteach. 2010. ‘‘What the 

Census Tells Us About the Great Recession: New Data Reveals Decreased Income and Health Coverage.’’ Washington, DC: Center for American Progress. 

Hersh, Adam S., and Christian E. Weller. 2011. ‘‘Measuring Future U.S. Competitiveness: U.S. Productivity and Innovation Snapshot.’’ Washington, DC: Center 

for American Progress. 

Hersh, Adam, and Isha Vij. 2011. ‘‘Economic Growth Continues, but Too Slowly to 

Secure Recovery: Policy Consistency Targeting Jobs Is Necessary.’’ Center for 

American Progress (http://www.americanprogress.org/issues/2011/01/december—jobs.html [1/25/2011, 2011]). 

Kahn, Lisa B. 2010 ‘‘The Long-Term Labor Market Consequence of Graduating from 

College in a Bad Economy.’’Labour Economics 17 (303-16. 

Linden, Michael. 2009. ‘‘Breaking Down the Deficit.’’ Washington, DC: Center for 

American Progress. 
28 

McArthur, Travis, and Todd Tucker. 2010. ‘‘Lies, Damn Lies and Export Statistics: 

How Corporate Lobbyists Distort Record of Flawed Trade Deals.’’ Washington, 

DC: Public Citizen’s Global Trade Watch. 

Mishel, Lawrence, Jared Bernstein, and Heidi Shierholz. 2009. The State of Working America 2008-9. Ithaca, NY: Cornell University Press. 

Piketty, Thomas, and Emmanuel Saez. 2003 ‘‘Income Inequality in the United 

States, 1913-1998.’’Quarterly Journal of Economics 118 (1): 1-39. 

Reinhart, Carmen, and Kenneth Rogoff. 2009 ‘‘The Aftermath of Financial Crises.’’American Economic Review (Papers and Proceedings) 99 (2): 466-72. 

Romer, Christina D. ‘‘Back to a Better Normal: Unemployment and Growth in the 

Wake of the Great Recession’’ In Woodrow Wilson School of Public and International Affairs, Princeton University Princeton, N.J.: 2010. Reprint. 

U.S. Congressional Budget Office. 2010. ‘‘Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from January 

2010 through March 2010.’’ Washington, DC. 

U.S. Congressional Joint Economic Committee. 2008. ‘‘Stemming the Current Economic Downturn Will Require More Stimulus.’’ Washington, DC. 

Vroman, Wayne. 2010. ‘‘The Role of Unemployment Insurance as an Automatic Stabilizer During a Recession.’’ Washington, DC: U.S. Department of Labor. 

Xie, Holly, Howard L. Fleischman, Paul J. Hopstock, Marisa P. Pelczar, and Brooke 

E. Shelley. 2010. ‘‘Highlights from Pisa 2009: Performance of U.S. 15-Year-Old 

Students in Reading, Mathematics, and Science Literacy in an International 

Context.’’ Washington, DC: National Center for Education Statistics. 

US Congress, Senate Committee on Finance. 2010. Testimony of Mark Zandi on 

Using Unemployment Insurance to Help Americans Get Back to Work: Creating 

Opportunities and Overcoming Challenges 111th Congress, 2nd session sess. 

ENDNOTES

1 Christina D. Romer, ‘‘Back to a Better Normal: Unemployment and Growth in the Wake of 

the Great Recession’’ in Woodrow Wilson School of Public and International Affairs, Princeton 

University (Princeton, N.J.2010). 2 Bureau of Labor Statistics, Employment Status of the Civilian Population by Sex and Age 

(U.S. Department of Labor, 2010), table A-1, Adam Hersh and Isha Vij, ‘‘Economic Growth Continues, but Too Slowly to Secure Recovery: Policy Consistency Targeting Jobs Is Necessary,’’ 

available at http://www.americanprogress.org/issues/2011/01/december—jobs.html (last 

accessed 1/25/2011 2011). 3———, ‘‘Economic Growth Continues, but Too Slowly to Secure Recovery: Policy Consistency 

Targeting Jobs Is Necessary’’. 4 Bureau of Labor Statistics, ‘‘Employment Status of the Civilian Population by Sex and Age’’, 

Hersh and Vij, ‘‘Economic Growth Continues, but Too Slowly to Secure Recovery: Policy Consistency Targeting Jobs Is Necessary’’. 5 Henry Farber, ‘‘What Do We Know About Job Loss in the United States? Evidence from the 

Displaced Workers Survey, 1984-2004,’’ Federal Reserve Bank of Chicago: Economic Perspectives 2 (2005). 6Lisa B Kahn, ‘‘The Long-Term Labor Market Consequence of Graduating from College in a 

Bad Economy,’’ Labour Economics 17 (2010): 303-16. 7 Bureau of Labor Statistics, ‘‘Worker Displacement: 2007-2009,’’ available at http:// 

www.bls.gov/news.release/disp.nr0.htm. 8 Bureau of Economic Analysis, National Income and Product Accounts Table 1.1.1, (December 

22, 2010). 9Federal Reserve Statistical Release. ‘‘Industrial Production and Capacity Utilization.’’ Table 

G.17, (January 14, 2011). 10 Hersh and Vij, ‘‘Economic Growth Continues, but Too Slowly to Secure Recovery: Policy 

Consistency Targeting Jobs Is Necessary’’. 11 Bureau of Economic Analysis, National Income and Product Accounts. 12 Author’s calculations from U.S. Census Bureau and U.S. Bureau of Labor Statistics 13 Adam S. Hersh and Christian E. Weller, ‘‘Measuring Future U.S. Competitiveness: U.S. 

Productivity and Innovation Snapshot’’ (Washington, DC: Center for American Progress, 2011). 14 Ibid. 15 Holly Xie, Howard L. Fleischman, Paul J. Hopstock, Marisa P. Pelczar, and Brooke E. Shelley, ‘‘Highlights from Pisa 2009: Performance of U.S. 15-Year-Old Students in Reading, Mathematics, and Science Literacy in an International Context’’ (Washington, DC: National Center for 

Education Statistics, 2010). 16 Boushey, Heather. ‘‘Compromising Women’s Jobs.’’ Center for American Progress, (February 

9, 2009). 17Karen Davenport Heather Boushey, Joy Moses, Melissa Boteach, ‘‘What the Census Tells 

Us About the Great Recession: New Data Reveals Decreased Income and Health Coverage’’ 

(Washington, DC: Center for American Progress, 2010). 18 U.S. Congressional Joint Economic Committee, ‘‘Stemming the Current Economic Downturn 

Will Require More Stimulus’’ (Washington, DC, 2008). 19Lawrence Mishel, Jared Bernstein, and Heidi Shierholz, The State of Working America 

2008-9 (Ithaca, NY: Cornell University Press., 2009). 
29 

20Thomas Piketty and Emmanuel Saez, ‘‘Income Inequality in the United States, 1913-1998,’’ 

Quarterly Journal of Economics 118 (1) (2003): 1-39. 21Lawrence F. Katz David H. Autor, and Melissa S. Kearney, ‘‘Trends in U.S. Wage Inequality: Revising the Revisionists,’’ The Review of Economics and Statistics 90 (2) (2008): 300-23. 22 U.S. Congressional Budget Office, ‘‘Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from January 2010 through March 2010’’ 

(Washington, DC, 2010). 23 Alan Blinder and Mark Zandi, ‘‘How the Great Recession Was Brought to an End’’ (Washington, DC: Economy.com, 2010). 24 A wide array of economists agree with this sentiment. See: US Congress, Senate Committee 

on Finance, Testimony of Mark Zandi on Using Unemployment Insurance to Help Americans 

Get Back to Work: Creating Opportunities and Overcoming Challenges,Cong., 111th Congress, 

2nd session sess., 2010.; Lawrence H. Summers, ‘‘Reflections on Fiscal Policy and Economic 

Strategy, ‘‘Remarks at the John Hopkins University, May 2010; 25Testimony before Committee on the Budget, U.S. Senate http://www.federalreserve.gov/ 

newsevents/testimony/bernanke20110107a.htm 26 Carmen Reinhart and Kenneth Rogoff, ‘‘The Aftermath of Financial Crises,’’ American Economic Review (Papers and Proceedings) 99 (2) (2009): 466-72. 27 Boushey, Heather. ‘‘Keep the Money Flowing.’’ The New York Times, (June 24, 2010). 28 Blinder and Zandi, ‘‘How the Great Recession Was Brought to an End’’. 29Michael Linden, ‘‘Breaking Down the Deficit’’ (Washington, DC: Center for American 

Progress, 2009). 30 Ibid. 31 American Society of Civil Engineers. ‘‘America’s Infrastructure Report Card.’’ (March 25, 

2009). 32 As Paul Krugman wrote in a recent column: ‘‘If you want a trade policy that helps employment, it has to be a policy that induces other countries to run bigger deficits or smaller surpluses. A countervailing duty on Chinese exports would be job-creating; a deal with South 

Korea, not.’’ Paul Krugman, ‘‘Trade Does Not Equal Jobs,’’ The New York Times, Dec. 6, 2010. 33David H. Autor, David Dorn, and Gordon H. Hanson, ‘‘The China Syndrome: Local Labor 

Market Effects of Import Competition in the U.S.’’ Working Paper Cambridge, MA: UCSD and 

NBER, 2010). 34 Ibid. 35 U.S. International Trade Commission. ‘‘U.S.-Korea Free Trade Agreement: Potential Economy-wide and Selected Sectoral Effects.’’ USITC Publication 3949. September 2007, Corrected 

printing March 2010, at 2-14, Table 2.3, Available at: http://www.usitc.gov/publications/332/ 

pub3949.pdf 36 Cooper, Michael and Mary Williams Walsh. ‘‘U.S. Bills States $1.3 Billion in Interest Amid 

Tight Budgets.’’ The New York Times. pg. A1 (January 15, 2011). 37 U.S. Department of Labor 38Wayne Vroman, ‘‘The Role of Unemployment Insurance as an Automatic Stabilizer During 

a Recession’’ (Washington, DC: U.S. Department of Labor, 2010). 

Chairman KLINE. Dr. Holtz-Eakin. 

STATEMENT OF DOUGLAS HOLTZ–EAKIN, PRESIDENT, 

AMERICAN ACTION FORUM 

Mr. HOLTZ-EAKIN. Thank you Chairman Kline, Ranking Member 

Miller, and Mr. Andrews and members of the committee, it is a 

great honor to be here today. 

In my written testimony I emphasized four points. First, that the 

distress of the American workforce is very real and easy to document. 

The second, that the most imperative thing at the moment is to 

concentrate on pro-growth policies and at every juncture, when 

faced with a policy decision, ask will this or will this not make it 

easier for an employer to put one more person on the payroll. With 

about 6 million employers, if everyone hired 1 person, we would 

take care of three-quarters of the unemployment problem very fast. 

The third is that many of the policies in which we are currently 

engaged are at odds with that requirement for pro-growth imperatives. 

And then the last is that over the longer term, when it is the return to full employment, our workforce will be best served by being 

better skilled, more flexible and better able to compete internationally, and that this committee is well situated to discuss the K-12 
30 

and higher education reforms that would be necessary to pursue 

that. 

Given the limited time that I have, I am going to go very light 

on number one—not because it is unimportant, the distress is 

real—and number four, not because it is unimportant, but you already know everything about it and I have nothing really to add 

here. 

I want to focus on the need for pro-growth policies and some of 

the things that I see on the landscape right now. Pro-growth policies are different than countersystemic cyclical policies, or stimulus 

in the political parlance. Stimulus is appropriate when the economy is falling, and we can debate the effectiveness of the American 

Recovery Act, and probably will, as an economics profession, for a 

long long time. 

But that is not the situation in which we find ourselves. We have 

been growing since the third quarter, a year ago. We are growing 

far too slowly. It is a growth rate that is consistent with the trajectory of the economy’s postfinancial crisis. All the evidence is, there 

are slow and long recoveries from financial crisis. That places an 

imperative on raising the growth rate to the maximum amount 

possible during that trajectory to get people back to work. 

Where will that growth come from? It won’t be from households. 

Households have seen their net worth badly damaged. Their pensions aren’t worth what they used to be. They are badly in debt. 

Their homes are underwater in some case. They are not going to 

spend this economy to prosperity. And if we write them checks, it 

will be—there is no way to do that to replace their lost wealth. It 

is a strategy that will fail. 

The same is true for governments. Our governments are on red 

ink everywhere. I applaud Governor McDonnell for avoiding such 

distress in Virginia, but if you look across the landscape, State and 

local governments are in deep financial trouble. They cannot be 

counted on to spend their way to prosperity. 

The Federal Government budget is something I am happy to expand on but, put simply, if we pursue the path that is laid out, for 

example, in last year’s administration budget or something that 

looks like the CBO report released earlier today, we will be downgraded as a sovereign borrower within this decade. And we cannot 

pretend that we can spend as a sustained mechanism to recover. 

That leaves, by process of elimination, the business community 

and then exports, both of which have to be given every opportunity 

to power this economy going forward. 

What is on the landscape at the moment in that area? Well, we 

have the fiscal outlook, which is in and of itself a threat to expansion. It is a promise of either higher taxes or higher interest rates 

in the financial classes in years to come, and the sooner Congress 

closes that debt by reducing the growth of spending, the better off 

the business environment will be. 

We have on the agenda the administration’s commitment to higher taxes. We heard last night about corporate tax reform. I am 

happy to give a sermon on the virtues of internationally competitive tax policies. But we also have the promise to raise taxes in 

2013, including those on small businesses, which are the engines 
31 

of job creation in the United States. That is a negative from the 

point of view of the jobs outlook. 

The recently passed Patient Protection and Affordable Care Act 

is riddled with bad economic policy from the point of view of 

growth. There are $700 billion worth of new taxes in that act. 

Those taxes, by any measure, will be passed along to workers in 

the form of lower wages or fewer jobs. And even the research of 

Christy Roemer, who was the former chairwoman of the President’s 

Council of Economic Advisors, suggests that discretionary tax increases have the single most powerful negative impact on economic 

recovery. It is the wrong time to be doing that. There are higher 

mandates. Employers are going to have to pay the cost of those 

mandates by again cutting wages or jobs, and higher premiums. 

The law, as I lay out in my written testimony, is a recipe for 

higher insurance premiums, which in the end will hurt employers 

as they try to hire people. 

And the last, which has been mentioned before, is the regulatory 

environment. 2010 was a banner year for regulators and saw an 18 

percent increase in Federal Register pages devoted to regulation. 

The cost of that regulation ranged from $20 billion, as Governor 

McDonnell mentioned, to 40 billion by some of our estimates. We 

can do better in providing an environment in which employers can 

put workers on the payroll and those workers can receive higher 

pay as we move forward. 

So I thank you for the opportunity to be here today and look forward to answering your questions. 

[The statement of Mr. Holtz-Eakin follows:] 
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Chairman KLINE. Thank you all for your testimony. We will 

move now to questions from the members. We will be abiding by 

the 5-minute rule here. I don’t have the same reservations about 

the gavel for my colleagues as I might for the witnesses. And we 

will try to get as many questions in as we can. And, again, I am 

mindful of the fact that members are having to leave as they look 

at their flight schedules shifting. You may see people taking a look 

at their BlackBerries and discovering that they have to leave even 

sooner. And so to give members a maximum opportunity, I am 

going to delay my own questioning and turn on my side to Dr. 

Bucshon. 

Mr. BUCSHON. Thank you, Chairman. I am going to direct this 

question to Governor McDonnell. Thank you all for coming. We appreciate it. I am from Indiana and the Daniel’s administration has 

estimated that the expansion of the Medicaid program, if 100 percent of the people sign up, may cost the State as much as $3.6 billion. I am going to make a few comments about Medicaid and what 

it does to access to health care, and then I will ask you a question 

about what your options are, what you see as the State’s options 

if we can’t get around that type of a mandate. 

As a physician, the Medicaid programs in many States already 

are severely strapped for funds. In fact, a neighboring State of 

mine, they run out of money in September or October every year. 

And from a provider’s standpoint, from a hospital or a physician, 

you basically have to re-bill the State later on, of which a good portion of that is further written off. What this has done across the 

country is it severely limits access to health care for Medicaid patients because providers won’t take them or they limit the amount 

of time that they have available in their day to see these patients. 

So at a time when we are trying to expand health care coverage 

for Americans, the Medicaid program, in my view, will expand coverage; but if you don’t have anybody to take care of you or that will 

accept what you have, then that doesn’t really help you very much. 
46 

The other thing I would like to comment on is our strapped 

emergency rooms. Across the country already, as everyone knows, 

emergency rooms already are overcrowded with long wait times, 

and statistically this population of folks are the highest utilizers of 

emergency room services. So if you see that in your public hospitals 

in your States, a massive expansion of ER utilization at a time 

when we are trying to control health care costs, we are going to 

have the opposite effect. 

So my question, Governor, is from your State’s standpoint, what 

do you see as the options for the States if they have to come up 

with this extra money? What do they do with their public hospitals 

for funding? How will it affect your overall budget at your State? 

Will it cause tax increases at your State? And just give me kind 

of a general overall view of what you see this particular portion of 

the health care bill will affect you. 

Governor MCDONNELL. Well, thank you Congressman Bucshon. 

We have looked at that and, of course, while my State is in litigation, we still know that with the clock ticking to 2014, we still have 

to take the prudent steps to build exchanges and do the things to 

implement the law. 

Let me give you a pre-health-care reform view of Medicaid in my 

State, and this is across the board with other Governors as well. 

Medicaid spending in Virginia has gone from—it has increased 

1,600 percent in the last 27 years. It has gone from consuming 5 

percent of the budget to now 20 percent. Other States are already 

in the high 20s, 27, 28. 

We are a relatively low-coverage State, and so with the impact 

of the Federal health care reform, we will have a precipitous increase in the Medicaid population in our State, such that we estimate by over the next 10 years it will—Medicaid spending in Virginia will go up even that much more and consume close to 30 percent of the budget. And that is about $2 billion of increased spending for Medicaid, unfunded from the Federal Government, by the 

year 2022. 

So we are looking at ways now to implement these requirements 

from the Federal law in a way that is least bureaucratic and most 

efficient. I have got initiatives before our general assembly this 

year to look at far more use of managed care across the spectrum 

for all health services, including mental health, more generics, copays, but also more education. 

You mentioned the issue of the overuse of the emergency room, 

which is the most expensive place to get medical care by this population, so education is obviously a part of it. But there is a tremendous budget-busting concern, I believe, of every Governor in the 

country about the growth in Medicaid on its own, plus the Federal 

mandate, with the new legislation growth and what it is going to 

do. So we are struggling to find ways to reduce Medicaid spending 

in a way that still keeps a healthy, quality, safety net but doesn’t 

break the bank on spending and force cuts in other areas or pressure more tax increases. 

It is a timely question. We don’t yet have the answer and, ultimately, depending on what the courts decide on this measure, and 

what we can implement in our legislatures for reductions, that will 

make a difference. 
47 

The one last thing I would say, Mr. Chairman, is I know you 

have gotten letters from a number of us Governors asking you for 

some consideration on flexibility with the MOE requirements. For 

us to be innovators in our State governments and to find ways to 

implement this law and also to keep the costs of Medicaid as low 

as possible, we have got to have some relief from some of the mandates, from some of the MOE requirements, more flexibility. 

I talked to Governor Daniels, in fact, yesterday about this issue. 

I think we will probably have another letter to you coming on this 

exact subject to say, Please, as long as this is the law, at least provide us more flexibility on how we can implement creative cost-cutting measures in Medicaid so that we can control our populations 

and our costs a little better. 

Chairman KLINE. Thank you, Governor. The gentleman’s time 

has expired. Mr. Andrews. 

Mr. ANDREWS. Thank you, Mr. Chairman. Thank the ladies and 

gentlemen of the panel for excellent testimony. 

The President said last night, and I think we should all embrace 

the goal you have reiterated of working together to foster an environment where entrepreneurs and businesses can create jobs for 

the people of our county. 

And Mr. Messinger, I wanted to thank you for taking time away 

from your family and your business. You are a very effective advocate for your beliefs as a small manufacturer. And I wanted to ask 

you just retrospectively for a minute, do you think that Congress 

did the right thing when we passed the TARP bill? 

Mr. MESSINGER. I happen to think that the TARP legislation was 

excellent. A quick story: I happened to go see Congressman Coble 

who had voted initially against it, and requested that he please 

vote for it. And I don’t know if it was just my showing up, but others too on the telephone, I think it stabilized our country. 

Mr. ANDREWS. I appreciate your advocacy efforts. I agree with 

you. And I think it was an important step forward and I appreciate 

you saying that, both previously and now. 

Governor, welcome. It is not an easy time to be Governor. I sure 

do know that. And I wanted to ask you about an initiative that you 

have launched that sounds a lot like some of what we have heard 

the last few days around here, which I understand is a $4 billion 

transportation investment program for the Commonwealth of Virginia. And if I understand it correctly, you are expediting some 

bonds the Commonwealth already issued, I think to the tune of like 

1.8 billion or so. And then you are proposing to borrow 1.1 billion 

and support that debt service with Federal payments from the 

transportation trust fund. 

Two questions. One is, you know, there is consideration of reduction of discretionary domestic spending by 25 percent. Would you 

ever want to see us exempt the transportation trust fund from that 

25 percent, or would you want to see us do the 25 percent cut? 

Governor MCDONNELL. Obviously, that policy is very similar to 

yours. What I can say is that I think infrastructure investment in 

Virginia and America is one of our top priorities, especially for us 

in Virginia. You have probably driven around the southern part of 

the Beltway and understand what congestion does to the quality of 

life. 
48 

Mr. ANDREWS. I was actually parked on the southern part of the 

Beltway. 

Governor MCDONNELL. I increased the speed limit to 70 miles an 

hour last year. Some in Northern Virginia said, We would be happy 

going 30. 

Mr. ANDREWS. Seventy miles a day would be pretty good in 

Northern Virginia. 

Governor MCDONNELL. But I would say to you that infrastructure investment is critical. I honestly think it was a lost opportunity to the degree that the stimulus policy was the right thing 

to do, there was very little money in there. Only about 6 percent 

of your total spending was there. That would have been nice. But 

I do think that, given the posture we are in, for us to use debt responsibly for the mortgage-like infrastructure is prudent, and I 

think we are going to get that done. 

Mr. ANDREWS. I agree. I do think that is one of the areas we 

should avoid, that 25 percent. And I want to square that comment 

with Mr. Holtz-Eakin’s testimony. And please forgive me if I 

mischaracterize what you say, or misunderstood, Mr. Holtz-Eakin, 

but I think you said that further stimulus at this time is ill-advised. And it seems to me the kind of transportation investment 

the Governor is supporting in Virginia, using Federal funds, is that 

kind of stimulus. Do you disagree with him about that point? 

Mr. HOLTZ-EAKIN. Infrastructure can be a central part of the 

supply-side economics where you get good long-term growth as part 

of the productivity of the Nation. What I would urge you to not do 

is judge it by construction jobs created. If we look back and somehow judge the construction of the interstate highway system by the 

construction jobs created, we would have missed its economic importance completely. 

Mr. ANDREWS. Using that litmus test, what would you think 

about the expansion of high-speed rail, like the President proposed 

last night? 

Mr. HOLTZ-EAKIN. The thing I would most urge you to do is before you start looking at the dollars, you start looking at the quality of the programs. I participated for the past 3 years in something known as the Bipartisan Policy Center’s national transportation policy project. And I won’t belabor you with the findings. It 

is a bipartisan project. We have a bigger report called Performance 

Driven, all of which suggests that before you spend a dollar, you 

have to take the hundred or so programs in the Department of 

Transportation and turn them into something that generally has a 

Federal rationale and is motivated on economic growth. 

Mr. ANDREWS. What about high-speed rail? Do you think it fits 

that litmus test or not? Do you agree with the President or disagree? 

Mr. HOLTZ-EAKIN. I would probably disagree at this point because the notion that you should pick a mode—we should not, you 

should not care how it gets done. You should care what gets done. 

Mr. ANDREWS. What do you think would have a higher priority, 

then? Which program would be better? 

Mr. HOLTZ-EAKIN. That which from a national perspective most 

improved national connectivity. Whether it is from a port to a rail 

or from a port to a passenger will differ in parts of the country, 
49 

and to pick a single mode, high-speed rail, is to actually get the formulation of the policy wrong. 

Mr. ANDREWS. So transportation investment based on economic 

productivity is something you support. 

Mr. HOLTZ-EAKIN. Yes. 

Mr. ANDREWS. Thank you very much. I yield back. 

Chairman KLINE. I thank the gentleman. Dr. Heck, you are recognized for 5 minutes. 

Mr. HECK. Thank you, Mr. Chairman. And also I would like to 

thank the panelists for braving the elements and taking the time 

to be with us this afternoon. 

My question is for the Governor. I represent southern Nevada 

which has the dubious honor of having the highest unemployment 

rate in the Nation right now with 14.9 percent, estimated that actual unemployment is about 22 percent. But I am intrigued by Virginia’s ability to be the fourth best in job creation and having an 

unemployment rate that is, you know, at ninth in the country, 

showing that there is still opportunity for success even in these 

tough economic times. I realize the demographics between Virginia 

and Nevada are very different. 

But Governor, if you were to pick one or two policies or programs 

that you could state had a significant effect on your unemployment 

rate and lowering it and creating jobs, what would those be? And 

likewise, were there any policies or programs you tried which you 

found were not successful? 

Governor MCDONNELL. I guess I would like to answer in part 

where I started with my remarks is there are certain fundamentals 

to economy and job creation and recruitment of entrepreneurs and 

innovation for small business that I think are universal, and that 

is keeping an environment where taxes and regulation and litigation are low. And the President frankly commented on all of those 

last night: that he wanted to see spending reform; keep taxes low; 

discretionary spending freezes; regulatory reform; medical malpractice reform. I mean, he said a lot of the right things last night 

that, if you all will work on that, I think are going to do some good 

things. 

We have tried to do that. For instance last year, we were faced 

with a $4.2 billion budget deficit. Some had proposed halving that 

with a tax increase of $2 billion, the largest in Virginia history. We 

said no. We made the tough decisions. We have cut spending $4.2 

billion and now we have got 5 percent-plus revenue growth, robust 

job creation numbers, and we have a $400 million surplus. I think 

those kind of physical principles is what I would say is the foundation. 

And then secondly is, you have got to be aggressive. The American dream is still well and alive, but you have got to be able to 

reach out to the entrepreneur and the small business person in 

particular and show them why coming to your State is going to 

make a difference for them; 71 or so percent of all the jobs in 

America are still created by that small business person, under 250 

jobs or so, and they have unique challenges; and a lot of them are 

the tax policies and the regulatory policies that inhibit them from 

getting started and then staying in business. Sixty percent fail 

within the first 5 years, and the number one reason is bad manage-
50 

ment. The number two reason is government interference, taxes, 

regulation, litigation, et cetera. 

So I think those fundamentals are universal and we have found 

a way for a while, frankly, with Democrat and Republican Governors to keep that formula in place and it is working. 

Mr. HECK. Mr. Chair, if I may. Were there any programs or policies that you put into place that you found might have been detrimental to your job creation and job growth, things that you would 

advise others to avoid? 

Governor MCDONNELL. Well, of course, I would say the flip side 

is the tax increases. We had our largest tax increase back in 04 

and we didn’t fare too well after that. Of course, some of that was 

the global economic downturn. 

But I would say that the programs that are used—and we have 

created some—and my response to Mr. Andrews earlier, we have 

created some that are targeted at things like mega sites and corporate tax credits to come to Virginia, particularly in the tech and 

manufacturing sectors. And I have an opportunity fund of essentially flexible money for me to make offers for businesses to come 

here, as most States do, and frankly, a lot of foreign countries, particularly the Pacific Rim has now. So that is part of the market 

right now. 

But if it is just corporate giveaways without targeted ROI analysis aimed at your core strengths, then I think you will waste 

money, and we have probably done a little bit of that over the 

years. So I think that is the key—strategic, targeted investments 

in those things that are going to grow on your core competencies 

in your State, and then be aggressive telling your story. 

Mr. HECK. Thank you, Governor. Thank you, Mr. Chair. I yield 

back. 

Chairman KLINE. Thank you. Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. And Governor, as a resident of Hampton Roads, spending a lot of time up here in Northern 

Virginia, I am looking forward to those transportation improvements. 

You referred to your Top Jobs of the 21st Century Initiative. And 

the President talked last night about there is a close correlation between education and jobs. Can you tell me what it is going to take 

to create 100,000 new degrees over the next 15 years, a total of 

6,000 a year. That is a lot of students. How are we going to do 

that? 

Governor MCDONNELL. First, we have got to be able to get the 

universities to grow the pie and expand the number of degrees that 

they offer. UVA has been the first taker; 1,400 new degrees they 

are going to offer over the next couple of years. Right now, only 38 

percent of the kids in Virginia can actually go to a Virginia university. So we have got enormous physical plant—only 38 percent of 

Virginians that are applying to college can actually go to a Virginia 

college. That is the limits on our capacity. About 42 percent have 

a college degree, but 4 percent or so of those earn those out of 

State. But we have to be able to use the enormous physical plant 

at our universities, weekends, summers, et cetera, to expand the 

opportunities. 
51 

Secondly, there is enormous potential with the Internet for distance education, having partnerships between multiple universities, which we now see in Virginia, to use virtual learning experiences. And they have to focus, Congressman, I believe on the 

STEM areas. 

The President mentioned that last night. I think he is absolutely 

right. That is where our future competitive disadvantages will 

occur compared to the Pacific Rim countries and other emerging 

countries that get that and are graduating more engineers and scientists per capita than we are. But I think we have to realize, then, 

that universities can’t be all things to all people. We may not need 

43 different degrees in, let’s say, philosophy. But we need a lot 

more in science and medical schools and engineering. 

So what it is going to cost in Virginia, I am investing about $75 

million by cutting other things out of the budget and reinvesting 

it in these core priorities of transportation and higher education. 

But it is going to take a sustained investment to create about 1,000 

new degrees over a year. 

Mr. SCOTT. Now, the President mentioned education past the 

high school level. All of that won’t be 4-year degrees. Are you focussing also on vocational educational opportunities? 

Governor MCDONNELL. Yeah. I think that is exactly right. There 

are a number of great paying jobs, not only in Virginia but around 

the country, that a 2-year certificate in welding or firefighting or 

a 2-year associate’s degree will earn you. And that is why I think 

the focus on workforce development is critically important. It is 

probably the number one or two thing people ask for when they 

want to come to Virginia: What kind of educational establishment 

do you have? How well trained are your workers? Because in the 

long term, that is what is going to be able to sustain their growth. 

Mr. SCOTT. From a jobs perspective, you faced, as all States did, 

significant budgetary challenges last year. Can you indicate what 

the revenue sharing part of the stimulus package did to your budget and how many fewer people you had to lay off because you got 

money from the stimulus package? 

Governor MCDONNELL. Well, I think certainly the components 

dealing with education and the Medicaid funding certainly were 

helping us in plugging some of the holes that we had, although, 

you know what? If I didn’t have it, I would have asked for more 

cuts. We cut $4.2 billion. Another billion, we would have found a 

way to do it, but it certainly lessened the blow in the short run. 

Mr. SCOTT. Well, if you had cut a billion dollars out of the State 

budget, that would have had employment implications, would it 

not? 

Governor MCDONNELL. It would. But I tell you what, virtually all 

the claims that were made were vastly overblown. We did some 

cuts to education. Your money that you provided last year helped 

to plug some of that. But the estimates were laying off 30,000 

teachers. In essence, it really came out to be less than 1,000. And 

I will tell you why. When you give people less resources and you 

tell them to do more with less, our dedicated employees at the 

State and Federal level will do it. They will be more entrepreneurial, they will be more innovative, they will be more efficient. 
52 

And that is what happened in Virginia, Congressman, is we 

didn’t have nearly those kind of layoffs. And of the job creation— 

maybe this will help answer your question. Of the job creation 

numbers that I have mentioned, about 60,000 net new jobs created 

over the last year in Virginia, only about 15 percent of those were 

public sector jobs. 

Governor MCDONNELL. The rest of them were all private sector 

jobs. 

Mr. SCOTT. Do you count government contracts like a road 

project as a private job or a public job? Although it is paid for—— 

Governor MCDONNELL. No, I don’t know how they are counted. 

I assume they are counted probably as private sector jobs because 

they would contract those out. 

Mr. SCOTT. Mr. Holtz-Eakin, you know in the 1990s we had great 

budget surpluses being developed and many jobs. In the 2000s we 

had a bad budget and bad jobs. Was that a coincidence? 

Mr. HOLTZ-EAKIN. I think that there are many more complicated 

explanations of that. We also had a dot-com bubble in the late 

1990s, early 2000s, that drove Federal receipts and probably the 

primary factor on top of some severe budgetary stringency in the 

late ’90s that drove the budget to surplus. 2000 was littered with 

some bad economic shocks that. Attacks on the U.S. directly, Sarbanes-Oxley, scandals, Enron, WorldCom. We have had a number 

of impacts both on the up and the downside over that period, and 

there is no simple explanation for the performance. 

Chairman KLINE. The gentleman’s time has expired. Mrs. Roby. 

Mrs. ROBY. Thank you, Mr. Chairman. My question is for Governor McDonnell. Being from another right-to-work State, could 

you explain more about how it has either helped or hindered the 

economic growth in increasing jobs during a recession? And are 

there any specific lessons or insights that you could share with the 

committee as it relates to that? 

Governor MCDONNELL. Of course there is another 22 right-towork States, and I have the privilege of being Governor of one of 

them. And it just obviously makes the opportunities and the flexibility for management that much greater in how they control their 

workforce. 

It is one of the top selling points that I use when I ask companies 

to come to Virginia. We recently had Northrop Grumman moving 

their corporate headquarters to Fairfax County. The largest data 

center in Microsoft’s history I believe is coming to Mecklenburg 

County this year. And one of the things that I tell them about why 

they ought to come here is because they will be able to have maximum flexibility under our law to control their workforce, set their 

policies. 

And so I think that is a critical selling point. I mentioned the 

card check bill. We were strongly opposed to that in Virginia, almost unanimously. Almost every business organization in Virginia 

sent letters and lobbied against that when you considered that in 

a last couple of years because we thought that would be a significant undermining of a key asset for our State and yours, Congresswoman, as well for expanding jobs and creating opportunities that 

reduce costs. 

Mrs. ROBY. Thank you. I yield back. 
53 

Chairman KLINE. Thank the gentlelady for setting that example. 

Ms. Hirono, you are recognized. 

Ms. HIRONO. Thank you, Mr. Chairman. My first question is for 

Governor McDonnell. I completely agree with you that more of the 

stimulus money should have gone for infrastructure support for our 

States and counties. It is good that you have that perspective. 

Would you support the Federal Government putting more money 

into supporting infrastructure development for our States and 

counties? 

Governor MCDONNELL. Not if it adds a penny to the debt or the 

deficit. That is the overriding concern that I hear from people in 

my State. And you have to understand it is a foreign concept, honestly, for a Governor. I think all but—49 States have a balanced 

budget amendment. We do not understand deficit spending very 

well because we are not allowed to do that under our Constitution. 

So I would say if you would reset the priorities and make some 

of the tough choices even in entitlements. Essentially that is what 

we did in Virginia last year with health care and education and 

things that are quasi-entitlements in our State. We cut, and it 

worked out pretty well. People did more with less, with smart decisions. If you retargeted that into infrastructure, I think that would 

be a good thing. That is real new jobs. 

The Federal Government has estimated that $100 million in 

transportation construction supports about 3,000 jobs. That is a 

significant return, not only in getting something done but also in 

job creation. 

Ms. HIRONO. So as long as it does not add to the deficit, then you 

would be all for it? Is that a view that is shared by your fellow 

Governors of the other 49 States? 

Governor MCDONNELL. I think we do believe that to the degree 

that you discern in Article I, section 8 that it is the responsibility 

of Congress at all to get into transportation. Perhaps under the 

general welfare clause. 

Ms. HIRONO. The jurisdiction of this committee. 

Governor MCDONNELL. If you deem that to be a proper role of 

the government, then I would say that these infrastructure investments in partnership with the State governments are something 

that is a top need for States and for our Nation. You have heard 

the stories obviously about roads, bridges, other infrastructure 

crumbling, 60, 70 years old. Something that I am focusing on, as 

I said to Mr. Andrews earlier here. 

Ms. HIRONO. It is clear in our country that we are trillions of dollars behind in supporting our infrastructure. 

You noted in your testimony that one of the areas that you would 

like Congress to focus on is the burden of regulation and you cite 

to the Heritage Foundation report that focused on 43 significant 

new rules. And I have a copy of that report. It is called Red Tape 

Rising. And one of the regulations that was focused on by the Heritage Foundation is one that has to do with crane and derrick safety standards to prevent cranes from falling into buildings and killing people, which is what was going on. If you read the regulation, 

the Heritage Foundation focused on the cost of the regulation, 

which it is true about 150 million, but when you look at the benefit 

side of the equation it actually saved 209 million. 
54 

So if you were just doing a simple cost-benefit analysis then the 

savings or the benefits would exceed the costs. But you know when 

you are talking about saving lives, I would say that that should 

have been even heavier on the side of the benefit side. 

So my question is are you aware whether the Heritage Foundation took the offsetting of the benefits into account when they cited 

to these 43 rules and the costs of those rules? 

Governor MCDONNELL. I can’t tell you. Under your analysis I 

think there are qualitative aspects after you do the cost-benefit 

analysis just on dollars, then there has to be some good management judgment applied. So perhaps in your analysis or your example that might not be one we might all embrace. But the macro 

point is that if this is the largest number of major new rules at 43 

that has promulgated since 1981, there is a problem. And I have 

the same problem in Virginia. When I was Attorney General we did 

a regulatory reform task force for 2 years and we had a similar 

standard that is what President Obama just put in his executive 

order. And that is that if there is a better way to do it that respects 

the free market, that reduces cost, then we ought to look at a different way of doing it and we got rid of about 350 pages of regulations. I have got 24,000 pages left. 

Ms. HIRONO. I agree with you. I am not a big fan of unnecessary 

regulations either. But there is also a danger when you do the costbenefit analysis that we really have the full package. 

Going on to Mr. Messinger, did you say that you thought the 

stimulus bill was a good thing? Did I hear you correctly? 

Mr. MESSINGER. I think the question was on TARP. 

Ms. HIRONO. What did you think of the stimulus? 

Mr. MESSINGER. I think parts of it were very helpful. I will give 

you an example. Our customers are highway contractors and they, 

and I think the rest of the country, expected more infrastructure 

money to come out of the stimulus. 

Ms. HIRONO. I am with you on that. 

Mr. MESSINGER. Okay. And as a result our customers put off purchases of new equipment because they didn’t see any certainty to 

what was going on. So we didn’t see a huge benefit for our business 

out of the stimulus. 

Chairman KLINE. The gentlewoman’s time has expired. 

Ms. HIRONO. I am so sorry. Thank you very much. 

Chairman KLINE. Mr. Thompson, you are recognized. 

Mr. THOMPSON. Thank you, Mr. Chairman. Thanks to the panel 

for being here and lending your expertise today. 

Governor McDonnell, my question has do with workforce in an 

area that we haven’t touched on specific to your State; concerns offshore oil and gas development off of Virginia’s coast. As I understand it, the President announced that Virginia’s lease sale 220 

would be included in the current 2007-2012 5-year plan and then 

following the Deep Water Horizon accident the administration 

withdrew the sale. Did Virginia play a role in making that decision 

not to move forward? 

Governor MCDONNELL. No, we didn’t. I will say with respect to 

the administration we did play a role in the initial decision that 

the President made in March to authorize Virginia lease sale 220 

to go forward. We were delighted and we thought the President 
55 

made the right decision. I had a number of conversations with Secretary Salazar and meetings with him in advance, and I was delighted with the administration’s decision to allow us to go forward 

as the first State on the East Coast to drill for oil and natural gas. 

The Secretary did call me shortly about an hour before the President made the decision that he was pulling the plug, frankly indefinitely, on offshore exploration. I told the Secretary that I appreciated the call but it was short-sighted and reflected no confidence 

in the Federal Government to be able to properly react to this disaster in the Gulf and no confidence in the ability of American industry to create the new technology that was necessary to react. 

And I didn’t think we ought to give up and write off an entire industry that could create tremendous capital investment and jobs at 

this time in America and that I was very disappointed. 

Mr. THOMPSON. Given that sounds like a unilateral decision on 

the part of the administration, have you made any estimates as to 

the economic impact exploration might have for the State or frankly the potential job growth that could be associated with the industry? 

Governor MCDONNELL. Congressman Thompson, there were several estimates by various groups that have been made over the last 

couple of years. Some of the problems dealt with the fact that because the ban had been in place for so long that the seismic studies 

were largely outdated and so there is so much better technology to 

know better what is out there. And I would say that a couple of 

the more reputable estimates indicated about 1,900 to 2,600 jobs 

over the next 10 years, about $10 billion in capital investment, and 

about $250 million in revenue sharing. And that would assume 

that Congress would allow offshore drilling off the Atlantic Coast 

to have the same revenue sharing deal that the Gulf States have, 

which is about 37.5 percent. If we got something like that sharing 

it with Virginia, it would be significant new revenue. 

In fact, I had a bill passed the last session of the general assembly approving offshore drilling and dedicating 80 percent of that 

new revenue from offshore drilling to transportation infrastructure. 

So we were ready to go with the President’s announcement. Unfortunately, now that is not the case. 

But what we do know is that it is an extraordinary opportunity. 

We don’t have great beaches just like they do on the Gulf Coast. 

I don’t want to drop a well on those beaches. We understand the 

need to be slow and prudent, but not to pull the plug indefinitely 

as I understand where we are now where Virginia really does not 

have a shot for an indefinite period of time. 

Mr. THOMPSON. You mentioned the beautiful beaches in Virginia. 

Do you believe that the oil and natural gas exploration in the Atlantic could coexist not just with the beautiful beaches, but obviously the presence of the Navy in that area? 

Governor MCDONNELL. We do. And I think national security 

ought to take the first priority. We have got the greatest naval 

base in the world in Norfolk, Virginia. It is a great source of pride 

for us in Virginia. We have had some discussions with some of the 

leaders down there about their operations to discuss what areas 

might need to be off limits and what areas could still be used for 

offshore exploration of gas, oil, or wind without affecting naval op-
56 

erations. We have the same issue with Wallops Island, the spaceport off of the Virginia-Maryland coast. But I believe those industries can coexist very well with offshore energy exploration. 

Some areas would have to be off limits, but some can still be 

used and I think that is just a matter of logistics. My concern is 

writing off the industry indefinitely because of clearly a disaster of 

significant proportions. But when you have 4,000 oil rigs that have 

been working reasonably well for 40 years and then to throw in the 

towel on the industry, that does not seem like the American way. 

We are better than that. And that is what I expressed to the Secretary, and I hope Congress would consider taking some action 

maybe to move this along a little bit quicker. 

Thank you. 

Mr. THOMPSON. Thank you, Chairman. 

Chairman KLINE. The gentleman’s time has expired. Mrs. 

McCarthy, you are recognized. 

Mrs. MCCARTHY. Thank you, Mr. Chairman. Ms. Boushey, listening to the testimony, one of the things I think is missing is we are 

hearing everybody saying the job killing effects of Federal regulation. And yet when you look at this chart, the brown area is basically during the Bush years and they had deregulation. During 

Obama’s 2 years we had regulation, yet we had job growth. 

Can you explain the difference between the regulation and deregulation and why we have job growth during those years? 

Ms. BOUSHEY. Thank you. That is an excellent question, and it 

does underscore that that can’t necessarily be the answer to what 

was going on with jobs necessarily. Two things that I would point 

out on the regulatory front. First of all, the Recovery Act was not 

necessarily a bunch of new regulations but was a bunch of spending designed to spur economic growth and to spur job creation, 

which clearly it did. It has been significantly effective. 

And I very much enjoyed some of the conversation on this panel 

talking about how we should have spent more of that money on infrastructure. My understanding of the political process was that a 

lot of—about a third of that money went towards tax cuts that did 

not have the biggest bang for the buck that those infrastructure 

dollars would have had. So that is something the next time this 

comes around I hope this conversation comes back up and we can 

spend all of that money on infrastructure. 

But the second piece that we need to note when we are thinking 

about regulation is of course when we are talking about regulation 

it is a wide array of different sorts of themes and different things 

that the government is doing. One piece—and again I would point 

to the report that came out yesterday from the commission that 

studied the financial markets and what happened. It was the lack 

of regulation that actually caused this whole crisis to begin with. 

And so when we are talking about this as if it was some sort of 

monolith, I would like us to just focus for a moment. The reason 

we saw these massive job losses was because we weren’t doing our 

job regulating the financial markets, and that is something that 

looks like is going to come up again in this Congress, whether or 

not we are going to make sure that the money is there to fund the 

agencies to do that regulation, to hire that staff to do that. 
57 

One thing that I always sort of note when you look at the fantastic people that do government service, those folks who are doing 

the regulating in those agencies are folks like you that are not 

making the big bonuses trying to regulate this very large industry 

with a lot of money at its disposal. But we need to make sure that 

those agencies are fully funded. 

I hope that answers at least part of your question. 

Mrs. MCCARTHY. Last night the President talked about the infrastructure of this country and many of us, probably many of us sitting here and in certainly some of the other committees, happen to 

think of putting more money into the stimulus for infrastructure. 

I can talk about the great State of New York. You know, our 

bridges, roads, basically are falling apart. States don’t have the 

money to do it. The high unemployment rate with our union contractors and our union laborers. So I happen to think that is where 

we are going with it. 

On the financial, I think people are starting to forget because the 

economy is coming back now. The Dow went over 12,000 today, and 

that is something that everybody has been looking for. But with 

that being said, we had a slow economy as far as getting people 

back to work because people were still holding their money. And 

as far as saying there are too many regulations out there, when 

you think of all the tax cuts we gave to those particular corporations to be able to buy equipment, to be able to have a tax writeoff going down 5 years on equipment that they bought, I don’t 

think people actually understand what we have been doing. And if 

you have any answers to that, that would be great. 

Ms. BOUSHEY. I would like to comment on infrastructure and 

needing to do more. Where I live here in the District of Columbia 

I have seen a small business owner across the street from me have 

to deal with three different water main breaks that has closed 

down his business for a number of days at a time. One of the 

things that we haven’t heard enough about in this infrastructure 

conversation is how important these investments are, especially for 

small- and medium-sized businesses who can’t relocate as easy as 

the big multinational can to a State with a better infrastructure to 

deal with it. But the traffic, the kinds of things that we were joking 

about earlier, that has a real impact on economic growth. 

And so making those investments will certainly boost jobs and 

boost employment, but it is also good for small business, even if it 

is not directly employment. It is helping them to do their business 

better. 

Mrs. MCCARTHY. Extremely important for small businesses. I 

live in Mineola, Nassau County, Long Island, New York. Most of 

our villages are 50 to 100 years old and the pipes are all 50 to 100 

years old and we have already had reports of many of the mains 

breaking. They have no money and they can’t even do the roads because there is no sense doing the roads until the mains are fixed. 

So it has been a round robin. That hurts our small businesses and 

that hurts downtown. And those revenues basically go into the villages to keep up the upkeep as far as they can. So I agree with 

you on that. 

And I guess what I would say, too, also, if right-to-work States— 

I happen to think it is a problem mainly because one of the things 
58 

when you talk about OSHA, they haven’t been aggressive enough 

to make sure that our people aren’t getting injured. The amount of 

injuries and the amount of deaths in this country because of workplace violations, shall we say, and we have seen those statistics 

and yet in my opinion it does not matter what administration has 

been there, they have not enforced the laws that are already on the 

books. 

Chairman KLINE. The gentlelady’s time has expired. I am going 

to take this opportunity to ask—take a little bit of time and ask 

some questions. 

Mr. HOLTZ-EAKIN. Mr. Chairman? 

Chairman KLINE. Yes. 

Mr. HOLTZ-EAKIN. With all due respect, I want to make the 

record to correct—— 

Chairman KLINE. I am going to start with you. We have multiple 

competing things here. Let me go to you, Dr. Holtz-Eakin, because 

I know that you wanted to say something about the regulatory 

issues. 

Mr. HOLTZ-EAKIN. I wish mostly to make sure the record correctly reflects that I am a sitting member of the Financial Crisis 

Inquiry Commission. I have served for nearly 2 years and I appreciate the honor of the appointment. The commission will not report 

until tomorrow at 10 a.m. So anything that Ms. Boushey may believe about the findings of that commission are premature. There 

is no public release of the document. I don’t know what she is referring to. I would ask members to read the complete report and 

the additional views by all members before drawing any conclusions. 

Chairman KLINE. Thank you. I am going to continue to ask questions. I will yield just a moment for a unanimous consent request. 

Mr. ANDREWS. I ask unanimous consent to include the statement 

of Congressman Kucinich in the record. 

Chairman KLINE. Hearing no objection, so ordered. 

[The statement of Mr. Kucinich follows:] 

Statement and Questions Submitted From Hon. Dennis J. Kucinich, 

a Representative in Congress From the State of Ohio 

I thank the Chairman for holding this important hearing on the state of the 

American workforce. 

We know from our constituents that they are hurting. In my home state of Ohio, 

the unemployment rate is at 9.6%. In October of 2010, there were 588,000 individuals in the State of Ohio who were forced to rely on unemployment insurance benefits to keep their heads and their families’ heads above water. And nationwide, according to the Department of Labor, nearly 8.3 million Americans were receiving 

unemployment compensation as of early November. The recession has pushed America’s middle class to the brink. Families across America are hanging on by their fingertips. 

Many are blaming the dire state of America’s workforce on small businesses regulations, unions, pension obligations, the health care bill, and even China. In my 

home state of Ohio, there is a movement to eliminate collective bargaining rights 

for home health care and child care workers, and to restrict the bargaining rights 

of police officers and fire fighters. I want to say clearly: targeting the right of workers to organize is no solution to our continuing economic crisis. 

Placing the blame on workers or on regulations ignores one of the main reasons 

for job loss in the United States: free trade policies. We have actively pursued policies that have shipped American jobs overseas and left our domestic manufacturing 

sector in shambles. We are here because we all agree we must do more to ensure 

that American industries, as a foundational part of our economy, remain strong. 
59 

Some of the witnesses today have spoken about the effect of regulations on small 

business. Yet they neglected to mention the free trade policies that give the same 

U.S. business incentives to close local factories and ship their production and jobs 

overseas for cheap labor. 

Question: In your testimony, Ms. Boushey, you make a very important point that 

I would like to highlight to the other members of this Committee. As you know, the 

President is urging Congress to approve a free trade agreement with South Korea 

that the Administration recently negotiated. You state in your testimony: 

There is also not strong evidence that the Korea Free Trade Agreement 

will generate economically meaningful job gains. 

Ohio’s economy was already struggling long before the current recession hit. According to the Bureau of Labor Statistics, Ohio lost approximately 430,000 manufacturing jobs from 1990 through July of 2010. 

So it seems that the ‘‘free trade’’ is actually a complex class war in which US 

CEOs who move their manufacturing to other countries are among the winners, and 

US workers are among the losers. 

Question: Ms. Boushey, would it be correct to say that one of the main effects of 

free trade policies is to incentivize US corporations into taking advantage of cheaper 

foreign labor by moving jobs to those other countries? 

So would you agree that the evidence is that free trade policies do not automatically increase employment, as some claim? 

Second Question: Ms. Boushey: I am particularly concerned with the bleak budget 

situation faced by state and local governments, who are the backbone of service to 

Americans. When our constituents turn to help from their government, they are 

most often using a state or local government service. In your testimony, you sound 

the alarm that funds from the President’s Economic Stimulus program (the American Recovery and Reinvestment Act) has prevented the employment level of women 

from dropping, and that this support is running out. You state in your testimony 

that last year, local governments in this country cut 259,000 workers, of which 

225,000 were women, offsetting some modest statewide government increases in employment of women. You state in your testimony that we need policies that create 

jobs and measures to increase aggregate demand and lay the foundations for economic growth. And I know that this means, among other efforts, a big movement 

to repair and replace infrastructure in this country. It is correct to say that in the 

area of infrastructure investment, it is not that the private sector does not want to 

invest in massive infrastructure projects but that they simply do not have the resources to do so? 

Chairman KLINE. Put me on the clock. I am going to try to mind 

my own regulations here. It is a little bit of a challenge sometime. 

I want to continue with you, Dr. Holtz-Eakin, for just a minute. 

You mentioned trade, and I think the Governor may have as well. 

What impact do you think that the year after year delay of enacting the free trade agreements that have been sitting in front of us 

has had on economic growth and job creation? 

Mr. HOLTZ-EAKIN. I think they are unambiguously bad. If you 

look at the Colombia free trade agreement, for example, it is already the case that Colombian companies have free access to American markets. The only thing that signing that agreement would do 

would be to allow U.S. workers through American companies to 

have the same access to Colombian markets, and we are sitting on 

the sidelines giving up the opportunity to sell these products 

abroad and create jobs in America. 

It also sends the signal to our international competitors that we 

will not be at the table and we are not an important country to negotiate with and we get bypassed in other opportunities to expand 

our access to trade. 95 percent of the world’s consumers are outside 

of our borders. Those are the markets our children will sell into 

and each day that we are on the sidelines we harm our future. 
60 

Chairman KLINE. What about, we talk about regulations. What 

about other regulations that may exist that are getting in the way 

or causing U.S. jobs to go overseas in this regulatory environment? 

Mr. HOLTZ-EAKIN. Every business location decision is a weighing 

of the value of the business proposition: What do I get in the way 

of a skilled labor force, the capacity to produce, and low taxes, low 

regulation, low litigation. We have at the moment a range of regulatory initiatives that are quite threatening to the business community. The EPA has five separate rulemakings at the moment ranging from the mercury rule to greenhouse gases under the Clean Air 

Act, intake for clean water; all are estimated to be quite expensive. 

Some will have dramatic impacts on particularly the electricity 

generation industry and that affects the manufacturing. So this is 

not in and of itself an explanation of anything but it is another 

piece of a puzzle that says if you want to create jobs do not create 

barriers over which businesses have to leap. 

Chairman KLINE. Okay. One more question. We have voted a 

number of times in this Congress to extend unemployment benefits, 

as we have had historically high unemployment continually month 

after month. And we hear an argument that Dr. Boushey mentioned and others have said that continuing these unemployment 

benefits is good for the economy. Fills the gap, I think. I am trying 

not to put words in her mouth. Do you have some observation on 

the effects of extending these unemployment benefits? 

Mr. HOLTZ-EAKIN. It is a complicated issue. The first thing is to 

recognize what dominates anything is getting a job. And so the premium should be put on all the factors that create pro-growth policy 

environment. 

The second would be that at some point you no longer are doing 

unemployment benefits. This is not a temporary bridge between 

jobs. You need to have effective education programs for workers to 

move into new industries, because they are not temporarily unemployed and we should recognize that. 

The third is that the extension is not unambiguously a good 

thing. Economics is in the end a calculus of benefits versus cost 

and there are costs to extensions of unemployment insurance, including harm to the worker’s skills themselves. Lots of evidence 

suggest that the longer someone is on a UI program the less likely 

they are to be employed and when employed at lower wages. And 

so in the research literature you find unemployment insurance extensions associated with continued high unemployment. Reduced 

extensions actually do lower the unemployment rate. And in some 

cases that is a benefit to the worker by getting them back into the 

labor force before their skills deteriorate. 

Chairman KLINE. I was going to move to the Governor but I can 

see that I am going to run out of time. I think an important message there is that we have workers now who are simply never 

going to go back to the job, maybe even the industry where they 

were employed. And so worker training and education is going to 

be an important part of what we look at. 

Thank you. I see I am about to run out of time. And Ms. Woolsey. 

Ms. WOOLSEY. Thank you, Mr. Chairman. I am concerned that 

because of this new found fever to cut regulations we might have 
61 

an open season on any regulations a Member of Congress or the 

business community doesn’t like regardless of its merits. So let’s be 

very careful that that is not where we go with all of this. The everything-on-the-table approach is quite worrisome because it has 

the potential to undermine rules meant to protect workers, rules 

that took decades to achieve. 

So as the President stated in his speech last night, we have to 

keep common sense regulations that protect people, even as we do 

away with rules that may in some way hinder job growth. The fact 

of the matter is that if more regulations had been on the books and 

government regulators had done their jobs, we may have averted 

the housing crisis that jump-started the recession in the first place. 

It should be clear to all of us that some areas of the economy need 

to be highly regulated. Complying with regulations should not be 

an excuse for failing to create jobs. And as the President pointed 

out last night, corporate profits are at record highs. Corporate profits are at record highs and the stock market is booming. United 

States businesses are sitting on nearly $2 trillion in cash. They 

need to start spending some of that money and making investments necessary to get our economy moving again. 

So this brings me to questions to you, Dr. Boushey. You are 

quoted and you have said in your statement that we need to find 

and fill the demand gap, that women—which I am assuming means 

that women and minorities have to be trained and educated and 

prepared for the jobs that we have available in our country now 

and jobs of the future. 

But what we are finding out and we do find out that most 

women are already working outside of the home and their families 

and they are struggling. Not only finding a job that pays a livable 

wage—not only finding a job but finding one that pays a livable 

wage but also affording to work in the first place, including child 

care. 

So what would be your recommendation that this—how can they 

contribute to balancing work and family—not just for women but 

for all workers—with these profits they are sitting on? What would 

you do to ensure a better workplace? 

Ms. BOUSHEY. Thank you, Congresswoman. I appreciate the 

question. There is a couple of things. Certainly first and foremost 

there is a lot of the great companies out there that are already 

doing a lot for their employees in terms of their families and in 

terms of workplace flexibility. There is a lot of opportunity for 

other companies to learn from that and to do more and the White 

House has had an initiative this year and they are going out to 

places around the country and talking about flexibility and what 

companies can do and doing some community forums. I think that 

is number one. 

Number two, as we have seen the budget crisis play out in the 

States, we have seen a lot of things that help them keep their jobs 

be some of the first things on the chopping block. Child care assistance, home health aides, after school programs. These are things 

that not only disproportionately employ women but also help families and provide the care they need and do their jobs. And one of 

the tragedies—there are so many tragedies of this great recession, 

but one of them is that as we have seen job losses at State level 
62 

and a quarter of million job losses at the local level over the past 

year, that has disproportionately affected women workers. So making sure that that those items are not always the first on the chopping block is something that we can think about. 

If I may just digress for just one moment, I did want to add one 

thing about the unemployment insurance system, which is that we 

do know that it is not from the conversation earlier, a lot of the 

economics, the bulk of the economics research shows that people 

who get these benefits, they need them and this has had the biggest bang for the buck relative to almost any other program we 

have. A recent report from the DLS shows that it has been about 

$2 into the economy for every $1 spent on those programs. I would 

just venture to say that we do need to continue these benefits until 

the unemployment rate comes down and not have them be sacrificed in the name of short-term deficit cutting. But I will let you 

continue your questions. 

Ms. WOOLSEY. Well, thank you very much. I have just a short 

question if I have time for the Governor. You mentioned regulations and the importance of the oil industry in the Gulf Coast area. 

There were regulations that are safety regulations that were ignored that had something to do, of course, with the deaths and the 

destruction that occurred. Would that cost jobs if those regulations 

had been in place or do you think there are some regulations we 

should be stricter with and about? 

Governor MCDONNELL. Yes, ma’am, absolutely. I don’t think anybody is advocating some arbitrary 30 percent across-the-board reduction. There should be a targeted strategy. We mentioned some 

of them. The President did in his executive order; That is, essentially does the cost of compliance and the cost of enforcement, does 

it far exceed whatever the benefit is from a public safety or consumer protection standpoint? Is there a better way to do it with 

less bureaucracy? And those ought to be the test. 

And in your example not only should those regulations have been 

in place, they should have been enforced better than what we are 

hearing now. That certainly is not the type of regulation we are 

talking about. It is the ones—we all know that regulations are such 

that businesses don’t pay taxes, nor do they really pay for the cost 

of regulations. They incorporate it in their price of goods and services and pass it on to you and me. 

So that is, I think, the concern that I have. Those that don’t pass 

that kind of test, that increase the cost of goods and services, is the 

ones that we ought to get rid of. 

Chairman KLINE. Thank you. The gentlewoman’s time has expired. 

Mr. Rokita. 

Mr. ROKITA. Thank you, Mr. Chairman. And I thank the panelists for your time. Following up on that a little bit, Governor, I appreciate the test that you just proposed but it is also true, isn’t it, 

that we can develop a regulation or a thousand that protects everyone? We could do things to make sure that no one gets killed and 

watch every single job that is left in this country go to China. So 

there is a balance test here. It is intangible. And the fact of the 

matter is in a free society and a free public, if we are going to keep 

it, sometimes bad things happen to very good people. And it can’t 
63 

be the mission of the Federal Government at every turn to try to 

stop it because it will fail. 

Governor, another point to you. You mentioned the word ‘‘latitude’’ at the very beginning of your remarks when you said if the 

Federal Government or this Congress would allow the States more 

latitude. I imagine you said that because you are a gentleman. 

That is all I have known from Virginia. But as a former statewide 

official and knowing a little bit of your history, I also understand 

that you are a constitutionalist. And it seems to me that we ought 

to be recognizing the fact that it is not for us to decide what latitude to give to the States. It is for the States and the people to decide under the enumeration clause what latitude to give us. And 

I have only been here 19 or so days, but I can already say that the 

last thing that this Federal Government needs or anyone even up 

here on the dais needs is more latitude to control, run, and otherwise dictate the lives of the people. 

I would ask you then, and the question is to you: Would you help 

us? There are some of us here who would like to see that turned 

around. Would you help us, with Governor Daniels, Governor 

Christie, others, to see the enumeration clause empowered again? 

Governor MCDONNELL. It is a very good question and you are 

correct. Philosophically I agree 100 percent with what you said. 

Many of us Governors in both parties talk about the 10th amendment as the forgotten amendment and that is the by-product of 

both Republican and Democrat congressional actions probably over 

the last 70 or 80 years. 

And so most Governors, while we appreciate certain Federal help 

and actions, especially if it is consistent with Article I, section 8, 

which is pretty much the founder’s mission for you, we do believe 

that most of the rest of those things to the maximum extent possible should be left to the States and the people respectively. That 

is the charter. 

So I think that is a great prescription for success in a new system of federalism for all of us going forward because when the Federal Government is not doing things that it shouldn’t be doing, one, 

you save money. And two, you allow the States, the laboratories of 

democracy closer to the people, to do some of the things that they 

ought to do. And we got an example of that I think just yesterday 

where we had a bipartisan letter from both Governor Gregory and 

Governor Heinemann, the Chairman and Vice Chairman of the National Governors’ Association, saying please don’t pass a law letting 

States file bankruptcy. One, you will take accountability away from 

us, and, two, we don’t need that kind of help. What we do need to 

do is make sure that we are governing ourselves accordingly in the 

States. 

I do think that you are going to hear more from the Nation’s 

Governors, and we appreciate the invitations like today for us to 

come and speak on these issues, to help us to discuss—have a robust dialogue about the rebirth of federalism and maybe a little bit 

different balance in State-Federal power because of the 10th 

amendment. I think you are right. 

Mr. ROKITA. Thank you, Governor. I yield, sir. 

Chairman KLINE. I thank the gentleman. 

Mr. Payne. 
64 

Mr. PAYNE. Thank you very much to the panel. Governor, I was 

interested in your comment that you like a program if it doesn’t 

add to the debt. I recall years ago, in the 50s and 60s, I used to 

travel in Virginia a lot and there was just Route 1. Many, many 

years later I came to Congress and met a late Congressman, Norm 

Sisisky. Norm was very effective. I know that many of the new 

Members do not like programs called by earmark, but Norm Sisisky actually added to the national debt because he built that highway system that brought Home Depot and all those great businesses into Virginia. 

Now, if he took your notion—of course, it did add to the Federal 

debt. Of course I think it has been paid back many times, at least 

to the State of Virginia. So I am trying to reconcile if you say it 

is a penny into debt, even though outward years it is going to be 

beneficial. Could you go through that again very briefly? Because 

Virginia wouldn’t be in the great position it is in today as a hub 

for Home Depot and those roads that were built through Norm 

Sisisky from Virginia getting the money to Virginia, adding to the 

debt. But it is helping your State in a robust way. 

Governor MCDONNELL. Congressman Sisisky was a very effective 

Congressman and we are fortunate to have a lot of effective Congressmen from the Great Commonwealth. What I would say, Congressman, is I think what I have heard from a lot of Virginians and 

on both sides of the political spectrum is that they are tremendously concerned about the future of this country if we stay on this 

trail of debt now at $14 trillion, the deficit going up a trillion over 

the last couple of years, and frankly billions, hundreds of billions 

before that under Republican administrations. So it is a bipartisan 

problem. 

When I as a Governor have to balance the budget every year, we 

borrow up to 5 percent of our total revenues solely for capital 

projects. What we don’t do is what people are concerned about Congress doing, and that is borrowing for the hot dogs, diapers, pencils, and cigarettes, the daily operations of government. That is a 

concern. 

So these targeted investments in infrastructure that are made by 

the Congress to invest in the States and claiming that as a priority 

without increasing spending in other areas, I think that is something a lot of people embrace. But if it continues to add to the price 

tag that my kids and your kids and our grandchildren have to pay 

back, that is what you are hearing from citizens far and wide that 

they are rejecting. 

Mr. PAYNE. Another—thank you for that clarification. You mention in your testimony that to post a workplace notice to employees 

outlining their rights under the NLRA that it is counterproductive, 

detrimental to the message that you are trying to send in Virginia. 

So I am just wondering how is informing a worker of their rights 

to you detrimental to the State of Virginia? 

Governor MCDONNELL. That may have been a little harsh. 

Mr. PAYNE. It is your testimony. You said it. 

Governor MCDONNELL. I know. I said it. But what I believe we 

don’t need to do in a right-to-work State is advertise how to create 

more labor unions. It has been a hallmark of Virginia’s success. 

That is why we are ranked number one in Forbes and CNBC and 
65 

every other periodical in the last 5 years as a place that business 

wants to relocate because of the tax regulatory litigation climate, 

the right-to-work laws, and our education system. Those are the 

fundamentals that build that. 

My point in that, while not stated as best as I could, my point 

is that a right-to-work State if we are advertising how to create 

more unions it is the opposite message that we are trying to send 

to create jobs and opportunity. 

Mr. PAYNE. Just very quickly, talking about right-to-work States, 

out of the three worst unemployment problems in the country, two 

are right-to-work States, including the worst in the Nation, Nevada, right-to-work, 14.5; California is a free bargaining State, 

12.5; Florida, right-to-work State, 12 percent. 

So I think a lot is being played into the right to work and not 

right to work. It does not seem that much of an impact. As a matter of fact, out of the 10 or highest unemployment, five are rightto-work, five are not. 

But just before my time expires, on the drilling we are happy 

about the President’s order to hold back. The companies did know 

what was right and wrong, but we had the big spill because they 

took a shortcut. And I think America is great, as you mentioned, 

and we ought to be able to get over these problems. However—and 

we don’t have time for an answer—but business seems that enough 

profit is not enough. So there is no ceiling. The question is how do 

you get people to know that that cap was not sufficient to prevent 

that blowup in the Gulf? 

Chairman KLINE. The gentleman’s time has expired. I am eager 

to keep my commitment to close this hearing at 4 o’clock, but I 

would like to yield a couple of minutes to Mr. Barletta, who has 

been waiting patiently. 

Mr. BARLETTA. My question is to Mr. Messinger. As a former 

business owner, I understand what a business looks for when making decisions for investment for the long-term. Uncertainty in the 

business environment today is handcuffing businesses in deciding 

whether to expand or invest or start a new business. 

We all can agree that we would like to save whatever manufacturing jobs we have left here in America, and I believe you had 

mentioned in your testimony that 70 percent of American manufacturers are subchapter S corporations. My question to you is do you 

believe that the current health care bill and the extension of the 

current tax rates for only 2 years is contributing to that uncertainty? 

Mr. MESSINGER. Absolutely, Congressman. I am going through a 

renewal process right now in our health insurance, and while we 

don’t have a final rate they are telling us in the 15 percent range. 

And clearly that is on top of prior years of multiple rate increases 

employing. The private insurers are unsure of what is going on and 

how they are going to be effected. So yes, on health insurance for 

sure. 

While I applauded many things the President said last night, especially concerning jobs in this country, I was concerned that he 

laid out his own cap for taxes, saying that they should be increased. Now is not the time for us to be worrying about what tax 

rates should be in 2 years. We should be worried about job creation 
66 

today. And I think in my testimony, I have laid out some of the 

things that I feel are important there. 

Mr. BARLETTA. Thank you. 

Chairman KLINE. I thank the gentleman. We are rapidly approaching 4 o’clock. I would like to certainly thank the witnesses 

and yield to Mr. Andrews for any closing remarks he might have. 

Mr. ANDREWS. I would also like to thank the witnesses for their 

preparation and their time. I have a unanimous consent request 

that a letter prepared by 250 economists supporting the health care 

bill be entered into the record. 

Chairman KLINE. Without objection. 

[The information follows:] 

January 26, 2011. 

Hon. JOHN KLINE, Chairman; Hon. GEORGE MILLER, Ranking Member, 

U.S. House of Representatives, Education and the Workforce Committee, Washington, 

DC 20515. 

DEAR CHAIRMAN KLINE AND REPRESENTATIVE MILLER: Congress this week is holding hearings on the economic impact of health care reform. We write to convey our 

strong conclusion that leaving in place the Patient Protection and Affordable Care 

Act of 2010 will significantly strengthen our nation’s economy over the long haul 

and promote more rapid economic recovery in the immediate years ahead. Repealing 

the Affordable Care Act would cause needless economic harm and would set back 

efforts to create a more disciplined and more effective health care system. 

Our conclusion is based on two economic principles. First, high medical spending 

harms our nation’s workers, new job creation, and overall economic growth. Many 

studies demonstrate that employers respond to rising health insurance costs by reducing wages, hiring fewer workers, or some combination of the two. Lack of universal coverage impairs job mobility as well because many workers pass up opportunities for self-employment or positions working for small firms because they fear losing their health insurance or facing higher premiums. 

Second, the Affordable Care Act contains essentially every cost-containment provision policy analysts have considered effective in reducing the rate of medical spending. These provisions include: • Payment innovations such as greater reimbursement for patient-centered primary care; bundled payments for hospital care, physician care, and other medical 

services provided for a single episode of care; shared savings approaches or capitation payments that reward accountable provider groups that assume responsibility 

for the continuum of a patient’s care; and pay-for-performance incentives for Medicare providers. • An Independent Payment Advisory Board with authority to make recommendations to reduce cost growth and improve quality within both Medicare and the 

health system as a whole • A new Innovation Center within the Centers for Medicare and Medicaid Services charged with streamlining the testing of demonstration and pilot projects in 

Medicare and rapidly expanding successful models across the program 

• Measures to inform patients and payers about the quality of medical care providers, which provide relatively low-quality, high-cost providers financial incentives 

to improve their care 

• Increased funding for comparative effectiveness research 

• Increased emphasis on wellness and prevention 

Taken together, these provisions are likely to reduce employer spending on health 

insurance. Estimates suggest spending reductions ranging from tens of billions of 

dollars to hundreds of billions of dollars. Because repealing our nation’s new health 

reform law would eliminate the above provisions, it would increase business spending on health insurance, and hence reduce employment. 

One study concludes that repealing the Affordable Care Act would produce job reductions of 250,000 to 400,000 annually over the next decade. Worker mobility 

would be impaired as well, as people remain locked into less productive jobs just 

to get health insurance. 

The budgetary impact of repeal also would be severe. The Congressional Budget 

Office concludes that repealing the Affordable Care Act would increase the cumulative federal deficit by $230 billion over the next decade, and would further increase the deficit in later years. Other studies suggest that the budgetary impact 

of repeal is even greater. State and local governments would face even more serious 
67 

fiscal challenges if the Affordable Care Act were repealed, as they would lose substantial resources provided under the new law while facing the burdens of caring 

for 32 million more uninsured people. Repeal, in short, would thus make a difficult 

budget situation even worse. 

Rather than undermining health reform, Congress needs to make the Affordable 

Care Act as successful as it can be. This would be as good for our economy as it 

would be for the health of our citizens. 

Sincerely, 

Henry J. Aaron, Senior Fellow, The Brookings Institution 

Jean Marie Abraham, Assistant Professor, University of Minnesota School of Public 

Health 

Randy Albelda, Professor of Economics, University of Massachusetts, Boston 

Sylvia A. Allegretto, Economist, University of California, Berkeley 

Stuart Altman, Sol C. Chaikin Professor of National Health Policy, Brandeis University 

Elizabeth Oltmans Anant, Assistant Professor of Public Policy and Economics, Duke 

University 

Rania Antonopoulos, Director, Gender Equality and the Economy Program, Levy Economics Institute 

Kenneth J. Arrow, Professor of Economics Emeritus, Stanford University 

Michael Ash, Associate Professor of Economics and Public Policy, University of Massachusetts, Amherst 

David Autor, Professor and Associate Head, Department of Economics, Massachusetts Institute of Technology 

Susan L. Averett, Charles A. Dana Professor of Economics, Lafayette College 

Christopher Avery, Roy E. Larsen Professor of Public Policy, Harvard University, 

Kennedy School of Government 

Rojhat B. Avsar, Assistant Professor of Economics, Columbia College 

M.V. Lee Badgett, Professor of Economics, University of Massachusetts, Amherst 

El-hadj Bah, Lecturer, University of Auckland 

Ron Baiman, Director of Budget and Policy Analysis Center for Tax and Budget Accountability 

Asatar Bair, Professor of Economics, City College of San Francisco 

Dean Baker, Co-Director Center for Economic and Policy Research 

Radhika Balakrishnan, Professor, Women’s and Gender Studies, Rutgers, The State 

University of New Jersey 

Nesecan Balkan, Department of Economics, Hamilton College 

Erol Balkan, Professor of Economics, Hamilton College 

Steve Balkin, Professor of Economics, Roosevelt University 

Nina Banks, Associate Professor of Economics, Bucknell University 

William Barclay, Adjunct Professor, University of Illinois at Chicago 

Drucilla K. Barker, Professor and Director, Women’s and Gender Studies, University of South Carolina 

David Barkin, Profesor de Economia, Universidad Autonoma MetropolitanaXochimilco 

Anirban Basu, Associate Professor, Department of Health Services, University of 

Washington 

Francis M. Bator, Lucius N. Littauer Professor of Political Economy Emeritus, Harvard University, Kennedy School of Government 

Charles M. Becker, Associate Chair and Research Professor, Department of Economics, Duke University 

Marc F. Bellemare, Assistant Professor, Duke University 

Gunseli Berik, Professor of Economics, University of Utah 

Carole Biewener, Professor of Economics, Simmons College 

Cyrus Bina, Distinguished Research Professor of Economics, University of Minnesota 

Christine E. Bishop, Atran Professor of Labor Economics, Brandeis University 

Josh Bivens, Economist, Economic Policy Institute 

Heather Boushey, Senior Economist, Center for American Progress 

Roger Even Bove, Department of Economics & Finance (retired), West Chester University 

James K. Boyce, Professor of Economics, University of Massachusetts, Amherst 

Elissa Braunstein, Associate Professor, Colorado State University 

Clair Brown, Professor of Economics, University of California, Berkeley 

Thomas Buchmueller, Waldo O. Hildebrand Professor of Risk Management and Insurance, Ross School of Business, University of Michigan 

Colin Cameron, Professor of Economics, University of California, Davis 
68 

Jim Campen, Professor of Emeritus, Economics University of Massachusetts, Boston 

Kathleen Carey, Associate Professor, Boston University School of Public Health 

Ann M. Carlos, Professor, Department of Economics, University of Colorado 

Frank Chaloupka, Distiguished Professor of Economics and Director, Health Policy 

Center, University of Illinois at Chicago 

Richard Chapman, Professor of Economics, Westminster College 

John Dennis Chasse, Professor Emeritus, State University of New York, Brockport 

Howard Chernick, Professor of Economics, Hunter College and the Graduate Center, 

City University of New York 

Raj Chetty, Professor of Economics, Harvard University 

Kimberly Christensen, Joanne Woodward Chair of Public Policy, Sarah Lawarence 

College 

Betsy Jane Clary, Professor of Economics, College of Charleston 

Paul D. Cleary, Dean of Public Health, Yale School of Public Health 

Jonathan Conning, Associate Professor of Economics, Hunter College and the Graduate Center, City University of New York 

Karen Smith Conway, Professor of Economics, University of New Hampshire 

Philip J. Cook, ITT/Sanford Professor of Public Policy, Duke University 

Paul Cooney, Associate Professor, Federal University of Para, Brazil 

Richard R. Cornwall, Professor of Economics, Emeritus, Middlebury College 

J. Kevin Crocker, Undergraduate Program Director, University of Massachusetts, 

Amherst 

David Cutler, Otto Eckstein Professor of Applied Economics, Harvard University 

Rada K. Dagher, Assistant Professor, University of Maryland 

Anita Dancs, Assistant Professor, Department of Economics, Western New England 

College 

Charles Davis, Professor, Labor Studies, Indiana University 

Susan M. Davis, Associate Professor, Department of Economics and Finance, Buffalo 

State College 

Partha Deb, Professor of Economics, Hunter College and the Graduate Center, City 

University of New York 

Gregory E. DeFreitas, Professor of Economics, Hofstra University 

Brad DeLong, Professor of Economics, University of California, Berkeley 

Timothy M. Diette, Assistant Professor of Economics, Washington and Lee University 

Marisa Elena Domino, Associate Professor of Health Economics, The University of 

North Carolina 

David E. Dowall, Professor, University of California, Berkeley 

Arindraijit Dube, Assistant Professor, Department of Economics, University of Massachusetts, Amherst 

Niev Duffy, President, Eastern Economic Research 

Mark Duggan, Professor of Economics, University of Maryland 

Randall P. Ellis, Professor of Economics, Boston University 

Elizabeth Elmore, Professor of Economics, Richard Stockton College of New Jersey 

Christopher L. Erickson, Professor, UCLA Anderson School of Management 

Jose Escarce, Professor of Medicine, David Geffen School of Medicine at UCLA 

Loretta Fairchild, Professor of Economics, Nebraska Wesleyan University 

Sasan Fayazmanesh, Professor Emeritus of Economics, California State University, 

Fresno 

Steven Fazzari, Professor of Economics, Washington University 

Judy Feder, Professor of Public Policy, Georgetown University 

Susan Feiner, Professor of Economics, University of Southern Maine 

Deborah M. Figart, Professor of Education and Economics, Richard Stockton College 

of New Jersey 

Kade Finhoff, Assistant Professor of Economics, University of Massachusetts, Boston 

Jason Fletcher, Assistant Professor of Public Health, Yale University 

Nancy Folbre, Professor of Economics, University of Massachusetts, Amherst 

Austin Frakt, Assistant Professor of Health Policy and Management, Boston University School of Public Health 

Jeffrey Frankel, Harpel Professor of Capital Formation and Growth, Harvard University 

Gerald Friedman, Professor of Economics, University of Massachusetts, Amherst 

Bianca Frogner, Assistant Professor, The George Washington University 

Bill Ganley, Professor of Economics and Finance, Buffalo State College 

Lorenzo Garbo, Professor of Economics, University of Redlands 

Irwin Garfinkel, Mitchell I. Ginsberg Professor of Contemporary Urban Problems, 

Columbia University School of Social Work 
69 

Paul J Gertler, Li Ka Shing Professor of Health Policy and Management, University 

of California, Berkeley 

Mwangi wa Githinji, Assistant Professor of Economics, University of Massachusetts, 

Amherst 

Devra L. Golbe, Professor of Economics, Hunter College and the Graduate Center, 

City University of New York 

Heather Taffet Gold, Associate Professor of Public Health, Weill Cornell Medical 

College 

Claudia Goldin, Henry Lee Professor of Economics, Harvard University 

Don Goldstein, Professor of Economics, Allegheny College 

Jose A. Gomez-Ibanez, Derek C. Bok Professor of Urban Planning and Public Policy, 

Harvard University, Kennedy School of Government 

Joshua Goodman, Assistant Professor of Public Policy, Harvard University, Kennedy 

School of Government 

Neva Goodwin, Co-Director, Global Environment and Environment Institute, Tufts 

University 

Elise Gould, Economist, Economic Policy Institute 

Ulla Grapard, Associate Professor of Economics and Women’s Studies, Colgate University 

Daphne Greenwood, Professor of Economics and Director, Colorado Center for Policy 

Studies, University of Colorado, Colorado Springs 

Tai Gross, Assistant Professor, Department of Health Policy and Management, Mailman School of Public Health, Columbia University 

Michael Grossman, Distinguished Professor of Economics, City University of New 

York Graduate Center 

Jonathan Gruber, Professor of Economics, Massachusetts Institute of Technology 

Kwabena Gyimah-Brempong, Professor and Chair, Department of Economics, University of Souh Florida 

Jack Hadley, Professor and Senior Health Services Researcher, George Mason University 

Paul Hancock, Professor of Economics, Green Mountain College 

Jeffrey S. Harman, University of Florida Research Foundation Professor, University 

of Florida 

Oliver Hart, Professor of Economics, Harvard University 

John T. Havey, Professor of Economics, Texas Christian University 

Gillian Hewitson, Department of Political Economy, University of Sydney 

Richard Hirth, Professor of Health Management and Policy, University of Michigan 

School of Public Health 

Vivian Ho, Baker Institute Chair of Health Economics and Professor, Rice University 

Joan Hoffman, Professor and Chair, Department of Economics, John Jay College of 

Criminal Justice, City University of New York 

Ann M. Holmes, Associate Professor, Indiana University-Purdue University, Indianapolis 

Barbara Hopkins, Associate Professor of Economics, Wright State University 

Jill R. Horwitz, Professor of Law, Co-Director, Program on Law and Economics, University of Michigan Law School 

Candace Howes, Professor of Economics, Connecticut College 

Hilary Hoynes, Professor of Economics, University of California, Davis 

Dorene Isenberg, Professor and Chair, Department of Economics, University of Redlands 

Ken Jacobs, Chair, Labor Center University of California, Berkeley 

Joyce P. Jacobsen, Andrews Professor of Economics, Wesleyan University 

Sanford M. Jacoby, Professor of Management and Public Policy, University of California, Los Angeles 

Habib Jam, Associate Professor of Economics, Rowan University 

Russell A. Janis, Senior Lecturer in Economics, University of Massachusetts, Amherst 

Arjun Jayadev, Assistant Professor of Economics, University of Massachusetts, Boston 

Neil Jordan, Assistant Professor and Director, Health Economics Center, Feinberg 

School of Medicine, Northwestern University 

Ted Joyce, Professor of Economics and Finance, Baruch College, City University of 

New York 

Geoffrey Joyce, Director of Health Policy, Schaeffer Center for Health Policy & Economics, University of Southern California 

Kyoungrae Jung, Assistant Professor, Health Policy and Administration, Pennsylvania State University 
70 

Daniel Kahneman, Professor of Public Affairs, Emeritus, Princeton University 

Rajani Kanth, Professor of Economics (Visiting), Loras College & Washington College 

Ethan Kaplan, Visiting Professor of Economics, Columbia University 

Lawrence Katz, Allison Professor of Economics, Harvard University 

Donald Katzner, Professor of Economics, University of Massachusetts, Amherst 

Paula M. Kazi, Assistant Professor, Bucknell University 

Valerie K. Kepner, Assistant Professor of Economics, King’s College 

Farida Khan, Professor of Economics, University of Wisconsin-Parkside 

Marlene Kim, Associate Professor, Department of Economics, University of Massachusetts, Boston 

Steven J. Klees, Professor of Education and Economic Development, University of 

Maryland 

Andrew I. Kohen, Professor Emeritus of Economics, James Madison University 

Brent Kramer, City University of New York 

Brent Kreider, Professor of Economics, Iowa State University 

Jill Kriesky, Economist, West Virginia Center on Budget and Policy 

Karl Kronebusch, Associate Professor, City University of New York 

Alan Krueger, Professor of Economics, Princeton University 

David Laibman, Professor (retired), Deparment of Economics, City University of 

New York 

Melaku Lakew, Professor of Economics, Richard Stockton College of New Jersey 

Thomas Lambert, Economics Lecturer, Indiana University Southeast 

Robert Lawrence, Albert L. Williams Professor of Trade and Investment, Harvard 

University, Kennedy School of Government 

Arleen A. Leibowitz, Professor, School of Public Affairs, University of California, Los 

Angeles 

David I. Levine, Trefethen Professor of Business Administration, Haas School of 

Business, University of California, Berkeley 

Frank Levy, Rose Professor of Urban Economics, Massachusetts Institute of Technology 

Peter M. Lichtenstein, Emeritus Professor of Economics, Boise State University 

Jeffrey B. Liebman, Malcolm Wiener Professor of Public Policy, Harvard University, 

Kennedy School of Government 

Peter H. Lindert, Distinguished Research Professor of Economics, University of California, Davis 

Richard C. Lindrooth, Associate Professor, Colorado School of Public Health, University of Colorado 

Victor D. Lippit, Professor of Economics, University of California, Riverside 

Linda Loubert, Assistant Professor, Economics Department, Morgan State University 

Harold S. Luft, University of California, San Francisco 

Catherine Lynde, Associate Professor, Economics, University of Massachusetts, Amherst 

Sean P. MacDonald, Assistant Professor of Economics, City University of New York 

Diane J. Macunovich, Department of Economics, University of Redlands 

Mark Maier, Professor of Economics, Glendale College 

Ann Markusen, Professor, Humphrey School of Public Affairs, University of Minnesota 

Eric S. Maskin, A.O. Hirschman Professor of Social Science, Institute for Advanced 

Study 

Thomas Masterson, Research Scholar, Levy Economics Institute of Bard College 

Julie Matthaei, Professor of Economics, Wellesley College 

Peter Hans Matthews, James Jermain Professor of Political Economy, Department 

of Economics, Middlebury College 

Kathleen McAfee, Associate Professor, Political Economy and International Relations, San Francisco State University 

Elaine McCrate, Associate Professor, Economic and Women’s and Gender Studies, 

University of Vermont 

Thomas G. McGuire, Professor of Health Economics, Harvard Medical School 

Ellen Meara, Associate Professor, Darmouth Institute for Health Policy and Clinical 

Practice 

Michael Meeropol, Visiting Professor, Economics, John Jay College of Criminal Justice, City University of New York 

Martin Melkonian, Adjunct Associate Professor, Economics, Hofstra University 

David Meltzer, Associate Professor, Department of Medicine and Associated Faculty 

Member, Department of Economics, University of Chicago 
71 

Peter B. Meyer, Professor Emeritus of Urban Policy and Economics, University of 

Louisville 

Marcelo Milan, Assistant Professor of Economics, University of Wisconsin-Parkside 

Lawrence Mishel, President, Economic Policy Institute 

Alan C. Monheit, Professor of Health Economics, School of Public Health, University 

of Medicine and Dentistry of New Jersey 

Taryn Morrissey, Assistant Professor of Public Administration and Policy, American 

University 

Karoline Mortensen, Assistant Professor of Health Services Administration, University of Maryland 

Tracy Mott, Associate Professor and Department Chair, Department of Economics, 

University of Denver 

Alicia H. Munnell, Peter F. Drucker Professor, Carroll School of Management, Boston College 

Richard J. Murnane, Professor, Harvard University 

Jason Burke Murphy, Department of Philosophy, Elms College 

Ellen Mutari, Professor of Economics, Richard Stockton College of New Jersey 

Reynold F. Nesiba, Associate Professor of Economics, Augustana College 

David Neumark, Professor of Economics and Director of Graduate Studies, University of California, Irvine 

Len M. Nichols, Director of the Center for Health Policy Research and Ethnics, Professor of Health Policy, George Mason University 

Laurie Nisonoff, Professor of Economics, Hampshire College 

Brendan O’Flaherty, Professor of Economics, Columbia University 

Albert A. Okunade, Professor of Health Economics, University of Memphis 

Oladele Omosegbon, Professor of Economics, Indiana Wesleyan University 

Shaianne T. Osterreich, Associate Professor, Economics, Ithaca College 

Zhaochang Peng, Department of Economics, Rollins College 

George Perry, Senior Fellow, The Brookings Institution 

Mark A. Peterson, Professor of Public Policy and Political Science, UCLA School of 

Public Affairs 

Karl Petrick, Assistant Professor of Economics, Western New England College 

Kathryn A. Phillips, Professor of Health Economics and Health Services Research, 

University of California, San Francisco 

Steven D. Pizer, Associate Professor, Boston University School of Public Health 

Harold Pollack, Helen Ross Professor of Social Service Administration, University 

of Chicago 

Daniel Polsky, Professor of Medicine, University of Pennsylvania 

Paddy Quick, Professor of Economics, St. Francis College 

Matthew Rabin, Professor of Economics, University of California, Berkeley 

Sarah Reber, Assistant Professor of Public Policy, University of California, Los Angeles 

Jim Rebitzer, Professor of Management, Economics and Public Policy, Boston University School of Management 

Michael Reich, Professor of Economics, University of California, Berkeley 

Uwe Reinhardt, James Madison Professor of Political Economy, Princeton University 

Dahlia Remler, Professor, School of Public Affairs, Baruch College, City University 

of New York 

Alice M. Rivlin, Senior Fellow, The Brookings Institution 

Charles P. Rock, Professor of Economics, Rollins College 

Christina D. Romer, Class of 1957, Professor of Economics, University of California, 

Berkeley 

Samuel Rosenberg, Acting Vice Provost for Faculty and Academic Administration, 

Roosevelt University 

Meredith Rosenthal, Associate Professor of Health Economics, Harvard University 

School of Public Health 

Roy J. Rotheim, Professor of Economics, Skidmore College 

Anne Beeson Royalty, Associate Professor of Economics, Indiana University, Purdue 

University, Indianapolis 

Cristopher J. Ruhm, Professor of Public Policy and Economics, University of Virginia 

Emmanuel Saez, E. Morris Cox Professor of Economics, University of California, 

Berkeley 

Harwood D. Schaffer, Research Assistant Professor, University of Tennessee 

John Schmitt, Senior Economist, Center for Economic and Policy Research 

Charles L. Schultze, Senior Fellow Emeritus, Economic Studies, The Brookings Institution 
72 

Eric A. Schutz, Professor, Economics, Rollins College 

Joseph M. Schwartz, Professor of Political Science, Temple University 

Charles R. Sebuharara, Visiting Assistant Professor of Finance, Pamplin College of 

Business, Virginia Tech 

Eric Seiber, Assistant Professor of Health Services Management and Policy, The 

Ohio State University 

Janet Seiz, Associate Professor of Economics, Grinnell College 

Bisakha Sen, Associate Professor, Department of Healthcare Organization and Policy, University of Alabama, Birmingham 

Mark Setterfield, Professor of Economics, Trinity College 

Anwar Shaikh, Professor of Economics, New School for Social Research 

Nina Shapiro, Professor of Economics, Saint Peter’s College 

Judith Shinogle, Senior Research Scientist, Maryland Institute for Policy Analysis 

Peter Skott, Professor of Economics, University of Massachusetts, Amherst 

Timothy Smeeding, Arts and Sciences Distinguished Professor for Public Affairs, 

University of Wisconsin-Madison 

Eugene Smolensky, Professor of the Graduate School, University of California, 

Berkeley 

Bryan Snyder, Department of Economics, Bentley University 

Eswaran Somanathan, Visiting Professor, Princeton University 

Paula H. Song, Assistant Professor, Health Services Management & Policy, The 

Ohio State University 

Neeraj Sood, Associate Professor, Schaeffer Center for Health Policy and Economics, 

University of Southern California 

Janet Spitz, Associate Professor of Business, College of Saint Rose 

James Ronald Stanfield, Emeritus Professor of Economics, Colorado State University 

Sally C. Stearns, Professor of Health Economics, University of North Carolina at 

Chapel Hill 

Bruce Stuart, Professor, University of Maryland School of Pharmacy 

Paul Swanson, Professor of Economics, William Paterson University 

Katherine Swartz, Professor of Health Economics and Policy, Harvard University 

School of Public Health 

Donald H. Taylor, Jr., Associate Professor of Public Policy, Duke University 

Mark Thoma, Professor of Economics, University of Oregon 

Chris Tilly, Professor and Director of the Institute for Research and Employment, 

University of California, Los Angeles 

Mariano Torras, Professor of Economics, Adelphi University 

Pravin K. Trivedia, J.H. Rudy Professor of Economics, Indiana University-Bloomington 

Jennifer Troyer, Associate Professor of Economics, University of North Carolina at 

Charlotte 

Laura Tyson, S.K. and Angela Chan Chair in Global Management, Haas School of 

Business, University of California, Berkeley 

Robert Otto Valdez, Robert Wood Johnson Foundation Professor, Family & Community Medicine and Economics, University of New Mexico 

Paul N. Van de Water, Senior Fellow, Center on Budget and Policy Priorities 

Courtney Harold Van Houtven, Associate Professor, Duke University 

Lane Vanderslice, Editor, Hunger Notes, worldhunger.org 

Elizabeth Richardson Vigdor, Research Scholar, Duke University 

Anca Voicu, Assistant Professor of Economics, Rollins College 

Mark E. Votruba, Associate Professor of Economics and Medicine, Case Western Reserve University 

Geetha Waehrer, Research Scientist, Pacific Institute for Research and Evaluation 

Jane Waldfogel, Professor of Social Work and Public Affairs, Columbia University 

Kenneth E. Warner, Avedis Donebedian Distinguished University Professor of Public Health, University of Michigan 

David Warner, Wilbur Cohen Professor of Public Affairs, LBJ School of Public Affairs, University of Texas at Austin 

Mark Weisbrot, Co-Director Center for Economic and Policy Research 

Thomas E. Weisskopf, Professor Emeritus of Economics, University of Michigan 

Charles K. Wilber, Emeritus Professor of Economics, University of Notre Dame 

Michael Wilson, Instructor, Harvard Medical School 

Cecilia Ann Winters, Associate Professor of Economics, Manhattanville College 

Jon D. Wisman, Professor of Economics, American University 

Barbara Wolfe, Professor, Economics and Political Science, University of WisconsinMadison 
73 

Justin Wolfers, Associate Professor of Business and Public Policy, The Wharton 

School, University of Pennsylvania 

Robert S. Woodward, Professor of Health Economics, University of New Hampshire 

Vivian Wu, Assistant Professor, University of Southern California 

David Zalewski, Professor of Finance, Providence College 

Joshua Graff Zivin, Associate Professor of Economics, University of California, San 

Diego 

Mr. ANDREWS. Finally, thank you for conducting this hearing so 

fairly. We would like to move to working together on good legislation that will help create jobs in our country. Thank you. 

Chairman KLINE. I thank the gentleman. I will close by saying 

thanks to my colleagues. Thank you very much to our witnesses— 

what a terrific panel—for enduring the weather and the voting and 

all of those things. Thank you very much. And thanks to my colleagues. Have a good safe trip. 

The committee is adjourned. 

[Additional submission of Mr. Messinger follows:] 
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[Ms. Boushey’s responses to questions submitted by Mr. Kucinich 

follow:] 

DEAR CONGRESSMAN KUCINICH: Thank you for your interest in my testimony before the Committee on Education and Workforces’ hearing entitled ‘‘State of the 

American Workforce,’’ on January 27, 2011. My answers for the record to your questions are: 

Question 1. You ask whether it would be correct to say that one of the main effects of free trade policies is to incentivize U.S. corporations into taking advantage 

of cheaper foreign labor by moving jobs to those other countries? Would you agree 

that the evidence is that free trade policies do not automatically increase employment, as some claim? 

Answer: Let’s start with what free trade agreements are supposed to do. The 

U.S. interest in these agreements is to promote trade, both imports and exports, 

with other countries. These agreements do not typically lower tariffs only in one di-
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1 U.S. International Trade Commission. ‘‘U.S.-Korea Free Trade Agreement: Potential Economy-wide and Selected Sectoral Effects.’’ USITC Publication 3949. September 2007, Corrected 

printing March 2010, at 2–14, Table 2.3, Available at: http://www.usitc.gov/publications/332/ 

pub3949.pdf 2 Christian Weller, ‘‘Economic Snapshot for January 2011,’’ Center for American Progress, 

January 31, 2011, available at http://www.americanprogress.org/issues/2011/01/ 

econsnap0111.html. 3 American Society of Civil Engineers, ‘‘America’s Infrastructure Report Card’’ (2009), available at http://www.infrastructurereportcard.org/sites/default/files/RC2009_full_report.pdf. 

rection but rather lower tariffs in both directions. Our economy’s total demand for 

goods and services is defined as consumption, plus investment, plus government 

spending, plus net exports, exports minus imports. Trade agreements typically lower 

tariffs for both U.S. exports and imports from other countries and should therefore 

raise both exports and imports. Given this, a pirori, there’s no reason to think they 

will increase U.S. jobs, unless we sign agreements heavily weighted in favor of U.S. 

exports. 

In the case of the Korea free trade agreement, the U.S. International Trade Commission, the independent federal body that analyzes potential effects of trade pacts 

for Congress and the executive branch, has estimated that while the Korea FTA 

would increase exports, it would increase imports even more. As a result, the U.S. 

ITC estimates that the Korea FTA will lead to an increase in the total U.S. goods 

trade deficit of between $308 million and $416 million.1 The largest estimated increases in the trade deficit would be in motor vehicles, electronic equipment, ‘‘other 

transportation equipment,’’ iron, metal products, textiles, and apparel. 

Question 2: You ask, is it correct to say that in the area of infrastructure investment, it is not that the private sector does not want to invest in massive infrastructure projects but that they simply do not have the resources to do so? 

Answer: As daunting as it seems, the level of capital investment needed in our 

nation’s infrastructure must grow. American businesses have the funds and access 

to credit markets to make investments. From December 2008 to September 2010, 

profits in the nonfinancial corporate sector rose in inflation-adjusted terms by 92.0 

percent before taxes and 93.3 percent after taxes. In September 2010, profits were 

at their highest point since at least September 2007, several months before the start 

of the Great Recession.2

But, even with strong profits, much of the infrastructure investment we need to 

do is in repairing our crumbling basic infrastructure. The American Society of Civil 

Engineers estimates that we need to spend at least $2.2 trillion over the next five 

years just to make repairs.3 This includes projects like replacing aging water facilities that are near the end of their useful life, repairing aging and deficient dams, 

and quarter of our nation’s bridges that are either structurally deficient or functionally obsolete. 

Roads, bridges, broadband, water and sewer lines, and a host of other goods require large-scale investments. For any one company it may be too expensive, but 

moreover, the public has an interest in creating widespread access to these goods. 

Businesses large and small and employees all benefit from infrastructure investments that they are able to make use of. If every bridge were private, then the toll 

costs and time wasted stopping for tolls might be prohibitively expensive and inefficient. Programs like Build America Bonds, which provides municipalities with subsidies to float bonds for long-term infrastructure projects, could help increase the 

capital available for these kinds of projects. 

[Whereupon, at 4:00 p.m., the committee was adjourned.] 

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