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	<title> - STATE OF THE AMERICAN WORKFORCE</title>
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	[House Hearing, 112 Congress]
	[From the U.S. Government Publishing Office]





	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


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




	Available via the World Wide Web:
	http://www.gpoaccess.gov/congress/house/education/index.html
	or
	Committee address: http://edworkforce.house.gov





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	64-120 PDF WASHINGTON : 2011
	-----------------------------------------------------------------------
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	COMMITTEE ON EDUCATION AND THE WORKFORCE

	JOHN KLINE, Minnesota, Chairman

	Thomas E. Petri, Wisconsin George Miller, California,
	Howard P. ``Buck'' McKeon, Senior Democratic Member
	California Dale E. Kildee, Michigan
	Judy Biggert, Illinois Donald M. Payne, New Jersey
	Todd Russell Platts, Pennsylvania Robert E. Andrews, New Jersey
	Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
	Virginia Foxx, North Carolina Virginia
	Duncan Hunter, California Lynn C. Woolsey, California
	David P. Roe, Tennessee Ruben Hinojosa, Texas
	Glenn Thompson, Pennsylvania Carolyn McCarthy, New York
	Tim Walberg, Michigan John F. Tierney, Massachusetts
	Scott DesJarlais, Tennessee Dennis J. Kucinich, Ohio
	Richard L. Hanna, New York David Wu, Oregon
	Todd Rokita, Indiana Rush D. Holt, New Jersey
	Larry Bucshon, Indiana Susan A. Davis, California
	Trey Gowdy, South Carolina Raul M. Grijalva, Arizona
	Lou Barletta, Pennsylvania Timothy H. Bishop, New York
	Kristi L. Noem, South Dakota David Loebsack, Iowa
	Martha Roby, Alabama Mazie K. Hirono, Hawaii
	Joseph J. Heck, Nevada
	Dennis A. Ross, Florida
	Mike Kelly, Pennsylvania
	[Vacant]

	Barrett Karr, Staff Director
	Mark Zuckerman, Minority Staff Director













	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


	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. 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 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
	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 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.
	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.
	<bullet> Today, all Americans will have access to quality,
	affordable health coverage no matter if their employer provides it, or
	if they change jobs
	<bullet> 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.
	<bullet> Today, businesses have powerful new tax incentives for
	businesses to hire unemployed Americans and expand their businesses
	<bullet> Today, workers have a Department of Labor that puts worker
	safety first--all which helps reduce workplace injuries and makes
	business more efficient.
	<bullet> 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.
	<bullet> Today, small businesses have more access to credit
	necessary to start, continue, or expand their business.
	<bullet> 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 go-go 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 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.

	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 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 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.
	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 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.
	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:
	<bullet> to be the best country in the world to headquarter a
	company;
	<bullet> to be the best country in the world to do the bulk of a
	company's research and development; and
	<bullet> 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 pro-manufacturing 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 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 employer-sponsored 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 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 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.
	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 2\1/2\ 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 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\
	figure 1
	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	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\
	figure 2
	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	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.
	figure 3
	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	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.
	figure 4
	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	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.
	figure 5
	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	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 middle-class 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 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\
	figure 6
	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	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 high-productivity 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 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.
	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).
	\6\ Lisa 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).
	\9\ Federal 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).
	\17\ Karen 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).
	\19\ Lawrence Mishel, Jared Bernstein, and Heidi Shierholz, The
	State of Working America 2008-9 (Ithaca, NY: Cornell University Press.,
	2009).
	\20\ Thomas Piketty and Emmanuel Saez, ``Income Inequality in the
	United States, 1913-1998,'' Quarterly Journal of Economics 118 (1)
	(2003): 1-39.
	\21\ Lawrence 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;
	\25\ Testimony 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''.
	\29\ Michael 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.
	\33\ David 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
	\38\ Wayne 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 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 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:]

	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	------

	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.
	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, co-pays, 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.
	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.
	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, 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 management. 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.
	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.
	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-to-
	work 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.
	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.
	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 cost-benefit 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 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 operations. 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.
	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 write-off 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 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.
	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.
	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 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 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
	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.
	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 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 right-to-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 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:
	<bullet> 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.
	<bullet> 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
	<bullet> 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
	<bullet> 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
	<bullet> Increased funding for comparative effectiveness research
	<bullet> 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
	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 Metropolitana-
	Xochimilco
	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
	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
	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
	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
	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
	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 Wisconsin-Madison
	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:]

	<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

	------

	[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 direction 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.
	---------------------------------------------------------------------------
	\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

	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\
	---------------------------------------------------------------------------
	\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.
	---------------------------------------------------------------------------
	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.
	---------------------------------------------------------------------------
	\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.
	---------------------------------------------------------------------------
	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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