Aloha kakou! I would like to begin by extending my thanks to the Board of Governors of the Hawaii Council on Economic Education for this invitation to speak to you on the issue of economic education. I know you have all taken time from your busy schedules, and your presence here clearly shows your commitment to this important council and its work on economic literacy. I would like to commend the efforts of Executive Director John Knox, whom I have known for many years, who has kept the council going. I would also like to commend Gail Tamaribuchi, director of the Center for Economic Education at the University of Hawaii. Both of them have diligently worked to improve economic education in our state.

The need for increased economic literacy is apparent right here, right now. The rise of Internet commerce, the growth of online investment services, and the growing number of Americans who have invested in the stock market serves to highlight the importance of economic literacy for citizens of every age and professional background.

Regrettably, Hawaii has not shared in the longest period of peacetime expansion in history which the rest of the nation is enjoying. While Hawaii has not shared in the good fortune, we must position our economy for better times and prepare our children for the workplace of the 21st century.

Economic education is by no means THE solution to recessions and economic downturns–any economist will tell you these are hard to predict accurately and prevent–but it would give people in Hawaii, particularly our youth, the tools to deal with poor economic conditions. We need to help our young people better understand the economic implications of their actions. That they cannot always get what they want. That they need to be more responsible with their money. And that they are learning fiscal habits now that will stay with them for the rest of their lives.

In addition to helping our youth make good financial decisions for themselves, we must help them become productive and well-informed citizens. It has been shown that a lack of knowledge about fundamental economics can have negative effects on our economy and lead to divisions and polarization in our communities.

We must do what we can to educate Hawaii’s future workforce about what effects the retirements of our “baby boom generation” will have on them. Currently, one of the biggest issues before Congress is Social Security reform. According to the 1999 Report of the Social Security and Medicare Trustees, the Social Security system will remain solvent until 2034. At that point, Social Security tax income will cover only 71 percent of benefits being paid out by the government. In addition, the number of people receiving Social Security will surge from 44 million now to 75 million in 2020.

Keeping these factors in mind, we in Congress are working to fix Social Security so that it will remain solvent and strong through the next century. We are looking over a number of different reform options and will take at least the rest of the year doing this so that we come up with the best possible plan. Even if we work toward reform and achieve a bipartisan product to save Social Security, our young people will still be impacted by the tremendous upcoming demographic shift and should learn how to prepare for themselves a secure retirement.

Economic education can help them do this–one of the reasons why I am working at the federal level to encourage economic education.

Another reason is that economic literacy is attracting a groundswell of attention in various parts of the country. Our Federal Reserve Banks are lending their support, such as through publications like this one put out by the Federal Reserve Bank of Minneapolis entitled “You Can’t Always Get What You Want, A Special Issue on Economic Literacy.” I recommend that you take a look at this publication which discusses just what economic literacy is and covers various related issues.

Also, I would like to share with you the attached reprint from Parade Magazine of April 18, 1999. It reports the results of a basic economics test given nationally to 1010 adults and 1085 high school students by the National Council on Economic Education. Among its findings:

• half of adults and two-thirds of high school students failed, while only six percent of adults and three percent of high school students got an A;

   

• on average, adults received a grade of 57 percent and high school students a grade of 48 percent;

   

• students and adults alike lack a basic understanding about the concepts of money, inflation and scarcity of resources–core economic concepts;

   

• a sizeable number of students (35 percent) admit that they simply do not know what the effect of an increase in interest rates would be; and

   

• only a little over half of adults (54 percent) and less than one in four students (23 percent) know that a budget deficit occurs when the federal government’s expenditures exceed its revenues for that year.

Along with these disappointing results, the national council also found that a full 96 percent believe basic economics should be taught in high school. Currently, 38 states have adopted guidelines for teaching economics in their schools, but only 13 states go as far as requiring that students take an economics course in order to graduate. In Hawaii, I understand that we have approved standards, guidelines and proficiencies in economic education for grades kindergarten through twelfth grade. However, we do not require our schools to offer economics courses or require our students to take economics before they graduate. We also do not test our students on basic economic education. In addition, inservice economics courses are not required for teacher relicensure. I am not prescribing that any of these things be done because it is not my role to do so, but I will say that Hawaii should be a part of a national effort to boost economic literacy and take steps toward this goal.

This brings me to a brief mention of my efforts on the national level. The massive Elementary and Secondary Education Act–which is some two thousand pages long–is up for reauthorization in the 106th Congress. It contains the vast majority of education programs affecting grades K through 12. These include Title I funds for disadvantaged students, Eisenhower Professional Development for teachers, education technology grants, Safe and Drug Free Schools, Impact Aid funding, Native Hawaiian Education Act programs, and many, many others.

We have an opportunity in the reauthorization of E-S-E-A, as it is commonly referred to on Capitol Hill, to propose a national initiative to enhance economic literacy in this country. The legislation is still being drafted, so I will not go into greater detail, but it will include funding to the National Council on Economic Education for grants to states, councils, centers and partnerships. It will promote flexibility and distribute funding where it is most needed. It will also emphasize generating support from the local business community which will benefit many times over in various ways, seen and unseen.

We are looking for ways to better educate our young people on how to manage their resources. How to be better workers. How to make wise investments. How to prepare for a secure financial future. This will be done through practical means and make economics come alive for students. It is important to start working on this now, before we know it current eighth graders will have gone through high school, possibly college, and entered the workforce.

As many of you familiar with the legislative process know, Congress will take some time to hold hearings on the reauthorization of ESEA. I have requested a hearing from the appropriate Senate committee on the subject of economic literacy, and I am working to include it on the committee’s schedule. After hearings, committees in the House and Senate will markup the language–possibly toward the end of this summer or in the fall. Each chamber will take up their versions of ESEA after that, possibly this year, more likely next year. There is an automatic one-year extension of funding for ESEA should Congress not act this year. Finally, the legislation will be reconciled in conference committee and go the President for his signature.

However, this time line does not mean that state and local efforts on economic literacy should stop and wait for us to complete our job on the Federal level. If this were the case, we would wait a very long time. Rather, I urge your continued support for the Hawaii Council on Economic Education and our Center for Economic Education. Its work is quite meaningful and it is important that it receive the resources in order to keep going and to grow.

Thank you all again for turning out and showing this support. I look forward to working with you to improve economic literacy and hope that this can be a working partnership. Mahalo for allowing me this opportunity to address you on this important subject today. The effort to bolster economic education could have a tremendous, positive impact on the lives of all of Hawaii’s people and millions around our great nation. Thank you.