May 1, 2008
Statement

Floor Statement on the Economy

MR. REED: Mr. President, we are here today in the midst of another filibuster in which the FAA reauthorization bill is before us, but we have to wait for a cloture vote and we have to wait many, many days past, I think, what was appropriate. But it does give us an opportunity to talk about the issue that is of most concern to Americans at this moment; that is, the economy.

We have an economy that is heading, unfortunately, toward recession. Some economists have already declared it here. Over the last few months, I have spoken about the situation and particularly, I say to the Presiding Officer, in our home State of Rhode Island where, as we go about, we are stopped constantly by our constituents, our neighbors, our friends who, quite rightly, complain about the current economic situation.

The Senator from Illinois was very accurate and very insightful when he noted that the incomes of most Americans have not risen over the last decade or more and that these individuals--and we are not talking about low-income Americans, entry-level workers; we are talking about going way up close to $100,000 or more--they have seen no real income growth. But what they have seen is accelerating prices.

Now, for several years, they thought they would be buttressed against these accelerating prices and slow income growth by the value of their homes. But, as we know now, we are seeing a huge recession in the real estate market. The values of homes are beginning to fall. They certainly are not rising as they were. The foreclosure situation is deepening everywhere. Again, in Rhode Island, there were traditionally a few notices each week in the paper.

Now it seems there is a whole section devoted to foreclosures in the Providence Journal.  It is evidence of the worsening of the economic situation.

Now, the pressure of flat wages, flat incomes, housing values falling--these accelerating prices are becoming very difficult to endure by Americans everywhere.

According to a review, a recent survey by the Pew Research Center, fewer Americans now than at any time in the past half century believe they are moving forward in life.

One of the great aspects of my youth in the 1950s, 1960s, and 1970s is not only did families deal with moving forward, they also were of an unshakeable belief that their children would have a much better life than they enjoyed. That belief is being shaken today, seriously. Many parents--again, we are not talking about low-income workers; we are talking about a range of Americans--believe that unless we take positive and effective action, we are going to be in a situation where the next generation of Americans will have it even more difficult than we do today. That is why it is very difficult to bear these filibusters because ultimately, this is not about parliamentary maneuvering. It is about whether we can provide the leadership and the policies to reverse course in America today and provide for that better future for our sons and daughters tomorrow.

Seventy-nine percent of Americans today believe it is more difficult to maintain their middle-class standard of living. In fact, one of the great hallmarks of this country in the last century was the creation and the expansion of the middle class. Again, there are many people who are sensing that the middle class is not expanding any longer, but that it is shrinking. It is shrinking on the load of increasing prices, flat incomes, and decelerating housing values. That is not just the sum of statistics and analysis and reports; that is what people are talking about everywhere in this country.

In Rhode Island, for example, with respect to prices, the average price of gasoline is soaring to record levels. Regular unleaded is currently at more than $3.60 per gallon. Diesel is getting close to $4.50 per gallon. For our trucking industry, for all of the businesses that depend on moving their goods around, for the service people who have to get to their service calls, when prices go up--gasoline and diesel--that is an additional business cost. It is an additional tax on them because of, I think, the failed policies of this administration, and it is a tax that is taking a big bite out of their well-being and the welfare of their families.

One thing we can do, and I think we should do--we could do it immediately--is we can refrain, at least temporarily, from filling the Strategic Petroleum Reserve. That seems to be a very simpleminded approach to lessening, at least in a small way, demand for oil at a time that oil is surging to around $119 per barrel. I think it also will send a signal that we are at least doing something to relieve the pressure on working families, and that can be done with the signature by the President and ordered by the President, and it should be.

At the same time families across this country and businesses across this country are seeing extraordinary price increases, oil companies are seeing extraordinary profits. I think we have to take action, and that action, once again, stalled on the Senate floor several months ago to eliminate some of the tax breaks that oil companies are receiving. I thought that at $119 a barrel, there would be sufficient incentives to go drill, but apparently the oil companies need tax incentives as well. I thought the market would be working in this case, but apparently it works in strange ways for these oil companies.

I think we also have to think about a windfall profits tax. We have huge expenditures. The President, as the Senator from Illinois pointed out, is sending up a supplemental appropriations bill for Iraq for billions of dollars. All of that is expended, and yet we can't tax some of the extraordinary profits of companies that are doing very well and don't seem to be reinvesting it robustly in drilling or searching for alternative sources.

I think we also have to protect consumers from price gouging at the pump, and something else--and that is speculation in the world oil markets. There are experts who suggest that more than 25 percent of the cost of crude oil may be the result not of supply and demand but of market speculation. We need to give the principal regulator for the energy-commodities markets, the Commodities Futures Trading Commission, the tools they need to review these transactions and to ferret out unscrupulous conduct in speculation.

That is why I support the Close the Enron Loophole Act that has been introduced by Senator Levin. It has been included in the Senate-passed farm bill, and I continue to advocate that provision should be adopted very quickly because without it, I don't think we can effectively provide regulation to a market that is exacting, in some estimates, a 25-percent premium, not because of supply and demand but because there are financial forces at work speculating in these commodities, and that speculation will go on until we authorize the appropriate regulatory authority to begin to supervise, regulate, and review those transactions.

The price of food is also, in many cases, spinning out of control for so many working Americans. Since March 2007, the price of eggs has jumped 35 percent, a gallon of milk is up 23 percent, a loaf of white bread has gone up 16 percent, and a pound of ground chuck is up 8 percent. Overall, food prices in 2008 are expected to rise 4 to 5 percent, about double the increase of recent years.

Again, this is not just an economic statistic. Talk to the bakers--and the Presiding Officer knows these families, such as the Calise family and other families in Rhode Island who have been baking Italian bread for 70 or 100 years--they have never seen the increase in wheat prices they have seen over the last several months. It is affecting their ability to make ends meet for their businesses. When you have accelerating energy prices, oil prices, gasoline prices, accelerating commodity prices such as wheat, a business such as that, a family-owned bakery, it is very difficult. It is extremely difficult for those families who are struggling to get by to get, frankly, to the supermarket, fill up their basket, and not walk out very much impoverished by the experience.

That is why I have requested the Senate Agriculture Committee to hold a hearing on the food versus fuel balance in U.S. agriculture policy. We have been encouraging ethanol production. That would bar us using some of our commodities, our agricultural commodities, but I believe we have to begin to focus on the tradeoff between energy production and food production.

I have also sent a letter to the Agriculture Secretary expressing concern with the cost of wheat, as I indicated, based upon comments I received from our bakers in Rhode Island, and requested that the Secretary work with the Environmental Protection Agency and the Department of Energy to look at the need to develop a mechanism to balance this tradeoff between food production and fuel production, and requesting information about how the Department of Agriculture is managing the wheat stockpile--which is something that will influence the price of wheat--as well as requesting information on how it is monitoring new speculative investment in commodities and its impact on prices. All of this has to be done.

What is becoming also more difficult to bear on top of everything we have talked about--flat income, rising prices, declining home values--is the fact that now we are seeing unemployment begin to accelerate. In Rhode Island, we are unfortunately experiencing a 6.1-percent unemployment rate--higher than the rest of New England. It is causing real problems, and it is something we have to address. I think we have to begin to recognize that as we lose jobs, we have to think seriously about employing people again.

As I mentioned, Rhode Island has a 6.1 percent unemployment rate right now. It is close to the highest unemployment rate in the United States, only behind Michigan, Alaska, and California. It is the highest unemployment rate in Rhode Island since August of 1995, more than 12 years ago. There are 35,100 people in Rhode Island who are unemployed, and this is a trend that has been going up, unfortunately, not down.
  
We have also seen a shift in employment recently from February to March of 2008. In just a single month, 3,100 less people were without jobs in Rhode Island, a decrease in 3,100 jobs. For a State with a population of just 1 million, that is a significant factor. It adds not only to the decline in the unemployment, but the velocity of that decline. Things seem to be trending much quicker downward than rebounding.

Now, it is no wonder that the Labor Department announced today that the number of first-time claims for unemployment benefits rose to 380,000 nationwide. That is the highest level in 4 years. Today's announcement concluded that Rhode Island had one of the largest increases in initial claims numbering 1,779. The direction is unfortunate, and it is the wrong direction. Approximately half of those unemployed workers were eligible to collect unemployment insurance benefits, and of this number, nearly 19 percent face long-term unemployment.

The number of Rhode Islanders in 2008 who continue to collect unemployment benefits has also increased--14.1 percent above the number of the same period last year. As a result of this situation of deteriorating employment and longer term unemployment, a significant number of Rhode Islanders are exhausting their benefits. They are receiving their final payment. That has occurred for more than 1,900 people, and that percentage is increasing also.

All of these numbers suggest something very obvious: more and more people need unemployment insurance. More and more people are on unemployment longer. The economy is not responding to their needs. This economy is not generating jobs, it is shredding jobs. That ultimately leads to the fact that the benefits run out if we do not extend unemployment insurance benefits.

Now, I think that is something we have to do. I think we have an obligation in this economy -- which is getting worse, not better -- to go ahead and provide extended unemployment benefits.  By the way, these benefits are one of the best stimulus programs we have because the proportion of the money that is expended that gets reinvested quickly -- respent in the economy -- is significantly higher than other programs.

I was pleased the Senate passed and the President signed into law the Economic Stimulus Act in February. I voted for this package. It will provide tax rebate checks. They are on their way out to many families across the country. But given the historically high unemployment in Rhode Island and in other parts of the country, I believe we need to do much more. This is a national problem. It needs attention. That is why I believe we have to extend unemployment benefits. In those States that are hit hard by this economic crisis, individuals should be eligible for benefits for an additional 13 weeks and another 13 weeks of emergency benefits in States where the unemployment rate is exceptionally high.

I pressed, as so many did, for inclusion of these extended unemployment insurance benefits last February, and I commend my colleagues who have fought also for this benefit, including Senators Kennedy and Durbin and Stabenow.

As I indicated, many economists have also pointed to the extent of unemployment benefits as not only something that helps the individual, but it provides further stimulus for our economy. An extension of these benefits provides a very high rate of return on the money expended, generating approximately $1.64 in gross domestic product per dollar invested in this program. This is especially helpful when we are looking for ways to get the economy moving again.

We get news each day of declining economic statistics. The last notice of our gross domestic product for the last quarter was a very unimpressive .6 percent. We need urgent action to move the economy. We need urgent action to help families who are struggling. They have worked. They have worked hard, and they are running out of their benefits. We can't run out on them.

That is why we need an economic stimulus package that will not only recognize obligations overseas, but we will recognize obligations at home. I hope we will enact a very robust extension of unemployment benefits for all Americans.

Mr. President, I yield the floor.

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