Let's Get to Work: Rebuilding Opportunity in America

We have been talking about jobs for awhile, but the story has remained largely unchanged. At the beginning of the month, the Department of Labor released the latest numbers on the U.S. employment situation, and we saw that American employers have added 244,000 new jobs, while the unemployment rate has edged up to 9 percent. While the Administration’s plan moving forward remains unclear, what is clear is that progress—wherever it can be found—is slow. The government needs to be proactive and get to work creating an economic environment that rebuilds opportunity in America.

Over the next several weeks, I want to discuss the practical ways leaders in Washington can get to work. We will look at specific, significant areas of our economy – areas like manufacturing, regulations, taxes, the deficit, and energy – to examine the situation as it is today and to analyze the relationship between these issues and American jobs, businesses and families. Most importantly, I want to discuss my ideas and proposed solutions to rebuild opportunity in America in all of these areas of our economy.

Next week, we will start by looking at manufacturing. Our manufacturing industry is a critical part of the U.S. economic infrastructure. With unemployment still hovering above 9%, bringing back a sector that has been eroding for decades is vital in order to create meaningful, well-paying jobs and enhance our ability to compete globally.

Manufacturing Situational Outlook

• For the first time in over 100 years, the United States is not the world’s top manufacturer. In 2010, China surpassed the U.S. as the global leader in manufacturing output.
• Our manufacturing industry is a critical part of U.S. economic infrastructure. Manufacturing directly employs nearly 12 million Americans, representing 9 percent of the workforce.
• However, only a small proportion of U.S. workers is now employed in factories due to manufacturers shifting low-value, labor-intensive production, such as apparel and shoe manufacturing, to other countries. The increased competition from manufactured imports is attributable not only to the low wages typically earned by workers in emerging economies, but also to the rapid growth in productivity overseas.
• But it’s not just call-center and factory jobs that are being sent overseas. Employers are increasingly willing to send overseas “highly skilled innovation activities,” such as “product design, R&D, engineering services, and software development,” according to the Congressional Research Service.

Impact on Jobs in America 

• The manufacturing sector of the U.S. economy has experienced substantial job losses since 2000. During the recession of 2001 and its immediate aftermath, employment in the manufacturing sector fell by about 2.9 million jobs, or 17 percent. Even after overall employment began to improve in 2004, the decline in manufacturing employment persisted. By the end of 2007, with the slowing of economic growth, the industry had lost an additional half a million jobs. As of November 2008, employment in manufacturing had fallen yet again, by slightly more than 600,000 jobs.
• U.S. employers could potentially move 3.4 million service sector jobs and $136 billion in wages overseas by 2015.

Proposed Solutions

• I am cosponsoring the Bring Jobs Back to America Act, which is a simple but powerful solution that seeks to bring outsourced jobs back to the United States in order to encourage job creation. It would comprehensively align existing federal funding, at no new cost, to organize a national strategy to rebuild America’s manufacturing industry, study incentives including tax breaks for companies looking to return jobs to the United States, and streamline the patent process for American research universities and bring innovative technologies to market faster. Specifically, the bill:
  
  • Requires the Secretary of Commerce to develop a national plan to energize manufacturing and bring back jobs from overseas;
  • Creates task forces to identify all American companies with manufacturing operations overseas and to work with state and local governments to help return these jobs to the U.S.; and
  • Sets up a study of tax incentives to encourage the return of U.S. jobs.
• I am also cosponsoring the National Manufacturing Strategy Act, which promotes policies related to our manufacturing sector intended to promote growth, sustainability, and competitiveness; create well-paying jobs; enable innovation and investment; and support national security. This bill also requires the President to submit a National Manufacturing Strategy to Congress during each presidential term.

I encourage you to check my blog each week to learn about the ideas I am proposing and to join in the discussion about those ideas. I am confident that if we just get to work, we will rebuild opportunity in America.

Ending Taxpayer Bailouts at Fannie Mae and Freddie Mac

Last year, Fannie Mae and Freddie Mac spent over $28 billion in taxpayer money. Since then, Fannie Mae has reported a net loss of $6.5 billion and requested an additional $6.2 billion in taxpayer funds from the Treasury. To date, the failures of the two government-sponsored enterprises (GSEs) have directly cost taxpayers more than $150 billion. The Congressional Budget Office (CBO) estimates that total federal subsidy outlays to Fannie and Freddie could total nearly $400 billion through 2019.

The housing crisis of 2008 revealed how the two GSEs were irresponsibly lending billions of dollars to homebuyers who ultimately could not afford houses. This irresponsible lending led to one of the worst housing crises in American history, and hardworking American taxpayers paid the price, not Fannie and Freddie.

We must enact fundamental reform of these entities and of the entire housing finance system. I have cosponsored the Government Sponsored Enterprise (GSE) Bailout Elimination and Taxpayer Protection Act to end the taxpayer-funded bailouts of Fannie Mae and Freddie Mac and put the two GSEs on a path towards privatization. This bill begins implementing important reforms upon enactment, puts a hard two-year end date on conservatorship, and eliminates the government charters after five years.

To protect taxpayers, the bill immediately implements several fundamental reforms:

• Repeals the GSEs’ misguided affordable housing goals mandate and the Affordable Housing Trust Fund;
• Starts shrinking the size of the GSEs by capping their maximum portfolio size at $700 billion and gradually reducing that cap to $250 billion over five years;
• Reduces the GSEs’ market share by returning the conforming loan limit to its pre-housing crisis standard limit of $417,000;
• Increases guarantee fees to eliminate the GSEs’ competitive advantage and bring more private capital into the market; and
• Prohibits any reduction to the senior preferred stock dividends the GSEs contractually agreed to pay taxpayers under their conservatorship.

By privatizing Fannie and Freddie over a five-year transition period and gradually eliminating taxpayer subsidies in the secondary mortgage market, the bill requires the GSEs to eventually stand on their own two feet and compete with private sector competitors. 

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