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Rebuilding America : investing in growth and jobs : hearing before the Subcommittee on Economic Development of the Committee on Public Works and Transportation, House of Representatives, One Hundred Third Congress, first session, November 16, 1993 online

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REBUILDING AMERICA: INVESTING IN
GROWTH AND JOBS



(103-58)

Y4.P 96/11:103-58

Rebuilding Anerica: Investing in Gr...

mjuAKING

BEFORE THE

SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT

OF THE

COMMITTEE ON

PUBLIC WORKS AND TRANSPORTATION

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS

FIRST SESSION



NOVEMBER 16, 1993



Printed for the use of the
Committee on Public Works and Transportation




' o









U.S, GOVERNMENT PRINTING OFFICE
83-033 WASHINGTON : 1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-045988-5




REBUILDING AMERICA: INVESTING IN
GROWTH AND JOBS

(103-68)

Y4.P 96/11:103-58

Rebuilding Anerica: Investing in Br...

HEARING

BEFORE THE

SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT

OF THE

COMMITTEE ON

PUBLIC WORKS AND TRANSPORTATION

HOUSE OP REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS

FIRST SESSION



NOVEMBER 16, 1993



Printed for the use of the
Committee on Public Works and Transportation




' 3



U.S. GOVERNMENT PRINTING OFFICE
83-033 WASHINGTON : 1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-045988-5



COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION



NORMAN Y. MINETA, California, Chair



JAMES L. OBERSTAR, Minnesota

NICK J. RAHALL II, West Virginia

DOUGLAS APPLEGATE, Ohio

RON de LUGO, Virgin Islands

ROBERT A. BORSKI, Pennsylvania

TIM VALENTINE, North Carolina

WILLIAM O. LIPINSKI, Illinois

ROBERT E. WISE, Jr., West Virginia

JAMES A. TRAFICANT, Jr., Ohio

PETER A. DeFAZIO, Oregon

JAMES A. HAYES, Louisiana

BOB CLEMENT, Tennessee

JERRY F. COSTELLO, Illinois

MIKE PARKER, Mississippi

GREG LAUGHLIN, Texas

PETE GEREN, Texas

GEORGE E. SANGMEISTER, Illinois

GLENN POSHARD, Illinois

DICK SWETT, New Hampshire

BUD CRAMER, Alabama

BARBARA-ROSE COLLINS, Michigan

ELEANOR HOLMES NORTON, District of

Columbia
LUCIEN E. BLACKWELL, Pennsylvania
JERROLD NADLER, New York
SAM COPPERSMITH, Arizona
LESLIE L. BYRNE, Virginia
MARIA CANTWELL, Washington
PAT DANNER, Missouri
KAREN SHEPHERD, Utah
ROBERT MENENDEZ, New York
JAMES E. CLYBURN, South Carolina
CORRINE BROWN, Florida
NATHAN DEAL, Georgia
JAMES A. BARCIA, Michigan
DAN HAMBURG, California
BOB FILNER, California
WALTER R. TUCKER III, California
EDDIE BERNICE JOHNSON, Texas
PETER W. BARCA, Wisconsin



BUD SHUSTER, Pennsylvania

WILLIAM F. CLINGER, Jr., Pennsylvania

THOMAS E. PETRI, Wisconsin

SHERWOOD L. BOEHLERT, New York

JAMES M. INHOFE, Oklahoma

BILL EMERSON, Missouri

JOHN J. DUNCAN, Jr., Tennessee

SUSAN MOLINARI, New York

WILLIAM H. ZELIFF, Jr., New Hampshire

THOMAS W. EWING, Illinois

WAYNE T. GILCHREST, Maryland

JENNIFER Y. DUNN, Washington

TIM HUTCHINSON, Arkansas

BILL P. BAKER, California

MICHAEL A. "MAC" COLLINS, Georgia

JAY KIM, California

DAVID A. LEVY, New York

STEPHEN HORN, California

BOB FRANKS, New Jersey

PETER I. BLUTE, Massachusetts

HOWARD P. "BUCK" McKEON, California

JOHN L. MICA, Florida

PETER HOEKSTRA, Michigan

JACK QUINN, New York



(II)



Subcommittee on Economic Development



ROBERT E. WISE, JR
LUCIEN E. BLACKWELL, Pennsylvania,

Vice Chair
SAM COPPERSMITH, Arizona
JAMES E. CLYBURN, South Carolina
NATHAN DEAL, Georgia
JAMES A BARCIA, Michigan
BOB FILNER, California
JAMES L. OBERSTAR, Minnesota
JAMES A. TRAFICANT, Jr., Ohio
BOB CLEMENT, Tennessee
JERRY F. COSTELLO, Illinois
MIKE PARKER, Mississippi
DICK SWETT, New Hampshire
JERROLD NADLER, New York
PAT DANNER, Missouri
KAREN SHEPHERD, Utah
ROBERT MENENDEZ, New Jersey
CORRINE BROWN, Florida
DAN HAMBURG, California
ELEANOR HOLMES NORTON, District of

Columbia
EDDIE BERNICE JOHNSON, Texas
PETER W, BARCIA, Wisconsin
NORMAN Y. MINETA, California

(Ex Officio)



, West Virginia, Chair
SUSAN MOLINARI, New York
SHERWOOD L. BOEHLERT, New York
THOMAS W. EWING, Illinois
JENNIFER Y. DUNN, Washington
TIM HUTCHINSON, Arkansas
BILL P. BAKER, California
MICHAEL A. "MAC" COLLINS, Georgia
JAY KIM, California
BOB FRANKS, New Jersey
PETER I. BLUTE, Massachusetts
JOHN L. MICA, Florida
PETER HOEKSTRA Michigan
JACK QUINN, New York
BUD SHUSTER, Pennsylvania
(Ex Officio)



(III)



CONTENTS



TESTIMONY

Page

Levy, David A., vice chairman and director of forecasting, the Jerome Levy
Economics Institute of Bard College, Mount Kisko, NY 13

Mudge, Richard R., president, Apogee Research, Inc., Bethesda, MD 13

Ooms, Van Doom, senior vice president and director of research, Committee
for Economic Development, Washington, DC 13

Thurow, Lester C, professor of management and economics, Massachusetts
Institute of Technology, Sloan School of Management, Cambridge, MA 13

Prepared Statements Submitted by Members of Congress

Blackwell, Hon. Lucien E., of Pennsylvania 4

Clyburn, Hon. James E., of South Carolina 11

Costello, Hon. Jerry F., of Illinois 9

Hamburg, Hon. Dan, of California 6

Prepared Statements Submitted by Witnesses

Levy, David A 43

Mudge, Richard R 61

Ooms, Van Doom 68

(V)



REBUILDING AMERICA: INVESTING IN
GROWTH AND JOBS



TUESDAY, NOVEMBER 16, 1993

House of Representatives,
Committee on Public Works and Transportation,

Subcommittee on Economic Development,

Washington, DC.

The subcommittee met, pursuant to call, at 11:05 a.m., in room
2167, Rayburn House Office Building, Hon. Robert E. Wise, Jr.
(chairman of the subcommittee) presiding.

Mr. Wise. I want to thank everyone for attending. I would like
to call this hearing of the Subcommittee on Economic Development
of the Committee on Public Works and Transportation to order.

I am joined by our Ranking Member, Ms. Molinari of New York;
the Subcommittee's Vice Chair, Mr. Blackwell of Pennsylvania; Mr.
Hamburg of California and other Members who may be joining us.

I want to thank the witnesses for being here.

Let me say that while all attention today focuses on NAFTA and
the vote tomorrow, I suspect that in a few months the subject that
our witnesses are talking about is going to be consuming not only
this committee but this Congress.

What we are talking about is growth in American jobs, and eco-
nomic growth in relation to infrastructure.

Technically, this recession ended in March 1991. Yet, 30 months
later, the Nation's economy limps along, growing somewhat but not
at the rate that anyone thinks is particularly healthy.

I have a sense that there is going to be a need to look at in-
creased growth measures following the turn of the year, particu-
larly as some of the contractionary effects of the Deficit Reduction
Package enacted in August begin to take hold.

I note also that while there is improvement in our Gross Domes-
tic Product growth during the last few months, it is considerably
less than the average rate of 6 percent following four previous re-
cessions since World War II.

We all know the title "jobless recovery." I know that in my State
of West Virginia, a dubious headline a few weeks ago was that
West Virginia was now only 49th in unemployment, exceeded by
California.

Nobody takes pleasure in someone else's pain and the irony to
this statement is that if California is now leading the Nation in un-
employment, that says something about our overall economy and
problems that it is facing.

The outlook may not be getting much better. The rate of unem-
ployment remains flat, currently at 6.8 percent nationally, with

(l)



many States having much higher rates continuing to go up not
down.

We also see structural changes in our economy that change the
jobs we are creating. In the last year alone, almost 450,000 people
have been laid off as a result of corporate downsizing, at the same
time, losing 270,000 manufacturing jobs. Sixty percent of new jobs
are in three industries: Health care, restaurants and bars, with
waitresses and bartenders averaging $5.33 an hour.

The purpose of this hearing and my hope, I might ask the sub-
committee, is to conduct similar hearings over the next few
months, to begin to develop the record and to begin developing the
case for a more concerted growth strategy for our Nation.

As I say, it would be my hope in this subcommittee, in working
with our full committee, we could be putting together legislation
that could be considered some time in January or February, when
the Congress returns. I would hope that we could all work together
to develop a consensus on some of those measures.

I thank the witnesses for the time they have taken.

I turn now to Ms. Molinari for any opening remarks she may
wish to make.

Ms. Molinari. Thank you, Mr. Chairman.

Just very briefly, I want to thank you for holding this hearing,
Mr. Chairman. I support my distinguished colleague in his purpose
of initiating this hearing today; to explore ways that public invest-
ment can best pay off in terms of jobs and the long-term economic
growth for our country.

I have always been supportive of innovative ways to encourage
infrastructure investment to create jobs and spur economic growth,
because this accomplishes two things: Number one, obviously, it
puts a certain sector back to work; Number two, in the long-term
it saves money by making necessary improvements to infrastruc-
ture that need to be done anyway.

In other words, these are not just "make work" jobs. These are
jobs that will save society an awful lot of money in the long-term.

Today, as you stated, our economy is struggling to recover. There
are many Americans who are unemployed and see no relief to their
economic problems in sight.

As Labor Secretary Robert Reich stated recently, "Even if you
have a job, your chance of not having that job a year or two from
now is increasing, and that is not just for blue-collar workers.
There is a great degree of job insecurity these days, no matter
where you are in the corporation, than we have seen at any time
in post-World War II era."

The national unemployment rate is at 6.8 percent, but in my dis-
trict, the rate has maintained itself above the national average and
is currently at 8.6 percent in Staten Island and 9.5 percent in
Brooklyn.

So, I am clearly reminded every day when I do get home to the
district, that unemployment is a problem that continues to occur in
all facets of our community.

It is my hope today that after listening to the presentations by
the members of the panel and after a continuing series of these
hearings to focus in on this issue, that we will be more informed
of methods to create jobs and increase government investment in



our private infrastructure without increasing the deficit in the
long-term.

I want to especially thank all those Members and witnesses who
came today to join in this debate. It is, as you have stated, perhaps
one of the most important debates facing the Nation, although per-
haps the rest of the United States Congress, the White House and
the media have not quite caught on until after the NAFTA vote in
the House on Wednesday.

I yield back the balance of my time and again welcome our wit-
nesses.

Mr. Wise. I thank the gentlewoman.

I want to announce that the Ranking Member and I have de-
clared by all the power vested in us, that this is a sanctuary from
any NAFTA appeals; no lobbying, telephone calls, White House or
other overtures will be permitted during the course of this hearing.
It is a sanctuary.

I now turn to the Vice Chair of our Subcommittee, Mr. Blackwell,
for any opening remarks.

Mr. Blackwell. Mr. Chairman, this is probably one of the most
important issues that will face this country in the next 10 or 15
years. Just this Sunday, we announced the Homeless and Hunger
Awareness Week in America, National Hunger and Homeless
Awareness Week.

A lot has to do with the fact that we just do not have jobs for
Americans and while we are talking about NAFTA, we should be
talking about the infrastructure of America. America is falling
apart and nobody is paying attention to it. They often equate us
with Japan and these other countries that were rebuilt, like Japan
and Germany, who were bombed to the ground during the war.

Now America has been bombed domestically because they have
the compassion and the loyalty to sacrifice while we fought com-
munism all over the globe and while we policed other countries.
Now that that is over, there are those of us who believe we should
come back home and spend some money to rebuild America.

There are those who will just ignore it. They want to reduce the
defense, but they won't reduce the deficit and misery in this coun-
try as though Americans did not exist.

So I believe this is more important than NAFTA. I am not wor-
ried about rebuilding Mexico. I am worried about rebuilding Amer-
ica. I want Mexico to work, but I am an American first.

That is what is wrong with this country. We are forgetting about
who we are and what we are and we are forgetting about the sac-
rifices that America has made to make this the great country that
it is.

So this is the beginning of something I hope will continue until
we reach that point where we decide not that Americans will get
jobs through this free trade agreement after the next 10 years, the
next decade, but what is happening to America right now, getting
Americans off the street, get rid of the soup lines, rebuild America
and then we can talk about how we are going to do business with
other countries.

I commend you for holding this hearing. I hope that we will stir
enough interest to wake America up and make them realize that



we are being trampled on after having sacrificed for so long to
make this a free world.

Thank you, Mr. Chairman.

[Mr. Blackwell's prepared statement follows:]

Statement of Congressman Lucien E. Blackwell

Mr. Chairman, this hearing captures the most important issue confronting this
Congress and this nation.

The tension between Federal investments in core infrastructure and, more impor-
tantly, human capital, as opposed to the effort to reduce the deficit, has given rise
to the most important debate in this century.

This debate will come to full form, once again, when we face the vote this week
on the Rescission bill, H.R. 3400, and even more sharply, when we face the Penny-
Kasich amendment to that bill.

The $108 billion in savings projected to come from the elimination of some
252,000 Federal jobs, through agency and other cutbacks may not resolve our eco-
nomic problems if we do nothing about the stagnant job situation.

Last month, unemployment in America crept up to 6.8 percent, an increase from
the level in September. And, unemployment in Philadelphia, the city I represent,
continues to be higher than the national average. At some point, we must turn our
attention to job creation and job development and get beyond this job reduction
mentality.

I look forward to the testimony of the witnesses. We are at a critical stage in this
nation's history.

Mr. Wise. Thank you.

The gentleman from the Wisconsin, Mr. Barca.

Mr. Barca. Thank you, Mr. Chairman.

I don't have any prepared remarks. I wanted to at least comment
that I am also very enthusiastic about this hearing and future
hearings to come on this topic.

As a Member of the State Legislature in Wisconsin for many
years, my favorite committee assignment was the Economic Devel-
opment Committee. Wisconsin has had considerable success, I say
with pride, in terms of having one of the lower unemployment rates
in our country. I think it was due in large part to our economic
strategies.

I think one of the most important things we can do as a Nation
is to provide job opportunities for our young people. Just last Fri-
day in one of my larger communities in my district, in the commu-
nity of Beloit, we had a community summit on economic develop-
ment. During that period, we took time out to take a tour of some
of the neighborhoods; in one of the neighborhoods we stopped at a
youth center. There was a young adult who had been undergoing
alcohol and drug abuse treatment.

Repeatedly, we heard from them that one of the contributing fac-
tors of their being involved in alcohol and drugs was the lack of op-
portunity they thought faced them in the future. One youth in par-
ticular just said, if there is one thing you can do for me, is just give
me a job. Provide me an opportunity. I will make a better life for
myself.

It is very compelling when you hear those kinds of statements
and you realize unfortunately that there is a dearth of job opportu-
nities for young people today. I think one of the most important ob-
ligations a country has to the people is to provide them with oppor-
tunities. The way you do that is through providing them a job.

So, Mr. Chairman, I look forward to hearing the testimony today
and other testimony we are going to receive. I think this indeed is



perhaps the most important topic we can confront as Members of
Congress.

Mr. Wise. I appreciate the gentleman's remarks. There is no bet-
ter program than a job.

The gentleman from California, Mr. Hamburg.

Mr. Hamburg. I wanted to thank the witnesses for coming here
today and thank you for holding this hearing. When you told me
on a Floor a couple of weeks ago that you were going to do this,
I was very enthusiastic at that point because I have been working
with a group of Members of the Public Works and Transportation
Committee, even some Members of the Senate who have voiced
their concerns about the jobless recession and the need to really
move forward with an infrastructure program.

One of the documents that I have become familiar with as we
move forward on this is a document prepared by the Jerome Levy
Economics Institute of Bard College. I am very glad to have Mr.
Levy here to discuss the issues around investment and economic
growth and how that can help lift the Nation at a time when I
think we desperately need a lift.

Also, I have had an opportunity over time to become familiar
with the writings of Mr. Thurow, his magazine articles, his partici-
pation in many seminars with the Economic Policy Institute and
other organizations.

Mr. Thurow, the committee is very privileged to have you here
today.

I am also looking forward to the testimony of Dr. Mudge and Dr.
Ooms.

So, Mr. Chairman, again I thank you very much for doing this.
I think this Economic Development Subcommittee and our full
committee really should be the focal point for the kind of infra-
structure investment program that we need.

Finally, I would like to ask unanimous consent to submit my
written statement for the record.

Mr. Wise. Without objection.

[Mr. Hamburg's prepared statement follows:]



DAN HAMBURG



j"kio.» Congress of tfje ®niteb States

MERCHANT MARI

Jfyou&t of &epregentatiue£f """""""ir.

Saashmgton, SC 20515

OPENING STATEMENT OF DAN HAMBURG

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT

November 16, 1993

Thank you, Mr. Chairman, for holding this hearing on job creation and
infrastructure investment.



I ran for Congress on a platform of change: a change in the role that the
government was playing in the economy; a change from a government standing on
the sidelines to a government in partnership with business promoting a vital
economy.

The United States is truly in a new economy. In the post-Cold War world,
military investment is no longer the primary driving force. Nowhere is this more
evident than in my state of California, where defense cutbacks require a
fundamental shift in the state's economic base.

But we cannot simply "prime the pump". A quick-fix cash infusion is
neither economically feasible nor likely to be successful.

Neither can we rely solely on low interest rates to create good jobs.
Although interest rates are at their lowest point in twenty years, good jobs are not



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being created. The "recovery" we hear so much about has created 2 million jobs;
yet 50% of them are part-time and temporary positions. Only well-paying
permanent jobs with health care benefits will instill confidence in consumers and
jump start the flagging economy nationwide.

Investment in our infrastructure will both create jobs and. re-establish the
basis for a competitive edge in the world economy. Our highway system is key
to the transportation of goods to ports and points of exit from the United States.
Yet, 235,000 miles of our federal highways need repair. How long can
maintenance be deferred before our systems crumble? We must invest in our
country if we expect to compete in a global economy.

We face a grand challenge: to improve the lives of our citizens at a time
when funds are scarce and people's confidence in government is at an all-time
low. In this effort, we must explore all alternative methods for financing
investment to create good jobs while promoting competition through infrastructure
improvements. This effort truly requires a new vision.

I am excited to hear from this panel today. I look forward to an intriguing
and thought-provoking discussion of job-creating investment in non-traditional
ways.



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8

Mr. Wise. The gentlewoman from Utah, Ms. Shepherd.

Ms. Shepherd. I will add my voice and welcome these very im-
portant economists to this hearing. I believe this is the most impor-
tant issue that faces this Congress and this economy this year and
next and perhaps into the future. This is what we need to learn
to do well and to learn how government can do it well. I am not
sure we have ever done it well.

Mr. Wise. I thank the gentlewoman.

I will turn to the gentleman, Mr. Franks, for any remark he
might wish to make.

Mr. Franks. I have no statement, Mr. Chairman.

Mr. Blackwell. Mr. Chairman, I ask unanimous consent to sub-
mit my remarks.

Mr. Wise. Anyone who wishes to submit opening statements for
the record, they will be entered without objection.

[Mr. Costello's prepared statement follows:]



JERRY F. COSTELLO

12TH DISTRICT ILLINOIS



Congress of the ftniteb &tate£

Ihouzc of IRcprcscntatitJce
SBaefiington, BC 20515-1312



BUDGET
PUBLIC WORKS AND TRANSPORTATION
SCIENCE. SPACE. AND TECHNOLOGY



OPENING STATEMENT

HONORABLE JERRY F. COSTELLO

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT

COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION

HEARING ON REBUILDING AMERICA: INVESTING IN GROWTH AND JOBS

NOVEMBER 16, 1993



Mr. Chairman, thank you for calling today's hearing on the
current state of our nation's economy and the need for further
infrastructure investment in our economy to encourage job growth.
As the representative from Southern Illinois, a depressed area of
our country, I am very interested in pursuing this subject.

My Congressional District's unemployment rate is
considerably higher than the national average of 6.8 percent.
Several major employers have gone out of business in recent years
leaving hundreds of people unemployed with no options to turn to
for employment. This type of situation coupled with the
devastating effects of the Clean Air Act on the coal industry in
Southern Illinois has made the extent of the recession much
harsher in the region.

I believe it is important for the Congress to act to
encourage job creation to help save our communities. One way the
Congress can act is to encourage infrastructure investment.
Studies have shown that infrastructure investment impacts



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10



positively on private sector output, investment and employment.
There are obvious needs in all areas of our nation's
infrastructure: highways, transit, aviation, wastewater
treatment facilities and drinking water supply. It is my view
that a significant public investment in these areas of need will
help to encourage job growth and improve the economic situation
facing our nation.

Again Mr. Chairman, thank you for your leadership on this
issue. I look forward to hearing the testimony that will be
presented by the expert witnesses who have gathered before this
subcommittee .


1 3 4 5 6 7 8

Online LibraryUnited States. Congress. House. Committee on PubliRebuilding America : investing in growth and jobs : hearing before the Subcommittee on Economic Development of the Committee on Public Works and Transportation, House of Representatives, One Hundred Third Congress, first session, November 16, 1993 → online text (page 1 of 8)