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Tay Tay posted Kerry's floor speech before NAFTA, which he called "What's NAFTA Got To Do With it?" which pointed out that the outsourcing of jobs was already occuring and suggested that legislation was the way to get some side agreements on labor and environmental issues. NAFTA was pushed very very hard by both Clinton and Gore. Gore very capably debated Perot on the issue. The side agreements seem to have lost after implementation.
The other thing is that most economists wrote favorable (though some included cautions) opinions. The other thing I get from Kerry's speech is how close the overall description of the underlying economic issue is to the ideas he still expresses. In 1993, he seems to say this bill is slightly better than the status quo. By 2005, in the confirmation hearing for Porter, he was saying that all the trade bills needed to be adjusted. During the CAFTA hearings, he said that both the Mexican peasants and Americans were hurt by NAFTA, which was part of his reason for voting against the even worse CAFTA. (I suspect a President Ted Kennedy of a President John Kerry would have put the worker and environmental controls in the bill and could possibly have ended up with a bill that helped more than hurt.)
From Thomas:
Kerry: Mr. President, not a day goes by now without significant change in our economy.
And not a day goes by when the opponents and the proponents of NAFTA do not seize on the story as evidence for their cause.
To paraphrase a line from Tina Turner, when it comes to the sea change underway in America today, what's NAFTA got to do with it?
The answer, Mr. President, is, much less than we are led to believe.
Opponents claim the treaty will cause our jobs to go south and cheap goods will come flooding back in, sending more jobs back south.
But the fact is, many jobs are going south now, unimpeded and unregulated by the environmental and labor law controls that NAFTA would impose for the first time between our two countries.
And as for those cheap goods, the tariff barriers in place today are mostly Mexican, not American. Their tariffs are 2 1/2 times larger than ours, on average. It's our goods that are prevented from going there, not the other way around. But you would never know that from all the anti-NAFTA rhetoric.
The proponents of NAFTA will tell you something like 200,000 net new jobs will be created in the United States by the year 1996. No new job is to be sneered at, but 200,000 jobs is approximately what the U.S. economy created in one fairly mediocre month, July of this year, in the middle of a so-called jobless recovery.
Let's put this job promise in perspective. Two weeks ago an article in the New York Times estimated that electronic bar code readers alone--the devices that so fascinated George Bush last year--bar code readers alone have eliminated 400,000 jobs in America.
So, what's NAFTA got to do with it, indeed.
It strikes me that in reality, the debate over NAFTA is not a debate about who's right and who's wrong. It's a debate about the future--about placing a bet on the future, on how the Mexicans will act, and how we will act.
The NAFTA opponents believe that the bet is too risky, because the Mexicans will not live up to their agreements. But the truth is NAFTA is not risky because of what the Mexicans will do--it's risky because of what we are failing to do for ourselves right now. It is a risk augmented by our failure to enunciate and aggressively pursue a national policy for the creation and retention of high-skill, high-wage jobs and preparation of our current and future workers to perform well in those jobs.
And in the absence of a clear, unmistakable, and forceful national strategy to create those jobs and move our workers into them, NAFTA might very well be doomed, a scapegoat for the much larger frustration in our country over our failure to deal with the massive changes underway in the economy, changes which are pushing up to 70 percent of our work force down the ladder of opportunity--changes which promise to claim more workers if we do not take action.
In many ways, we are witnessing the most rapid change in the workplace in this country since the postwar era began. For a majority of working Americans, the changes are utterly at odds with the expectations they nurtured growing up.
Millions of Americans grew up feeling they had a kind of implied contract with their country, a contract for the American dream. If you applied yourself, got an education, went to work, and worked hard, then you had a reasonable shot at an income, a home, time for family, and a graceful retirement.
Today, those comfortable assumptions have been shattered by the realization that no job is safe, no future assured. And many Americans simply feel betrayed.
To this day I'm not sure that official Washington fully comprehends what has happened to working America in the last 20 years, a period when the incomes of the majority declined in real terms.
In the decade following 1953, the typical male worker, head of his household, aged 40 to 50, saw his real income grow 36 percent. The 40-something workers from 1963 to 1973 saw their incomes grow 25 percent. The 40-something workers from 1973 to 1983 saw their incomes decline, by 14 percent, and reliable estimates indicate that the period of 1983 to 1993 will show a similar decline.
From 1969 to 1989 average weekly earnings in this country declined from $387 to $335. No wonder then, that millions of women entered the work force, not simply because the opportunity opened for the first time. They had no choice. More and more families needed two incomes to support a family, where one had once been enough.
It began to be insufficient to have two incomes in the family. By 1989 the number of people working at more than one job hit a record high. And then even this was not enough to maintain living standards. Family income growth simply slowed down. Between 1979 and 1989 it grew more slowly than at any period since World War II. In 1989 the median family income was only $1,528 greater than it had been 10 years earlier. In prior decades real family income would increase by that same amount every 22 months. When the recession began in 1989, the average family's inflation-adjusted income fell 4.4 percent, a $1,640 drop, or more than the entire gain from the eighties.
Younger people now make less money at the beginning of their careers, and can expect their incomes to grow more slowly than their parents'. Families headed by persons aged 25 to 34 in 1989 had incomes $1,715 less than their counterparts did 10 years earlier, in 1979. Evidence continues to suggest that persons born after 1945 simply will not achieve the same incomes in middle-age that their parents achieved.
Thus, Mr. President, it is a treadmill world for millions of Americans. They work hard, they spend less time with their families, but their incomes don't go up. The more their incomes stagnate, the more they work. The more they work, the more they leave the kids alone, and the more they need child care. The more they need child care, the more they need to work.
Why are we surprised at the statistics on the hours children spend in front of the television; about illiteracy rates; about teenage crime and pregnancy? All the adults are working and too many kids are raising themselves.
Of course, there is another story to be found in the numbers. Not everyone is suffering from a declining income. Those at the top of the income scale are seeing their incomes increase, and as a result income inequality in this Nation is growing dramatically. Overall, the 30 percent of our people at the top of the income scale have secured more and more, while the bottom 70 percent have been losing. The richest 1 percent saw their incomes grow 62 percent during the 1980's, capturing a full 53 percent of the total income growth among all families in the entire economy. This represents a dramatic reversal of what had been a post-war trend toward equality in this country. It also means that the less well-off in our society--the same Americans who lost out in the Reagan tax revolution--are the ones being hurt by changes in the economy.
You might say that we long ago left the world of Ward and June Clever. We have entered the world of Roseanne and Dan, and the yuppies from `L.A. Law' working downtown.
Many, many commentators have explained how the assumptions from that long-ago world will cripple us if we do not have the courage to look at today's economy with a clear eye.
Back then, we were the only economic superpower. American companies had virtually no competition and, since they produced almost entirely in the United States, their workers felt no particular threat from workers abroad. This was the era when `Made in Japan' meant something was cheap--not good, just cheap.
Throughout the 1950's and 1960's productivity was rising rapidly throughout the American economy, so that people could expect over time to work less, but earn more.
Back then, free trade for America meant more markets for America, not competition. We maintained the Bretton Woods rules, the GATT, and other treaty obligations not only to buttress the free world against communism, and not only out of the goodness of our hearts; we enforced a basic level of stability in the world because a stable world meant open markets for us, and we made the products people most wanted to buy.
Back then, large corporations and large unions set the pace for middle-class prosperity. Remember it was Henry Ford, no fan of unions, who created the mass production line to turn out cars cheaply--cheaply enough so that his own workers could buy them. When he finally capitulated to the United Auto Workers, he gave his workers the largest settlement of the Big Three.
In those days, Fortune 500 companies controlled well over 50 percent of our total economy, and employed three-quarters of our manufacturing work force. If the New Deal built the floor for personal security in America, the corporate economy put up the middle-class safety net, with pension plans and health insurance.
In those days, American families lived on one man's paycheck, from one job that lasted with one company for an entire lifetime.
If you were laid off, you were laid off for the duration, and you were called back when business picked up.
No more.
And two key words summarize the difference: globalization and technology. Each one feeds the other. Each one confronts American employers with a choice: Can I beat the competition by making a stand in America with my own workers, or must I beat the competition by going abroad? Will my workers join the ranks of the 70 percent falling behind, or will they join the ranks of the 30 percent--or fewer--who will get ahead?
The dynamics of this are familiar to anybody who works. Technology, particularly computer technology, makes it possible to move production anywhere in the world. Technology makes it possible for formerly large corporations to make do with drastically fewer people at home. Remember those bar-code readers.
Increasingly freer trade amongst nations means that competition comes from low-wage workers in developing countries, or from high-skilled, highly productive workers in the industrialized countries. The choice is a stark one: either a nation must secure more technology and become more productive or it must underbid all others for labor and other costs. Most countries understand that this is a choice they have to make.
I submit to you, Mr. President, that this is a choice which we are not making, and the consequence is that the choice is being made for us--toward low costs, leading to the unprecedented wave of downsizing underway in our economy.
Two weeks ago an American Management Association survey reported that nearly half of the companies polled had reduced their work forces in the last year. A quarter reported that they will do so again in the coming year, some for the second or third time in 5 years, and experience shows that the number of companies that eventually downsize is twice the number that predict they will.
Workers who are downsized in today's environment are not out for the duration. They are out for good, and their ability to climb back into the economy is utterly dependent on the match between their skills and the needs of the small and midsized companies which now represent the pivot point for American economic success. Central to this division is skills: those that have them win, those that do not have them lose.
Workers with high skills can reap the rewards of the new technology, which is higher productivity. Higher productivity is not only the basis of increased pay, it is the ticket of admission to world markets, hence to growth, hence to new jobs and higher pay.
Recently Princeton economist Alan Krueger showed that workers who used computers on the job earned a 10- to 15-percent higher wage rate than otherwise similar workers. On the basis of this study, Microsoft Corp., the software giant, ran advertisements in Time magazine and elsewhere declaring `we make it easier to get a 15-percent raise.'
On the other hand, there is a growing disadvantage to not being well educated and flexibly skilled. Workers with lower skills find that technology either eliminates their jobs or moves them overseas. It is this disadvantage that lower skilled
workers face in the new global, high-technology economy that explains why they are faring increasingly poorly in terms of wages and incomes. It is these lower-skilled workers who are having the rug pulled out from under them. And it is no wonder they are scared by NAFTA .
Now, I do not come to this issue as some latter-day luddite, ready to smash bar code scanners in the supermarket and wall off our borders from foreign imports.
I believe that the change we are witnessing--whether we like it or not--is inevitable. What is not inevitable is our passivity, and our inability to make change work for, instead of against, American workers.
In the past few months I have visited any number of companies in my home State of Massachusetts that have made technology work for them and their workers. Through aggressive R&D, advanced manufacturing technology, and continuous worker training and involvement, they have maintained and often increased manufacturing jobs in Massachusetts, a State where manufacturing is supposedly dead and buried. These include the Bose Corp., a major player in the Japanese hi-fi and automotive parts market, thanks to its constant innovation; and Modicon Corp., which brought jobs back from Asia when it radically upgraded technology and workplace organization. In my State, you simply cannot create new manufacturing jobs with a low-skill, low-wage strategy. You must go the high-technology, high-skill route, and you must export.
The question is, Are we going to learn from the Boses and the Modicons?
Other nations, notably Japan and Germany, have structured their entire economies around the goal of employing their citizens in well-paying jobs. This is the goal toward which government, industry, and individuals work together.
This happened in part because they were poor in natural resources and had small home markets. And so in order to become industrialized nations they were forced to export. At an early stage, therefore, international competition became their obsession. And economic considerations often dominated foreign and security policy. They were not afraid--in part as a result of cultural differences--of an economic model where big business and big government worked together to promote long-term job creation.
But in this country, Mr. President, we are still lacking a strategy that sends out an unmistakable signal to every American that the highest priority of the American Government and American industry is ensuring that Americans have the ability to get good
jobs--maybe not one job for their entire lives, but one or a series of jobs that will support their families for the entirety of their careers.
This strategy needs to address the insecurity that people feel for their economic future and in order to do so it must recognize the centrality of education and training--two priorities on which President Clinton rightly focused during the campaign.
In 1949, we spent 9 percent of our Federal budget on education. We now spend less than 3 percent. An estimated 83 million Americans have inadequate reading skills and the United States is the only major industrialized nation in the world with no formal system or structure to facilitate the school-to-work transition. Federal support for vocational education has declined approximately 30 percent in real dollars over the last decade. Meanwhile, such competitors as Germany spend dramatically more on training the best educated and now the highest-paid workers in the world. American students attend school for 180 days per year while Japanese children go to school for 243 days and German children for 240 days. This means that our children attend school for 25 percent less time each year than their future competitors.
This is unacceptable. There is no question that our priorities have become skewed. The space station will cost us $2 billion this year, while the Federal Government will spend only $630 million on primary and secondary education. Over 80 percent of prison inmates are dropouts, and they each cost us between $15,000 and $30,000 per year to incarcerate. This situation is totally unacceptable.
We should be prepared to use any mechanism necessary to find more money to invest in our one true asset--our people. We can find this money in pork-barrel projects; in entitlement programs; we can reexamine the issue of the gas tax--surely Americans would be willing to pay a few more pennies a gallon to educate our children for the global competition they will face. There are many other places we can look for the resources--if we are serious and committed to the objective.
We need to begin by quickly funneling more money into our education budget. I strongly support Senator Jefford's suggestion that we add money to education spending in increments of 1 percent of the Federal budget until it accounts for 10 percent in the year 2004. I also agree with Senator Simon and Senator Dodd that we must abandon property tax supported education which leads to inequities among school systems.
Next, we need to quickly put in place the School-to-Work Program on which the President and Senator Kennedy have been
working. And we must not be shy about fully funding these, either. This is no place to be penny wise and pound foolish.
We must quickly enact the Worker Adjustment Program that Secretary Reich has been drafting--and I believe that we should attach it to the NAFTA as part of the implementing legislation to ensure that full help is available for all workers who need it. In addition to streamlining our disparate adjustment programs, this plan would make unemployment insurance flexible so that workers could use it as income support while they retrain--a need that did not exist when the UI system was designed to buttress workers who were temporarily laid off. It will also put the Federal Government in the business of smoothing out the labor market's information flows--so that displaced workers can find out where jobs are, what kinds of skills they require, and how they can obtain them.
And I believe, Mr. President, that we should go beyond the administration's current proposals and create an Incumbent Worker Training Program. During the campaign, President Clinton discussed encouraging companies to train their workers and I feel that we must return to that concept. We cannot wait to do this until our companies lose the global competition and our workers are downsized out of their jobs. We must help them retain the jobs they have by ensuring that they are the most technically adept in the world.
But it is not enough, Mr. President, to say `if we train them, the jobs will come.' Because the jobs may not come. A recent 2-year study of the American system of capital investment by researchers at the Harvard Business School raises the question of whether U.S. companies are sufficiently focused on the long-term to be competitive and to create high-wage jobs.
The report points out that leading American firms in many industries are outinvested by their Japanese counterparts; that the R&D portfolios of American firms include a smaller share of long-term projects than those of European and Japanese firms and that American firms invest at a lower rate than both Japanese and German firms in intangible assets--such as human resource development. The report relays the fact that American CEO's believe that their firms have shorter investment horizons than their international competitors. As a result, they sometimes confuse cutting back and downsizing with a solution--restructuring may give a short-term lift to a company's stock but unless the savings are invested in productive assets, it will not help the company compete better with its German rivals over the long run.
This would explain why the Bose Co., which I mentioned a few moments ago, feels the need to remain proudly privately held in order to continue investing in R&D and its workers without
pressure from Wall Street? Surely something needs to be changed if our capital system forces companies to take a short-term view when their international competitors are resolutely focused on the long-term.
In order to encourage U.S. companies to invest in their long-term growth, we must make permanent the R&D tax credit; we must put in place a full capital gains tax cut for long-term investments; we must make available support for the Department of Commerce's Advanced Technology Program as well as its manufacturing extension programs; and we must take the lead in communicating that both the private sector and the public sector should make people the center of any industrial policy.
There is plenty of evidence that the Mexicans have learned the lesson from Germany and Japan that a national strategy focused on creating high-wage jobs is a necessity in the new global economy. An influential Business Week article pointed out months ago that Mexico has no intention of settling for millions of low-wage jobs supporting high-wage jobs in the United States.
President Carlos Salinas' dream is the creation of millions of high-wage jobs in Mexico. As I mentioned earlier, the real thing for us to be wary of, if NAFTA passes, is not that Mexico will welch on the deal, and not even that ti will comply with a vengeance. What must concern us is that we will fall short.
After all, it is President Salinas who declared 6 years ago that he would slay hyperinflation, drastically reduce debt, and liberate job creation in Mexico. That's exactly what he did.
It is our political system which declared that it would eradicate the Federal deficit, and create millions of well-paid jobs to replace those that went abroad in one long `morning for America.' Need I say more?
So, Mr. President, when it comes to trade with Mexico, we have met the enemy, and it is us.
Millions of Americans understand this in their bones. They understand our stake in following the path of high-skill, high-wage jobs, and in electing Bill Clinton last year they expressed their belief that Government must play a role.
But when it comes to NAFTA , Mr. President, a treaty that even proponents concede will create some short-term job loss, the debate has become a game of `who do you trust?'
And the people are not in a trusting mood.
We have yet to see the implementing legislation or to have an inkling of how much money will be found to pay for cleaning up the border or providing training for workers. We have yet to see if we will invest in the American worker before we increase his vulnerability.
With so much of the NAFTA package left to be seen, to, at this time, call the package a resounding success or a resounding failure seems somewhat premature.
We should use NAFTA as the wake-up call to attend to the real agenda of this Nation. We should do what President Clinton called on us to do in his campaign, put people first.
My urgent plea to the President, and to the leaders of my own party is that we go back to the people, back to the same dialog from last year's campaign about putting people first, and that we resolve to enact a clear and effective strategy for ensuring each American the means to find a job paying a livable wage throughout his or her lifetime, no matter how the international economy may buffet us.
I would like to thank the distinguished Senator from North Carolina for permitting me to make this lengthy statement.
I yield the floor.
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