Reed Warns Federal Government Shutdown Could Hurt RI & U.S. Economy
Reed on Senate floor: “I am here to address the looming fiscal deadlines, and, more importantly, how to keep our economy growing and increasing jobs. That is why I believe we were sent here, not to engage in some of these procedural arguments, not to challenge the basic presumptions and the history of our country – which show that, with few exceptions, we have always managed to keep our government open, and with virtually no exceptions we have paid our bills. Yet today we are consumed by these debates when most every American in every corner of this country is asking us: What about our jobs? What about growth? What about the future for our children? So we have to refocus on growing our economy and investing in our country. A big part of that is to fund our government and to pay our debts.”
“Denying health insurance to 30 million Americans doesn’t help the economy and it doesn’t create jobs. It will do quite the opposite -- it will set us back.”
“We have to have an economy that works and a government that helps that economy work. We have to be efficient and effective. But we simply can't leave to the mercies of the market and fate what happens in our economy. We have to take purposeful action. That means we have to have a government that is prepared and able and has the resources to act.”
“If Republicans force a shutdown of the government, it will have extraordinarily adverse consequences to thousands of Rhode Island workers, my constituents, and people all across this country. It would hurt our economic growth.”
WASHINGTON, DC – U.S. Senator Jack Reed today spoke on the Senate floor regarding the economic impact of a potential federal government shutdown. Below is a copy of his remarks:
MR. REED: Mr. President, I will begin where Senator Pryor left off, and that is to commend our Chairwoman for her extraordinary leadership -- not only on behalf of her constituents but for the Nation. These are very difficult times, and we all feel much more confident because of her leadership, because of her commitment, because of her incredible and energetic advocacy for commonsense solutions, in terms of not just her work on Appropriations but in terms of the way we conduct ourselves in the Senate. We are fortunate to have her leadership.
Along with many of my colleagues, I am here to address the looming fiscal deadlines, and, more importantly, how to keep our economy growing and increasing jobs. That is why I believe we were sent here, not to engage in some of these procedural arguments, not to challenge the basic presumptions and the history of our country – which show that, with few exceptions, we have always managed to keep our government open, and with virtually no exceptions we have paid our bills. Yet today we are consumed by these debates when most every American in every corner of this country is asking us: What about our jobs? What about growth? What about the future for our children? So we have to refocus on growing our economy and investing in our country. A big part of that is to fund our government and to pay our debts.
Let me start by pointing out that denying health insurance to 30 million Americans doesn’t help the economy and it doesn’t create jobs. It will do quite the opposite -- it will set us back. We had substantial debate and we passed legislation; the Supreme Court of the United States declared the legislation constitutional, and we are going forward now, as most Americans want us to do, to deploy it, to fix it where it needs to be fixed, but not to use it as a political wedge for purely political means. We are for the first time about to achieve the dream of many people in many decades -- that every American will have affordable access to health care; and, by the way, to do what other nations have been able to do and reduce the cost of health care so it’s affordable it, not just today but in the generations ahead. I think the idea that you would threaten a government shutdown to try to defeat this objective is unfortunate and inappropriate.
We are facing two fiscal deadlines, and they can be reduced to very simple questions: Do we fund the government? Do we pay the Nation's bills? My answer, and the answer of the vast majority of constituents, is: Yes, we do. We have to.
We understand we have to have an economy that works and a government that helps that economy work. We have to be efficient and effective. But we simply can't leave to the mercies of the market and fate what happens in our economy. We have to take purposeful action. That means we have to have a government that is prepared and able and has the resources to act.
If Republicans force a shutdown of the government, it will have extraordinarily adverse consequences to thousands of Rhode Island workers, my constituents, and people all across this country. It would hurt our economic growth. Rather than doing this, we should be working to expand our growth. We should be doing more to get people back to work.
But, instead, we have heard Republicans from both Chambers talking about another round of brinkmanship. We saw this in August 2011, and the results there were palpable. It set back our economy. It suppressed job creation. It took what looked like growing economic momentum and it deflated that momentum. Our credit rating was downgraded for the first time in anyone's recollection and perhaps in history. It was a shortsighted political game that hurt people all across this country. Yet Republicans are here again, apparently prepared to play the game.
People do not want us to gamble with their futures, their children's futures. They want us to be helping them, both sides investing in those futures in a positive and collaborative way.
But we are back arguing over whether to pay existing bills. Will we pay our bills by voting to raise the debt ceiling? Will we keep the government open and working so we can help people who need help, so we continue to research issues, so we continue to innovate, so we continue to build, literally, the country? We believe we must do this.
This March, Senate Democrats passed a budget that set spending levels, responsibly replaced the sequester, reduced the deficit, and included a $100 billion targeted jobs and infrastructure package that would start creating new jobs quickly, begin repairing the worst of our crumbling roads and bridges, and help train our workers to fill 21st century jobs.
The Republican-controlled House also passed a budget. It is in stark contrast to ours, but they have a budget too. The basic constitutional approach, the basic procedural approach is to bring those two budgets to conference, to iron out the differences, and to have a plan to go forward to fund the government.
But we cannot do that because repeatedly Republicans here have objected to going to conference. This is ironic since the refrain we heard several years ago from Republicans was “the Senate Democrats don't have a budget, they don't have a budget, et cetera.” This of course was a political refrain; it ignored the fact that in the Budget Control Act of 2011 we actually set budget limits and effectively had a budget. But now the Republican refrain is sort of, “never mind, they have a budget,” and Senate Republicans object to conferencing the Senate and House budgets because they do not want the Congress to have a budget.
We need to pass a budget. We need to responsibly deal with sequestration. We have to create jobs and strengthen the middle class.
Last Friday, the House Republicans played their latest card in this gambit, which they have extended over several years, to achieve their political goals by holding the economy hostage. This time they want to defund health care reform as a condition of keeping the government open -- indeed, a tactic that I believe even some Republicans in this body have rejected, and I think sensibly rejected.
There is no doubt if the House position prevails it will hurt our economy, it will reduce revenue, it will waste taxpayers' dollars. According to the Congressional Budget Office, the shutdowns of the mid-1990s reduced GDP by half a percent. Those shutdowns during the Clinton administration, again prompted by a Republican political agenda in the House, not an economic agenda, cost Americans jobs and growth. It is estimated every week the government shuts down it will cost the economy about $30 billion. This is a very expensive political gambit -- something that should be rejected on its face but also rejected because of the harm, the demonstrable economic harm, it will do to the country. If you do care about jobs and the economy, the last thing you want to do is shut down the government.
First of all, it eliminates directly a lot of people who work for the Federal Government-- who pay taxes, who provide critical services. The secondary effect is they cannot do their job so economic activity stalls. Then the tertiary effect is that the local vendors in the community who rely on government contracts lose their business. It is a downward spiral. Everyone here, particularly my colleagues, the chair men and women of the appropriations subcommittees, recognize this.
Senator Pryor was articulate about some of the effects on the agricultural sector. I have the privilege of chairing the Interior Appropriations subcommittee. A shutdown would be very disruptive. For example, lease sales and permits for oil, gas and coal and other minerals on Federal lands would be stopped. Processing onshore oil and gas drilling applications would be stopped. Processing applications for permits to drill offshore will stop. Review and approval of offshore exploration and development plans will stop. What will be the effect? This will delay revenue, obviously, both to the Federal Government and for the private sector, as those private entrepreneurs who are out there investing their own capital to try to develop natural resources and provide them to the marketplace will lose out too.
Another example, public access to recreation on federal lands will virtually cease. The national parks, national monuments, and national wildlife refuges will be closed to visitors. Campgrounds, lodging, visitor centers, marinas, food services, and other concessions will be closed, with thousands of people without jobs. Businesses that operate in the parks or as outdoor outfitters will not be able to access permitted areas.
If you go to any national park there is typically around it a group of small businessmen and women who provide backpacking gear, who provide rental of rafts and boats and outdoor equipment. What happens when the park closes? Their business goes to zero, practically. That is a consequence that is predictable, in fact, inevitable in the event of a shutdown.
There is another aspect to this government shutdown too. While many Federal employees will be furloughed -- again directly losing their pay, not contributing their tax dollars to the national economy -- there are some who will not be. In the Interior Department alone, thousands of Federal workers will continue their jobs in order to protect life and property, but they will not be paid. This will include the Park Police. They were one of the first responders a few days go to the Navy Yard shootings. Typical of their ethic of service and dedication to the country, they risked their lives, rushed to that place to try to protect fellow Americans. Those men and women of the Park Police will still stand guard, but they will not be paid.
It also includes park rangers who provide valuable safety. It would include tribal law enforcement officers for our tribal police departments, tribal child protection services, and the oil and gas inspectors who have to go out and make sure existing operations are being conducted in a technically appropriate way.
Turning to the EPA, Administrator Gina McCarthy has said, in her words: "EPA effectively shuts down with only a core group of individuals who are there in the event of a significant emergency."
EPA is planning to furlough approximately 95 percent of its total workforce. Staff will not be reviewing air, water, and hazardous waste permit applications or writing such permits. This will slow construction of new facilities and major improvements to existing ones, impacting jobs and impacting industry's overall willingness to plan investments.
This could shrink construction in the United States, it could halt major construction projects, because you can’t just take out the permitting process, or nullify it; these projects cannot go forward legally without permits, permits from EPA, permits from local regulators. We could have a huge construction contraction. We will have projects that have been planned, that are going forward, that will be put on hold, and it will ripple through the economy.
EPA, for example, also will stop certifying that manufacturers are complying with all vehicle emission standards and without EPA certification, automakers will have a difficult time selling products in the United States.
One of the great examples of what the President's leadership has done, the revitalization of the American automobile industry, could be jeopardized simply because they cannot have their vehicles certified by the EPA, which has basically closed.
A shutdown compounds the hidden costs of the sequester. Sequestration is an inefficient and blunt instrument. It forces the Agency to make drastic decisions that frustrate that mission, that do not allow them to prioritize their work, and it frustrates our work here and throughout the United States. It will complicate and compound our life going forward.
We are already feeling -- put aside for the moment a potential government shutdown -- the effects of the pending sequestration. We are seeing forced furloughs up in Rhode Island at the Newport Navy Base and other facilities and we are seeing the ripple effect of that. The local businesses are seeing demand go down, revenues go down. Their financial stability is being threatened. Rhode Islanders who have been laid off in private enterprises, through no fault of their own, are seeing their unemployment insurance cut by the sequester already. The average weekly benefit of $377 is being cut by $46. The Rhode Island Department of Labor and Training estimates 6,000 to 7000 Rhode Islanders are being affected, taking $1.4 million per month directly out of our economy. Our economy is at 9.1 percent unemployment. This is something that is causing pain and hardship to families throughout my State. The sequester is cutting back on the very modest benefits that they might be receiving after losing employment.
Head Start is an extraordinarily valuable program that serves more than 2,400 children in my State. For fiscal year 2013, the sequestration has reduced funding by $1.3 million, which is a big number when it comes to the smallest state in the Union. To manage these sequestration cuts, staff have been laid off, transportation has been reduced, as have other support services. Even with those savings, 370 slots -- children, don't call them slots -- children will not gain access to Head Start. That means in many cases their parents cannot continue to work because they cannot leave their child alone, and the problem becomes more and more complicated. These problems have profound implications and they reach very far across the spectrum.
Then there is one other point I wish to make. Some people are saying sequestration is bad, but we just have to deal with the defense aspects of it because that is the most important thing –that these other programs, they can go away. Norm Augustine is one of the premier leaders in the defense industry. He is former chairman of Lockheed Martin, former Secretary of the Army. He served on so many different boards as one of the great public servants as well as one of the great industrial leaders -- National Academy of Engineering, Defense Science Board, American Institute of Aeronautics and Astronautics. In his speech recently, Mr. Augustine said that much of the non-defense spending people are dismissing as unimportant is more critical to our national security or as critical as some of the defense programs. He talked about how today's youngest generation will be the first in history to be less well educated than their parents, if trends continue.
They are likely to be less healthy, particularly if we do not continue to support the health care improvements of the Affordable Care Act. One of the startling discoveries is that the military, according to Mr. Augustine, is claiming that 70 percent of today's young people are ineligible for military service because of mental, physical, and moral shortcomings.
The mental and physical shortcomings are a function of two things -- education and health care. Republicans are proposing to say: Let’s cut them. Let’s defund the Affordable Care Act. Who will be the beneficiaries of the Affordable Care Act and better Head Start and better education? Probably those 70 percent of the young people who cannot qualify to be recruits in the Army. So if you think we have a problem of national defense, we do have a problem of defense, but it is not simply solved by buying more platforms, more ships, more planes; it is by having a generation of Americans who can stand and serve.
I could go on, but I simply want to say we are in a situation where we have to basically do what we have always done -stood and said: We are going to keep the government moving. We are going to make choices about priorities, but we are going to keep our government open. We will debate those choices and we will debate those priorities and we will come to a conclusion and we will move forward and we are going to pay the debts we already accumulated.
The American people should understand this is not like an initial offer of a debt security.
We are not going out there and saying: Listen, let us borrow some more money so we can spend this new money. We are just trying to pay for programs and appropriations that have been approved by Congress, both Republicans and Democrats in both the House and the Senate. These are accumulated debt. Many of the debts were accumulated in the previous administration while we were fighting two wars.
We are not -- and we shouldn't -- turn our back virtually for the first time in our history on what we have voted previously to spend. Indeed, if we do that, it will create chaos in the economic markets. It will create chaos like we have never seen before. The international markets are so fragile that we dare not risk this.
With that, I yield the floor.