MR. REED: Mr. President, across the nation, millions of Americans are struggling to make ends meet as our economy has slowed dramatically. In December, I spoke on this floor about how President Bush has presided over a period of divided prosperity in the United States, where a privileged few have done remarkably well but the rest of us have been trying to get by. For most working people, the trademark of the Bush administration and their economy is wage stagnation. Indeed, in my home state, real median wages have not increased since 2000.
Rhode Islanders are coping not only with flat wages but increasing prices in critical commodities they must consume. Energy, education, and health care have all gone up. In January, in Rhode Island, gas was $3.11 cents a gallon; heating oil costs in the Northeast are projected to be at least $2,000 this year, which is about a $400 increase from last year. These price increases would be difficult to manage even in good times, but again paychecks for most working families have not kept up. In fact, they have been flat.
With prices accelerating, wages flat, and a huge gap in the capacity of middle-income working Americans to keep up and try to get ahead, the subprime crisis is real. This housing crisis is having huge and devastating effects. Two years ago, most of our constituents, the vast majority of them, were sitting around the table thinking: Well, when my daughter is ready to go to college in 2008, we will go ahead and borrow from the house to provide the extra income she will need to go ahead and make it through college. A lot of those families now are recognizing they can't do that. They are more concerned about a health care incident, because, unlike a few months ago, there is no reservoir in the value of their house to cushion the blow of unexpected expenses.
So this housing crisis, together with this wage stagnation, together with increased prices for energy and health care and education, and so many other things, is putting middle-class Americans in a vise and squeezing them.
We have to do much better. The Joint Economic Committee and others have estimated some of the costs already in terms of this mortgage-related foreclosure crisis. In my home state, they think $670 million will be lost to the family incomes of Rhode Island from 2007 through the end of 2009.
These economic conditions are being felt across the country. They are not localized warnings. The weakness in housing has spread to all parts of our nation and across our economy. Growth in the fourth quarter of last year was .6 percent compared to a 4.9-percent increase in the third quarter.
We are slowing down, moving into a recession. Yesterday the market, Wall Street, went down over 300 points, largely due to a very weak report of a survey on the service sector. We have known for many months now that the manufacturing economy was having difficult times, but the service sector was holding up a bit.
Yesterday, there was a chilling indication the service sector has also contracted. The market took the news very badly. The market also took the news very badly a few days ago, when we showed a loss of 17,000 jobs, the first time we have actually lost jobs in more than 4 years.
Again, the administration's performance in terms of creating jobs has been less than stellar, barely keeping up with the new entrants into the labor market on a monthly basis. Now, for the first time in more than 4 years, we have lost jobs.
Furthermore, the average length of unemployment is increasing from 16.6 weeks in December to 17.5 weeks in January. More people are losing jobs and it is harder to find a new job.
Yesterday, the Federal Reserve released a survey of senior bank loan officers who indicated that the credit crunch is spreading from consumer loans into the commercial and industrial loan sectors and that foreign banks are tightening their lending terms, in fact, even more so than some U.S. financial institutions.
Taken together, it clearly shows Wall Street is going into what one analyst called a recession panic mode and many economists are seeing signs that weaknesses in our economy are spreading internationally. In fact, one investment banker today, in a speech reported on the Internet, suggested that in the credit markets fear has overtaken greed, creating a situation of near panic in many respects.
So there is no doubt we have to act quickly on this stimulus package, not only to inject needed spending power into the economy to try to revive our consumer sector but also to signal to the American public we will act decisively to try to moderate, if not head off, the effects of a pending recession.
We have, I think, a lot to be grateful for in the work of Senator Baucus and Majority Leader Reid and Senator Grassley in terms of taking a House proposal and increasing it with important provisions, such as expanding the eligibility criteria for income tax rebates, including 20 million seniors and 250,000 disabled veterans.
The package we are considering also includes $10 billion for a temporary extension of unemployment insurance and $1 billion of emergency funding for the Low-Income Home Energy Assistance Program, the LIHEAP program. Both of these initiatives are targeted to families, seniors and low-income households, and they would help jump-start the economy.
Economists agree these programs among others are a good use of taxpayer money. Last week before the Budget Committee, Alan Blinder from Princeton University and Mark Zandi of Moody's Economy.com both recommended that unemployment insurance and LIHEAP be included in the stimulus package. They also included other elements, but at least these elements are part of the list they feel will provide a bang for the bucks we are going to invest in the economy.
They meet the three T test--timely, targeted, and temporary.
Now, Friday's disappointing jobs report showed that the ranks of the unemployed are unfortunately growing. Nonfarm payrolls actually decreased, as I said, by 17,000 workers last month. In fact, even President Bush acknowledged "troubling signs in the economy."
So given these facts, I was surprised to hear Treasury Secretary Paulson say yesterday, in testimony before the Finance Committee, that he does not support including unemployment benefits in the stimulus package because national unemployment is only 4.9 percent, which is not historically high.
What we want to do is take preemptive action to prevent the situation from further deterioration. We want to move now so we do not see unemployment rates climb, so we do not see the duration of unemployment continue to grow, so that we give Americans a real chance to get back to work; and if they are not back to work, then at least we provide something to sustain them in these difficult moments.
In Rhode Island, my home state, we have reached a very high unemployment rate, 5.5 percent. Many other States are creeping up there too. We should, I think, move quickly, move decisively and support the Senate Finance package.
We are also beginning to see that unemployment insurance provides a very good return on the investment. Mark Zandi, the economist I mentioned before, indicated that for every dollar the government spends on unemployment insurance, it adds $1.64 to the national GDP. In other words, it leverages the investments we are making.
So contrary to what some have talked about as excessive spending, this is exactly the targeted, temporary, timely spending that will accelerate, not decelerate, the economy.
The stimulative effects of unemployment insurance will get more money into the hands of people who will spend it right away in their local communities, which is generally the whole purpose of our stimulus approach.
Moreover, providing these benefits to these individuals will give them not just some dollars but a sense, I hope, of hope, that their government is responding to their concerns and that we will respond in the future, if necessary.
Making the long-term unemployed eligible for a temporary extension of an additional 13 weeks at this time also makes good sense and is the right thing to do. Two weeks ago, I wrote a letter to the majority and Republican leaders asking that they include unemployment insurance in the stimulus package, and 26 other Senators joined me.
Senators Durbin and Kennedy have long led the fight on this issue. I commend them for their efforts. I hope unemployment insurance is part of the final package we are able to vote out of this body.
Now, there is another aspect of the package we will consider later today, I hope; that is the LIHEAP support. We have seen a huge increase in energy costs. On average, Americans are spending about 11 percent more to heat their homes this winter. For Rhode Islanders who rely on heating oil, that is about 39 percent higher than last year in terms of their heating oil expenses.
We know that the timely, targeted, and temporary aspects of stimulus have to be met. LIHEAP will do this. It is timely because it will be delivered very quickly. We have a delivery mechanism in place. It is also something that will fund families, low-income families, who desperately need this money.
I do not have to belabor the point that today, around the kitchen table, people are figuring things out. They are thinking, first of all, they probably need to take off sending their first born or their second or third child to the expensive school; that may be off the table for a few years. But they are also talking very basically about which bills to pay this month? Do we pay our mortgage? Do we pay the energy bill? Do we pay the credit cards which we are using to buy food at the supermarket these days?
I mean, these are the debates American families are having. They are not talking in terms that we are here, such as what is the best macroeconomic policy or how we can delay these expenditures, they are talking in terms of a real crisis in the family. We have to respond.
One way we can respond quite clearly is with this LIHEAP money because that will go to one of their major concerns: How do we keep the heat on in the Northeast for the next several weeks and month; and in the Southwest, in anticipation of the grueling temperatures down there in the summertime, too. This additional money will provide an advance payment on cooling problems in the Southeast and the South, parts of the country that will soon encounter warm temperatures, not cold temperatures, which cause their energy costs to rise.
Again, these are the households who need LIHEAP. And so we know we have a program that works in LIHEAP. If we can deliver additional resources, it will get to the families who need it, particularly seniors, it will get out immediately. It will add to the stimulus effect because as the economists--both Mr. Blinder and Mr. Zandi--pointed out, it will leverage our investment in the economy.
So with the escalating costs for energy I would urge my colleagues that we go ahead and accept this amendment, particularly the funds for LIHEAP. I urge us all to support the Senate Finance Committee package, a package that provides for greater coverage to seniors and disabled American veterans and also provides unemployment insurance for those who desperately need it and heating assistance for, again, the families who desperately need it.
I hope that today, not only good sense, good economic sense, but a sense of our obligations to the most vulnerable in this country will persuade us to support this package strongly.