The Recovery Act Blog

Fiscal Responsibility Summit Report

We welcome OMB Director Peter Orszag, who has agreed to lend his expertise for a post discussing the new Fiscal Responsibility Summit Report.  Read Director Orszag regularly at his own blog at http://www.omb.gov. 

Today, the Administration is releasing the Fiscal Responsibility Summit Report (pdf)that the President announced during the final session of the Summit on February 23.

The Summit was convened so that the President could solicit ideas and discuss solutions to our long-term fiscal imbalance with a broad array of national leaders—from both political parties, from in and out of government, and from Washington, DC and the country as a whole. The President and the Administration are committed to seeking out the best ideas, wherever they may be found, and the Fiscal Responsibility Summit was an important early step in this vital effort.

The Report offers a summary of the Summit’s events, which encapsulates the comments and insights contributed by the full array of Summit participants.

As I have stated elsewhere, our nation is currently being forced to grapple with a pair of trillion-dollar deficits. One is the trillion-dollar deficit between what the economy is producing each year and what it could produce. The other is the trillion-dollar budget deficits that this Administration is inheriting.

The first deficit, the trillion-dollar income gap this year, is an urgent crisis. The longer it persists, the more jobs that are lost, the more income that households lose, and the more businesses that are closed. The Recovery Act that was enacted last month is intended to address that crisis.

The second deficit, the budget deficit, may be somewhat less urgent, but it's no less important. Over the medium to long term, the nation is on an unsustainable fiscal course, and to be responsible, we must begin the process of fiscal reform now.

That's why the President convened the Fiscal Responsibility Summit, because we can no longer let the urgent get in the way of the important. In charting a new fiscal course, we need to be clear in diagnosing the problem. The single most important thing we can do to put this nation back on a sustainable long-term fiscal course is to slow the growth rate of health care costs.

So, as I stated during my remarks at the Summit, let me be very clear: Health care reform is entitlement reform. The path to fiscal responsibility must run directly through health care.

This is part of the reason why the President had said, time and again, that he is committed to reforming the health system this year. And at the Summit, there was consensus on this point across a range of voices. From Senator Alexander and Douglas Holtz-Eakin on one side of the aisle, to Senator Baucus and Senator Dodd and Representative Waxman on the other, all agreed to try to tackle health care this year.

With the President’s leadership, and with the support of a diverse set of voices, we can reform health care this year, start to bend the curve on long-term costs, and get our economy back on a path of long-term fiscal sustainability.

Task Force Meeting 2: A New Perspective on the Middle Class

The second meeting of the Middle Class Task Force, dealing with the Recovery Act and the middle class, concluded this afternoon. The staff report (pdf) issued as the meeting was set to begin is an insightful document, explaining how over the past decade, and to degree the last three decades, media family income has become decoupled from productivity in the broad economy. The report then goes on to explain how the Recovery Act goes beyond simply providing a generic stimulus to the economy, and instead provides countless avenues by which to correct that underlying disconnect. The Recovery Act is primarily focused on providing a foundation for the long-term health of the middle class and providing a structure for the middle class to be a full stakeholder in the economy’s success again. The report concludes:

Conclusion

There are, of course, many other ways that ARRA helps to offset the economic stress that so many families are experiencing today. Some of these are hard to quantify. For example, the expansion of broadband technology into areas that currently lack internet access could have many positive benefits, ranging from greater access to information and entertainment to the ability to job hunt across greater areas. Folks who take advantage of ARRA’s weatherization subsidies to better insulate their homes could save hundreds of dollars per year on energy costs. Someone who loses his or her job and at the same time loses his or her health insurance coverage can benefit from a 65% subsidy to COBRA, a program that allows former employees to keep their health coverage for a period of time after they are laid off.  Thanks to the ARRA expansion of Trade Adjustment Assistance, a service worker laid off due to trade competition will soon receive help that was previously reserved for manufacturing workers.10 And state fiscal relief is already helping to prevent teachers from being laid off in public schools, a benefit that means a lot to families with kids in these classrooms.

In other words, there are many ways this comprehensive legislation will help middle-class families as they struggle to deal with a period of great economic turmoil. Yet the President and Vice President recognize that helping families make it through these hard times is just one part of their agenda for lifting up the middle class. They also are acutely aware of the disconnect between growth and middle-class incomes that persisted even in good times. They know, therefore, that an economic recovery is necessary, but not wholly sufficient to lift the fortunes of the middle class and to correct the economic imbalances that held them back in recent years.

In this regard, future meetings of the Middle Class Taskforce will tackle those policy matters that taskforce members believe will help create the policy "glue" to reconnect growth and middle-class prosperity. In April, for example, we plan to tackle an issue of pressing concern to so many middle-income families with children: college affordability.
 

(Vice President Joe Biden answers a question at a Middle Class Task Force Town Hall Meeting at New Flyer of America Bus Company, in St. Cloud, Minnesota, Thursday, March 11, 2009.  Also in attendance were Secretaries Shaun Donovan, Arne Duncan, Ray LaHood, Tom Vilsack, and Senator Amy Klobuchar.  Official White House Photo by David Lienemann)

Here is some of what the press reported out of today’s meeting, which happened at the New Flyer of America Co. in Minnesota, a leader in transit innovation and low-emission, alternative fueled vehicles:

St. Cloud Times:

Vice President Joe Biden and four members of President Barack Obama’s cabinet brought their best sales pitch for rebuilding America’s middle class to St. Cloud today.

"The goal is basic," Biden told a crowd of more than 400 gathered at a town hall forum inside the New Flyer of America bus assembly plant. "Getting the vast majority of people feeling enough confidence to say to their children, ‘Work hard, play by the rules, love your country and look out for others, and there’s nothing you can’t do. I’m absolutely positive we can restore that."

Biden and U.S. Sen. Amy Klobuchar, D-Minn, along with Transportation Secretary Ray LaHood, Education Secretary Arne Duncan, Housing and Urban Development Secretary Shaun Donovan and Agriculture Secretary Tom Vilsack, flew into St. Cloud Regional Airport this morning, before heading to the forum.

KSAX-TV, Minnesota:

A full house was on hand for the Vice President's town-hall style meeting in St. Cloud. 

The focus of the meeting today was the ways the middle-class can benefit from the $787 billion stimulus measure President Obama signed last month. 

Local residents had a chance to speak directly to the Vice President and other officials. 

The session was held at New Flyer of America Bus Company, which produces low-emission, alternative fuel vehicles. 

More than 90 people were hired there last year. 

It's 650 employees are working to fill a two-year backlog of orders. 

Star Tribune:

Biden also said the stimulus will do more than create temporary, make-work jobs. "Built into the Recovery Act are jobs that will be maintained. It will lay the foundation for a new economy, an economy for the 21st century."

"We'll measure our success, whether it's four years or eight years, by one thing: If we can raise the standard of living for middle-class people."

The White House has described New Flyer of America as "a leader in transit innovation and low-emission, alternative fueled vehicles."

Biden praised the company today and pointed to the fact that $8 billion will be available to local governments to buy new mass transit vehicles.

Not incidentally, New Flyer also is adding jobs at the plant at a time when most of the nation's manufacturers are furiously shedding them.

Associated Press:

"We'll measure our success in these four or eight years based on one thing: whether or not we've been able to raise the standard of living for middle-class people," Biden said. "We've got to get this nation growing again."

The forum at New Flyer of America Inc. was the second meeting of the Middle Class Task Force, a Biden-led group of Cabinet members and top administration officials. Sen. Amy Klobuchar, D-Minn., and the secretaries of Agriculture, Housing and Urban Development, Transportation and Education joined Biden on a stage surrounded by new electric hybrid buses manufactured at the plant.

After giving an overview of programs that will get a boost from the economic stimulus and explaining how the middle class would benefit, Biden and the others fielded questions from an audience that included members of the public, students and teachers from local colleges, transit officials and New Flyer employees.

Joyce Helens, president of St. Cloud Technical College, told Biden and the others that colleges are facing a funding crisis, and she asked what the federal government could do to help make sure colleges are still able to train workers.

Biden said billions in financial aid will get more students in college and keep them there to finish their degrees. That potential boost in enrollment could help offset budget cuts while training workers for good-paying jobs, he said.