On February 1 the Center for American Progress hosted an event with Sen. Tom Harkin (D-IA), chairman of the Health, Labor, Education, & Pensions Committee, in which he talked about what he’s learned from the HELP Committee hearings and events on the decline of the middle class. He also outlined his Rebuild America Act, which puts the middle class first and, through sweeping policy changes, will enable it to thrive again.
In her introductory remarks CAP President Neera Tanden said, “We believe that a strong middle class and a strategy of shared growth is central to better and stronger and more long-lasting growth in our economy. And that will be the central argument that we make in our economic policy over the next year, and one that we are excited to have Sen. Harkin discuss today.”
In his speech, Sen. Harkin talked about one of his goals for his committee: “to rebuild and strengthen and preserve the middle class itself.” He discussed the importance of job creation, saying, “The single most important thing we can do to restore the middle class now is to create good jobs, reduce the unemployment rate, get this economy moving again.”
Sen. Harkin then discussed the Rebuild America Act. He touched on six different areas on which the act focuses: infrastructure and manufacturing; education and job training; the empowerment of workers; the security of retirement benefits; the strengthening of families; and the ability to finance the act itself. To finance the Rebuild America Act, he mentioned putting a three-cent tax on every $100 traded on Wall Street, which would add up to $350 billion in 10 years.
To close, Sen. Harkin said, “There could be no sustainable economic recovery and no sustained return to fiscal balance without the recovery and enhancement of the middle class. The middle class is the backbone of this country. It’s time for Washington to have the backbone not only to defend it, but to rebuild it.”
A panel discussion followed Sen. Harkin’s speech. Moderated by Michael Ettlinger, CAP’s Vice President for Economic Policy, the panel included Heather Boushey, CAP Senior Economist; Isabel Sawhill, senior fellow of economic studies at the Brookings Institution; and John Schmitt, senior economist at the Center for Economic and Policy Research.
Boushey cited the senator’s legislation, agreeing that “having a strong middle class is not in opposition to a strong economy, but that the two go hand in hand. … We’re not going to have a strong economy unless we have a strong middle class.”
Sawhill then discussed the “almost unprecedented level of inequality in the U.S. right now,” saying that any money earned through economic growth is being enjoyed by those in “that famous top 1 percent.”
She said, “When most of the income growth in the economy is going to the people at the very top, and those people save their money and don’t spend it, and the middle class has wages or incomes that are flat or even declining recently, then you don’t have the purchasing power there to keep businesses going, and you don’t therefore have them hiring workers.”
She continued, “I think that when you have a lot of inequality, it means that the rungs on the ladder of opportunity are getting further and further apart.” This, she said, is making it “harder and harder to climb into the middle class.”
Schmitt then looked at how the minimum wage affects mobility. He said that while around 250 hours at a minimum-wage job earned someone enough to pay a year’s worth of tuition at a four-year college in 1979, one year of school today requires around 1,000 hours of minimum-wage work.
Overall, the panelists agreed that strengthening the middle class is essential to strengthening America as a whole, and that Sen. Harkin’s proposed legislation is a step in the right direction.
Senator Tom Harkin (D-IA)
Neera Tanden, President, Center for American Progress
Heather Boushey, Senior Economist, Center for American Progress
Isabel Sawhill, Senior Fellow of Economic Studies, Brookings Institution
John Schmitt, Senior Economist, Center for Economic and Policy Research
Michael Ettlinger, Vice President for Economic Policy, Center for American Progress
Coffee will be served at 8:30 a.m.
Coffee will be served at 8:30 a.m.