In 1975, New York City was on the brink of bankruptcy. The City did not have the cash to make municipal bond payments and continue to pay for vital services or its public retiree and healthcare benefits. Consequently, New York City was on the verge of defaulting on its municipal bonds. In the face of this reality, New York City pursued three options: seeking aid from the federal government, negotiating a deal with its public unions or filing for bankruptcy. The federal government rebuffed New York City’s request for a bailout. Faced with the option of a municipal bankruptcy, the unions agreed to invest $2.5 billion of their pension funds in municipal bonds, which were used to bail the City out. The unions’ investment put the pensions of thousands of public employees and retirees at risk, but it enabled New York City and the unions to avoid bankruptcy and positioned the City to build a strong, long-term fiscal foundation. New York City avoided bankruptcy because it had the option to file for bankruptcy.
Economy & Budget
When an entrepreneur or a small business owner has a problem, what does he or she do? The answer is simple; they usually roll up their sleeves and handle the problem themselves. With that approach, America's small business owners and entrepreneurs are now rolling up their sleeves and solving America's problems in Congress.
Small business owners are moving to our nation's capital to make a difference. In the 2010 elections, 33 small business owners were elected to Congress from both major parties. In the 2008 elections, 24 incoming members of Congress had some small business experience according to the Small Business Advocate, a monthly newsletter published by the SBA's Office of Advocacy. With the current state of America's economy and the role small businesses play as the economic engine that runs our country, it is small businesses and entrepreneurs that tend to lead our nation out of recessions and perennially lead job creation and growth. According to SBA, small businesses employ over half of all private-sector employees. As more former small business owners and entrepreneurs walk the halls of Congress, their imperative to get things done will be felt, as will their commitment to making decisions that impact Main Street job creation.
When it comes to dealing with China, the United States has experienced nothing short of an identity crisis: from big stick diplomacy, to use of (at times) a bigger carrot, to somewhere in the middle. The twenty-one gun salute slated to greet President Hu Jintao upon his arrival in Washington this week should serve as a wake-up call for U.S. policymakers. Indeed, Paul Revere’s words of warning from 1775 seem apt. China is coming, and as was the case with Great Britain, it’s now up to the U.S. to develop a well thought-out plan.
Considering recent economic events, this is arguably for good reason. As U.S. prospects for growth remain sluggish, China quickly recovered from the global recession and is experiencing meteoric 9.3 percent growth. It recently passed Japan and is now the world’s second largest economy, is the third largest holder of foreign debt reserves, is leading the way in developing trade relationships with emerging markets in Asia, Africa, and Latin America. China is also leading the world in investing in alternative energy and nano-sensory diagnostics, while securing the rare-earth materials necessary to develop innovative technologies of the future.
The election that polarized our country is behind us and a new Congress is back in Washington to address the many challenges facing our nation. While the number of Democrats and Republicans in each chamber has changed, one thing has not: more than 14 million Americans need jobs.
People like Robert Baker, a Milwaukee construction worker who specializes in elevators. He is one of the millions of long-term unemployed workers in America. Despite his specialized skill set, he hasn't been able to find work for more than a year. Robert, a proud man in his sixties, has been collecting unemployment benefits to survive, but would much rather have a permanent job.
Robert’s situation isn’t unique. With an estimated one job for every four unemployed workers, there’s little sign of any relief for our families and communities. Every minute, two more families lose their homes to foreclosure. Every 20 seconds, another American files for bankruptcy. Yesterday, nearly one in four kids in our country went to bed hungry. One in six Americans looked for work and, in just the first week of 2011, the number of Americans filing for unemployment benefits for the first time rose to 445,000.
America can do better.
This holiday season, millions of Americans paid for holiday gifts with a debit card instead of using cash because of the efficiency, convenience and security. However, thanks to the efforts of several large retailers and their lobbying operations, consumers may find all of those things at risk. This week, the Federal Reserve proposed rule changes which, if adopted, would severely limit financial institutions’ ability to maintain debit card systems in the manner consumers expect. These proposals would affect the “interchange” process, or the amount that merchants pay for a secure, smooth-running debit card transaction.
President Obama delivered just the right speech in Tucson. Can he replicate that performance for his State of the Union address on January 25? For the sake of our nation’s economic well-being, he must.
Just as our national psyche needed some healing this week, our nation urgently needs a boost Jan. 25. Some startling deficiencies in our economy have surfaced recently: anemic job creation, a hollowed-out productive base, stagnant wages, and persistent global imbalances.
Over the past few months, there have been encouraging signs that the nation is successfully exiting the economic recession. The spirits of all Americans rise with these hopeful indicators. While we join in the optimism, we must also draw attention to one effect of the recession that is only beginning to emerge – an increase in homelessness.
According to The State of Homelessness in America, a new report released by the National Alliance to End Homelessness, the recession contributed to an increase in homelessness across the country. Sadly, families with children were the group most affected. Between 2008 and 2009, homelessness increased three percent to 656,129. Homelessness among families increased four percent. Nearly two-thirds of states experienced increases in homelessness.
For too long, our government has been fiscally irresponsible and allowed reckless spending that has added three trillion dollars to the national debt in just the two years since Obama took office. In fact, since Democrats took control of Congress in 2007, we’ve seen our debt level increased by 91 percent. These actions have serious consequences. The health of the American economy at risk, and we must work together to put America back on the path to prosperity.
First, we need to make clear that the spending spree is over, and now there is a mess to clean up. We need to significantly reduce spending in the Congress, in order to lower the deficit. Even though revenues are at their highest levels in history, the increase in spending over the years has exceeded the revenue increase. Reining in this spending will help get our nation’s finances under control.
Treasury Secretary Timothy Geithner gave these remarks Wednesday morning.
Next week, President Obama will host President Hu Jintao at the White House.
This State Visit takes place at a time of important transition for the world economy, the Chinese economy, and the U.S. economy.
The global economy is emerging from the financial crisis, but that crisis has left lasting scars that will take years to repair. And it has left a growing gap between the growth trajectories of the large developed economies and the rapidly growing emerging economies.
Critics claim that Republicans haven’t been specific enough in our pledge to cut government spending. That is simply not true. The very first day of the new Congress, I reintroduced two bills to make specific cuts to our out-of-control federal spending. One bill, H.R. 68, would end all federal subsidies for the Corporation for Public Broadcasting (CPB), the parent organization of National Public Radio (NPR). My second bill, H.R. 69 more narrowly restricts federal tax dollars from going just to NPR. Both are examples of specific cuts Congress can make now to keep our unsustainable federal debt of more than $14 trillion from getting worse.