MEDIA ADVISORY:

AS INVESTMENT BY FOREIGN GOVERNMENTS IN THE U.S. INCREASES, SCHUMER CONVENES FIRST 2008 CONGRESSIONAL HEARING ON SOVEREIGN WEALTH FUNDS

Joint Economic Committee to Examine How These Foreign Investments May Affect U.S. Economic and National Security

Amid Credit Crunch and Mortgage Mess, U.S. Institutions Turning to $2 Trillion in Assets Held by Sovereign Wealth Funds for Economic Boost


Washington, D.C. – U.S. Senator Charles E. Schumer (D-NY), will convene the Joint Economic Committee (JEC) to examine increased investment by foreign-government controlled funds, known as sovereign wealth funds. The hearing entitled, “Do Sovereign Wealth Funds Make the U.S. Economy Stronger or Pose National Security Risks?” will be held Wednesday, February 13, 2008 at 2:00pm in Room 106 of the Dirksen Senate Office Building. A top Treasury Department official and experts on sovereign wealth investments will offer their views on the benefits and risks associated with investment in the United States by these funds. Schumer will also ask witnesses for their best recommendations to ensure U.S. economic and national security.

WHAT: Joint Economic Committee Hearing on “Do Sovereign Wealth Funds Make the U.S. Economy Stronger or Pose National Security Risks?”

WHO: David McCormick, Under Secretary for International Affairs, U.S. Department of Treasury
Ambassador Stuart Eizenstat, Partner, Covington and Burling; Former Deputy Secretary of Treasury and Ambassador to the European Union
Douglas Rediker, Co Director, Global Strategic Financial Initiative at the New America Foundation

WHEN: 2:00pm, Wednesday, February 13, 2008

WHERE: Room 106, Dirksen Senate Office Building


The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

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JOINT ECONOMIC COMMITTEE TO HOLD FIRST 2008 CONGRESSIONAL HEARING ON NEW JOBS REPORT ON DAY OF ITS RELEASE
 
With a Looming Recession, JEC to Address New Jobs Report from Bureau of Labor Statistics and Assess Economic Impact

Schumer to Welcome Newly-Confirmed BLS Commissioner Keith Hall to First Congressional Jobs Hearing

Washington, D.C.U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee (JEC), will hold a hearing on the newly released Bureau of Labor Statistics’ (BLS) monthly employment figures with Commissioner Keith Hall on Friday, February 1, 2008 at 9:30 am in the Dirksen Senate Office Building, Room 106. The hearing, entitled “The Employment Situation in January 2008 will address the new jobs report and previously weak jobs reports in light of a potential recession. The hearing will also address chronically-low job creation during this administration and examine revisions to payroll figures for the past several years to be made that morning. With a recession looming and the unemployment rolls growing, Dr. Hall is expected to provide insight on labor market trends and conditions in a deteriorating economy.

 WHAT: Joint Economic Committee Hearing on The Employment Situation in January 2008

WHO: Dr. Keith Hall, Commissioner,Bureau of Labor Statistics

WHEN: 9: 30 a.m., Friday, February 1, 2008

WHERE: Dirksen Senate Office Building, Room 106

 The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy. 

 www.jec.senate.gov

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NEW JOINT ECONOMIC COMMITTEE REPORT FINDS: AS ECONOMY SLOWS, DEMAND FOR CHILDREN'S HEALTH INSURANCE AND MEDICAIDE GROWS

JEC Vice Chair Maloney: Wednesday’s Vote to Override President’s CHIP Veto Critical To Preserving Health Coverage For Millions of Children in a Weakening Economy

Cash-strapped States Face CHIP/Medicaid Annual Enrollment Growth of Between 700,000 and 1.1 Million Additional Children Due to Slower Job Creation, Apart from Trend in Program’s Growth, JEC Estimates

Washington, D.C. – Congresswoman Carolyn Maloney, Vice Chair of the Joint Economic Committee, today released a report showing that worsening economic conditions will increase demand for the State Children’s Health Insurance Program and Medicaid, and called on colleagues in Congress to vote next Wednesday to override the President’s veto of H.R. 3963, legislation that would bring health coverage to approximately ten million children over the next five years.

"A million more children a year may need public health insurance due to worsening economic conditions, but state budgets are already strained by the weak national economy and the growing housing crisis," said Congresswoman Maloney. "This is a perfect storm that can be avoided, if Congress votes to override the President’s veto of legislation that would bring health care to millions of children in need. Additional Medicaid assistance to the states as part of a stimulus package would also provide shelter from this storm."

The JEC report finds that if employment growth falls to the levels seen following the 2001 recession, then demand for CHIP and Medicaid will grow, even apart from the normal growth trend in public coverage. The report’s key findings are the following:

• Between 700,000 and 1.1 million additional children will enroll in Medicaid/CHIP each year due to slowing employment growth alone.

• Up to 1.5 million additional persons will enroll in Medicaid each year due to slowing employment growth alone.

SCHIP provides health coverage to American children whose parents do not qualify for Medicaid, but cannot afford private insurance. Over the next five years, the House SCHIP reauthorization legislation would bring health coverage to approximately ten million children in need – preserving coverage for all 6.6 million children currently covered by SCHIP, and extending coverage to 3.8 million children who are currently uninsured, according to the nonpartisan Congressional Budget Office.

A slowing economy will likely lead to substantial increases in Medicaid/CHIP demand, yet the Administration is proposing a range of cutbacks to CHIP and Medicaid funding that will make the problem even more severe. These cutbacks will put increased fiscal demands on states at a time when they are ill equipped to handle them, according to the JEC report.

The report concludes that overriding the President’s veto of CHIP reauthorization would guarantee sufficient funding levels for the CHIP program to serve future enrollment needs. Furthermore, increasing the Federal Medicaid match percentage (FMAP) to the states as part of a stimulus package would help buffer the impact of the economic slowdown.

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

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SCHUMER: ECONOMIC STIMULUS PACKAGE COULD GEL QUICKLY

In response to positive statements by both the White House and Federal Reserve Chairman Ben Bernanke on the need for an economic stimulus plan, Senator Charles E. Schumer, Chairman of the Joint Economic Committee, released the following statement urging quick bipartisan action to boost the economy:

“Everything seems to be coming together. Chairman Bernanke’s explicit endorsement of a stimulus package and his implicit judgment that extending Bush’s tax cuts would not help create short term economic stimulus, along with President Bush’s interest in stimulus, and House and Senate leaders coming together around a bipartisan plan – means that this could all gel shortly. And that is very important for our economy.”

The Joint Economic Committee held the first Congressional hearing of 2008 yesterday on the economy and need for an economic stimulus package. Former Treasury Secretary, Larry Summers testified to the need for up to $150 billion in economic stimulus, including tax cuts and spending measures. Fellow panelists from the Economic Policy Institute and the Heritage Foundation and most members of the Committee concurred that economic stimulus was needed. Schumer said yesterday that that the right combination of short-term tax cuts and spending stimuli, enacted quickly, will boost the economic fortunes of middle class families and jumpstart our economy.

Schumer, joined by Sen. Ted Kennedy yesterday, expressed a strong desire that an economic stimulus package be put forward before the President’s State of the Union Address because quick action is required to boost the economy.

All testimony and opening statements from yesterday’s JEC hearing can be found HERE

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WITH THE ODDS OF A RECESSION RISING, JOINT ECONOMIC COMMITTEE TO HOLD FIRST CONGRESSIONAL HEARING TO DETERMINE MOST EFFECTIVE WAYS TO STIMULATE THE U.S. ECONOMY

JEC Chair Schumer to Urge Administration to Work with Congress to Adopt Targeted, Timely and Temporary Stimulus Measures Former Treasury Secretary Summers to Answer Key Question: "What Should the Federal Government Do to Avoid a Recession?"

Washington, D.C.U.S. Senator Charles E. Schumer (D-NY) will convene a Joint Economic Committee (JEC) hearing to examine targeted economic policies for fending off the predicted recession. The hearing entitled, “What Should the Federal Government Do to Avoid a Recession?” will be held on January 16, 2008 at 9:30 am in the Hart Senate Office Building, Room 216. Former Treasury Secretary Lawrence Summers will testify at the first Congressional committee hearing this year on his assessment of the deteriorating economic conditions in the country and his views on targeted, timely and temporary measures to help middle class families weather a likely recession. Sen. Schumer is the Chairman of the JEC and Rep. Carolyn Maloney (D-NY) is the Vice Chairman.

WHAT: Joint Economic Committee Hearing on “What Should the Federal Government Do to Avoid a Recession?”

WHO: Dr. Lawrence Summers, Former U.S. Treasury Secretary

Lawrence Mishel, President, Economic Policy Institute

William W. Beach, Director, Center for Data Analysis, The Heritage Foundation

WHEN: 9:30AM, Wednesday, January 16, 2008

WHERE: Hart Senate Office Building, Room 216

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

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SCHUMER: WITH RISING UNEMPLOYMENT RATE AND ANEMIC JOB GROWTH, BUSH'S FAILING ECONOMIC POLICIES ARE LEAVING THE U.S. ECONOMY MUCH MORE VULNERABLE TO RECESSION

Bush Jobs Record the Worst since Presidents Herbert Hoover and George H.W. Bush

BLS Report Indicates Loss of 13,000 Private Sector Jobs and Increase in Unemployment Rate to 5 Percent


Washington, D.C. – U.S. Senator Charles E. Schumer, chairman of the Joint Economic Committee, today reacted to the dismal employment report released this morning by the Department of Labor. The Bureau of Labor Statistics announced that the number of unemployed increased by 474,000 with the unemployment rate rising to a two-year high of 5 percent.  Non-farm payrolls increased by only 18,000 in December, the weakest showing since August of 2003. Sluggish job growth in the service sector was offset by significant job losses in construction and manufacturing.   


“If there were ever a shot across the bow to this Administration to get off its laissez-faire boat and start helping the economy, this is it. It’s about their last chance to avoid tumbling into recession.” Schumer said.  “The president's possible plan for economic stimulus in the eighth year of his presidency will likely be too late, hopefully it isn't too little to stave off a recession in 2008.”


 

Highlights of Today’s BLS Report

·        Job losses were widespread across the private sector. Private-sector employers shed 13,000 jobs in December, while government added 31,000 jobs. Manufacturing lost 31,000 jobs, for a total of 212,000 for the past year and retail trade lost 24,000 jobs last month. Declining employment occurred alongside a drop in hours for production workers from 40.6 to 40.5 hours per week.


 

·        The effects of the housing collapse are being felt throughout the labor market. Construction lost 49,000 jobs last month, for a total of 195,000 jobs over the past year. Losses occurred in both residential and non-residential construction. "Credit intermediation," which includes mortgage brokers, lost 7,000 jobs last month, for a total of 75,000 over the past year.


 

·        The pace of job creation in services has slowed. Over the past year, services typically added 142,000 jobs each month, but in December, only 93,000 jobs were added. Temporary help services, often a leading indicator of employers' willingness to hire, added no jobs in December.


 

·        December's wage growth was far below the pace of inflation. The annualized quarterly rate of wage growth in December was 3.3 percent, far below the last reported quarterly inflation growth of 5.6 percent in November. Inflationary pressures are not coming from wages, but rather from the higher prices of commodities (food and oil, especially).


 

·        There are many indications that people are being laid off and having a hard time finding a new job or having to take a part-time job instead of a full-time one. The share of the unemployed who are "permanent job losers," that is, they were fired or laid off and their employer indicated that they have no intention of rehiring them, has increased sharply over the past year, from 35.7 to 40.1 percent. Over the past year, the share of part-time workers who would prefer to work full-time but can only find a part-time job has risen from 64.0 to 68.0 percent.

SCHUMER: WITH RISING UNEMPLOYMENT RATE AND ANEMIC JOB GROWTH, BUSH'S FAILING ECONOMIC POLICIES ARE LEAVING THE U.S. ECONOMY MUCH MORE VULNERABLE TO RECESSION

Bush Jobs Record the Worst since Presidents Herbert Hoover and George H.W. Bush

BLS Report Indicates Loss of 13,000 Private Sector Jobs and Increase in Unemployment Rate to 5 Percent

Washington, D.C.U.S. Senator Charles E. Schumer, chairman of the Joint Economic Committee, today reacted to the dismal employment report released this morning by the Department of Labor. The Bureau of Labor Statistics announced that the number of unemployed increased by 474,000 with the unemployment rate rising to a two-year high of 5 percent. Non-farm payrolls increased by only 18,000 in December, the weakest showing since August of 2003. Sluggish job growth in the service sector was offset by significant job losses in construction and manufacturing.

“If there were ever a shot across the bow to this Administration to get off its laissezfaire boat and start helping the economy, this is it. It’s about their last chance to avoid tumbling into recession.” Schumer said. “The president's possible plan for economic stimulus in the eighth year of his presidency will likely be too late, hopefully it isn't too little to stave off a recession in 2008.”

Highlights of Today’s BLS Report

• Job losses were widespread across the private sector. Private-sector employers shed 13,000 jobs in December, while government added 31,000 jobs. Manufacturing lost 31,000 jobs, for a total of 212,000 for the past year and retail trade lost 24,000 jobs last month. Declining employment occurred alongside a drop in hours for production workers from 40.6 to 40.5 hours per week.

• The effects of the housing collapse are being felt throughout the labor market. Construction lost 49,000 jobs last month, for a total of 195,000 jobs over the past year. Losses occurred in both residential and non-residential construction. "Credit intermediation," which includes mortgage brokers, lost 7,000 jobs last month, for a total of 75,000 over the past year.

• The pace of job creation in services has slowed. Over the past year, services typically added 142,000 jobs each month, but in December, only 93,000 jobs were added. Temporary help services, often a leading indicator of employers' willingness to hire, added no jobs in December.

• December's wage growth was far below the pace of inflation. The annualized quarterly rate of wage growth in December was 3.3 percent, far below the last reported quarterly inflation growth of 5.6 percent in November. Inflationary pressures are not coming from wages, but rather from the higher prices of commodities (food and oil, especially).

• There are many indications that people are being laid off and having a hard time finding a new job or having to take a part-time job instead of a full-time one. The share of the unemployed who are "permanent job losers," that is, they were fired or laid off and their employer indicated that they have no intention of rehiring them, has increased sharply over the past year, from 35.7 to 40.1 percent. Over the past year, the share of part-time workers who would prefer to work full-time but can only find a part-time job has risen from 64.0 to 68.0 percent.

 

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

 

 

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SCHUMER ADDRESSES THE SUBPRIME HOUSING CRISIS AND POSSIBLE RECESSION AT THE BROOKINGS INSTITUTION

Joint Economic Committee Chairman Outlines Myths Surrounding the Subprime Housing Crisis, Addresses the Bush Administration’s Failure to Respond, and Offers Policy Solutions To Keep Families in Their Homes and the Economy on Track

Washington, DCU.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee and Chairman of the Senate Banking Subcommittee on Housing, Transportation, and Community Development, addressed the twin challenges of the subprime lending crisis and of a potential recession in a speech at the Brookings Institution today. In his speech, “A Call to Action on the Subprime Mortgage Crisis: Putting Common Sense Ahead of Ideology”

Senator Schumer discussed the shortcomings of the Bush administration's recent measures to address the subprime mortgage crisis, the myths that have propelled this crisis, and proposed a series of major, alternative steps the federal government should take to protect homeowners from foreclosure and the U.S. economy from recession. Schumer joined former Treasury Secretary Lawrence Summers in the Economic Studies event

“The subprime crisis has become a symbol of the Bush Administration’s serious mishandling of so many economic and domestic policy priorities,” Schumer said. “The housing mess, which has hit homeowners and neighborhoods with massive foreclosures, credit markets with mountains of debt, and the economy with weak job and economic growth, is further evidence that this administration is ideologically handcuffed and cannot step up to the plate to solve major problems.”

 

Schumer offered seven policy solutions that would help address the subprime mortgage crisis:

1. To alleviate the current crisis, ensure that there is someone on the ground to help out struggling borrowers. Through their relationships within the community and with lending organizations, housing counseling agencies are able to bring troubled borrowers and their lenders together to begin working out mortgage problems. Senator Schumer, with Senators Brown and Casey, and with critical help from Senator Murray, got $180 million in the omnibus appropriations bill that passed last night in the Senate, over the Administration’s objections, for foreclosure prevention counselors. However, more resources are needed.

2. Provide additional flexibility to Fannie Mae and Freddie Mac to provide liquidity to the markets. Senator Schumer introduced legislation that would temporarily raise the portfolio caps for Fannie and Freddie by 10%, with 85% of the increase targeted towards refinancing subprime borrowers. Schumer also introduced legislation that would raise the conforming loan limits for the GSEs. Secretary Paulson, as well as Chairman Bernanke, has supported an increase in the GSE’s conforming loan limits. This kind of targeted help, although potentially more risky for the GSEs, is why they were created in the first place. These measures would increase liquidity to the troubled subprime and jumbo loan markets and make more refinancing options available for subprime borrowers.

3. Introduce new legislation to provide additional liquidity to the markets. This legislation will increase private activity bond cap and temporarily allow states and localities to use single-family tax-exempt bonds—known as Mortgage Revenue Bonds or MRBs—to refinance subprime loans at risk of foreclosure. Currently, mortgage refinancing is not permitted under the MRB program. The legislation will also allow states to use this increase in the bond cap for affordable multifamily rental housing, an important resource for families who have already lost their homes to foreclosure. The Schumer legislation would double the amount of increased bond cap that the Bush Administration has proposed; make a portion of the increased cap permanent, and give states and localities the flexibility to respond to a wide range of mounting housing needs.

4. Amend the bankruptcy code to make primary home loans eligible for the same remedies that are available on other, less important debts. Judicially mandated loan modifications could be a highly effective tool for helping families recover from subprime loans, but today’s bankruptcy code prevents courts from providing relief on mortgage loans. In fact, the law singles out the home mortgage loan as the one debt the courts are not permitted to modify. Senator Schumer supports a measure that would amend the bankruptcy code to temporarily exclude primary home loans from the remedies that are available on other, less important debts. This would allow borrowers to pay the fair market value of their home and to keep that home, rather than seeing the home sold to a third party for its liquidation value.

5. Enact major reforms to the rules that govern the mortgage lending industry, improving the regulation of mortgage brokers and non-bank lenders. Federal laws are needed to impose new standards of care for mortgage originators, create a requirement that originators consider a borrower’s ability to repay a loan, prohibit appraisal fraud, reduce or eliminate “liar loans”, eliminate prepayment penalties and create effective remedies so that borrowers who do receive predatory or fraudulent loans have some recourse to restore their financial health. In May, Senator Schumer introduced the first legislation to do just that—the Borrower’s Protection Act. Schumer also co-sponsored Senator Dodd’s recently introduced bill, which preserves many of the original proposals in the Borrower’s Protection Act.

6. Create an easy-to-read one-page disclosure form with all of the information that a borrower needs to make an informed decision on their mortgage. Senator Schumer introduced legislation to require the banking regulators to create such a one-page mortgage disclosure form with all of the critical information on payments and fees that would impact the borrower. This information will give borrowers a clearer picture of the agreement that they’re signing and allow them to more easily compare loans to ensure that they get the best deal.  

7. Closely examine the role of that the rating agencies played in the explosive growth, and subsequent problems of the secondary mortgage market. The risks associated with subprime mortgages and the related securities were drastically underestimated by the credit rating agencies.  One reason for this, which merits closer examination: most rating agencies are paid by the companies they rate rather than by the investors who use the ratings. A more reliable rating system that provides accurate information about the value of securities will greatly reduce the fear and uncertainty that are creating the current credit crisis.

Schumer presented the four myths that have propelled the Bush Administration’s inadequate response to the subprime mortgage crisis:

MYTH: Vastly expanded home ownership from subprime lending: Subprime lending led to millions of brand-new, first-time homeowners in America .  

FACT: Only a small percentage of subprime borrowers were first time homeowners.  According to the chief national bank examiner for the Office of Comptroller of the Currency, only 11 percent of subprime loans went to first-time buyers last year. According to the Center for Responsible Lending, the subprime crisis will lead to a net loss in homeownership.

MYTH: The unqualified borrower: Subprime borrowers couldn’t have qualified for better loans, and thus that the subprime market is the only place they could have gotten a mortgage.

 

 

FACT: In truth, many of the subprime borrowers were eligible for prime loans. Based on the Wall Street Journal’s analysis of borrowers’ credit scores, 55 percent of subprime borrowers had credit scores worthy of a prime, conventional mortgage in 2005.  By the end of last year that percentage rose to over 61 percent, according to their study.

 

 

MYTH: Borrowers can easily understand all the terms of their mortgage loans. When market participants have full knowledge about transactions, the results are efficient. And subprime borrowers had all of the information about their mortgage terms and payments at their fingertips before they signed their loan documents.

 

FACT: Mortgage documents seem to be designed to hide information from the borrower.  The truth is that almost no one reads their entire mortgage document’s fine print, few hire special real estate lawyers to walk them through the home purchase, and given the complexity of mortgage documents, many borrowers can be easily manipulated into bad loans by unscrupulous brokers and lenders.

 

MYTH: The free market, left alone, will fix everything: Left alone, free market forces will correct the disruptions caused by the subprime crisis.

 

FACT: The market did not contain this problem within the subprime segment. In fact, the crisis has spread into the global economy. In August of this year, a severe credit crunch in the U.S. credit markets began, forcing financial institutions to limit the amount of loans that they offered to individuals and companies. As the administration looked on, the credit crisis trickled into the Alt-A and prime mortgage markets, pushing up mortgage rates for borrowers with even the best credit. The tightening of lending and lack of confidence in credit quality has led to shrinking investment and consumption, a slowdown in domestic economic growth, and even threatens a slowdown in the global markets.

 

Senator Schumer's entire speech, as prepared for delivery: “A Call to Action on the Subprime Mortgage Crisis: Putting Common Sense Ahead of Ideology”

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

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SCHUMER, MALONEY INVITE OMB DIRECTOR NUSSLE TO EXPLAIN ADMINISTRATION’S ECONOMIC COST OF WAR ESTIMATES

Previously Released Joint Economic Committee Report Estimates Iraq War Could Cost $3.5 Trillion Through FY2017, Likely to Reach 1.3 Trillion in FY2008

OMB Director Nussle Criticized the JEC Report, But JEC Calculations Were Based on White House and CBO Endorsed Guidelines and Figures

U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee (JEC) and Congresswoman Carolyn B. Maloney, Vice Chair of the JEC, sent a letter to the Office of Management and Budget Office Director James Nussle today, inviting him to testify before the committee on the costs of the Iraq War. The Joint Economic Committee recently released a report, “War at Any Price? The Total Economic Costs of the War” revealing the true costs of the wars in Iraq and Afghanistan beyond the funding budgeted by Congress. The JEC estimates that the sum of direct budget costs, lost productive investment due to Iraq-related borrowing, interest payments to foreign purchasers of Iraq-related debt, oil market disruptions, long term health care for veterans, and the costs due to strains on our military could total $3.5 trillion or more depending on how long President Bush pursues the same course of action in Iraq. OMB Director Nussle has taken issue with these findings according to press reports.

“The backbreaking costs of this war to American families, the federal budget, and the entire economy are beyond measure in many ways,” Schumer said. “What this report makes crystal clear is that the cost to our country in lives lost and dollars spent is tragically unacceptable, and this Administration’s refusal to enter into an honest debate about the costs of its war policy, beyond the dollars included in federal budget, is shameful.”

Maloney said, “An open and honest debate about the true costs of the Iraq war is long overdue.  No credible economist or policy expert would doubt that the full long-run costs of war spending to the American economy do in fact exceed the enormous Federal budgetary costs. The OMB Director has charged that we are trying to ‘manufacture bad news’ about the Iraq war, but the staggering figures speak for themselves. By every measure, this war has cost Americans far too much – whether it’s lives lost, dollars spent, or our reputation tarnished around the world. The Iraq war threatens to harm our economy for years to come and it’s time for the Administration to acknowledge this fact.”      

In their letter to Nussle, Schumer and Maloney point out that the JEC report relied only on sound, generally accepted data and many cost estimation assumptions and methodologies that had already been endorsed by the White House. “In fact, the JEC report relies heavily on OMB Circular A-94, the official White House guidance to Federal agencies on how to perform cost analyses of Federal programs that your agency produced,” they write.

“Unfortunately, to date, the Administration has failed to produce any economic cost estimate of our continued presence in Iraq and will not even include war spending in traditional defense budgeting and spending requests. The American people deserve an honest debate about the full costs of this war, not empty partisan rhetoric.  To that end, we would certainly welcome your appearance before the Committee, where you could present your data and calculations about what the administration believes the full economic costs of the Iraq war have been so far, and will be going forward.  We look forward to a productive and open dialogue with you on this critically important issue,” Schumer and Maloney conclude.

The JEC has estimated the total costs of the war to the American economy and the key findings are:

·        The total economic costs of the wars in Iraq and Afghanistan so far have been approximately double the total amounts directly requested by the Administration.

·        Even assuming a moderate drawdown in troop levels, total economic costs of the wars in Iraq and Afghanistan (with the vast majority of funds going to the war in Iraq) would amount to $3.5 trillion between 2003 and 2017.  This is over $1 trillion higher than the recent Congressional Budget Office (CBO) federal cost forecast for the same scenario, which counted only direct spending and interest paid on war-related debt.

·        The total economic cost of the war in Iraq to a family of four is $16,500 from 2002 to 2008. When the war in Afghanistan is included, the burden to the American family is $20,900.  The potential future impact on the family of four skyrockets to $36,900 for Iraq and $46,400 for Iraq and Afghanistan from 2002 to 2017.

 

Senator Schumer and Congresswoman Maloney’s letter to OMB Director, James Nussle, is reproduced below:

December 6, 2007       

The Honorable James Nussle
Director

The Office of Management and Budget
725 17th Street, NW
Washington, DC 20503

Dear Director Nussle:

In a recent Associated Press article you were quoted taking issue with the Joint Economic Committee (JEC) report examining the total economic costs of the war in Iraq

Virtually no economist or policy expert would doubt that the full long-run costs of war spending to the American economy do in fact exceed the Federal budgetary costs. Since these Federal budgetary costs are enormous, over ten times what the Administration originally estimated the war would cost and still rising, it stands to reason that the economic costs would be substantial as well.

As a former Chairman of the House Budget Committee and new Director of the Office of Management and Budget, we’re sure you would agree that determining the true economic costs of this war is vital to our economic security. Right now, our economy faces threats from the housing downturn and related credit crunch, the falling dollar, and our $9 trillion debt, which is being fueled in no small part by the growing cost of the Iraq war. We asked our staff on the Joint Economic Committee to undertake this study in order to examine the broader impact of the war on the American economy.

The JEC report estimates that through the close of FY 2008 the full economic costs of the Iraq war will be about $1.3 trillion.  This is about double the immense federal budget costs that have been reported to the American people.  Based on Congressional Budget Office (CBO) budget forecasts, the JEC report estimates that the total economic costs of the wars in Iraq and Afghanistan would rise to at least $3.5 trillion over the next decade if the occupation of Iraq continues.

The JEC report relied only on sound, generally accepted data and many cost estimation assumptions and methodologies that had already been endorsed by the White House. In cases where there were doubts about proper assumptions to use in determining the economic costs of the war, moderate to conservative assumptions were used.  In fact, the JEC report relies heavily on OMB Circular A-94, the official White House guidance to Federal agencies on how to perform cost analyses of Federal programs that your agency produced.

The American people deserve a full and complete accounting of the costs of this war. Given our current budgetary situation, which has led the President to state that the nation cannot afford to spend an additional $5 billion per year on health care for our nation’s low-income children, it is especially important that we have a clear picture of what this war is costing us and will cost us in the future. Unfortunately, to date, the Administration has failed to produce any economic cost estimate of our continued presence in Iraq and will not even include war spending in traditional defense budgeting and spending requests.

The American people deserve an honest debate about the full costs of this war, not empty partisan rhetoric.  To that end, we would certainly welcome your appearance before the Committee, where you could present your data and calculations about what the administration believes the full economic costs of the Iraq war have been so far, and will be going forward.  We look forward to a productive and open dialogue with you on this critically important issue.


Sincerely,

Senator Charles E. Schumer

Chairman, Joint Economic Committee


Congresswoman Carolyn B. Maloney

Vice Chair, Joint Economic Committee

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