Apr 11 2018
Chairman Erik Paulsen Delivers Opening Statement
on "Unleashing America's Economic Potential"
WASHINGTON--Chairman Erik Paulsen, R-Minn., delivered his opening statement for the Joint Economic Committee's hearing on "Unleashing America's Economic Potential," in which he highlighted the economic growth that's transpired over the last 15 months and its relationship to the reduction of regulatory and tax burdens on everyday Americans. The text is below:
I call this hearing to order.
Good afternoon, and welcome to this hearing on “Unleashing America’s Economic Potential.”
For the eight years prior to this new Administration, we were told America could never do better than 2 percent growth. We were told that such sluggish growth was the new normal, and that we had to lower our expectations.
This contradicted what we knew to be true about America.
We all know America is an economic powerhouse. We are blessed with vast and bountiful land, massive energy resources, and most importantly, the American people. Our dreams, as a nation, don’t rely on government fiat or foreign influence, but on the resourcefulness, the innovativeness, and the hard work of everyday Americans.
The question is: Will we, elected officials of the U.S. government, allow them to work towards their dreams and fully contribute to our nation’s prosperity?
This hearing is about just that. How is it, for instance, that we have just seen a remarkably good job growth for the last few months?
Listen to these numbers:
We are averaging 214,000 more jobs for February and March and the employment-to-population ratio held steady.
The unemployment rate has remained stable at 4.1% for 6 months, the lowest since 2000.
Meanwhile average hourly earnings continue their upward trend.
It wasn’t long ago, we were told not to expect this. In fact, we were told to lower our expectations. I’ll explain.
When my daughters set goals, these goals are generally beyond where they are at the time. Maybe they want to get better at math or science. Maybe they want to read more books than before. But the point is, they know their potential, and set goals beyond where they are currently at because they want to grow.
It should be the same when thinking about our economy.
The first graph was displayed at our last hearing. The top line is what the Congressional Budget Office thought in 2007 our economy was capable of producing. This is an economy of hope and growth.
The bottom line, regrettably, is what our economy in fact produced—our actual real GDP. To be sure, the financial crisis knocked us off our feet.
The lines in between are annual CBO forecasts of our economic potential over the course of the Obama Administration. Each year, these forecasts were lowered.
This is what it looks like when a nation is urged by its leaders to accept mediocrity and to let the government handle more. More taxes, more regulations, and more control meant that the American economy was held back.
This was a self-fulfilling prophecy.
These projections dragged under growing weight of high tax rates and record-setting levels of regulation.
Before 2017, economic growth was slow, employers weren’t willing to invest in their businesses or their employees.
Productivity and take-home pay stagnated.
People in their prime working years stayed out of the workforce.
Fewer people were willing to risk starting a business so entrepreneurship fell.
Businesses found it more attractive to invest and create jobs overseas, where other countries had learned to lower their corporate tax rates and reduce regulations.
At the same time, the federal government’s power over nearly every aspect of our lives grew.
Yes, there are constructive things that government does, such as by keeping us safe, enforcing civil and property rights, and setting rational “rules of the road” by which the economy can operate efficiently.
However, government does not create prosperity.
Our people create prosperity—by having great ideas, working hard, and having the resources to take a risk on building a piece of the American dream.
Far too often government stands in the way of prosperity and opportunity by overtaxing and overregulating.
A country’s GDP is based on its workforce, capital stock, and productivity—determined by technology, innovation, and training. It isn’t based on how much the government succeeds in redirecting capital.
We’re seeing a different course that lifts the artificial restraints government imposed on the economy.
This graph is similar to one in the report the JEC published last week in response to the Economic Report of the President.
If we lift the government constraints of high taxes and heavy regulation that weighed down our potential, our economic potential can rise. If it rises to what CBO projected as recently as 2012, there would be plenty of room, displayed as the output gap, for our economy to grow faster.
We’ve removed the government obstacles that prevented Americans from achieving their dreams.
When growth is strong, businesses have the confidence to invest, jobs are plentiful, potential entrepreneurs become willing to risk starting a business, and American households become more prosperous. We’re already seeing results:
Every quarter of economic growth in 2017 outperformed the same quarter in 2016;
Business investment is strengthening and small business confidence is high;
Production and investment are coming back to the United States;
Paychecks are growing because (1) the government is taking a smaller cut and (2) businesses are investing in their workers.
In my home state of Minnesota, the good news about tax reform keeps pouring in as companies like Best Buy, Bio-Techne (BIO-TECH-KNEE), CIT Relay & Switch, LORAM, Data Sales, DTN, Hormel, TCF, and US Bank invest in their employees by giving them special bonuses, pay raises and better benefits.
But even with the tailwinds of pro-growth tax and regulatory reform, there are still risks to the economy, such as the newly announced tariffs. Trade is critical to our economic growth. A robust trade agenda is essential for the United States to grow jobs by selling American goods and services around the world as 96% of world’s consumers live outside the United States.
The end goal of trade policy should be to eliminate artificial barriers to the free flow of our goods and services, not cause new ones.
I look forward to hearing from our distinguished panel of witnesses today as they advise us on ways to unleash greater opportunity in America.