I’ve been asked here tonight to talk about building an economy that works for everyone – and about the better choices we must make, together.
I. Land of Opportunity for All
Our national character is defined by a powerful idea. The idea that the United States of America offers economic opportunity for all. As Americans, we believe that no matter who you are or where you were born, your hard work should pay off. We believe as Americans that every individual willing to work hard should be able to get ahead. That every American should be able to provide for a better quality of life for their children and grandchildren.
This is the powerful truth of the American Dream we share.
It is the core of our national character. It is the story that has guided our economic choices as a people for most of these 240-years. These are the choices that built the strongest and most resilient economy the world has ever known. We the People have chosen, generation after generation, to give our children a future with more opportunity, and not less. Together, we have strived in every generation to include more of our citizens more fully in the economic, in the social, and in the political life of our Republic. To extend and make true the American Dream to ever widening circles of our people.
This is both the moral theory of our nation, and it is the economic theory of our nation. It is this inclusive theory of growth, put into practice, that built the largest, strongest, and most prosperous middle class the world had ever known. It is the national story of success that has made us known the world over, as “the land of opportunity.” There is no such thing in our country as a spare American. The impulse that we share as Americans, to treat everyone with dignity and respect, is the same impulse that is best for economic growth that lifts us all.
You see, the economy isn’t money. It is people.
It is the work, the imagination, the grit, the desire, the skill, the love of family, and creative capacity of every person that drives our economy, and makes our country stronger. This is why signs that once read “No Irish Need Apply,… or no women,… or no blacks,…or no Jews” have become sad relics of our past. This is why the next generation of Americans so universally rejects state laws that discriminate against gay and lesbian Americans.
The fact of our world is this:
Democratic nations are more prosperous nations. It’s not merely a coincidence. People in democratic nations have the opportunity to participate more, to innovate more, to take risks and start companies, and yes, to drive economic demand, consumer demand, through their higher earnings. And this inclusiveness, the robust participation of more and more of our people — is the heart and cause of sustained, long-term, generational prosperity in the United States of America.
II. The False Myth of Concentrated Wealth
The American economy that many of our parents and grandparents lived – and built from their choices – was an extraordinary success. In sharp contrast from the last 40 years, from 1947 to 1979, every income group of households in the United States of America, from the poorest to the richest, was able to increase their earnings by at least 100% in real, inflation adjusted dollars over that 40-year period of time.
All of that progress was built on hard work, expanding economic participation, and policy choices that made sure that wages kept up with increased productivity. All of that started to change when we started making different choices.
Beginning in 1980, we turned away from this tried and true success story. We embraced a new theory. A new story. A story that turned out… to be false.
Whether we called it Supply-Side Economics (as its pioneering proponent, President Reagan liked to call it), or Voodoo Economics (as President George H. W. Bush called it), or Trickle-Down Economics, as Americans who have come to know it now call it, the primary goal of that theory was this: to greatly concentrate the wealth and capital of our nation in the hands of the very few.
And what was the promised benefit of this strategy for our country, and for our economy — for the common good that we share? It was this: That the very rich, once made very much richer, would invest larger sums of this newly concentrated capital into greater job creation. And then our entire country would benefit. “Just wait”, they told us. Concentrated capital and free markets were far better for economic growth, we were told, than wage policies, investment policies, or regulatory policies – and the actions that flow from those policies.
The goal of a stronger middle class was thereby replaced, in the 1980s, by the goal of capital accumulation and capital concentration. Poverty was no longer our common enemy or a problem that our government could solve. The new common enemy became our federal government itself. As President Reagan famously proclaimed – government is the problem.
And for the good of the people, we were told, our federal government needed to be weakened, reined in, and removed from our lives wherever and whenever possible. Over the next thirty years this Trickle-Down Theory dominated our economic debates and guided our political choices.
Its three main tactics have been:
1) Tax cuts and tax policies that not only underinvest in our nation, but grossly and disproportionately benefit corporations and the ultra-wealthy;
2) The systematic de-regulation of even the riskiest investment behavior on Wall Street;
3) And the adoption of state and national policies designed to keep wages low, in the name of making us more competitive.
This theory, of course, fell apart with the crash of 2008. Millions of Americans lost their jobs, lost their homes, and lost retirement benefits. And now Americans are demanding a better balance.
As we gather here tonight, wealth and economic power in the United States of America have now been concentrated in the hands of the very few as almost never before in our nation’s history. The top one percent of American society now controls more wealth than 95 percent of American families combined. After worsening cycles of boom, bust, and bail-out, just five big banks now control half of the $15 trillion in assets in our banking industry.
Corporate consolidations have now created near-monopoly concentrations in important sectors of our once-competitive American economy. In the 1980s, CEOs earned 46 times as much as their average worker. Today, the average CEO earns 331 times as much as their average worker. Bad trade deals have sent American jobs and American profits abroad. And we are all paying for these poor choices. We’re paying for it in lower wages. And we’re paying for it in diminished economic opportunities for our children.
Wages in the United States of America are lower now today than they were 12 years ago. This is the first time that has happened this side of World War II and it is not good for economic growth. Bonuses alone, paid on Wall Street last year, were greater than the wages of every single American working at minimum wage combined. And now concentrated wealth has accumulated concentrated political power in the halls of Congress and in our Statehouses – making it harder than ever to get things done.
The vast majority of us are working harder but our families are falling further behind. This is not how our economy is supposed to work. This is not how our country is supposed to work.
And I know there are many good and caring CEOs, and people working on Wall Street who would agree – who are troubled and saddened by what these trends portend for the future of the country we love.
It doesn’t have to be this way.
So, how do we change this?
How do we reward productive investment and hard work again?
How do we restore a human purpose to our American Economy?
III. Accountability and Opportunity
I believe we do this in five ways.
First, we must restore common-sense wage policies that strengthen our middle class. This means that we must raise the minimum wage and index it to inflation – so the minimum wage always stays above the poverty line.
We must also raise the threshold for overtime pay – so that six million more people can actually be paid what they’re owed for the extra hours they’re working every week on the job. And, so employers will have the incentive to add new workers rather than forcing employees to work longer and longer hours. We must make it easier, and not harder, for workers to organize, to press, and to collectively bargain for better wages — wages that keep pace with the remarkable productivity increases of American workers.
And we must recognize that policies that are good for women and families – like paid leave, and safe and affordable childcare – are also good for our national economy and for economic growth. Because when women succeed, our American economy succeeds.
Also, in order to raise wages, we must recognize that immigration reform is an economic imperative for our country.
We must build a path to citizenship, to bring 11 million undocumented immigrants out of the shadows of our economy and into the mainstream — to boost consumer demand, to create new businesses, and to expand our tax base — thereby raising wages for everyone.
Second, we must restore public investments in the common good and the future of our nation. Investments in research and development. Investments in infrastructure. And investments in education — like universal pre-k. We need to invest also in our public colleges and universities again, to make college more affordable for more families. Because the more a person learns, the more a person earns. We need to make it possible to refinance student loans – just as millions of Americans are already able to refinance their home mortgages.
And we should make income-based repayment plans the norm – so that young people whose passion might be teaching, or nursing, or policing can afford to pay their bills and pursue their dreams.
Third, we need to restore accountability to our financial markets. Not a single Wall Street executive was convicted of a crime related to the 2008 economic meltdown. Not a single one. Explain to me how it is that you can get pulled over for a broken tail light in our country, but if you wreck the world’s economy you are untouchable? We must charge and empower professional regulators, to penalize and prosecute those who lie, cheat, and steal with billions and trillions of our dollars at stake. We must reinstate Glass-Steagall, to prevent giant banks from gambling with our economy and our money.
And if a bank is too big to fail, we need to break it up before it breaks us.
Fourth, we must stop entering into bad trade deals – bad trade deals like the Trans-Pacific Partnership – that hurt middle class wages and ship middle class jobs overseas. And we certainly shouldn’t be fast tracking failed deals. Chasing cheaper labor abroad will not help us build a stronger economy here at home.
And fifth, we must honor those who have worked hard all their lives and now find themselves approaching a retirement that is anything but secure. We cannot grow our economy if we resign a whole generation of our senior citizens to spending their golden years living in poverty. Rather than reducing Social Security benefits or privatizing Social Security, we need to expand Social Security benefits.
In summary: the better choices our national interest demands are not radical, rash, or unproven choices. They are the better choices, common-sense choices to which many states like Maryland, Colorado, Washington State, Minnesota, and California are returning. In Maryland, we put the primary goal of a stronger middle class at the center of every decision we made.
So yes, we raised the minimum wage and expanded collective bargaining. We passed a living wage — while freezing in-state tuition for four years in a row, and we made record investments in education to make our schools the best in the nation.
These choices and investments, made Maryland one of the top states for upward economic mobility for families, secured for Maryland the highest median income in the nation, and — since the depths of the recession — gained Maryland a faster rate of job creation than our neighbors in Virginia or Pennsylvania.
IV. A New Era of American Progress
You see — a stronger middle class is not the consequence of economic growth — a stronger middle class is the cause of economic growth.
We must return to our true selves.
We must rebuild and restore our economy from the middle out and from the middle up.
When workers earn more money, businesses have more customers, and need more workers – and our whole economy grows.
This is why every choice we make together in our democracy — wage policies, investment policies, regulatory policies — should serve the cause of a stronger and growing and more inclusive middle class.
We are Americans, we make our own destiny.
We use our talents, hard work and better choices to build a better future together.
A jobs agenda for renewable energy that is a match for the climate challenge. A national agenda to rebuild America’s cities.
Investments in infrastructure and innovation and the skills of our people that make our country stronger so she can give back more to us and to our children and our grandchildren.
Free markets, by themselves, do not create the generational wealth of great nations. Rational, hard-working, patriotic, and caring human beings do.
The future we choose for our children and grandchildren is not a future of less opportunity, it is a future of more.
We are standing at the threshold of a new era of American progress.
We need only the will and the leadership to move forward to the future we prefer.
Thank you very much. And I look forward to the conversation ahead.