Remarks On Middle Class Opportunity
As Prepared For Delivery at the Jack Kemp Foundation Dinner
Senator Marco Rubio
Tuesday, December 4, 2012
I am so honored to be receiving this award tonight, named after one of the great visionaries of the modern conservative movement in America. We sure could use Jack Kemp right now. Sadly, he is not here, but his ideas and the principles behind them are. And they are useful to us as we confront the great economic challenges and opportunities our nation currently faces.
The existence of a large and vibrant American middle class goes to the very essence of America’s exceptional identity. Every country has rich people. But only a few places have achieved a vibrant and stable middle class. And in the history of the world, none has been more vibrant and more stable than the American middle class.
One of the fundamental promises of America is the opportunity to make it to the middle class. But today, there is a growing opportunity gap developing. And millions of Americans worry that they may never achieve middle class prosperity and stability and that their children will be trapped as well with the same life and the same problems.
For those of us blessed with the opportunity to serve our country in government, one of the fundamental challenges before us is to find an appropriate and sustainable role for government in closing this gap between the dreams of millions of Americans and the opportunities for them to actually realize them.
The key to a vibrant middle class is an abundance of jobs that pay enough so that workers can provide for themselves and their families, enjoy leisure time, save for retirement and pay for their children’s education so they can grow up and earn even more than their parents.
Today, too many Americans cannot find jobs like these, and in fact some cannot find any job at all.
There are two main reasons for this.
First, the weakened American economy is not creating enough jobs of any kind, especially middle class jobs. And second, we have a “Skills Shortage”. Too many Americans do not have the skills they need to do the new middle class jobs.
The path to a prosperous and growing American middle class is the combination of a vibrant economy that creates middle class jobs and a people with the skills needed for these new jobs. The federal government can play an important role in encouraging a vibrant economy and in equipping our people with the skills they need for 21st century middle class jobs.
Federal policies on the national debt, taxes and regulations all have a tremendous impact on economic growth and middle class job creation.
Our $16 trillion debt and the lack of a plan to fix it, scares people from investing money in opening or growing a business. They are afraid of getting hit with massive tax increases in the future to pay off this debt.
The leading cause of our growing future debt is the way Medicare is currently designed for the future. That is why we must reform and save Medicare as soon as possible. The sooner we act, the likelier we can do it without making any changes for people who are currently in the system, people like my mother.
Our complicated and uncertain tax code is also hindering the creation of middle class jobs. You can’t open or grow a business if your taxes are too high or too uncertain. That is why I oppose the President’s plan to raise taxes. It isn’t about a pledge. It isn’t about protecting millionaires and billionaires. For me, it’s about the fact that the tax increases he wants would fail to make even a small dent in the debt but would hurt middle class businesses and the people who work for them. Over half of the private sector’s workers in America work for the kind of companies the President’s plan may raise taxes on.
Instead, we should follow the example set by Jack Kemp set, who laid the foundation for the Economic Recovery Act of 1981 that helped usher in the strong economic recovery during President Reagan’s first term. We should keep rates low on everyone. End the multiple taxation of savings. Simplify our tax code by getting rid of unjustified loopholes. And generate new revenue by creating new taxpayers, not new taxes. Rapid economic growth is the only way to generate the kind of money we need to bring this debt under control. Tax increases do not create new taxpayers. And they do not create rapid economic growth.
And excessive regulations are impeding middle class job creation too. Regulation is necessary to protect our natural environment, keep our food and medicine safe, and ensure fair competition and fair treatment of our workers. But regulations cost money to follow. The more expensive a regulation is, the less money a business has left to give raises or hire new people. So we need to have a balanced approach to regulations. We have to weigh the benefit of any given regulation, against the impact it will have on job creation. That is why we should implement something like Senator Paul’s REINS Act so that if a regulation is going to cost the economy over $100 million, Congress gets the final say on it, not an unelected and unaccountable bureaucrat.
Getting control of our debt, and reforming our federal tax code and regulations are critically important, but it is not enough. We will need to do more.
For example, we should expand our domestic energy industry. American innovation has now given us access to massive new deposits of oil and natural gas, making America the most energy rich country on the planet. This new energy wealth means all kinds of new middle class jobs, from the fields and platforms where we drill, to the manufacturing plants that will return to the U.S. with the lower cost of energy. These are just the type of jobs we need most right now: well-paying, middle class work that doesn’t require an expensive advanced degree and that contributes to the strength of our economy.
We need to take full advantage of this by approving the Keystone pipeline, tearing down unnecessary regulatory barriers to tapping our own energy sources and opening more federal land to safe and responsible exploration.
Sound monetary policy would also encourage middle class job creation. The arbitrary way in which interest rates and our currency are treated is yet another cause of unpredictability injected into our economy. The Federal Reserve Board should publish and follow a clear monetary rule – to provide greater stability about prices and what the value of a dollar will be over time.
Getting control of the debt, reforming taxes and regulations, growing our energy industry, and predictable monetary policy are five concrete things the government can do to help our economy create new middle class jobs. But if the higher wages people make at these jobs is offset by an increase in the cost of living, we are just running in place.
Nothing is taking a bigger chunk out of the budgets of our middle class households than the cost of health care. We must provide the conditions for people to get the health coverage they need in an affordable way.
One way to make health care more affordable is a Flexible Savings Account that allows families to save tax free money to pay for medical bills. As a federal employee with four young kids who have had their share of accidents, I am blessed to have that option, which I use to pay for our co-payments, my 12 year old daughter’s braces and out of pocket costs of medicine. I wish more Americans had the chance to have one like their members of Congress do.
That is why we should all be shocked that Obamacare cuts the amount you can save from $5000 to $2500. And it requires you get a prescription from a physician to purchase over the counter medications. So if I want to buy some Advil with my FSA, I now need my doctor’s permission.
In addition to promoting Flexible Savings Accounts, we should create a health insurance system that focuses on empowering people, not bureaucracy. People should be able to buy a health care plan that fits their needs and budget, from any company in America that is willing to sell it to them. And they should be able to buy it with tax free money, just like their employers buy it for many of them now.
We should also expand the number of Community Health Centers, as well as work with hospitals to find the best way to integrate them with their emergency rooms to try and get non-life threatening walk-ins to seek treatment there.
These are just a few of the things we can do at the federal level to create the conditions for middle class job creation and stabilize the growth in the cost of living. But no matter how many middle class jobs are created, you can’t grow the middle class if people do not have the skills to get hired for these jobs.
Not so long ago, even if you didn’t graduate from high school, if you were willing to work, you could find a job that paid enough for you to buy a home, start a family and eventually send your kids to college and a better life. Those days are long gone, and they are probably never coming back.
Today, education plays a central role in the 21st century knowledge economy. Four-year college graduates earn an average of 70 percent more than those without such a degree. But that doesn’t mean that everyone has to get a four year degree from a university in order to get ahead. I am proud that my hometown, Miami, is the home of Miami-Dade College, one our nation’s pioneers in education-for-work programs. Years ago, they set up numerous work training programs by working with employers to design the curriculum, and provide mentoring and internship opportunities. Even if you don’t go the traditional college route, you can secure a good living by earning an education that is customized to your interests and strengths.
So what are the things government should be doing in education?
First, our elementary and secondary schools need state level curriculum reform and new investment in continuing teacher training. We have an opportunity through the 2013 reauthorization of the Higher Education Act to make some major improvements.
Second, the public school system for millions of disadvantaged American children is a disaster. Many of these schools deny opportunity to those who need it most. We need to allow charter schools and other innovative schools to flourish. The key to that is empowering parents. Parents should be the ultimate decision makers on where their children go to school. But poor and working class parents often have no choice about what schools their children can attend. All our parents should be able to send their children to the school of their choice. For parents with special needs children, the freedom to choose their kids’ school is especially important.
Third, our tax code should reward investment in education. If you invest in a business by buying a machine, you get a tax credit for the cost. If there is a tax credit for investing in equipment, shouldn’t there be a tax credit for investing in people?
Let’s provide tax encouragement to help parents pay for the school of their choice. Let’s create a corporate federal tax credit to a qualifying, non-profit 501(c)(3) Education Scholarship Organization, so that students from low income families can receive a scholarship to pay for the cost of a private education of their parents’ choosing.
Fourth, let’s encourage career, technical and vocational education. Why can’t more of our students graduate with a high school diploma and an industry certification in a trade or career? Let’s find ways for our returning veterans to put the skills they’ve developed in the Armed Forces to use in civilian job opportunities.
Fifth, let’s look for ways to address soaring college costs and encourage skill development that doesn’t require the traditional four year college route. The groundswell of creativity and technological change in higher education will lead to dramatic reductions in the time and expense of higher education, so long as government financial policy doesn’t stand in the way. We should make sure our federal aid programs don’t discriminate against online course credits and help give parents and students more choices.
And finally we need to reform our federal college grant and loan programs. College affordability is an issue that is very personal to me. The only reason why I was able to go to college was because of federal grants and loans. But when I graduated from law school, I had close to $150,000 in student debt.
A debt I paid off just this year with the proceeds of my book An American Son, the perfect holiday gift and available on Amazon for only $11.99
Let’s explore integrating the Pell Grant program with our tax system. And before they take out a student loan, let’s make sure students and their parents know how long it will take them to complete their education, what their likelihood of completion is, how much they can expect to make after graduation, and how much their monthly payment on the loan is going to be.
The “Know Before You Go” Act which I co-sponsored with Senator Wyden of Oregon would ensure future students and their families can make well-informed decisions by having access to information about things like their expected post-graduation earning potential, and how long it will take them to pay off their student loans.
The bottom line is we are trying to prepare 21st century students using a 20th century education model. Now is the time to be creative, innovative and daring in reforming the way we provide our people the skills they need to make it to the middle class.
Beyond education, there is another obstacle that is keeping too many young Americans from moving ahead. Many young Americans do not have the skills they need to get a middle class job because they grew up in an unstable environment.
They live in broken and often violent homes. In substandard housing, in a dangerous neighborhood. With poor nutrition and no access to primary health care. Often they are being raised by a heroic single parent, and sometimes an elderly grandmother. And they may not have the chance to participate in afterschool activities because they can’t afford the fees and can’t get out of work in time to take them.
Rising above these circumstances is possible. Every day, some amazing parents and caretaker grandparents are overcoming all of this to give these kids the chance at a better life. But the research on this topic has consistently found that children raised in tough circumstances, struggle in comparison with children raised in a more stable family setting. They face higher risks of falling into poverty, failing in school, or suffering emotional and behavioral problems. They have lower scores on standardized tests, lower grades, and a much higher chance of dropping out of high school or failing to attend college. Widespread societal breakdown is not something government can solve, and yet it is one that the government cannot ignore. We cannot separate the economic well-being of our people from their social well-being.
What the federal government can do to confront societal breakdown is limited, yet important. Rather than pretend we know the answer, we should start by engaging those who do important work every day in mentoring young people and leading them on the right path: their teachers, coaches, parents, priests, and pastors. Government leaders should take part in, and encourage, a national conversation about the importance of civil society institutions and leaders in creating the social infrastructure needed for success.
We should look at churches and faith-based organizations in the community as part of the solution. Kids joining the Boy Scouts and being involved in a church’s youth group aren’t just nice things for them to do. One day it might have a real impact on their standard of living and ultimately our national economy.
And let’s protect our nation’s safety net programs. Not as a way of life, but as a way to help those who have failed to stand up and try again, and of course to help those who cannot help themselves. But these programs must be reformed to enhance family stability, financial opportunity, education and a culture of work.
But perhaps the most effective thing we in government can do about societal breakdown is acknowledge the impact it is having. Ask any of the amazing teachers we are blessed to have here in America. I have four of them in my own family. They are on the frontlines of this problem. They will be the first to tell you that every single day, kids bring their home experience in to the classrooms. Every day, they see firsthand how kids living in dysfunctional homes are going to really struggle to make it. As a people, we cannot build a vibrant and broad-based middle class if we do not solve this problem.
My parents immigrated here with few skills, limited education and no money. They worked in the service industry. In almost any other nation on earth, those jobs would barely provide a daily living much less a better future. But in America, my parents made enough money to buy their own home and a car. They felt so confident in the future that in their 40’s they had two children, me in 1971 and my sister in 1973.
We didn’t have everything we wanted, but we had more than we needed. And most importantly we had a strong family, living in a safe and stable home. Our parents loved each other, made sure we knew they loved us, and encouraged us to dream. They made it very clear that, because we were Americans, we could go as far as our talent and hard work would take us.
My father grew up poor and motherless with limited education. My mother lived in a home with dirt floors in rural Cuba, raised by a disabled father who struggled to bring food home every night. But their children now live lives so far removed from where they came from not so long ago. The four children of an uneducated working class immigrant couple from Cuba are all college graduates working in a professional field and enjoying a standard of living significantly higher than our parents.
Our story is not rare in America. But it is rare in the world. Had we been born almost anywhere else, at any other time in history, our lives would have been very different.
I would probably have been a very opinionated bartender.
But instead I was born and raised in late 20th century America. Where our economy produced jobs for relatively low skilled workers like my parents. Where those jobs paid enough for them to make it into the middle class. Where the government helped me and my siblings pay for college. And where today all four of us live a life much better than our parents.
Because of where I was raised, and who I was raised by, I know that what we have here is special. The exception, rather than the rule. And if we lose it, there is nothing to take its place. If America declines, so will the world.
Today, the journey my parents made from poor immigrants to working middle class is harder than it was in their time. The world has changed, the economy has changed and our society has changed. But whether or not the journey my parents made is still possible to all who are willing to work for it will decide whether America will decline or remain this special place. For nothing represents how special America is more than our middle class. And our challenge and opportunity now is to create the conditions that allow it not just to survive, but to grow.
Government has a role to play. And we must make sure it does its part. But it’s a supporting role: to help create the conditions that enable prosperity in our private economy. That’s a crucial role but a necessarily limited one. It can’t substitute for what it is meant to enable—a thriving free economy. It is not the ever expanding reach of government, but rather having access to the benefits of thriving economy that allows the poor to rise into the middle class. Not by making rich people poorer, but by making poor people richer.
To do that we need a limited and effective government. And you can’t have one without the other. Big government is not effective government. Big government has never worked. The promise of more government as the answer to all our problems is easy to sell. But when it is put in practice, it fails every time. Big government has never been able to create and sustain a vibrant and stable middle class.
If any people on earth should know that, it is us. For most of us, we need to look no further than our own communities to see where the answers to our challenges lie. It starts with strong and stable families. It continues with a vibrant civil society filled with people working together to improve their country, and with a thriving free enterprise economy that creates good paying jobs and can draw upon people with the skills to do those jobs.
Government’s role is to support those institutions and policies that strengthen the family and the community. To implement pro-growth policies that support a vibrant free enterprise economy that creates middle class jobs. And to provide access to schools that teach our people the skills they need to fill those jobs.
The emergence of a strong, vibrant and growing 21st century American middle class is the answer to the most pressing challenges we face. Millions of Americans with jobs that pay more means more buyers for our products, more customers for our businesses and more taxpayers for our governments. The more they spend, the more jobs they create for others, who in turn spend their money in the economy as well. And even with low and stable tax rates, the taxes they pay will mean new revenue for our government to provide for the national defense, fund our safety net and pay down our debt.
If we are determined to remain an exceptional nation, this is the only way forward. And if we embrace it, the promise of the 21st century is extraordinary. The United States will soon be the world’s largest producer of energy. The emergence of affordable American natural gas will allow manufacturing to return in force to our shores once again. American innovation promises to revolutionize health care, communications and transportation. And every year, millions of people around the world are entering the middle class, now able to afford the things we invent and build, hire us to provide services, and take trips here to visit our tourist destinations. If we make the right choices now, life in America can be better than it has ever been.
Some say that our problem is that the American people have changed. That too many people want things from government. But I am still convinced that the overwhelming majority of our people just want what my parents had, a chance.
A real chance to earn a good living, and provide even better opportunities for their children.
A few weeks ago, I was giving a speech at a fancy hotel in New York City. When I arrived in the banquet hall, I was approached by a group of three uniformed employees from the hotel’s catering department.
They had seen my speech at the Republican Convention, where I told the story of my father the banquet bartender. And they had a gift for me. They presented me with this name tag, which says “Rubio, Banquet Bartender”.
That moment reminded me that there are millions of Mario Rubio’s all across America today. They aren’t looking for a handout. They just want a job that provides for their families.
But there just aren’t enough jobs out there like that. And many of them do not have the skills they need for the jobs that are available.
All they want is a chance to earn a better life for themselves and a better future for their children. Whether they get that chance or not, will determine whether America remains exceptional or declines.
But it all starts with our people. In the kitchens of our hotels. In the landscaping crews that work in our neighborhoods. In the late night janitorial shifts that clean our offices. There you will find the dreams America was built on. There you will find the promise of tomorrow.
Their journey is our nation’s destiny. And if they can give their children what our parents gave us, 21st century America will be the single greatest nation that man has ever known.