“Sparking Dynamic Growth in 21st Century America”
Remarks as Prepared for Delivery
Kemp Forum – Google Headquarters
March 10, 2014
As a young boy, I would sit for hours on the porch of our home listening to my grandfather’s stories about history and his life. He was born in rural Cuba in the last year of the 19th century, at a time when there were still no planes in the sky. But just 70 years later, he watched an American walk on the moon.
His life spanned a time of extraordinary progress and change. He marveled at the opportunities this new world presented. And in his stories, I sensed that he wondered what he could have achieved had he been born in a different time and place.
My grandfather loved this country and he never took it for granted, because he knew what life was like outside of it.
He knew first hand that for almost all of human history, economic prosperity belonged primarily to those born into families with power and influence. And he knew America was different, because it was founded on the belief that every human being has a God given right to pursue a happy life. It put in place a free enterprise economy that rewards merit and work rather than social status and privilege.
For over two hundred years, equal opportunity has defined us as a nation and a people. In fact, it is so closely associated with us that the universal desire of all people to achieve a better life has come to be known as the American Dream. It is not a Dream about acquiring wealth or fame. It’s about having the opportunity to achieve happiness, to be free to worship as you choose, to raise a family safely and securely, to do meaningful and rewarding work, and to give your children a chance at a life better than your own.
Long before I ever heard the term “American Dream,” my grandfather instilled in me a belief in its underlying truth. And years later, I came to fully understand why he spent so much time talking with me about his own life growing up. He wanted me to know that, unlike him, I was blessed to have been born in the one place on earth where the son of a bartender and a maid could dream and achieve the same dreams as a child born into privilege.
This remains a country where you can get ahead through hard work and determination. But we cannot deny that achieving this has become increasingly difficult for millions of Americans. A growing number of our people are gripped by economic insecurity, haunted by the realization that they are one bad break away from financial ruin. Despite their hard work, they feel they can’t get ahead. And they fear that they will be unable to give their children a chance at a life better than their own.
As a result, many are losing confidence in the American Dream. And we are left with a growing sense that the economic mobility and equality of opportunity that has defined our nation for so long is now eroding.
This is not without cause. Today, children born into poor families in places like France or Canada have a better chance of emerging from it than poor children in America. This erosion of mobility and opportunity would be a problem for any nation, but for ours it is an urgent crisis. Because equal opportunity is at the core of our national identity. There cannot be an America without the American Dream.
While we’ve had recessions and depressions before, in those instances the average recovery took 33 months. Our current recovery stands at 54 months and counting, and our feeble annual growth rates of two or three percent don’t offer much hope that it will end soon. In fact, the economy was projected to have grown by 3.2% in the last quarter of 2013. But even that paltry number turned out to be wishful thinking, as it was recently revised down to 2.4%.
Even more troubling are the projected long-term trends. The projected gross domestic product is a measure of the maximum amount of GDP we can achieve if we are operating using all of our resources and at near full employment. Just two weeks ago the Congressional Budget Office revised its estimate for potential GDP in 2017, and it is 7.3% lower than the original forecast they made in 2007. This would mean a loss of $1.5 trillion in economic growth. A troubling sign that not only are we failing to reach our potential, but unless we address the trends creating this erosion, the losses we suffered in the great recession threaten to become permanent.
This anemic growth and economic underperformance is not just due to the recession that began in 2007. It is primarily the result of trends that began well before then, a rapid, fundamental economic transformation that Washington hasn’t even begun to seriously address.
While the 84 years my grandfather lived in the last century brought historic progress, the 21st century is seeing even greater and more rapid change.
We no longer operate in a simply national economy, we are now a vital participant in a global one. Things happening on the other side of the world can have a larger impact on our lives than things happening on the other side of town.
This new economy comes with both exciting opportunities and vexing challenges. A global middle class has emerged that is eager and willing to buy the services we provide, the products we build and the food we grow – but it is also eager and willing to compete with us for jobs and business.
Advances in technology have made communication, learning and work faster and more productive – but it has also allowed machines to replace many of the jobs people once relied upon to improve their lives.
And while we still have many jobs that cannot be outsourced or automated, the wages many of those jobs now pay have not kept pace with the growing cost of child care, health care and education.
The problem is that while we are feeling the full brunt of the disruptions created by this economic revolution, its opportunities are not reaching enough Americans. And so the enormous challenge before us is to help more people overcome these problems and access the promise of our time.
The good news is that no nation on earth is better prepared to do this than ours. Another American century is within our reach. But achieving this will require us to replace the antiquated policies and institutions of the last century with ones built for this new era.
In the middle of the last century we began a war on poverty. But five decades later these efforts remain incomplete. While the anti-poverty programs in place today help alleviate the pain of poverty, they do not help enough people emerge from it. So earlier this year I proposed a wage enhancement credit that would encourage work. And I proposed streamlining our anti-poverty programs into a fund that would allow states to design their own creative initiatives.
The 20th century made higher education an option for more people than ever. But today our current system of higher education has become too expensive and too inflexible. It offers limited options for those who do not need and do not want a traditional four-year degree. And it is graduating too many people with degrees that lead to massive student loan debt rather than jobs.
In the 21st century, higher education will no longer be an option for some, it will be a necessity for all. That is why earlier this year I proposed creating additional pathways to earning a degree or vocational certification, as well as new ways to open employment opportunities to those with non-traditional educations. In fact, Google is a leader in this practice. One out of every seven Google hires does not have a traditional bachelor’s degree.
Addressing our antiquated antipoverty programs and reforming our education system are both important initiatives. But ultimately, in order to harness the promise of a new era and build another American Century, we will need millions of new middle and higher-wage jobs.
We will face unprecedented global competition for these jobs. It is a competition we can win, but not unless we reform our current polices in Washington.
Today I am grateful for this opportunity to share with you a few reforms that will position us to compete and win in this new global economy.
These policies are built on two fundamental principles.
First, there is no better economic model for equality of opportunity than the American free enterprise system. More government is often presented as the best way to help those trying to get ahead in life. But in fact, the bigger the government, the more your ability to influence that government determines your chances of success. Only a free enterprise system that rewards merit and work can promote the upward mobility we seek.
The second principle is that we cannot rebuild the American Dream when 43% of new jobs pay less than $16 an hour and our economy is growing at only two or three percent a year. I worry Washington has begun to accept this bleak reality as the new normal. Rather than focusing on policies that give the American people access to an entire banquet of economic opportunities, Washington is arguing over how best to divide up the scraps. Look at the fervor surrounding the minimum wage debate. A $10.10 minimum wage is not the American Dream. We need jobs that pay $30, $40, $50 an hour, and we need to equip more of our people to fill them.
With these two principles in mind, here are three avenues of reform that will help us achieve another American Century.
First, we need new policies that encourage bold innovation.
Making more of what we already produce can grow the economy. But innovating a new service or product can transform it. And we Americans innovate better than anyone else.
From the automobile to the airplane, from the personal computer to the Internet, from biomedicine to social media, just think of all the jobs and careers that now exist as the direct result of American ingenuity.
These innovations have not sprung simply out of a desire to earn money. They come from something deeper. Something in the hearts and minds of our people that sets us apart from the world. And that is the profound desire to create. To innovate. To build. To take the resources given to our nation and carve something out of them that is beautiful and lasting. We want to build products and companies that change not just our lives – not just the numbers in our bank accounts – but that change the world, and for the better.
The power of innovation is present in this room right now. You have technology in your pocket that couldn’t fit in an entire room 30 years ago. But 30 years from now, this technology may fit on the tip of your finger, or in a single blood cell. This progress is happening whether we like it or not. The question is whether Americans will continue to stand at the helm of discovery, or fall behind and watch others take our place.
Right now, we remain the world’s leading innovators. Think of all the examples of modern American ingenuity. We can scarcely go a week without hearing of new futuristic products being developed in the secret labs of GoogleX. Or look at SpaceX, which has revolutionized a once government-dominated industry and helped revitalize the Space Coast in my home state of Florida. And every year, Americans launch thousands of innovative startups in every conceivable field.
The result is that with these new forces of innovation, plus the established manufacturing and production strength of our nation, 20% of the world’s goods are now made in America. And another 15% are made by American companies in other countries. So combined, our people – who make up just 4% of the world’s population – produce at least 35% of the world’s products.
And we produce the right products. While it’s true China may produce more toys and shoes and toothbrushes than us, America is the global leader in high-value production. Our people create and build the airplane engines and medicines and medical devices that are used all over the world.
The exciting part is that as much as we innovate now, we could be doing even more. But Washington puts up a blockade of restrictions, regulations, and taxes that prevent innovators from accessing the full range of opportunity offered by American free enterprise. But with new pro-innovation policies, we can collapse this barrier and open new pathways to accessing our 21st century economy.
If the first 14 years of this century have been any indicator, much of our groundbreaking innovation will take place in the vast, still unexplored realm of digital media, particularly with devices and services related to the Internet. In just the last twenty years, the web has forever changed each and every industry in our economy. And this revolution will not slow down. As seemingly ubiquitous as the Internet is now, web traffic is expected to be thirteen times as high by 2017.
Ensuring that our people’s access to the Internet remains free and open is not some obscure technological discussion – it is now central to human freedom. Given this, it is not surprising that Internet freedom has many enemies. Since the web is worldwide – and since it has proven such an effective catalyst for pro-democratic revolution – it has become a battleground that many fight to control. There are currently 42 nations known to restrict or censor their people’s online access. Many of these nations now wish to take this further by exerting control over the way the Internet is governed and regulated internationally.
The current bottom-up, multi-stakeholder model that governs the web consists of independent boards, governments, businesses, civil society and others. This model may currently be a topic of debate, but no one can question that it has been wildly effective thus far at promoting a free and open Internet. But now many governments are lobbying for regulatory control by the United Nations or a governmental regime.
Opposing this takeover and preserving Internet freedom must be a top national priority. That is why I will soon introduce legislation to make the multi-stakeholder system the official policy of the United States.
We must also recognize that, here at home, too much of the digital realm is blocked by unnecessary federal restrictions. The more spectrum and bandwidth we can open up to the private sector, the more jobs it can create.
Wireless Spectrum now serves the same role as roads and highways. It is a critical means of conducting commerce and getting our products to market. And if spectrum is the highway of the digital age, we know that this highway is getting crowded and traffic will only continue to get worse.
If we do not address it, innovations will go unrealized. Consumers will face more dropped calls, over-capacity networks and higher prices.
But the shortage of wireless spectrum is about more than personal inconvenience. It is about individual opportunity and economic mobility. Estimates are that for every 500 MHz of spectrum made available for commercial use, an additional $87 billion is added to our GDP and 350,000 jobs are created.
To capitalize on this potential, I will soon introduce legislation to increase wireless access and affordability. My bill will reallocate spectrum currently controlled by the Federal government for commercial wireless services.
The resulting innovation will create thousands of jobs. But our efforts to expand innovation should not be limited to technology. We must remain a global pioneer in fields such as science, medicine and energy.
The federal government has a limited but important role in supporting the basic research that will make this possible. Agencies such as NASA, the National Institutes of Health, and even the Department of Defense have historically been effective incubators of research, and can continue to serve as a pipeline for private sector innovation.
Our network of national labs has also long been a leading source of research. But they currently lack the ability to work with the private sector to translate this into American jobs.
That is why I, along with Senator Chris Coons, recently filed a bill called the America INNOVATES Act that will make it easier for our labs to work together with businesses to bring groundbreaking research to fruition in the marketplace.
This research will be critical to sparking innovation, and innovation will be critical to creating higher paying jobs in this new century. But innovations can only lead to more jobs if innovators have access to more customers. The emergence of a global middle class has created more potential customers than ever for our products and services, yet our trade barriers and domestic restrictions keep too many American businesses out of these emerging international markets.
Globalization is already a fact, but much of the rest of the world is ahead of us in adapting and catching up to it. So after spurring innovation, our second goal for reform must be to expand the markets for American products and services by actively engaging in today’s global economy.
First and foremost, we need trade policies that make it easier for our products to reach a global network of consumers.
Take for example a family owned trucking company that transports export products from manufacturers to ports. There are now billions of people around the world who want to and can afford to buy these American products. If we could make it easier to ship to those countries, the volume of work this trucking company has could grow dramatically. This means that not only will they make more, but they will need to hire more drivers and buy more American made trucks.
Carefully crafted trade policies could be a boon to tens of thousands of small businesses like this one. That is why I support trade promotional authority for the President. And it’s why I support continued efforts to pursue regional and bilateral trade agreements – such as the Trans-Pacific Partnership with developed economies in Asia and Latin America, and the Transatlantic Trade and Investment Partnership with Europe.
And as we open up these avenues for trade, we will also see growing opportunities to export American energy. As hundreds of millions around the world become drivers and move into modern homes, selling some of our vast energy resources will lead to explosive growth and higher paying jobs here at home.
Despite burdensome federal rules and red-tape, the United States has experienced a spike in energy production in recent years. We produced nearly 14% more energy in 2012 than in 2005 and this is projected to rise steadily in the years ahead.
Nonetheless, we must remember that we are in constant competition with other global energy producers. To stay competitive, we must promote access to our nation’s abundant resources. This means supporting rail transport for crude oil, which has recently come under regulatory attack. But it also means constructing a more efficient, modernized infrastructure to ease the transport of oil and natural gas.
The interstate highway system of the last century helped foster an explosion of economic opportunity. An interstate energy pipeline would have a similar impact in this century.
The good news is that – unlike the interstate highways of the 1950s – the private sector, not taxpayers, can and will pay for this new system. What we need from government is a reduction or elimination of the regulations that are preventing the private sector from doing this.
Many of the regulations affecting energy transport on the books today are decades old. They’ve resulted in a sluggish administrative certification process that often prompts years of litigation or – as we’ve seen with the Keystone Pipeline – a seemingly endless wait while bureaucrats in Washington argue the details.
In fact, an effort is underway to build a natural gas pipeline into Florida but, before construction can even begin, the businesses involved have to spend months under the review of as many as six different federal agencies.
So we should explore ways to streamline the regulatory review process for natural gas pipelines. And we must eliminate the barriers that prevent us from exporting natural gas and oil abroad, such as the outdated ban on crude oil exports that dates back to the 1970s.
Fully benefiting from the opportunities of the 21st century will require us to reform policies such as these that put us at an international disadvantage, and this includes more than just energy policies.
From our tax code, to our regulatory system, to the dark cloud of federal debt that hangs over our economy, America has steadily become less and less appealing to entrepreneurs and job creators. Not long ago, there were only a handful of economies on earth to compete against, but today there are dozens of countries vying for the modern jobs that our people need.
So after sparking innovation and expanding markets for our products, our third avenue of reform must be to make America the best place in the world to invest.
Investment is what creates higher-paying jobs. My father had a job at a hotel as a bartender and my mother as a maid – not because the government had opened that hotel – but because someone somewhere had decided to invest in starting it. But in the years since, the growth of government has made this sort of job-creating investment harder, not easier.
We now have the highest corporate tax rate of any advanced economy in the world. Combining federal and state taxes, our corporate rate is nearly 40%, while the global average is under 25%. Just on taxes alone, it is more expensive to invest and create jobs in America than in most other developed economies in the world. If we stick with this status quo, we risk losing the next great American company before it has the chance to begin.
That is why Senator Mike Lee and I have dedicated ourselves to the development of a new, modernized tax reform plan – one that is broad and fundamentally pro-growth. Our proposal will encompass both the individual and business sides of the tax code, and will prioritize replacing our current business tax system with a new globally competitive model.
The reforms we are considering would allow businesses to take a full and immediate deduction for all investments. This fair and equal treatment would end the crony capitalist loopholes that benefit politically connected corporations. Allowing businesses to immediately write-off all investments will not only result in a lower tax burden, it will create an incentive to invest, leading to job growth.
Take the example of a business that brings in $50,000 per month. Let’s say $20,000 of this goes to basic operating costs. That leaves the owner with a $30,000 profit. Now the owner has to decide: do they withdraw and spend the $30,000 or do they take some of it and use it for investments that would grow the business, allowing it to hire more people?
Under the current system, the safe thing to do is to leave it in the bank. We see evidence of this in the fact that American businesses are sitting on an estimated $4 to $5 trillion in uninvested cash. That's more than the size of the German economy, and twice as large as the entire economy of Russia.
Instead of being invested to grow and hire, this cash is just sitting there. But under the changes we are working on, the more a business invests, the less the federal government gets to take away. That serves as a powerful incentive to invest, grow, hire and give raises.
Our current tax system also discourages growth by placing major obstacles in the path of companies wishing to participate in our global economy. As I mentioned earlier, about 15 to 20% of the products made in the world are made by American companies operating overseas. Despite this, under our current tax laws, if an American business makes money in Japan, for example, they have to pay taxes in Japan. But if they want to take that money and bring it back to America to open a new factory, they would also have to pay U.S. taxes on the same money.
We can fix that by implementing what 28 of the 34 OECD countries already have: a territorial system of taxation. The fact that the vast majority of developed economies in the world already have a territorial tax system – including all other G8 nations – has put American companies at a major competitive disadvantage.
In addition to tax reform, we also need to remove the impediments to investment put in place by government. Chief among these are a health care law that has led to uncertainty, insecurity and rising costs; a national debt that stands at a staggering, hulking $17 trillion and only continues to rise; and a regulatory code that has become at best a burdensome and unnecessary distraction, and at worst an attempt on the part of some to rig the game and pick winners and losers.
All three of these are – in their own ways – directly contributing to the decrease in private sector investment, as well as the economic insecurity felt in households across America.
ObamaCare, for one, has become the single largest impediment to job creation today. It is a perfect storm of federal mandates, costly regulations, and aggressive marketplace intrusions that – taken together – threaten jobs and economic growth on a historic scale. Repealing and replacing it with market-based reforms is the only option.
To bring the debt under control, we need to limit spending and reform the entitlement programs that drive our long-term fiscal imbalance. To that end, the budget that President Obama introduced last week was a missed opportunity. Washington cannot wait for a debt crisis before solving this problem.
And lastly, our invasive regulatory code needs a taste of its own medicine – it needs to be restrained and restricted. We can do this by establishing a National Regulatory Budget. The budget would be set by an independent board, which would be tasked with estimating the cost of all existing federal regulations and setting an amount each agency’s regulations would be allowed to cost the economy. This would force federal agencies to enact only those regulations that serve an essential role.
Confronting the threat of ObamaCare, our federal debt and our burdensome regulatory system would go a long way toward restoring the certainty that leads to private sector investment.
All of the policies I’ve outlined today are important in their own right, but each is like a single brushstroke. Only when they are combined together do we see what they really create: a grand illustration of American potential in the 21st century.
As I mentioned earlier, we are already able to say that 20% of the products made and sold in the whole world are made in America. But imagine when we combine this existing depth of manufacturing capability with the trillions in private money waiting to be invested in our economy, plus a creative and well trained workforce, plus access to more wireless spectrum, abundant domestic energy and millions of new global customers. The American economy will take off at a historic rate, creating hundreds of thousands of high-paying jobs.
This is the exciting opportunity before us. We no longer have the luxury of wasting time on the failed promises of big government or the divisive rhetoric of class warfare. The world around us is changing quickly, and we have waited for far too long to change with it. We still have time to build a new American Century, but we do not have forever.
We should not take for granted how blessed we are to be Americans. We inherited from those before us the most exceptional nation in human history: a truly unique place where the dreams that were impossible almost everywhere else became possible here.
Some say American Exceptionalism is a national myth we perpetuate simply to make ourselves feel better. But I for one know it is not myth. I have seen it with my own eyes and been touched by it in my own life.
My parents were both born into poor families in another land. And by the grace of God they found their way here.
Their lives were never easy. They both worked well beyond retirement age. They never became rich or famous. They weren’t able to leave us any money or even help us pay for college. And yet they lived the American Dream.
Because here they were given the opportunity to live happy and fulfilling lives. To own their own home where they raised a family in a safe and stable environment.
They had dignified work that paid enough to provide for their children. And they gave us the chance to achieve our own dreams and a life better than their own.
This was their version of the American Dream. It gave purpose to their work. And it made them feel that their own lives mattered. That even though they never made it big, through us they had made a mark in this world. And everything they had been through was not in vain.
This is the true meaning of the American Dream. To have the freedom to decide the kind of life you want and to have the real opportunity to achieve it. This Dream is neither dead nor doomed. But it is also not self-perpetuating. Each generation before us has had to step up to protect it and expand it. And now the time has come for us to do the same.
We live in an uncertain and insecure time. The world around us is changing and many of the paths we once relied upon to take us to our dreams no longer do. But there are new paths waiting to be opened. And they can bring more people to that dream than ever before.
This is the exciting opportunity before us. To usher in a new era of opportunity and prosperity. One better than anything the world has ever seen before. To bring about yet another American Century greater than the one we leave behind. And in doing so, to write the latest chapter in the story of the greatest nation the world has ever known.