Thompson Opening Statement at Select Revenue Measures Hearing on How Middle Class Families Are Faring in Today’s Economy
Feb 13, 2019
(As prepared for delivery)
Good morning. I’d like to welcome all of my colleagues—especially my friend the new Ranking Member, Mr. Smith of Nebraska, and the distinguished panel of witnesses who have joined us here today.
This is the first hearing of the Subcommittee on Select Revenue Measures in the 116th Congress, and I want to welcome all of the members, Republicans and Democrats, who will be serving on this panel for the next two years. I look forward to working with each and every one of you.
The subject of today’s hearing, how the middle class is faring in today’s economy, cuts to the core of what I view as the key mission of this subcommittee—a subject that could not be more important, more timely, or more urgent.
It has been eight years since my side of the aisle controlled Ways and Means Committee and Subcommittee gavels, and the economy has been transforming rapidly during that time. On the surface, many measures of the American economy look excellent. Unemployment is near its lowest point in twenty years. We’ve seen 100 straight months of job growth. GDP growth has been steady. We’re always pleased to see these positive economic trends.
But those top-line economic indicators don’t capture the whole story. These indicators don’t acknowledge the anxiety of regular, middle class families in communities all across our country—red and blue communities alike—who feel like their economic position is getting more fragile.
They don’t reflect the fact that middle class wages have been mostly flat for the last twenty years, while basic, unavoidable family costs like housing, higher education and health care are going up fast.
The unemployment rate is thankfully low, as I said. But the jobs it counts are now more often part-time jobs, temporary jobs, or low paying jobs. Too many people want, but cannot find, full-time, stable, good-paying jobs. We can all agree that it is this kind of job that is key to achieving the middle class dream, and it’s this kind of job that is proving elusive to so many of the Americans we represent here.
The GDP is growing, and of course we’re glad to see that. But we also understand that, in today’s economy, most of that GDP growth is captured by wealthier families with large investment portfolios and big retirement accounts. We’re glad to see those families succeed. But the economic prosperity we’re supposedly enjoying right now is leaving too many hardworking people behind.
For middle income families who sometimes have trouble making ends meet and who struggle to save much—they aren’t necessarily feeling that GDP growth in the same way as their more affluent fellow Americans.
Last May, the Federal Reserve found that 40 percent of American adults could not come up with $400 to cover an unexpected expense without selling belongings or going into debt. Over a fifth of adults are not able to pay all their current month’s bills in full, and more than a quarter of adults skipped necessary medical care in 2017 because they couldn’t afford it.
Consumer debt is at record levels: Americans hold close to $4 trillion in non-mortgage debt. Student loans play a big role: since the 1970s, the cost of college has exceeded inflation by 500 percent. 70 percent of today’s college students borrow money to attend, and the average debt at graduation is $39,000.
Home ownership is slipping among millennials, who are struggling to repay crushing student loan debt. What used to be a mortgage payment a generation ago is now a payment on an education already earned – and the prospect of home ownership, one of the greatest creators of net worth among hard working Americans, slips farther away.
I am concerned that, with these trends, upward mobility—which has always been a core part of the American Dream—is in decline. Harvard economist Raj Chetty and his colleagues famously pointed out that Americans born in 1940 had a 90 percent chance of earning more at age 30 than their parents did at that age, adjusted for inflation. But among Americans born in 1980, only about half out-earned their parents at age 30.
It used to be that people who worked hard and played by the rules could be confident of getting ahead in America’s economy. These days, that’s just not a given anymore. Middle class families are working so hard to try to get by. They are doing everything that anyone could ask of them, but life still feels precarious. They worry: Will I get a raise this year? How much will child care cost next month? Can I stay current on my student loan? Will I ever be able to afford to own a house? Can we put something away to help the kids pay for college? Will we ever be able to retire?
I want to be clear here – I am an optimist. I want our work here to reflect the idea that we can do good for the people we represent. The policies we enact should result in security, stability, and prosperity for generations to come. To do our work, we need better insight into the financial situation of middle class families – and that’s what I hope to learn today.
And with that I will recognize the Ranking Member, Mr. Smith of Nebraska, for an opening statement.