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Schumer Crain's 1.18.11

Schumer Crain's 1.18.11

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Published by: katehinds on Jan 18, 2011
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U.S. SENATOR CHARLES E. SCHUMER Remarks for Crain’s Breakfast ForumJanuary 18, 2011
Building for New York's Future
When I last came to speak to a Crain's breakfast, in March 2009, it was at a moment of great economic uncertainty. We had avoided, it seemed, the worst case scenario of another Great Depression, but it wasn't clear how soon we would again see economicgrowth, and what kind of growth it would be.Today, we are without doubt in a better place. The economy is beginning, albeit slowly,to recover. We have now had 5 quarters of economic growth, and most economists, both private and public, expect that to continue, and even to be quite strong. Locally, both New York City and New York State have done better than the rest of the country in termsof not just preserving but adding jobs.But the recovery remains fragile, and it remains vulnerable. And that means that aboveall, we must avoid doing things that will set the economic recovery back. This isespecially difficult in a moment when all three levels of government – Federal, state, andlocal – face severe fiscal problems. There can be no question that it is imperative that weaddress our long term fiscal issues. But whatever we do to address the deficit federally,and the budget gaps at the state and local levels, we must be mindful of the need for future economic growth. Without fostering economic growth, reducing the deficit will be a truly hollow accomplishment.The growth of the American economy, what has made us the leading economic engine of the world, has always been about the entrepreneurialism and dynamism of the American private sector. But, historically the dynamism of the private sector has also been matched by a recognition that we must provide the public goods that allow entrepreneurialism toflourish. This is exactly what the government is supposed to do. Whatever your ideology, whether left, right or center, there is little dispute that government mustcontinue to provide these public goods. If the people sitting in this room are the chefsthat create the great seven course meal that is our economy, than the role of governmentis to continue to provide the right ingredients, the sharpest knives, and the best kitchen tocook in.And, for years, we did that. We built a primary education system that was the envy of theworld. We have a higher education system that remains so. We made sure that wecontinued as a nation to attract the best and brightest from around the globe, and made it possible for them to stay and start new companies. We funded basic research andencouraged its commercialization. We aided our firms as they sought to compete abroad by supporting institutions that ensured global free trade. And, perhaps most importantly,we built and maintained a state-of-the-art transportation infrastructure that allowed theeasy and efficient movement of goods and people. It is this transportation infrastructure
along with our education system that have been the public goods most responsible for theeconomic growth and prosperity that have been the hallmark of the United States for thelast 100 years, and made us the envy of the world.In other words, we invested in the future. And that investment led directly to economicgrowth, and created the largest, most successful middle class in the world.And that is what I want to speak about today. Over the next few months, you willcontinue to hear a lot of talk about deficits. It is important. There is work, hard work, to be done, work that can no longer be avoided at any level of government. But in trying tofix the long term problems we face, it would be counterproductive to reducing our long-term deficits if we eat our seed corn. We can't abandon investment in the very economicgrowth that is the key to improving our economic future.Over the next two decades, the United States is expected to average real GDP growth of about 2%. That's a full percentage point less than the 3% growth we averaged from 1975to 2005. The difference between that two and three percent? A difference of over $4trillion in output by 2030 and millions and millions of jobs, not to speak of thereductions in the deficit that such growth would bring. At 3% growth, we would see anadditional $800 billion in government revenue in 2030 alone. Increased growth will domore than any other tool at our disposal to put people back to work, to restore to theAmerican middle class the increased standard of living that they have a right to expect,and to reduce, and potentially even eliminate, the deficit. That is where our focus should be. And continued investment is an absolute if we are to improve our growth trajectory.Throughout the world, wherever you look, you see other nations investing in their brick and mortar in ways we have not.China is currently spending 9% of GDP on infrastructure. In India, they're spending 5%.Brazil, Korea, and the Gulf states are all making significant infrastructure investments aswell.And it's not simply emerging markets. Other mature economies invest at rates greater than we do. In Europe, where they face deficits of their own, they continue to spend oninfrastructure at a rate of roughly 5% of GDP each year, or double what we invest. Prior to the passage of the stimulus bill, the comparable number in the United States was below2.5 of GDP, and that’s likely what we’ll be budgeting again this year, a formula that willclearly hurt economic growth, and our competitiveness, in the future.
The need for infrastructure spending is great. The American Society of Civil Engineersestimates that we need 2.2 trillion dollars in infrastructure spending over the next 5 yearssimply to bring our current infrastructure – our roads, our bridges, or rail systems and our waterways - to a state of good repair. That is over $1 trillion more than we havecurrently budgeted.As an urban center, in New York, we are competing with cities across the globe, and thatis where much of that infrastructure spending is going. In London, they are building ahigh frequency rail project to link commuter areas, the center city, and Heathrow. InParis, they have proposed the world's longest automated rapid transit line that wouldconnect the airports, the business center, and the university area in one continuous link.In Shanghai, already the longest subway system in the world, they are investing billionsof dollars both to build new subway lines, and expand the lines that exist. In Seoul andMunich, they are building the infrastructure for electric vehicles, so they can be preparedfor the new transportation technologies that arise.This is what we are competing with, both as a nation, and a region. We cannot fall behind.Historically, the vitality of maintaining a healthy urban infrastructure is something wehave always recognized in this city, and in this region. Quite frankly, it's the secret to our success. With eight million people living in one city, and twenty million in the region,ease of travel is what has allowed us to thrive.Public transportation is what separates the New York region from almost every other American city and surrounding suburbs. That we can move so many people in and out of such a dense environment is essential, and one of the reasons that, even today, New York is the largest metropolitan region in this country, with 5 million more people than live inand around Los Angeles.And public transportation is also one of the key reasons that our city is growing onceagain in the 21
century. Mass transit allows this city and this region greater density of  population than any other in our country, and with it comes a density of job opportunities,economic cross-fertilization, cultural, educational and social opportunities. On any givenweekday, there are two million people commuting into Manhattan alone. And it is thisvery density, which only mass transit allows, that has always allowed our region to attractthe wealthy, the middle class, and the poor, all seeking one or more of theseopportunities.We live in close quarters and we work in close quarters, and many experts would tell youthe interconnections that having so many people in one place gives rise to is one of thereasons that we have become a dominant financial center, a dominant media center, andnow, increasingly, a dominant high-tech center. The density that mass transit facilitates

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