Amy in the News
Economy needs help, experts say (Star Tribune)
February 21, 2008
By Neal St. Anthony
Minnesota's economy is performing worse than the national economy for the first time in decades, and larger investments are needed in basic research, education, infrastructure and energy-saving technologies to add jobs and spark economic growth, prominent panelists told two U.S. senators at a hearing Wednesday in St. Paul.
Tom Stinson, Minnesota's longtime state economist, said the $150 billion federal tax rebate recently signed into law will be a shot in the arm that will buoy consumers and spur some spending.
But it was investment by the state and private sector in education and basic research that led to a prepared workforce and the spawning of Medtronic, Control Data and spinoffs, and agribusiness giants and innovations that made Minnesota a world-class player, Stinson said. And Minnesota personal income grew from 95 percent of the U.S. average to 106 percent between 1960 and 2000.
Stinson said there is evidence of underinvestment in recent years.
Sen. Byron Dorgan, D-N.D., and Sen. Amy Klobuchar, D-Minn., led the hearing on behalf of the U.S. Senate Democratic Policy Committee, an information-gathering effort that aids in development of Democratic policy and legislation.
Dorgan and Klobuchar said the federal government is now running budget deficits in excess of $500 billion annually, compounded by a $700 billion trade imbalance with China and oil-producing nations. And that has dramatically driven down the value of the U.S. dollar since 2002. The senators are part of a group that would cut oil-company subsidies, invest in alternatives, cut U.S. oil imports, and start pulling out of the $500 billion-and-counting Iraq war that has been financed entirely with debt.
Jacob Hacker of Yale University, who researches the growing gap between American classes, said the wealthiest 1 percent of Americans has seen after-tax income more than triple since 1979, thanks to tax cuts and explosive earnings growth, while the middle 20 percent of American wage earners has seen real earnings rise 21 percent.
Hacker, the author of a book that asserts that more working-class Americans are worried because they no longer can claim pensions or afford health care, said too many Americans are one lost job or one severe illness away from financial disaster. Citing studies and polls, he said the economy will sputter until workers gain confidence in a brighter future.
He advocates health insurance and retirement savings programs that would cost less than the annual spending on the war in Iraq, or a rollback of the Bush tax cuts to households with income of more than $250,000 a year.
Gary Stoks, CEO of SMI & Hydraulics of Porter, Minn., said his business employs more than 50 blue-collar workers and is seeing increasing business from wind-turbine construction. Porter is in southwestern Minnesota, not far from the Buffalo Ridge wind farms.
Klobuchar recently offered a bill that would make a long-term commitment to tax credits on wind, solar and other energy alternatives to spur sustained investment by the private sector. Such credits have been approved on a year-to-year basis.
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