Sen. Reed shares Washington outlook on economy
These are difficult times because the United States is facing major challenges both on the domestic and international fronts, U.S. Sen. Jack Reed told a group of Jamestowners last week at the Bay Voyage.
Reed spoke at the final event of the Winter Breakfast Series hosted
by the Jamestown Chamber of Commerce. About 60 people attended the morning talk, which was sponsored by BankNewport.
Reed said the economy is the major issue facing the U.S. and the world today. "I think we are making some progress, but it is an international challenge," he said.
Besides the economy, banking crisis and housing market decline at home, the U.S. has serious challenges overseas with Afghanistan, Iraq, Mexico and pirates, Reed said. In the past it was rare for Congress to be dealing with domestic and international crisis at the same time, he added.
"What we have seen over the last several months is a significant deceleration of the economy," he said. "Household wealth fell $5 trillion from last October to last December. For the full year we probably lost about $11 trillion of wealth."
Most of the loss was attributed to falling stock prices and declining home values, he added.
Reed said the economic decline translates to people's lives - when their homes lose value, they lose confidence. Employment security is also a concern as the unemployment rate has surpassed 10 percent in Rhode Island. "This is a fragile moment," he said.
Reed said the first response from the federal government was the stimulus package which was passed by Congress in the early days of President Obama's administration.
For Rhode Island, the stimulus package will total about $1.1 billion, he said, with the goal of increasing employment by at least 12,000 jobs. Part of the money will goes to the Small Business Administration to get lending going to small businesses and also provides for a reduction payroll taxes, he said.
In order to keep the health system operation, $178 million in additional Medicaid funding is earmarked for Rhode Island, Reed said.
Reed said the stimulus package is a "commitment to infrastructure" by funding projects that are ready to go with a 120- day time limit. He said the goal is to get people started working and investing in the future.
Money has also been targeted to education. Reed said education is an important investment that would help return our country to its ranking as the best educated in the world.
Reed said the Congress designed the stimulus package to allow individual states to spend the money where it was needed most.
In regards to the growing debate over deficit spending, "signifi cant economic stimulus" is necessary, Reed said, adding that most economists agree that in order to get the economy moving again, we have to spend money. "Economists on both side say this is one of those time have to stimulate the economy, put people to work, get economy growing again," he said. "The flip side is that we have to tackle this defi- cit."
The nation's deficit has grown to more than $1 trillion, he said.
The nation faced a similar situation in the early 1990s but "by end of 1990s we were running a surplus," Reed said.
President Obama's budget plan calls for cutting that deficit in half over the next five years. "That will be tough to do," he added.
Reed said that banks are not well capitalized. "It could be argued that banks have not been as well managed or as well regulated as they should be," he added.
Reed said there has been progress is getting the banks lending again and added that Congress will consider "significant reform in regulations" for banks in the future.
After meeting with the Chamber of Commerce members, Sen. Reed crossed the bridge to Newport where he helped announce the funding of a $9.9 million unmanned underwater and surface vehicle testing facility. The project will provide an extra stimulus for the local economy, he said.