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Archived News Release--Caution:
information may be out of date.
For more information call: 202/219-8211.
Differences in Final "Anxious Class" Speech at National
Press Club
Drawing a strong distinction between the Clinton
Administration's Middle Class Bill of Rights and that of the new
Republican-controlled Congress, US Labor Secretary Robert B. Reich today
outlined a vision for rebuilding the middle class that focuses on job training
and education as the best way to succeed in the new economy. Reich made his
comments in a speech before the National Press Club in Washington DC.
Discussing plans in the Contract with America to reduce
the capital gains tax and grant corporations larger tax deductions for
purchasing equipment, machinery and buildings, Reich declared, "We are eager to
cooperate with Congress in the days to come. But America cannot simply split
the difference between the two visions. The choice cannot be sidestepped. Their
long list of tax cut proposals conspicuously omits investments in skills.
What's worse, the price of their bid to boost profits and capital spending will
be sharp cuts in education, job training, and other investments in middle class
prosperity.
"The ultimate question," he continued, "the real test, is
whether their proposals will make working families' incomes higher and more
secure -- whether they will put working Americans back on the path to
prosperity." Arguing that Republican proposals miss the mark, Reich said,
"Behind their rhetoric of change is a rerun on a larger screen of twelve years
of Republican government -- twelve years of stagnation or decline for most
working Americans. We've seen this movie before, and we know the plot.
"The best way to increase the wages of most Americans is
to follow a very different path -- one that this Administration has begun to
blaze: Equip all Americans to earn their own prosperity in this new economy.
The evidence is overwhelming that the sharper a person's skills, the higher
that person's wages. Each year of education or job training after high school,
whenever it occurs in the course of a career, increases income by 6 to 12
percent."
Skills and Income
"Most of the good-paying jobs that have been created in the
last two years require some technical know-how," Reich said. "That doesn't mean
that everyone has to get a college diploma. Gas station attendants are lucky to
make $12,000 a year, but an auto mechanic skilled in computer diagnostics can
earn up to $70,000. Unskilled assembly-line workers rarely take home more than
$20,000, but the yearly pay of a programmer or repairer of computerized machine
tools begins at $50,000. There is no quick fix to the plight of working
Americans. But many technical skills can be learned in a year or two by someone
with a high school degree.
"A few weeks ago the President mapped the next steps, in
his call for a Middle Class Bill of Rights. First, a tax deduction for
education and job training, starting at $5,000 a year and rising to $10,000 a
year within four years. The significance of this idea has been little noticed
in the horse-race coverage of competing tax cut proposals. But tuition
deductibility is not merely a tax cut; it is pathbreaking tax reform. It puts
individual investments in human skills -- for the first time -- on an equal
footing with corporate spending on machines, advertising, buildings, or
business lunches.
"This means that for a typical family, the after-tax cost
of equipping a parent with new job skills, or sending the kids to college,
would be cut by 15 to 28 percent. Research suggests that well over half a
million Americans each year who wouldn't otherwise get advanced education or
job training will do so because of this tax break. And there's little reason to
fear that the benefits of the tax cut will be swallowed up by rising tuition.
Tuition inflation is already slowing, and competition among the thousands of
community colleges, technical schools, and other educational institutions will
ensure that most of the gains of tuition deductibility stay with the families
who make the investments."
It's Employment and Training, Stupid
"But bringing the tax code into the 21st century isn't
enough," Reich continued. "If America is to restore its defining bargain --
that if you work hard and play by the rules, you should be able to get ahead --
we need to completely transform the employment and training system. For
Americans who are unemployed, or whose wages are too low for them to take
advantage of tuition deductibility, the President proposes skill grants of up
to $3,000 per year for up to two years. This represents a radical shift from
programs to purchasing power. Instead of feeding the budgets of bureaucracies
-- federal or state -- we'll channel the resources directly into the pockets of
ordinary Americans so they can get the skills they need -- at the time, in the
place, in the way that makes sense for them. Workers who need to start new
careers and workers who need to make a fresh start will have access to this
gateway to better jobs.
"The agenda I have outlined will not create a new middle
class overnight. But it is the only realistic approach. And it is resonant with
American values -- that we earn our keep, that opportunity is the solution to
inequality, that work is always better than welfare, that people should develop
their talents and make the most of their abilities, and that economic growth
should work for everyone. Our solution depends on people taking responsibility,
but it gives them a chance to turn their responsibility into results. It
doesn't look to government or to corporations to rescue hardworking Americans.
It empowers working men and women to prosper on their own.
"They ask of corporations no other duty than to maximize
prof its, and imply that if they do so the future will take care of itself. We
say there is no automatic link between economic growth and middle class living
standards; that link must be forged.
"They ask America's middle class to entrust its fate to
the masters of physical and financial capital. We want to equip all working
Americans to become masters of their own economic fates.
"Which is the better path? Which do you believe will make
working families better off? This is the choice before us."
Archived News Release--Caution:
information may be out of date.
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