A Promise to the Middle Class

An Eight Point Blueprint to Restore Economic Justice in America

www.Nuciforo.com

Andrea uciforos Promise to the Middle Class

An Eight Point Blueprint to Restore Economic Justice in America

This economic and political assault on working- and middle-class Americans must be confronted and can be reversed. We cannot depend on the same politicians who played a decisive role in creating the greatest level of economic inequality in the United States since the Great Depression to suddenly reverse course and respond to the peoples just demands. -Andrea F. uciforo, Jr.

Table of Contents
A Letter from Andrea uciforo
THE DECLINE OF THE MIDDLE CLASS THE FAILURE OF THOSE ENTRUSTED WITH PROTECTING AND ADVOCATING FOR THE PEOPLE MY PLAN TO RESTORE PROSPERITY TO THE WORKING AND MIDDLE CLASS

Priority One
REVIVE AMERICAN MANUFACTURING

10 16 19

Priority Two
REBUILD AMERICAS INFRASTRUCTURE

Priority Three
INVEST IN EDUCATION FOR A 21st CENTURY WORKFORCE

Priority Four
PROVIDE MIDDLE CLASS TAX RELIEF

21 23 25 27 29 31

Priority Five
ENSURE ROCK-SOLID RETIREMENT SECURITY

Priority Six
MAKE FINANCIAL REFORM STICK

Priority Seven
REPEAL CITIZENS UNITED

Priority Eight
REVITALIZE SMALL BUSINESSES

Conclusion
MY PROMISE, OUR FUTURE

A letter from Andrea uciforo

Dear Friend,

I was born in Pittsfield, Massachusetts. During my childhood, Pittsfield was a typical New England city with a strong manufacturing base and it was a great place to grow up. Anyone who was willing to work hard was rewarded with an opportunity to find a job, buy a home, raise a family, and save for their childrens education and their own retirement. I watched my neighbors, my friends parents, and members of my family do exactly that. Because the opportunity for upward mobility was available even to folks without a college degree, economic prosperity was broad-based, and the resulting middle-class stability helped strengthen families and promote community solidarity. I know Pittsfield as a place where adults could work by day and coach little league, attend PTA meetings, or otherwise participate in the life of the community in the evening. By the time I reached adulthood, that reality had already begun to shift, driven primarily by changes in the broader economy. During the years between my high school graduation in 1982 and my return to Pittsfield in 1995, GE and other large companies had dramatically slashed their blue-collar work force. For generations, these companies formed the backbone of middle-class prosperity in Pittsfield and across the state. As the manufacturing sector in Pittsfield contracted, I witnessed firsthand the collapse of that broad-based prosperity and saw the destabilizing effects it had on working- and middle-class families. The circumstances of working- and middle-class families have continued to worsen, and the damage is not limited to Pittsfield. Middle-skill jobs that paid a living wage, provided healthcare, and included retirement benefits have since been eliminated, thereby leaving a gap in the labor market. The result is a division between the high-skill, high-wage jobs in the professional, technical, and management sectors those requiring at least a college diploma or, more frequently, an advanced degree and the low-skill, low-wage jobs in the greatly expanded service sector. This second category includes most of the jobs presently available to more than one5

hundred-million working-age Americans without a college education.

The Decline of the Middle-Class

Given the systematic replacement of living-wage jobs with low-wage jobs, it is no surprise that economic prosperity is funneled to a distinct minority while working- and middle-class families struggle to stay afloat. While our current economic state is certainly a factor, this shift began prior to the start of the Great Recession in 2007 and the collapse of the global financial system in 2008. Indeed, when adjusted for inflation, real incomes for middle-class families have risen at a crawl over the last thirty years, growing only 15.5 % between 1979 and 2007.1 By contrast, growth has exploded for the top 5% of American families that have incomes of $184,500 or above, with real income growth exceeding 87% over the same period.2 The negative impact of these economic trends on middle-class families has been made even worse by a political shift over the past thirty years. During that time, elected officials have become increasingly responsive to the desires of those special interests with enough money to hire lobbyists to ensure their preferential treatment in the power corridors of Washington. We can see the results of this dynamic all around us every day. Even as millions of Americans struggle to find jobs, American corporations have enjoyed record profits that they have not reinvested to expand their business and create jobs. We have seen the very same bank executives whose greed, deceit, and mismanagement brought the global financial system to the brink of collapse subsequently rewarded with annual bonuses worth hundreds-of-millions of dollars. Indeed, salaries for chief executives in all sectors of the economy have soared, from 42 times the earnings of average workers in 1980, to 344 times in 2007.3

The Failure of Those Entrusted with Protecting and Advocating for the People
Our government is designed to protect the interests of many from an elite minority. For decades, however, our elected representatives have diverged from their duty, making corporations and wealthy individuals the recipients of several beneficial changes to the tax code. Congress reduced the tax rate on
6

inherited wealth (commonly known as the estate tax) by 46% since 1980, and lowered the tax rate on investment income (the capital gains tax) by 31% over the same period.4 Not only have working- and middleclass families not received the same kind of preferential treatment, but Congress actually increased the payroll taxes that average Americans pay by 25% during those years.5 The recent Citizens United v. Federal Election Commission, 558 U.S. 50 (2010) decision of the Supreme Court will only further entrench this system of corruption.6 The ruling allows a tiny minority those wealthy elites controlling a disproportionate share of the nations wealth to garner an unprecedented degree of power over the electoral process and the politicians who depend on their largess to remain in office.7 This corruption erodes the foundation of American democracy and threatens to alienate the overwhelming majority of average voters from a system of government now run by politicians who willfully shirk their sacred oath to represent We the people and spurn their responsibility to serve the public interest. This economic and political assault on working- and middle-class Americans must be confronted and can be reversed. It took bold action from Congress to help create the conditions in which a middle-class could grow and flourish in the wake of the Great Depression. It was that same passion and dedication which ensured that prosperity of the post-War decades of the 1950s and 1960s was broad-based. These efforts must be properly focused, however, as we have seen deliberate action by Congress over the past thirty years constricting prosperity to the select few who have captured the lions share of the economic growth during that time. Obviously, we cannot depend on the same politicians who played a decisive role in creating the greatest level of economic inequality in the United States since the Great Depression to suddenly reverse course and respond to the just demands of working- and middle-class Americans. The change we need now will require nothing less than the revitalization of American democracy from the ground up. The first and most crucial component of this effort is not politicians, but people. Our success at uprooting the corruption in Washington depends on an engaged citizenry organized to elect new representatives who remain unencumbered by ties to wealthy backers and powerful interests, leaders who are instead empowered by the grassroots support of their constituents.

My Plan to Restore Prosperity to the Working- and Middle-Class

The trickle down economy of the past 30 years has not worked for the overwhelming majority of Americans who are working- and middle-class. Instead, conservative economic policies have redistributed wealth upward to large corporations and wealthy individuals. In fact, 52% of all income growth between 1993 and 2009 was captured by the wealthiest 1% of American households.8 The wealthiest 1% now own 34% of all the household wealth in the country, an amount equal to $21.9 trillion.9 By contrast, the total net worth of the bottom 90% of households is only $18.4 trillion.10 Three decades of conservative economic policies have recreated levels of income and wealth inequality not seen since the decades just prior to the Great Depression. The unequal distribution of wealth and income is not only unjust, it is also destabilizing to the economy as a whole. This is made evident by the collapse of the U.S. financial system in 2008 and the lingering Great Recession, which triggered the loss of over 8 million jobs. Furthermore, the present level of wealth and income inequality is not the result of a meritocratic system that rewards hard work and skill. It is extremely troubling that pay for blue collar work has stayed almost flat despite consistent increases in worker productivity, while corporate executives have been rewarded with billions of dollars in bonuses even when they have failed at their jobs. Despite this grim reality, we can make the changes necessary to restore economic justice by advancing a platform of progressive policies designed to promote broad-based prosperity and economic stability. Specifically, we need to focus on creating jobs that pay a living wage through the revitalization of domestic manufacturing and investments in large-scale infrastructure projects that will put millions back to work rebuilding America. We need to enable our young people to compete in the global labor market of the 21st century by diversifying the educational options that lead to middle-class prosperity and fighting to make higher education affordable again. We need to rebalance our tax priorities and make rates more equitable across all income levels. We must safeguard Social Security, and promote sound investments in individual retirement plans to ensure stable and secure retirement for working- and middle-class Americans. We must enact financial reforms that break up institutions that can hold taxpayers hostage by growing too big to fail. Most importantly, we must act decisively to restore our democratic system of government by rooting out the
8

pervasive corruption enabled by unlimited corporate spending on federal elections. As your Congressman, I promise that within the first 90 days after taking office, I will propose the following blueprint to rebuild Americas middle-class as a series of legislative bills, and I will fight every day to pass those bills into law.

Set forth in greater detail below, my plan to restore economic justice in America is built around the following eight priorities:

o Revive American Manufacturing o Rebuild Americas Infrastructure o Invest in Education for a 21st Century Workforce o Provide Middle-Class Tax Relief o Ensure Rock-Solid Retirement Security o Make Financial Reform Stick o Repeal Citizens United o Revive Small Business

Priority One
Revive American Manufacturing

So-called free trade agreements have created incentives for companies that were founded and built in the United States to offshore production to countries where cheaper labor is available. These lower labor costs are achieved, in part, through the absence of basic rights that American workers fought for and secured generations ago. Since 2000, America has lost nearly one third of its manufacturing jobs, which is directly related to the shrinking of the middle class. This recent decline is only an acceleration of a long-term trend with manufacturing jobs decreasing from 27 percent of our workforce in 1970 to a little over 10 percent today.11

Manufacturing accounts for only

11.2%
of gross domestic product; in 1950, it comprised

27%
To illustrate the effect outsourcing has had on Americans: Companies outsourced 32% of all manufacturing jobs in the first decade of the 21st century12 42,401 factories closed in the United States from 2001 through 200913 Fewer than 9% of American workers were in the manufacturing sector in 2011, down from more than 20% in 198014

10

The global economy is a reality of the 21st century. If the United States is going to continue to lead the world, we need to implement fair trade policies that acknowledge and protect the human rights of workers around the globe. At home, we must leverage key assets through strategic investments to stimulate a renaissance in American manufacturing and remain on the forefront of innovation. For the 1st District, this means harnessing the research capacity of our educational institutions to our renewable-energy, technology, and transportation infrastructure to drive innovation and promote sustainable, high-tech production for the 21st century. To achieve the greatest return on our investment, we need to focus our efforts on the following key areas:

A. Implementing Global Fair Trade Policies

The U.S. imported $738.3 million more in manufactured goods than it exported in 2011.15 This is by far the largest trade deficit in the world.16 Numerous studies show that cheap foreign imports, low wages in Asia and South America, and the absence of workplace health and safety rules account for much of this. Data shows that the North American Free Trade Agreement, while beneficial to corporate shareholders in all three nations, has had hugely negative impacts on workers in manufacturing and assembly industries, as well as farmers. We must increase our exports by strengthening our manufacturing base. We must also ensure that our
11

trading partners, especially China, India, Mexico and South America, engage in free and fair trade with us and that our currencies are appropriately valued. Congress should immediately pass legislation requiring every bilateral and regional trade agreement to adhere to the following principles: fair wages; protections for workers, including health care, retirement contributions, and workplace safety rules; gender equality, including access to employment and equal pay for equal work; prohibition on child labor; and adequate and reasonable environmental protections.

B. Increasing Public Investment in Research and Development

In 2011, the federal government allocated $143.4 billion to research and development.17 These research dollars touch every segment of American life, ranging from health care (36% of all medical research), energy, the environment, and national security. The United States accounted for three quarters of the worlds biotechnology revenues and of global research and development spending on biotechnology.18 These investments have established the United States as the leader in health technology, and Massachusetts has emerged as a critical hub of biotechnology research and medical device manufacturing. Total research funding in most developed countries is between 2% and 3% of Gross Domestic Product (GDP). The United States spends 2.8%.19 While we are on the higher side of average, we trail Japan, Israel, and a number of European nations in this measure. The United States government should double its investment in innovative research and development over the next five years. This research and development investment would lead to new jobs and additional tax revenue, and would promote the development of innovative products in energy and green technologies. Furthermore, the United States should immediately commit to spending no less than 3% of GDP on research and development. By supporting research and innovative technologies at university-based settings, the National Institute of Health, the National Science Foundation, and other agencies and non-profit organizations, we will build Americas competitive advantage in manufacturing for years to come.

The U.S. spends only 2.8% of its GDP on research and development; Japan spends 3.1%

12

C. Creating a Permanent Research and Development Tax Credit

Studies show that 80% of the benefits of Permanent Research and Development Tax Credits directly support jobs in the United States, and that every dollar spent promotes investment in research and development based in the United States.20 Several studies also show that every $1 spent on research and development adds about $2 of benefit to our economy.21 The U.S. should establish a permanent 20% research and development tax credit available to small and large businesses. This will allow us to catch up to and compete with peer countries in Europe and Asia, many of which already offer more generous tax credits.

D. Promoting Public and Private Investment in Green Technology

In 2011 the U.S. invested 48.1 billion dollars in clean energy which was 42% higher than the amount invested in 2010 and gives the U.S. a slight edge over China. However, it is crucial that the U.S. continues investing in clean energy at a rapid rate in order to stay in the lead.22 Congress should authorize a $100 billion federal investment in clean energy technologies over two years. One University of Massachusetts study proposes an annual division of that amount into $46 billion in direct government spending for public building retrofits, mass transit, freight rail, smart electrical grid systems, and renewable energy systems; and $4 billion for federal loan guarantees to help finance building retrofits and renewable energy projects.23 Large-scale investment in clean energy would boost employment, lower home energy bills, and reduce prices for non-renewable energy sources. Providing further benefits, such an investment would yield two million new American jobs and cut the unemployment rate by 1.3%.24 Additionally, Congress should require electric utilities to meet 20% of their electricity demand through renewable energy sources and energy efficiency by 2020, thereby promoting investment by the utilities in renewable energy. As proposed in the American Clean Energy and Security Act, Congress should also mandate a nationwide 17% emissions reduction from 2005 levels by 2020, more than President Obamas recommendation of 14%.25 Using both increased Corporate Average Fuel Economy standards and emissions limitations on power producers, this approach could reduce United States emissions nearly 83% by 2050.26

13

I further propose that Congress should make up to 20% of private investment in modernizing Americas energy grid tax deductible, incentivizing the development of clean-energy-generating systems, and promoting investment in promising renewable energy sources.

E. Cutting Corporate Tax Rates for Manufacturers and Other Key Employment Sectors
American manufacturers pay a corporate tax rate of 40%. This rate applies to all corporate income above $18 million, and is the highest rate in the industrialized world.27 As compared to the average corporate tax rate in industrialized countries at 26%, American manufacturers are paying over 50% more on average than their competitors around the industrialized world.28 Corporate income is also subject to state excise rates. The U.S. should cut its corporate excise tax to 25%, approximately equal to the average in the industrialized world. This will fuel hiring and jobs, in both the industrial sector and financial services. With increased employment and business investment, federal tax revenue would increase by at least a full percentage point. This benefit has already been realized by numerous countries; the average corporate tax rate in 19 industrialized countries fell from 45% in 1985 to 29% by 2005, and during that time period, corporate tax revenues in those countries increased from 2.6% to 3.7% of GDP.29

F. Allowing Foreign Customers Better Access to American Suppliers

Export growth will be key to the long-term health of the American economy. Unfortunately, companies that would like to do business with American manufacturers and service providers have trouble entering the United States to discuss product development, meet American sales teams, and place orders. We must streamline the Visa application process for companies to have access to American exporters.

95%
of consumers reside beyond our borders

G. Cleaning Up Polluted Industrial Sites

We have a limited amount of usable space suitable for industry in Massachusetts, much of which has been previously developed. In order to maintain the integrity and beauty of the natural environment, and leverage the infrastructure and location advantages of developed sites, we need to invest in their renewal and reuse for
14

manufacturing in the 21st century. Since the early 1980s, the federal Superfund trust fund has been used to clean up contaminated sites, and parties found responsible for contaminated sites usually bear the cost of Superfund cleanups.30 As a failsafe, the Superfund trust fund covers the costs when liable parties no longer exist, or for some reason will not undertake a cleanup.31 For the last several years, the program has received funding from two sources: general funds from the U.S. Treasury, and remaining balances in the Superfund trust fund.32 In earlier years, revenues for the trust came from dedicated taxes on petroleum, chemical feedstocks, and corporate income.33 When those taxes expired in December 1995, the amount of unobligated money in the fund gradually declined to almost zero by 2003.34 The Superfund program has been funded almost entirely through general revenues ever since. The Superfund trust fund should be restored to its pre-1995 status, thereby creating a dedicated funding stream to support the cleanup and reuse of contaminated industrial sites. When they expired at the end of 1995, Superfund taxes included an excise tax of $0.09 per barrel on crude oil or refined oil products, excise taxes of $0.22 to $4.87 per ton on certain hazardous chemicals, and a similar excise tax on imported hazardous chemicals.35 This funding stream should be temporary, with a ten-year sunset provision designed to raise the revenue necessary to clean up existing contaminated sites. This funding approach is consistent with a polluters pay principle: industries that manufacture, use, and sell hazardous substances should bear the cleanup costs. 36 The additional costs may also discourage the use of toxins, petroleum, and other hazardous material. A portion of the fund should also be dedicated to finding responsible parties, and recovering some portion of cleanup costs from them. Companies subject to the tax could then distribute the cost of these cleanups into the marketplace, and thereby recoup some of the expense.

15

Priority Two
Rebuild Americas Infrastructure

Americas infrastructure is crumbling. From a collapsing bridge in Minnesota to a creaking railway network on the east coast, Americas infrastructurethe backbone of our economy is rapidly deteriorating. According to the 2009 Report Card by the American Society of Civil Engineers (ASCE), 26.9% of the nations 600,905 bridges require repair or replacement within the next few years.37 The costs associated with this work could equal $17 billion annually for the next 20 years.38 This figure does not include the maintenance costs for roads, water, educational and other infrastructure. The ASCE estimates that the total costs associated with maintaining all public infrastructure for the years between 2009 and 2014 will exceed $2.2 trillion.39 This number is almost half a trillion dollars higher than ASCEs five-year estimate in 2005.40 Most of these costs will be borne by the states, even while state lawmakers and city officials are strapped for cash and loathe to raise taxes. Because state and local officials recognize the crisis facing the country in maintaining these core systems, states and municipalities have begun to use risky strategies to keep infrastructure intact. In one extreme example in Michigan, the cities of Detroit and Flint have been compelled by budget constraints to give up on maintaining much of their public infrastructure. Unable to afford the cost of fixing the roads and maintaining the water systems, Detroit and Flint have been forced to adopt a policy of reversion. That is, the cities have informed neighborhoods and community leaders that the water will be turned off, the roads not plowed, salted, or maintained, and that the sidewalks and other infrastructure would be allowed to revert to their natural state. A less drastic but equally short-sighted approach taken by cities and states facing imminent budget concerns has been to sell or lease publicly-owned infrastructure to private companies. Over the last ten years, some 15% of Americas drinking water systems have been conveyed or leased to private companies. These arrangements
16

26.9%
of the nations 600,905 bridges require repair or replacement within the next few years

usually involve a one-time payment to the public and a schedule of required improvements. Using a similar model, the city of Chicago in 2005 entered into a 99-year lease for the Chicago Skyway, gaining an up-front payment of $1.8 million. Meanwhile, tolls have increased 75% since the lease went into effect. This privatization effort has served as a template for proposals relating to a toll bridge in Massachusetts, a turnpike in Pennsylvania, and an airport in Illinois, among others. These arrangements have not always proved popular, or even successful. Indeed, the record reveals that privatization of public infrastructure commonly results in higher fees for the public, with benefits flowing to private investors. Outcomes like these are on display throughout the nation, including the 1st district in Massachusetts. In Holyoke, for example, sewer rates for homeowners rose 176% after the city privatized its wastewater management in 2005,41 while the city of Atlanta reclaimed its water system after a contracted company fired half the staff and failed to maintain water quality. The time has come for our country to reclaim our responsibility for maintaining our infrastructure, and to honestly and openly discuss how we plan to fund trillions of dollars of critical repairs and improvements over the next several years. Such a task obviously presents an enormous challenge, on which Congress has continually deferred action. Unfortunately, as homeowners know, deferring routine maintenance only leads to bigger problems and increases the cost of repairs. We need to accept the fact that spending on infrastructure is a necessary investment for economic growth and the long-term vitality of our nation. The truth is that our infrastructure is not only old, it is also outmoded. This means we have the opportunity and the responsibility to think creatively about how to execute needed upgrades in ways that embrace new global realities and position us to thrive in the 21st century. We should adopt a ReNew Deal, according to which the federal government can underwrite key infrastructure investments that maximize efficiency in high population areas. Such projects should include the high speed rail in Connecticut, Massachusetts and Vermont, the new tunnel and road linking New York and New Jersey, and the connector rail and road systems in Indiana, Chicago, and the Midwest. We can gain early benefits by focusing federal resources on projects that have already been through a local planning process, projects where federal and state governments have already paid for much of the planning, permitting, environmental work. Furthermore, these projects carry immediate employment benefits, especially to tradesmen and laborers.

The World Economic Forum ranks the U.S. 24th in the world in terms of infrastructure

17

Over the longer term, we should establish a federal infrastructure bank, using the approach proposed by Congresswoman Rosa DeLauro of Connecticut. Modeled after state infrastructure banks created under federal law in the 1990s, a federal infrastructure bank would operate as a revolving loan fund. Funds would be available on a project-specific basis, carry below-market interest rates, and amortization schedules of up to 35 years. As part of rebuilding Americas energy infrastructure, the U.S. should create a National Smart Grid Consortium, modeled on the one formed in New York in 2008, in order to build on the recent developments of utility companies, researchers, and individual inventors. Congress should triple Department of Energy funding available for the Smart Grid Initiative, and urge the scientific and energy sectors to develop a national smart grid plan within three years. Investment in smart-grid technology will allow American manufacturers better and cheaper access to power, maximize traditional fuel sources, promote the development of renewable energy sources, and use timing technologies to regulate peak demands all of which can provide the power necessary to fuel the American economy. Lastly, we should promote financial innovations like the Build America Bonds (BAB) created by Congress and the President in 2009 to allow states and municipalities to devise private sector solutions where appropriate.42 BABs reduce the cost of borrowing for states and cities, and provide tax advantages for the investors that buy them.43 The municipal finance markets are very well developed, and regulators should encourage states and municipalities to access those markets to finance infrastructure improvements.

The Smart Grid could create as many as

280,000
new jobs

18

Priority Three
Invest in Education for a 21st Century Workforce

The 21st century reality of a globally competitive workforce means that now, more than ever, we must invest in strengthening public education and improving access to higher education for all Americans. As American manufacturing declined over the last thirty years, a college degree continued to provide secure access to employment, thereby ensuring a middle-class standard of living for young people entering the workforce. But as college tuition and fees have skyrocketed in recent years, millions of young people are unable to afford the increasing costs. Millions more now bear the burden of record-levels of debt from the student loans they needed to fund their schooling. At the same time, graduates are entering the weakest labor market America has experienced since the Great Depression. Unable to find full-time work, too many are staggering under the weight of student loan debt. Educating our young people is a public responsibility, and we need to take it seriously. As such, the government has a role in making sure a college education is affordable. Congress should increase funding for Pell Grants to $50 billion, reducing the primary barrier to college for millions of Americans, and providing a crucial resource that students from lowincome backgrounds can use to pull themselves up into the middle class.

The U.S. ranks 12th in the world in college attainment for the 25-34 year old population

In addition, Congress should lead the way in student loan reform to root out the predatory lending practices that characterize the current system. This can be achieved by enacting legislation to prevent private lenders from also servicing loans made through the Department of Education, and to restore the consumer protections (bankruptcy protection, refinancing rights, and statutes of limitation) that apply to all other kinds of loans. Congress should further act to provide subsidies to maintain lower interest rates for student loans. While a four-year degree remains a relatively sure path to the middle-class, a bachelors degree is not necessarily the right choice for all students. We need to leverage other educational assets to provide alternative

19

routes to the middle class. Community colleges are a vital resource in this respect, providing job skills and professional training in less time and at a dramatically lower cost than four-year institutions. Further, community colleges serve as a crucial link between students and local employers. We need to provide community colleges with the resources to remain flexible and able to provide the education and training sought after by employers. Lastly, we need to retool vocational education in America to include a range of new skills that will become increasingly important in the 21st century. In addition to the traditional trades, vocational schools should expand their curriculum to include training for green-collar jobs and jobs in the digital realm.

The return on investment from an effective training program is as high as $9.10 per $1 invested

20

Priority Four
Provide Middle Class Tax Relief

As federal tax policies have placed a proportionally greater burden on working- and middle-class families, their purchasing power has stagnated over the last ten years. Because household spending is a crucial driver of the American economy, restoring balance to the tax code in order to ensure that everyone pays their fair share is a crucial step toward economic recovery and the return of broad-based prosperity in America. Tax rates for all individuals and families are set to increase in 2013. While this is appropriate for the wealthiest Americans who were the biggest winners under Bush administration tax policies, working- and middle-class families have been stretched to the limit. We should freeze income tax rates at 2011 levels for households earning less than $379,150 per year (the highest 2011 tax threshold). This would fix a maximum federal income tax rate of 33% for 98% of all income earners, and would result in most taxpayers continuing to pay 15-28%, as provided under current law.

Americans earning

less than $100,000 annually

pay a higher tax rate

than millionaires

For the top 2% of households with an annual income above $379,150, we should revert to the 39% rate that was in effect before the Bush tax cuts in 2001. There are additional steps we can and must take to maintain an equitable tax system.

Repealing tax cuts for the wealthiest 2% of Americans would save approximately $700 billion over ten years

Young families that work, earn income, and file returns are facing economic hardship and need all the help they can get. We need to increase the federal dependent child credit for all families from $1000 to $2000
21

through 2015. This would help those young families that work, earn income, and file returns pay their bills now and build savings for the future. In addition, The Making Work Pay tax credit expired in 2010. The credit should be renewed and increased from $400 to $750, and should be available only to self-employed people earning $250,000 or less. This promotes self-employment, encourages entrepreneurship, and spurs economic activity. It is particularly useful in cities hard hit by the decline of manufacturing, because so many workers who previously worked for large employers are now working for small companies, or have started their own small businesses. Lastly, we need to repeal the special tax treatment of carried interest income. Carried interest is a form of compensation paid by hedge funds and private equity funds to their owners and money managers. Under one of the most outrageous provisions of the U.S. tax code, this kind of compensation gets special treatment and is taxed at a rate of 15% as if it were passive income on at-risk capital, rather than being taxed at the rate of ordinary income. The Congressional Joint Committee on Taxation has said that treating most carried interest as ordinary income would raise $17.7 billion over 10 years.

22

Priority Five
Ensure Rock-Solid Retirement Security

As wages and retirement savings shrink for working- and middle-class households, many fear that they will not be able to afford food, housing, health care, and other living expenses during retirement. Older Americans who have worked hard and contributed to Social Security during their most productive years deserve the security of a guaranteed income in retirement. The Social Security program has been the foundation of that security for the last 77 years, and will rightly continue to provide benefits to retirees for decades. Despite longrange funding challenges, Congress can, and should, take action to ensure the retirement security of younger workers as well. According to the 2012 Social Security Trustee Report, the Social Security trust fund is solvent until 2037. To assure Social Security is in place for years after 2037, Congress should raise wage thresholds for the social security payroll tax. Under current law, all wage income up to $106,000 is subject to the payroll tax of 6.2% for social security. The threshold should be adjusted up to $150,000 over the next fifteen years, raising additional revenues to bolster the social security trust fund. In addition, Congress should make a very slight adjustment in the payroll tax. According to the Social Security trustees and the American Association of Retired Persons, an increase in the payroll tax of just 0.12 % (from 6.2% to 6.32%) would ensure solvency in Social Security for many years after 2037. Furthermore, we need to tie social security benefits to a Consumer Price Index that reflects the actual cost of living. Lastly, we must defeat efforts to privatize all or parts of Social Security. Such efforts will drain payroll tax revenue and trust fund assets away from Social Security and funnel them to Wall Street, where they will become a new revenue stream for bankers and traders all-too-willing to gamble on the retirement security of working- and middle-class Americans in order to win enormous bonuses for themselves.
23

Social Security has been the foundation of retirement security for 77 years

In addition to protecting the long-term vitality of Social Security, Congress can do more to promote individual retirement savings. The first step is to increase the catch-up provision allowable under current law for 401(k) plans. The maximum before-tax contribution limit ($16,500 in 2010) is subject to the catch-up provision, which is available to employees who are over 50 years old. This provision allows these employees to contribute extra amounts above the limit in effect for that year. The additional contribution maximum amount is currently set to $5,500 (2010), and should be increased to $10,000 or more, so that older workers that are trying to increase their retirement savings may do so tax-deferred. Congress should also require automatic enrollment in 401(k) and 403(b) plans. In 2006, Congress passed and the president signed a law that allows public and private employers to implement opt-out 401(k) and 403(b) plans. That is, under the 2006 law, employers have the option to enroll employees in a companysponsored 401(k) or 403(b), with the understanding that employees can affirmatively opt-out of the retirement accounts. The law should be changed to require employers to use automatic enrollment, reserving for employees the right to opt out. According to the Employee Benefit Research Institute,44 this simple change would have a dramatic positive effect for all workers, and particularly for lower income workers. For example, if all 401(k) plans are assumed to be using automatic enrollment provisions available under current law, the median 401(k) accumulations for the lowest-income quartile jumps to almost five times the final annual earnings for that employee. This simple move would dramatically increase private retirement savings for low and moderate income workers, and would reduce retiree reliance on various federal safety net programs.

24

Priority Six
Make Financial Reform Stick

From 1994 through 2000, Congress made a series of changes to legislation, some of which had been in place since the Great Depression. These changes allowed banks to consolidate until they became too big to fail, erased the line between commercial banks and investment banks, and deregulated American financial markets. Ultimately, banks and investment firms were enabled to take unprecedented levels of risk and gamble with the American economy. Passage of the Commodity Futures Exchange Act of 2000 deregulated investments in derivatives and allowed the creation of exotic finical instruments like credit default swaps. Speculation on these unregulated derivatives inflated the housing bubble; when the bubble burst in 2007, the overexposure of Wall Street quickly became apparent. Lehman Brothers collapsed, creating a wave of panic about the likely insolvency of American banks. The stock market plunged into free fall, decimating the retirement savings of millions of Americans. Working- and middle-class families saw the value of their homes plummet. The ensuing economic collapse required an unprecedented level of government intervention, including the effective nationalization of several institutions, and nearly a trillion dollars in bailouts through the Troubled Asset Relief Program (TARP) to the very same banks and investment firms whose greed caused the economy to crumble. Despite initial efforts at financial reform, including the Dodd-Frank bill, recent reports indicate that Congress has not gone far enough. Indeed, the Special Inspector General for TARP reported that several of the banks deemed too big to fail in 2008 have actually grown bigger since the financial crisis, and that increased moral hazard (the willingness of banks to take even greater risks with their investments on the assumption that the federal government would again provide funds to rescue banks) has been a significant legacy of the bailout program. Noting the same problems, the Chairman of the Dallas Federal Reserve has stated explicitly that ending too big to fail is imperative.

Since 1979, income for the top 1% of households

more than tripled

while increasing

by only 1/3 for the bottom 80%

25

Large banks have used their wealth and lax campaign financing rules to curry favor with Washington and gain legislative outcomes that enable their reckless behavior. They are likely, therefore, to use those same resources to fight any effort to break them into smaller, less hazardous units. While we must continue the fight to shrink too big institutions to an appropriate size, there are other reforms we can and should enact right away. We should prevent political contributions to members of Congress from TARP recipients until repayments are made in full. Congress should also strengthen the say-on-pay provision for all TARP recipients, in order to allow shareholders to take a binding vote on board proposals for executive compensation. In its current form, DoddFrank allows for a non-binding say-on-pay vote, which has taken effect for banks and other systemically significant institutions. In addition, we should restore Glass-Steagall restrictions to prevent FDIC-insured commercial banks from engaging in speculative trading in equity securities. Lastly, if we are serious about financial reform, we must enforce higher capital requirements so that banks have a greater cushion against failure. Congress should act to pass legislation requiring Tier 1 capital requirements of not less than 6% for all FDIC insured banks, in order to guarantee they can meet their true objectives: protecting the college, retirement, and other savings for American depositors, and having adequate capital available for lending to homeowners and small business.

CEO compensation has approached 300 times that of the average worker

26

Priority Seven
Repeal Citizens United

On January 21, 2010, the United States Supreme Court issued its decision in Citizens United v. Federal Election Commission.45 The Courts ruling that corporations and labor unions could make unlimited independent expenditures to support or oppose candidates for federal office was predicated on the dubious notion of corporate personhood and the fallacy that spending money is the equivalent of speech in a democratic system of government. The decision overruled 100 years of federal precedent, and for the first time in modern history allowed companies to use their corporate treasuries to influence the outcome of federal elections. The impact of Citizens United can hardly be overstated. Corporate contributions, which had previously been banned in federal elections, can now be directed to ostensibly independent groups called Super PACs. These contributions are unlimited, and can be used to support or oppose candidates directly. Worse, corporate contributors to Super PACs can hide their identities from voters and obfuscate their involvement in influencing the electoral process. The practical effect of the ruling will be to drown the voices of ordinary citizens in a tide of special interest money designed to tilt the playing field further in favor of the most powerful interests in the country. We need a Constitutional amendment repealing Citizens United to prevent the escalation of corruption, to restore the sanctity of citizenship, and to ensure a government of the people, elected by the people, working for the people. The U.S. Constitution should be amended to allow Congress and state legislators to pass legislation limiting corporate spending in elections to the levels currently allowed for individuals. Such an amendment would not ban corporate spending outright. It would, however, permit citizens, through their representatives on the state and federal level, to pass laws restricting corporate spending that would otherwise distort the democratic process.

Citizens United allows unlimited corporate campaign contributions through Super PACs

27

Amending the Constitution is a daunting task, and could take many years to accomplish. Under Article V of the Constitution, an amendment requires approval of the House and the Senate, both by a two-thirds majority, and approval of three-fourths of state legislatures. Several members of Congress have offered proposals that would initiate the constitutional amendment process, and almost any one of them would accomplish the desired outcome. In the meantime, Congress must act to ensure full disclosure of corporate political spending. Several members of the House and Senate have introduced a bill, known at the Disclose Act,that would require all corporations and other business and labor groups to disclose the amount, date, and nature of the expenditures that they make in connection with a federal election. The Disclose Act attracted bi-partisan support, including 114 co-sponsors in the House concerned about the corrupting influence of secretive and unlimited political contributions from corporations. If enacted, the Disclose Act would enhance the existing disclaimer requirement, and thereby require corporate CEOs and other corporate officers to make public their responsibility for campaign ads. It would allow the public to follow the money connection between corporations and their political activity. It would also permit shareholders of publicly-traded corporations to understand how the company is targeting its political spending, and would prevent government contractors from using taxpayer money to buy political advertising.

28

Priority Eight
Revitalize Small Businesses

Thriving small business is crucial to creating a stronger economy especially in Massachusetts. From a report produced by the Small Business Association Office of Advocacy in the 2011 Economic Report of the President from 1993 to 2009, small businesses accounted for 9.8 of 15 million or 2/3 of the net new private jobs.46 Furthermore, during periods of normal economic growth, small businesses create enough new jobs to compensate for when new companies fail.47 In the 2001 Economic Crisis, small businesses consisting of fewer than twenty employees lost few jobs and recovered more quickly than larger businesses.48 Small business also plays a key role in our local communities. For every $100 spent at an independent business, $68 is put back into the local community, versus only $43 when the same $100 is spent at a national chain.49 Also, buying local reduces the amount of trucks that haul goods from one place to another reducing the use of natural resources and the amount of greenhouse gas emissions. Small business is crucial to keeping our local economies strong and making an easy recovery in times of economic crisis. Yet, there are many obstacles that small businesses face on a day to day basis. Small businesses receive approximately ninety percent of their financing from banks, where larger businesses are only reliant on banks for approximately thirty percent of their financing.50Historically, small businesses have also drawn upon home equity and credit cards to supplement their businesses.51 Since the collapse of the housing bubble, small businesses are unable to use equity as they have in the past and nearly eighty percent of small business owners have stated that there credit card terms have changes for the worse.52 Since the economic recession, 68 percent of small business owners reported an increase in their interest rate and 41 percent reported a reduction in their credit limit.53 Instead of creating more obstacles for our small businesses, we need to get rid of these debilitating challenges.
29

During the 2001 economic crisis, small businesses

lost fewer jobs and recovered more quickly than larger

businesses

I have always been an advocate for small business development and will continue to support small business. When I was a Massachusetts State Senator, I lead the effort to secure funding for roof repairs at the Berkshire Museum, restoration efforts at the Mohawk Theater in North Adams, restoration of the historic Mahaiwe Theater in Great Barrington, and creation of the Pittsfield Downtown Cinema Project. I also led the fight in the Senate to secure $6 million in funding for the Colonial Theater in downtown Pittsfield and sponsored Artist Enterprise Zone legislation to support the growth of artist gallery and living spaces in downtown Fitchburg and Pittsfield. There have been a few efforts in Congress to provide relief for small business which include the implementation of the Recovery Act. We can do more - starting with increasing the cap for small business loans allowing small business owners to continue moving forward with their businesses in difficult economic times.54 Furthermore, only 23 percent of federal government contracts are required to be awarded to small businesses.55 We need to increase that number to 30 percent which will result in an additional $100 billion investment into the American economy annuallyhelping to initiate an increase in job growth and solidify the economic sustainability for American businesses.56As your congressman, I will fight to give small businesses stability and create more opportunities for small business growth.

30

My Promise, Our Future

I believe in the power of hard working Americans to revitalize our working- and middleclass. As history shows, when faced with economic instability, we are more than capable of rising to the challenge and emerging as a better, stronger country. That is why I am running for Congress. I have no illusions about the magnitude of the opposition. They have the money, the name recognition, and the support of the current system. But I know that these advantages shrink to insignificance when they are confronted by the power of the people. That is the founding truth of American democracy, and it is what my candidacy represents. It will take hard work if we are to succeed, and I cant do it without you. In the weeks and months to come, I will depend on you to stay involved, to reach out to your friends and family, to knock on your neighbors doors and urge them to support our effort to renew the promise of democracy and restore broad-based prosperity for working- and middle-class families throughout the Massachusetts 1st congressional district. I look forward to serving as your Congressman.

Sincerely yours,

31

Sources
1

Congressional Budget Office. Trends in Distribution of Household Income Between 1979 and 2007. Accessed May 16, 2012. http://www.cbo.gov/sites/default/files/cbofiles/attachments/10-25-HouseholdIncome.pdf Id.

Institute for Policy Studies and United for a Fair Economy. Executive Excess 2008. Accessed May 16, 2012. http://www.faireconomy.org/files/executive_excess_2008.pdf UFE calculations from Tax Policy Center data (www.TaxPolicyCenter.org) for Payroll Tax (through 2005) and Capital Gains Tax (through 2002) and the Heritage Foundation for the Estate Tax (through 2005). Id. Citizens United v. Federal Election Commission. 558 U.S. 50 (2010). Id.

Saez, Emanuel. Striking it Richer:The Evolution of Top Incomes in the United States (Updated with 2009 and 2010 estimates). March 2012. Accessed May 23, 2012 http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf
9

Ponds and Streams: Wealth and Income in the U.S., 1989 to 2007 by Arthur B. Kennickell, Federal Reserve Board

<http://www.federalreserve.gov/pubs/feds/2009/200913/200913pap.pdf>.
10

Id.

Report to the President on Ensuring American Leadership in Advanced Manufacturing, (Executive Office to the President and Presidents Council of Advisors on Science and Technology, June 2011), available at http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-advanced-manufacturing-june2011.pdf.
12 13

11

U.S. Department of Labor.

Richard McCormack The Plight of American Manufacturing,..The American Prospect, December 21,2009.Available at http://prospect.org/article/plight-american-manufacturing
14

Industries at a Glance: Manufacturing. Bureau of Labor Statistics. Available at http://www.bls.gov/iag/tgs/iag31-33.htm

U.S Bureau of Economic Analysis News. U.S. Dept. of Commerce, last modified May 10, 2012. Accessed May 23, 2012. http://www.bea.gov/newsreleases/international/trade/2012/pdf/trad0312.pdf
16

15

Id.

Bennof, Richard. Proposed Federal R&D Funding for FY 2011 Dips to $143 Billion, with Cuts in National Defense R&D. ational Science Foundation, September 2010. Available at http://www.nsf.gov/statistics/infbrief/nsf10327/ European Federation of Pharmaceutical Industrises and Associations. Improving Europes Competitiveness. Available at http://www.efpia.eu/content/default.asp?PageID=388
19 18

17

2012 Global R & D Funding Forecast. Battelle, The Business of Innovation. December 2011. Available at http://www.battelle.org/aboutus/rd/2012.pdf

EXPANDED, SIMPLIFIED AND PERMANENT RESEARCH AND EXPERIMENTATION TAX CREDIT. The White House. Gov. Available at http://www.whitehouse.gov/sites/default/files/fact_sheet_re-credit_9-8-10.pdf.
21

20

Id.

22

Konrad, Tom. US Re-takes Lead in Clean Energy Race from China But Not for Long. April 20, 2012. Available at http://www.renewableenergyworld.com/rea/news/article/2012/04/us-re-takes-lead-in-clean-energy-race-from-china-but-not-forlong Pollin, Robert et al. Green Recovery. A Program to Create Jobs and Start Building a Low-Carbon Economy. The Political Economy Research Institute, September 2008. Available at http://www.peri.umass.edu/fileadmin/pdf/other_publication_types/peri_report.pdf Id.

23

24

25

Building the Clean Energy Economy.The United States House of Representatives, July 30, 2009.Available at http://globalwarming.house.gov/files/WEB/ACESPacket/ACESCleanEnergyPlan.pdf Id.

26

27

KMPGs Corporate and Indirect Tax Survey 2010. KMPG, October 15, 2010. Available at http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/Corp-and-Indirect-Tax-Oct12-2010.pdf Id. Edwards, Chris. Corporate Tax Laffer Curve. CATO. Available at http://www.cato.org/pubs/tbb/tbb_1107_49.pdf

28

29

30

United States Environmental Protection Agency. Superfund. Last modified May 14, 2012. Available at http://www.epa.gov/superfund/about.htm Id.

31

32

Tax Policy Center. 2013 Budget Proposals. Last Modified May 8, 2012. Available atg http://www.taxpolicycenter.org/taxtopics/2013-Reinstate-Superfund-Taxes.cfm Id. Id. Id. Id.

33

34

35

36

37

Report Card for Americas Infrastructure 2009: Bridges. American Society of Civil Engineers. Last modified 2012. Available at http://www.infrastructurereportcard.org/fact-sheet/bridges Id.

38

39

2009 Report Card for Americas Infrastructure. American Society of Civil Engineers. Last modified 2009. Available at http://www.infrastructurereportcard.org/ 2009 Report Card for Americas Infrastructure. American Society of Civil Engineers. Last modified 2009. Available at http://www.infrastructurereportcard.org/sites/default/files/RC2009_full_report.pdf Holyoke Department of Public Works.

40

41

42

Build America Bonds. U.S. Department of Treasury Recovery Act. Available at < http://www.treasury.gov/initiatives/recovery/Pages/babs.aspx> Id.

43

44 45

Report, April 2010. 558 U.S. 50 (2010).

46

Economic Report to the President, (Council of Economic Advisors, 2011), available at http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President. Id.

47

48

Report to the President, Small Business Financing Forum, (U.S. Department of the Treasury and the U.S. Small Business Administration, November 2009), available at http://archive.sba.gov/idc/groups/public/documents/sba_homepage/small_buss_finan _forum_report.pdf. The Andersonville Study of Retail Economics, (Civic Economics, October 2004, Modified February 2005), available at http://www.civiceconomics.com/Andersonville/AndersonvilleStudy.pdf. Report to the President, Small Business Financing Forum, (U.S. Department of the Treasury and the U.S. Small Business Administration, November 2009), available at http://archive.sba.gov/idc/groups/public/documents/sba_homepage/small_buss_finan_forum_report.pdf. Id. Id. Id. Id.

49

50

51

52

53

54

55

Martin Neil Baily, Karen Dynan, and Douglas J. Elliott, The Future of Small Business Entrepreneurship: Jobs Generator for the U.S. Economy, (The Brookings Institution, June 2010), available at http://www.brookings.edu/papers/2010/0604_innovation_small_business.aspx. Id.

56