(These are the prepared remarks of Education and Committee Chairman George Miller from today’s press conference on the urgent need to include student loan reform as part of the reconciliation.)

Senate Democrats have a very simple choice to make in the next few weeks.

This choice speaks to the true character of our country and of our Congress.

It speaks to what America’s priorities will be for the next generation.

It speaks to fiscal responsibility and fairness.

Here’s the choice. We can continue a student loan program that the Congressional Budget office has documented will waste tens of billions of dollars over the next 10 years on a titanic boondoggle in excess subsidies to some of the nation’s rich and most powerful banks.

Or we can do what President Obama suggested in his budget, and what the Congress voted last year to do in its budget resolution.  We can reform the student loan program by taking these wasteful subsides to banks, and redeem the savings for millions of families and students who want a shot at attending college, go to a community college, and attend a school that is crumbling around them.  

It is that simple.

Just consider what this bill would do for students, families – and our economic future.

It would invest tens of billions of dollars in the Pell Grant scholarship.

For millions of Americans, Pell Grants are the pathway to prosperity.

They have become America’s great equalizer – allowing anyone with talent and gumption to get an education and a good job.

There are few greater job creators than a highly skilled workforce.

Our bill would invest billions in school modernization, give urgent help to historically black colleges and Hispanic serving institutions, and boost support for the nation’s bedrock local community colleges.

It would make our community colleges part of the solution to our competitive challenges by giving them the tools they need to prepare students for good jobs with local employers.

Who in good conscience can trade any of this away for billions in excess subsidies for banks?

Now, this is not a radical idea.

In his 2005, 2006 and 2008 budget requests, President George W. Bush recommended reducing these wasteful subsidies by tens of billions of dollars.

President Obama has shown the courage to take this on by insisting we re-deploy all of these subsidies to help students and families.

The 2009 budget resolutions passed by the House and Senate required both chambers to use reconciliation to enact student loan reforms that save taxpayers billions of dollars.

In order to comply with these reconciliation instructions, we would be required to save $1 billion for taxpayers over 5 years.

This legislation would be fully paid for.

But now this promise is at risk.

Critics of this bill, fueled by the banks’ well-heeled lobbyists, have been hard at work fighting to kill it.

They have been busy spreading lots of falsehoods about how this bill might impact the budget, or jobs, or students.

Let me set the record straight, right now.

This bill will not add a penny to the deficit – it will help reduce it. The budget reconciliation instructions require that any student loan reforms return at least $1 billion to the Treasury over 5 years.

It will meet PAY-GO. We are committed to that, and it will be done.

The bill creates and retains jobs.  It maintains a robust and appropriate role for private banks and lenders in servicing loans. Servicing loans through the Direct Loan program will not only preserve most jobs, it will bring jobs back home that can currently be shipped overseas by lenders.

Moving to Direct Loans is a much better use of taxpayer dollars. Consider that right now, between schools that have switched to Direct Loans and emergency federal aid banks are relying on – the federal government is already funding 8.8 of every 10 dollars lent in federal student lending.

The current FFEL system can’t continue.  We saw this two years ago when the markets seized up, students would have been left high and dry if we had not stepped in to provide liquidity.  

It’s also wrong to suggest this is being talked about at the 11th hour.

We have known since last April that reconciliation would be used for this bill.

So this is really what is comes down to now.

The Senate has a choice to do something that is fair and right for American families.

They have a choice to end this system of corporate welfare for banks – a system that has stayed alive because of well-entrenched lobbyists and cozy Washington relationships.

They can either continue to send tens of billions of dollars to banks and a broken system – or they can send those dollars directly to students, at no costs to taxpayers.

This is a moment in history where Senators can either look back and say – we did the right thing for the American people, or they can say we did the bidding of banks.

(An update on the Stimulus from Rep. Miller – promoted by Brian Leubitz)

One year ago, our nation was headed toward an economic collapse, shedding an average of 600,000 jobs a month. State and local budget cutbacks were putting teachers’ jobs – and our students’ education – in peril. Our economy was in need of emergency triage that would immediately begin to save and create jobs and lay the foundation for longer-term economic growth. One year after its enactment, it is clear that the American Recovery and Reinvestment Act is meeting these core goals.

Edit by Brian: See the flip for more…

To date, the law has already created or saved two million jobs and helped our economy grow at its fastest rate in years. It has funded more than 300,000 education jobs, keeping teachers in classrooms and children and students of all ages learning. It has helped minimize harmful cuts at public colleges and universities and provided students with larger Pell Grants to pay for college.

The Recovery Act has provided a much-needed lifeline for workers who lost their jobs – and their health insurance along with it. Millions of Americans have received extended or increased unemployment benefits and many got help paying for their COBRA premiums because of the Recovery Act. We can’t underestimate the difference this has made for laid-off workers struggling to put food on their tables, heat their homes, or pay for a visit to the doctor.

The Recovery Act is also making strategic investments in our future. Recovery programs are training displaced workers for high-growth jobs in our health care, biotech, clean energy and manufacturing sectors. The Race to the Top program is leveraging key education reforms that will better prepare our children for college, competitive jobs and a global economy.

The footprints of the Recovery Act run across my own district. It’s funding the construction of a dental clinic in Vacaville and a community health center in West County that will create 250 construction jobs immediately and longer-term health care jobs. It’s keeping teachers employed in Mt. Diablo, Martinez and West County school districts, or hiring new ones, like Jessica Pozos. It’s giving laid-off workers with families who depend on them, like Brandi Britt of Richmond, new hope by training her for a new career.

As President Obama and Congress have repeatedly said, the Recovery Act marked the beginning of our efforts to rebuild our economy and our middle class. Too many workers continue to lose their jobs or have trouble finding new ones. Our work will not be over until every American in need of a job can find one.

RECOVERY ACT: HELPING STUDENTS, WORKERS AND FAMILIES

• 2 million: the number of jobs created or saved by Recovery dollars thus far, according to the Congressional Budget Office.
• 300,000: the number of teaching and other education-related jobs saved or created.
• $500: the increase in the Pell Grant scholarship eligible students received for the 2009-2010 year due to this law alone.
• $2.4 billion: the amount of Federal support that helped colleges and universities keep teaching, even as enrollments grew, according to the State Higher Education Executive Officers.

(Welcome Rep. Miller to Calitics.   – promoted by David Dayen)

Today, I chaired a U.S. House Committee on Education and Labor hearing in San Francisco where we examined how the current financial crisis is affecting retirement savings.  Witnesses told us that after a lifetime of planning and saving, a growing number of retirees are facing shrinking 401(k)s and increasing insecurity as a result of the ongoing financial crisis.  While this crisis may have started on Wall Street, it's Main Street that stands to suffer the most. More than ever before, there is an urgent need to help Americans strengthen their retirement savings.

We also learned today that U.S. Pension Benefit Guaranty Corporation lost at least $3 billion in stock investments during the last fiscal year through August, and invested a significant portion of its funds in mortgage-backed securities. The head of the PBGC, Charles Millard, will testify before the committee on Friday in Washington regarding the agency's financial problems.

Taxpayers subsidize 401(k) plans by $80 billion dollars annually. For a taxpayer investment of this size, we must ensure that the structure of 401(k)s adequately protects the nest eggs of participating workers.

At a minimum, we know that much greater transparency and disclosures in 401(k) investment policies are needed, to protect workers from “hidden” fees that could be eating deeply into their retirement accounts.

And with seniors poised to suffer the most from the current economic turmoil, we must suspend an unfair tax penalty for seniors who don’t take a minimum withdrawal from their depleted retirement accounts, like 401(k)s.  We’ll push to enact legislation based on a bill Rep. Rob Andrews recently introduced, so that seniors who have seen their retirement savings evaporate don’t get penalized for trying to build those savings back up.

At the hearing today, we heard from Roberta Quan, a retired school teacher from San Pablo, CA, who is also caring for her husband who has Alzheimer’s:  “The recent unstable financial crisis is having a devastating effect on my life.  A lifetime of savings in catastrophic decline is demoralizing. The bottom line is that I am retired and unable to re-earn lost funds.”

Steve Carroll, a retired writer from Petaluma, CA, told us: “Our monthly budget has been severely depleted for life.  We still have our IRAs. But, as they are in mutual stock funds they are so far down in value that selling any of them right now, as the law requires of [my partner] Chuck, the loss would be an enormous percentage of the investment.”

Current regulations require account holders of 401(k)-type account to withdraw a minimum amount of money every year after they reach 70 ½ years old. If seniors do not take out a minimum amount based on an Internal Revenue Service formula, they are subject to a 50 percent penalty. For instance, if an individual fails to withdraw $4,000, they would be assessed a $2,000 tax the next year.

Registered investment advisor Mark Davis told us that a temporary repeal of minimum required distribution rules could help some retirees.  On October 10, Rep. Andrews and I called on U.S. Treasury Secretary Henry Paulson to suspend the tax penalty for retirees who are forced to make withdrawals but want to have additional time to rebuild their retirement savings.

Other witnesses spoke about problems with the current retirement security system where individually directed 401(k)-type plans have become a worker's main retirement savings vehicle. Where investment decisions were once made by professionals managing a traditional pension portfolio on behalf of workers, the responsibility of picking the right investments and implementing retirement savings strategies are left up to an individual account holder.

The Education and Labor Committee passed legislation earlier in the year that would help workers shop around for the best retirement investment options by providing complete information on the fees taken from their retirement accounts. According to the Government Accountability Office, a 1 percentage point difference in fees can reduce retirement benefits by nearly 20 percent.

We started this investigation last week, as part of a series of hearings the House is conducting to investigate the causes of the financial crisis, and what additional steps are needed to protect homeowners, workers, and families.

Last week, Peter Orszag, the director of the Congressional Budget Office, told us that American workers have lost more than $2 trillion in retirement savings over the last fifteen months – an astonishing loss that could lead workers to delay their retirement.

Several experts also told us that workers closest to retirement could suffer the most from this financial tsunami.  But while the housing and financial crises are intensifying retirement insecurity, we also know that workers’ retirement savings have been declining for quite some time.  Rising unemployment, stagnating wages and benefits, and a shift away from more traditional defined-benefit pension plans have been making it much harder for workers to save for retirement while juggling other expenses.

Now, the number of investors taking loans on their 401(k) accounts is increasing. And hardship withdrawals are also increasing. T. Rowe Price estimates a 14 percent increase in hardship withdrawals just in the first eight months of 2008. And, all the signs point to an increased frequency of 401(k) loans and hardship withdrawals in the coming year.

As other committees’ hearings have revealed, many of the Wall Street titans responsible for this crisis have still escaped with their plush perks, lavish spa trips and golden parachutes intact. This is an outrage. For too long, the Bush administration anything goes economic policy allowed Wall Street to go unchecked.

As we look at how we can rebuild workers’ retirement savings and our nation’s economy, the Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.

Being able to save for retirement after a lifetime of hard work has always been a core tenet of the American Dream. We can’t allow the promise of a secure retirement for workers to become a casualty of the financial crisis.

Cross-posted at the EdLabor Journal.