[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
             GROWTH, OPPORTUNITY, COMPETITION - AMERICA 
                             GOES TO WORK


                               HEARING
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                             BEFORE THE
 
                      COMMITTEE ON ENERGY AND 
                              COMMERCE

                     HOUSE OF REPRESENTATIVES


                    ONE HUNDRED NINTH CONGRESS

                          SECOND SESSION


                           JUNE 29, 2006

                         Serial No. 109-116

         Printed for the use of the Committee on Energy and Commerce


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                   COMMITTEE ON ENERGY AND COMMERCE
                      JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas                      JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida                  Ranking Member
  Vice Chairman                           HENRY A. WAXMAN, California
FRED UPTON, Michigan                      EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida                    RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                      FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky                    SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia                  BART GORDON, Tennessee
BARBARA CUBIN, Wyoming                    BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois                    ANNA G. ESHOO, California
HEATHER WILSON, New Mexico                BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona                  ELIOT L. ENGEL, New York
CHARLES W. "CHIP" PICKERING,  Mississippi ALBERT R. WYNN, Maryland
  Vice Chairman                           GENE GREEN, Texas
VITO FOSSELLA, New York                   TED STRICKLAND, Ohio
ROY BLUNT, Missouri                       DIANA DEGETTE, Colorado
STEVE BUYER, Indiana                      LOIS CAPPS, California
GEORGE RADANOVICH, California             MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire            TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania             JIM DAVIS, Florida
MARY BONO, California                     JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                       HILDA L. SOLIS, California
LEE TERRY, Nebraska                       CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey                 JAY INSLEE, Washington
MIKE ROGERS, Michigan                     TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho                 MIKE ROSS, Arkansas                       
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                     BUD ALBRIGHT, Staff Director
                    DAVID CAVICKE, General Counsel
       REID P. F. STUNTZ, Minority Staff Director and Chief Counsel




                              CONTENTS


                                                                     Page
Testimony of:
        Gutierrez, Hon. Carlos M., Secretary, U.S. Department 
                of Commerce	                                      22


               GROWTH, OPPORTUNITY, COMPETITION - AMERICA 
                            GOES TO WORK


                        THURSDAY, JUNE 29, 2006

                       HOUSE OF REPRESENTATIVES,
                   COMMITTEE ON ENERGY AND COMMERCE,
                                                        Washington, DC.


        The committee met, pursuant to notice, at 10:18 a.m., in Room 
2123 of the Rayburn House Office Building, Hon. Joe Barton 
(Chairman) presiding.
	Members present: Representatives Bilirakis, Upton, Stearns, 
Norwood, Shimkus, Bass, Pitts, Walden, Terry, Otter, Murphy, 
Burgess, Blackburn, Dingell, Eshoo, Stupak, Engel, Green, Allen, 
Schakowsky, Solis, Gonzalez, Inslee, Baldwin, and Barton.
	Staff present: David Cavicke, General Counsel; Brian 
McCullough, Professional Staff Member; Will Carty, Professional 
Staff Member; Billy Harvard, Legislative Clerk; Jonathan 
Cordone, Minority Counsel; David Vogel, Minority Research 
Assistant; and Jonathan Brater, Minority Staff Assistant.
	CHAIRMAN BARTON.  The meeting will come to order.  Today 
we are going to have a hearing on general issues between the 
Commerce Committee and the Secretary who is the President's 
number one person.  By prior arrangement, Mr. Dingell and myself 
will be allowed opening statements of 5 minutes.  Ms. Schakowsky 
and Mr. Stearns, if they are here, will have 3 minutes.  All other 
members will have 1-minute opening statements.
	As head of the Department of Commerce, Secretary Gutierrez 
is responsible for promoting trade and industry for the United 
States companies at home and abroad.  The Department has 
responsibility for a diverse portfolio of Federal programs including 
those relating to telecommunications, technology, economic 
statistics, trade promotion, weather, and oceanographic services.
	One of the priorities of the Bush Administration of this 
committee is creating policies that allow economic growth and job 
creation to flourish.  American innovation, technology, and the 
standard of living are the reasons we are the envy of the entire 
world.  It is an impressive cycle that attracts creative genius and 
rewards innovative progress.  It is strong foundations that others 
around the world have been trying to replicate for a number of 
years.  I believe that the Administration and Congress have done a 
good job to maintain that foundation when faced with some of the 
extraordinary challenges of the last 7 or 8 years.
	In the wake of the technology market collapse and the onset of 
recession in 2000, we faced a significant test to restore economic 
growth and prosperity.  The test became even more difficult with 
the terrorist attacks on September 11, 2001, and the resulting 
economic shock that sent business investment into steep decline.  
The Administration and Congress have worked together to help 
prevent the economic downturn from being too prolonged and 
destructive to the American standard of living.
	We have done a number of proactive policies that have spurred 
investment through tax cuts.  Those policies have brought 
investment back to the market to create job growth and increase 
overall economic output.  This created one of the strongest periods 
of economic activity we have experienced in our history.  For 
example, since 2001, productivity has grown annually 3-1/2 
percent.  It outpaced the previous 5-year annual rate of 2.3 percent.  
This is the fastest rate of productive growth in four decades.
	As the key driver to economic growth, it is not surprising that 
productivity is translating into strong GDP growth.  For the first 
quarter this year gross domestic product grew at an annual rate, 
believe it or not, of 5.6 percent.  Unemployment has fallen from its 
peak in July of 2003 at 6.3 percent to 4.7 percent last month.  This 
is a historical low and at a point many economists consider full 
employment.  When compared to other industrialized countries 
many of which have double digit unemployment there is no doubt 
that we are succeeding in fostering an environment conducive to 
creating jobs.
	Given all these remarkable statistics, we must remain 
committed to promoting policies that increase productivity and 
continue to provide real growth for all Americans.  The Secretary 
of Commerce has reported that American employment rates are 
substantially higher than our Western European trading partners.  
The May unemployment rate of 4.6 percent, however, is 
significantly below the 30-year average of 6.4 percent and has 
fallen for all races, ages, and levels of education.
	During the committee's hearing 2 years ago with Secretary 
Gutierrez's predecessor, Secretary Evans, we discussed a number 
of ways to promote growth in employment in U.S. industry 
particularly with regard to the manufacturing sector.  Those issues 
at the time were to enact a national energy policy, which we did, to 
promote reliable delivery of energy and diminish our reliance on 
foreign sources of oil and natural gas.  On that second point, we 
have not done that.  We wanted to enact tort reform to improve the 
competitiveness of U.S. manufacturers, and we wanted to control 
health care costs which make up a disproportionate share of 
manufacturers' cost and increasingly affect all businesses.
	This committee is working hard to achieve these goals and I 
am proud to say that we took a good step forward accomplishing 
the first one when we passed the Energy Policy Act on a bipartisan 
basis last summer.  However, as the hurricanes last fall 
demonstrated, more needs to be done to increase our refinery 
capacity to further reduce our dependence on foreign oil.  As the 
increase in gasoline prices remains higher than anyone likes on 
either side of the aisle, it is essential that we continue to address all 
aspects of energy policy to provide viable alternatives for long-
term sustainable energy independence.
	We are continuing to pursue these goals on a bipartisan basis.  I 
am sure that as the year progresses we will have more successes on 
this front.  Mr. Secretary, we are very glad to have you here.  A 
number of other members have opening statements, but again 
personally I appreciate your appearing before us and look forward 
to hearing your testimony.
	SECRETARY GUTIERREZ.  Thank you.
	[The prepared statement of Hon. Joe Barton follows:]

PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN, 
COMMITTEE ON ENERGY AND COMMERCE

        Good morning.  It is my pleasure today to welcome the 
Honorable Carlos M. Gutierrez, Secretary of Commerce, to the 
Committee.  As head of the Department of Commerce, Secretary 
Gutierrez is responsible for promoting trade and industry for U.S. 
companies and workers.  The Department has responsibility for a 
diverse portfolio of federal programs including those relating to 
telecommunications, technology, economic statistics, trade 
promotion, weather, and oceanographic services.
        One of the priorities of this Administration and of this 
Committee is creating policies that allow economic growth and job 
creation to flourish.  American innovation, technology, and 
standard of living are the reason we are the envy of the entire 
world.  It is an impressive cycle that attracts creative genius and 
rewards innovative progress.  It is a strong foundation that others 
cannot replicate and which we must ensure is not diminished.
        I believe the Administration and Congress have done an 
excellent job to maintain that foundation when faced with 
extraordinary challenges.  In the wake of the technology market 
collapse and the onset of recession in 2000, we faced a significant 
test to restore economic growth and prosperity.  That test became 
immeasurably more difficult with the terrorist attacks on 
September 11, 2001 and the resulting economic shock that sent 
business investment into deep decline.
        The Administration and Congress helped prevent the economic 
downturn from being prolonged and destructive to Americans' 
standard of living through a number of proactive policies that 
spurred investment through tax cuts.  Those policies have brought 
investment back to the market to create job growth and increase 
overall economic output that has created one of the strongest 
periods of economic activity we have experienced in our history.
        Since 2001, productivity has grown annually at 3.5% and 
outpaced the previous five year annual rate of 2.3%.  This is the 
fastest rate of growth in 4 decades.  As the key driver to economic 
growth, it is not surprising that productivity is translating into 
strong GDP growth.  For the first quarter of 2006, GDP grew at an 
annual rate of 5.6%.  Furthermore, unemployment has fallen from 
its peak in July 2003 of 6.3% to 4.7% this past May.  This is at 
historical lows, and at a point many economists consider full 
employment.  When compared to other industrialized countries-
many of which have double-digit unemployment-there is no 
doubt that we are succeeding in fostering an environment 
conducive to creating jobs.
        Given all these remarkable statistics, we must remain 
committed to promoting policies that increase productivity and 
continue to provide real growth for America.  The Secretary has 
reported that American employment rates are substantially higher 
than our Western European trading partners.  The May 
unemployment rate of 4.6% is significantly below the 30-year 
average of 6.4% and has fallen for all races, ages, and levels of 
education.  Promoting employment remains a key goal.
        During the Committee's last hearing two years ago with 
Secretary Gutierrez's predecessor (Secretary Evans), we discussed 
a number of ways to promote growth and employment in U.S. 
industry, particularly with regard to the manufacturing sector.  
Those issues are: 1) enact a national energy policy to promote 
reliable delivery of energy and diminish our reliance on foreign 
sources of oil and natural gas; 2) enact tort reform to improve the 
competitiveness of U.S. manufacturers, and 3) control health care 
costs which make up a disproportionate share of manufacturers' 
costs and increasingly affect all businesses.
        This Committee has worked hard to achieve these goals and I 
am proud to say we took a great step toward accomplishing the 
first one when we enacted the Energy Policy Act of 2005.  
However, as the hurricanes last fall demonstrated, more needs to 
be done to increase our refinery capacity to further reduce our 
dependence on foreign oil.  As the increase in gas prices remains 
higher than anyone likes, it is essential we continue to address all 
aspects of energy policy to provide viable alternatives for long-
term sustainable energy independence.  I intend to continue to 
pursue these issues on a bipartisan basis, and I encourage all 
Members to work with us to promote economic growth and job 
creation.
        Despite the impressive state of our economy, our competitors 
are not standing still.  Indeed, they seek to replace us as world 
leader in many areas of innovation that are inherent to our 
continued economic health and wealth as a nation.  I am pleased to 
see the Administration has responded to these challenges with 
proposals to maintain our leadership role, such as the proposed 
investments in research and technology contained in the American 
Competitiveness Initiative.  I am also pleased to see the budget 
request reflect a disciplined approach to achieve results based on 
priorities.  I look forward to discussing these and other of the 
Secretary's proposals that will strengthen our commitment to 
achieve the United States' long-term economic goals.
        With respect to the management of the Department of 
Commerce, I am concerned that the role of the Technology 
Administration has been diminished.  I believe that Commerce has 
an important role to play in coordinating government-wide 
technology efforts and encourage the Secretary to see that the 
Technology Administration is adequately funded.
        I want to thank the Secretary for making himself available 
today.  I look forward to his testimony and assessment of our 
economy as well as any policy changes he may suggest.

	CHAIRMAN BARTON.  I would recognize the distinguished 
Ranking Member, Mr. Dingell, for his opening statement.
	MR. DINGELL.  Mr. Chairman, thank you.  I appreciate your 
holding this hearing.  I thank you, Mr. Secretary, for joining us 
today.  I appreciate your kindness.  There are many important 
issues affecting our economy, manufacturing, and workers.  And I 
think this will be a most useful dialogue, and I look forward to 
working with you.  Since January of 2001, Michigan has lost over 
235,000 jobs.  Many of these were high-paying manufacturing 
jobs.  This number, though staggering by itself, is just a small 
portion of the 2-1/2 million manufacturing jobs and 850,000 
service sector jobs that have been lost across the country.
	Moreover, the few jobs that have been created during this 
period pay approximately 21 percent lower wages than the ones 
they replace.  This is a serious matter and deserves the attention of 
all of us.  The American people want to hear that we understand 
what is happening in the real world.  They want to know that we 
are doing something to help them earn an honest living and support 
their families.  Some of these issues need to be discussed, and I 
hope the committee will continue to explore them and take proper 
action where appropriate.
	First, everyone today is talking about outsourcing, but 
outsourcing really is a fine word for something else.  It is exporting 
jobs.  It used to be that manufacturing jobs were at risk.  Now 
white collar positions such as accounting and even medicine and 
the practice of law are being exported to countries with lower 
wages.  Yet many continue supporting tax breaks for large 
corporations encouraging this practice.  These perverse initiatives 
and incentives are costing American taxpayers up to $12 billion a 
year in addition to costing us large numbers of jobs.
	Second, small and mid-size manufacturers are an integral part 
of the domestic economy and they need assistance to compete 
more effectively on the world stage.  For example, many of the 
parts and components that go into automobiles are manufactured 
by small businesses.  We should expand these programs in the 
Department of Commerce such as the Manufacturing Extension 
Partnership and the Advanced Technology Program.  Regrettably, 
instead, these programs have been continually cut, and now we 
find that some seek to eliminate the Advanced Technology 
Program in its entirety.
	I would note parenthetically here, Mr. Secretary, that your 
proposals which relate to whether the programs within your 
department which relate to expansion of American exports and 
assistance to American exporters and businesses have been 
suffering ill days.  I know this is not your fault, but it is a source of 
concern because these are programs which create large numbers of 
jobs and which are very important to a very large segment of the 
American economy which finds these programs to be uniquely 
valuable and successful.
	Another thing, the third item, Mr. Secretary, American 
businesses and American workers deserve a government that 
pursues a policy of fair trade.  We do not see that in this 
Administration, and it is a matter of great concern.  Countries such 
as China and Korea artificially lower their currency values and 
allow deplorable labor practices.  These countries have an unfair 
trade advantage over American countries that do the right thing.  
We need to see to it that there is a fair, level, and even playing 
field for our industry.  That is a fair way of protecting 
manufacturing jobs and manufacturing capacity.
	And these are matters where the jobs and the industries are 
vital to our national security, and they are being afflicted severely 
by unfair trading practices and other unfair activities by competing 
trading partners.  Fourth, the health care costs in this country are 
out of control.  This places an enormous burden on American 
companies and puts them in a severe competitive disadvantage.  
We see estimates of $1,200 to $1,400 of every American 
automobile goes towards the healthcare cost that companies carry 
for their workers and retirees.  By contrast, Mr. Secretary, it is 
about double the $700 worth of steel that is in an American car.  
While other industrialized nations cover some and in many cases 
almost all of their healthcare costs for their workers, American 
companies that are doing the right thing again are severely 
disadvantaged.
	The Federal government can and must do more.  Finally, 
American workers deserve a fair wage.  Hard-working families 
struggle to make ends meet.  The minimum wage, however, has 
not been raised since 1997.  If we do not act to increase the 
minimum wage by December 1 it will be the longest period 
without an increase since the wage was first established back in 
1938.  American families deserve better, and not acting to increase 
this wage is just plain wrong.
	I look forward, Mr. Secretary, to hearing the testimony that you 
are about to give, and it is my hope that we can work cooperatively 
to address many of these matters.  Thank you, Mr. Secretary, and, 
thank you, Mr. Chairman.
	[The prepared statement of Hon. John D. Dingell follows:]

PREPARED STATEMENT OF THE HON. JOHN D. DINGELL, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Chairman, thank you for holding this hearing, and I want 
to thank my friend Secretary Gutierrez for joining us today.  There 
are many important issues affecting the American economy, 
American manufacturing, and American workers.  I welcome this 
dialogue, Mr. Secretary, and look forward to working with you.
	Since January of 2001, Michigan has lost over 235,000 jobs, 
and many of those were high-paying manufacturing jobs.  This 
number - though staggering by itself - is just a portion of the 2.5 
million manufacturing jobs and 850,000 service sector jobs that 
have been lost across the Nation.  Moreover, what few jobs that 
have been created during this period pay approximately 21 percent 
lower wages than the ones they replaced.  This is a serious matter 
that deserves our attention.
	  The American people want to hear that we understand what is 
happening in the real world.  They want to know what we are 
doing to help them earn an honest living and support their families.  
So I would like to discuss a few of those issues, and I hope that this 
Committee will continue to explore them and take prompt action 
where appropriate.  
	First, everyone today is talking about "outsourcing."  Let's call 
it what it is: exporting jobs.  It used to be that manufacturing jobs 
were at risk; now white-collar positions such as accounting are 
being exported to countries with lower wages.  Yet many continue 
supporting tax breaks for large corporations encouraging this 
practice.  These perverse incentives cost the American taxpayer up 
to $12 billion a year.
	Second, small and mid-sized manufacturers are an integral part 
of the domestic economy, and they need assistance to compete 
more effectively on the world stage.  For example, many of the 
parts and components that go into an automobile are manufactured 
by small businesses.  We should expand programs in the 
Department of Commerce such as the Manufacturing Extension 
Partnership and the Advanced Technology Program.  Instead, these 
programs have been continually cut, and some now seek to 
eliminate the Advanced Technology Program in its entirety.  
	Third, American businesses and American workers deserve a 
government that pursues a policy of fair trade.  Countries, such as 
China and Korea, that artificially lower their currency and allow 
deplorable labor practices, have an unfair trade advantage over 
American companies that do the right thing.  We must protect 
manufacturing jobs and manufacturing capacity, that in many 
instances are vital to our national security, from these unfair 
practices. 
	  Fourth, the cost of health care in this country is out of control.  
It places a substantial burden on American companies and places 
them at a competitive disadvantage.  Estimates are that $1,200 to 
$1,400 of every American automobile sold goes toward the 
healthcare costs that the company carries for its workers and 
retirees.  When other industrialized nations cover some - and in 
many cases all - of their worker healthcare costs, American 
companies that are doing the right thing are disadvantaged.  The 
Federal Government can and should do more.
	Finally, American workers deserve a fair wage.  While hard-
working families struggle to make ends meet, the minimum wage 
has not been raised since 1997.  If we do not act to increase the 
minimum wage by December 1st, it will be the longest period 
without an increase since the wage was first established in 1938.  
American families deserve better, and not acting to increase the 
minimum wage is just plain wrong.
	I look forward to hearing the testimony of our distinguished 
witness, and it is my sincere hope that we can work cooperatively 
to address many of these matters.  Thank you, Mr. Chairman.

	CHAIRMAN BARTON.  Thank you, Mr. Dingell.  We are going to 
go to Mr. Bilirakis for 1 minute.
	MR. BILIRAKIS.  Thank you, Mr. Chairman.  Mr. Secretary, 
thank you for being here and thank you for your leadership in 
promoting prosperity and job growth in the U.S.  I am particularly 
interested, Mr. Secretary, to learn about the ways in which the 
Administration and your department are addressing the 
outsourcing and off shoring of American jobs, specifically in the 
information technology sector.
	I have a constituent, Dale Tindall, who worked for IBM for 19 
years, mainly in a highly paid supervisory position where he 
managed over 100 employees.  Mr. Tindall was laid off in 2003 
and has remained unemployed for 33 months despite applying for 
thousands of jobs, working with eight job recruiters, and meeting 
weekly with his local workforce development board.  Although he 
is committed to seeking employment, he has not had any success 
with securing interviews or job offers.  He does remain one of the 
many Americans that fall into the 4.6 percent unemployment 
category.
	Do not get me wrong, sir.  I applaud the decline in the nation's 
unemployment rate and am pleased to learn that many Americans 
are returning to work, but I do question what more can be done to 
promote job growth and help those who have not been fortunate to 
land jobs that enable them to maintain a decent quality of life.  I 
look forward to discussing this with you, sir, during the question 
period of today's hearing.  Thank you.
	[The prepared statement of Hon. Michael Bilirakis follows:]

PREPARED STATEMENT OF THE HON. MICHAEL BILIRAKIS, A 
REPRESENTATIVE IN CONGRESS FORM THE STATE OF FLORIDA

        Mr. Secretary, earlier this week I spoke at length with one of 
my constituents, Dale Tindall, who once earned over $100,000 per 
year as a manager at IBM.  Mr. Tindall is highly educated and 
spent 19 years working for the IBM Global Network/AT&T 
Business Services, including 10 years in supervisory management 
positions.  He was laid off from his job in 2003 and has been 
unemployed for two years, nine months.  Despite working with 
eight different job recruiters, visiting his local workforce board 
weekly, and applying for thousands of jobs, Mr. Tindall has yet to 
be offered gainful employment and will soon exhaust his savings.
        I know that Mr. Tindall is not alone - countless Americans 
have been laid off or lost their jobs in recent years, and many of 
them are lower-paid workers who do not have substantial savings 
to cover their living expenses while they hunt for jobs.
        1. What is the Department of Commerce and the Bush 
Administration doing to promote job creation and help 
unemployed Americans return to work?
        2. I understand that accurate data on the number of jobs that 
have been "outsourced" or "offshored" is difficult to 
compile.  Does the Department of Commerce have access 
to data about employment trends in the United States?  
What can be done to improve data collection so that the 
Administration and Congress have accurate information as 
we examine ways to help strengthen the economy and 
foster an environment which encourages job creation?
        3. Is it unusual for highly-paid, educated, long-serving 
employees serving in management positions (such as Mr. 
Tindall) to be laid off and not return to similar positions and 
wages?  What trends has the Department observed with 
respect to the loss of high-paying management jobs?

	CHAIRMAN BARTON.  We will go to Ms. Schakowsky, the 
Ranking Member of the subcommittee for 3 minutes.
	MS. SCHAKOWSKY.  Thank you, Chairman Barton and Ranking 
Member Dingell for holding today's hearing.  As we head into the 
4th of July holiday it is appropriate that our committee is taking 
time to talk about the American economy and American workers, 
and I welcome Secretary Gutierrez.  Since the adoption of the 
Declaration of Independence and the birth of our Nation we have 
benefited from the great work and contributions of countless 
American patriots, and the Congress and the Administration have 
always undertaken efforts to honor those men and women.
	Secretary Gutierrez, in February you told the Government 
Reform Committee, "the Commerce Department and this 
Administration are committed to maintaining America's leadership 
and competitiveness in today's dynamic global economy, to raise 
standards of living, and create new American jobs."  I could not 
agree more.  Yet, over 2.8 million manufacturing jobs have been 
lost since 2000, and I believe that we need to do what we can to 
encourage and reward corporations that commit to America's 
economic growth and create jobs for American workers.
	That is why I, along with members of this committee, 
Representatives Sherrod Brown and Solis, introduced the Patriot 
Corporations of America Act yesterday.  Instead of providing 
corporations incentives to slash benefits or offshore their finances 
and jobs, the Patriot Corporations Act would encourage American 
corporations to invest in America and American workers.  Patriot 
Corporations would be rewarded by receiving preference for 
government contracts and a 5 percent tax rate reduction.  Patriot 
Corporations would be asked to pledge their allegiance to our 
country by producing at least 90 percent of their goods and doing 
at least 50 percent of their research and development in the United 
States.
	They would limit top management's compensation to no 
greater than 100 times that of their lowest compensated full-time 
workers.  They would show their commitment to their workers by 
contributing at least 5 percent of payroll to portable pension funds 
and by paying for at least 70 percent of the cost of health 
insurance.  Finally, Patriot Corporations would simply be required 
to comply with existing Federal regulations regarding the 
environment, workplace safety, consumer protections, and labor 
relations, including maintaining neutrality and employee 
organizing drives.
	Secretary Gutierrez, since we are both committed to creating, 
this is from your Web site, "the conditions for economic growth 
and opportunity by promoting innovation, entrepreneurship, 
competitiveness, and stewardship," I hope that you will join me 
today or at least take a good close look at the Patriot Corporations 
of America Act.  I look forward to hearing from you today what 
the Administration has been doing to promote corporate patriotism, 
and I would very much like to work with you on developing this 
concept.  Thank you very much.
	CHAIRMAN BARTON.  Does Mr. Shimkus wish to make an 
opening statement?
	MR. SHIMKUS.  I will waive for questions, Mr. Chairman.
	CHAIRMAN BARTON.  Does Mr. Upton wish to make an 
opening statement?
	MR. UPTON.  Just briefly, thank you, Mr. Chairman, for 
holding this hearing.  I am glad to see my old, young friend, Mr. 
Gutierrez, a solid friend who ran a great company in southwest 
Michigan as Chairman of Kellogg's, and I appreciate your 
experience there but even more so now serving the whole country.  
Today I want to hear a little feedback on foreign trade zones.  We 
have one, of course, in Battle Creek, but specifically what we can 
do more in this area to keep manufacturers competitive.  I look 
forward to your leadership and I yield back at this time.
	[The prepared statement of Hon. Fred Upton follows:]

PREPARED STATEMENT OF THE HON. FRED UPTON, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

        Thank you, Mr. Chairman.  I remain concerned about the state 
of manufacturing competitiveness in the U.S. - I am pleased to see 
the Secretary of Commerce here to address that issue today.  
Secretary Gutierrez is a former resident of my district - having 
served Kellogg Company with distinction and having real world 
experience in making a company more competitive.  It is great to 
see you again, Carlos.
        Today I would like to hear some feedback on the idea of 
Foreign-Trade Zones and how they are working - specifically if 
we can do more in this area to help keep our manufacturers 
competitive.  Foreign Trade Zones were created to provide special 
customs procedures to U.S. plants engaged in international trade-
related activities.  This offsets the customs advantages available to 
overseas producers who compete with the domestic industry. 
        The FTZ program encourages U.S.- based operations by 
removing the disincentive of duties on raw materials, parts and 
components that are used for the production of another finished 
good.  The FTZ program levels the playing field for these 
companies by treating the products in the same was as they would 
be if they were produced abroad.
        I know that companies in my district have successfully used 
Foreign Trade Zone 43 in Battle Creek, Michigan to import raw 
materials for their production and it has helped us keep jobs in 
Michigan and in the United States.
        I hope that Secretary Gutierrez can touch on this issue and 
whether or not we can expand this important program to further aid 
in American competitiveness.  If there is a need for legislation to 
expand this program - I am ready to commit to that today because 
I know that this program works for manufacturers.
        Thank you Mr. Chairman, I look forward to today's testimony.

	CHAIRMAN BARTON.  Does Ms. Eshoo wish to make an 
opening statement?
	MS. ESHOO.  Thank you, Mr. Chairman.  Good morning, Mr. 
Secretary, and thank you for meeting with some of us that 
represent coastal communities in California, Oregon, and 
Washington State.  So I am going to direct my opening statement 
to the issue at hand and the devastation we are talking about, 
America going to work.  There are many, many, many of our 
constituents that are part of the fishing industry that you heard 
about this morning that have been devastated by what is taking 
place in these coastal communities.
	There has been a failure in my view to respond to the dire 
emergency that is affecting the commercial salmon fishing 
industry, and this has had a devastating effect, a devastating impact 
on salmon fishermen and related businesses along the California 
and Oregon coasts.  You have been to my Congressional district 
which everyone thinks of as solely being Silicon Valley, but on the 
other side of the hill is the magnificent coast side, and this is a vital 
part of the economy there.  The impact of the fishing closure on the 
fishermen and coastal communities is really in many ways 
unfathomable because it stretches across so many parts of this 
sector.
	This is the largest in the history of the West Coast, the largest 
commercial fishing closure in the history of the West Coast.  So 
we need your help.  I think that this has been worsened by the 
failure to recognize the damage the decision has caused and so 
your response to this is really going to be key.  It is in your hands.  
Very often there are decisions that are made that span many 
agencies and many individuals.  If you stand up and take action on 
this, it will help save the livelihoods that have been destroyed.  
People have actually lost their living, lost their living.
	CHAIRMAN BARTON.  The gentlelady's time is up.
	MS. ESHOO.  Thank you for being here today.  I appreciate the 
time that you spent with a handful of Members earlier, and we are 
going to look forward to the action that I am confident after 
hearing the facts that you will take.  Thank you, Mr. Chairman.
	CHAIRMAN BARTON.  Thank you.  Mr. Norwood.
	MR. NORWOOD.  Thank you, Mr. Chairman.  Did you say 1 
minute?
	CHAIRMAN BARTON.  I did.
	MR. NORWOOD.  In courtesy to the Secretary, I will just put my 
remarks in the record, and let us get to him.
	[The prepared statement of Hon. Charlie Norwood follows:]

PREPARED STATEMENT OF THE HON. CHARLIE NORWOOD, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

        Mr. Chairman, 
 	Thank you for testifying today on job creation and the 
economy.  In my district, we are experiencing the "best of times, 
the worst of times."  While national key indicators are good, some 
people are doing well, others are being destroyed by unfair global 
competition. 
        I have had three major textile employers in my district forced 
to close in a single month, due to unfair competition from Red 
China.  People's lives are being ruined by bad trade policy under 
WTO and NAFTA.  Foreign competition is strong and gaining, 
entirely because we have allowed the deck to be stacked in their 
favor. 
        Meanwhile, high gas prices and rising interest rates threaten to 
combine with this trade deficit to send us into a serious recession. 
        I look forward to your testimony about how we avoid this 
impending doom from globalism.   

	CHAIRMAN BARTON.  All right.  Does Mr. Terry wish to make 
an opening statement?
	MR. TERRY.  Can I submit my opening statement as well?
	CHAIRMAN BARTON.  You sure may.
	[The prepared statement of Hon. Lee Terry follows:]

PREPARED STATEMENT OF THE HON. LEE TERRY, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA

        Thank you Mr. Chairman for holding today's important 
hearing on the future of growth and competition in America.
There are a few vital elements needed to create and sustain 
healthy competitive markets.
        The foundation for a strong market consists of innovation, 
protection of intellectual property, easy market entry, and access to 
consumers.  Of these components, government can assist in 
protecting intellectual property and streamlining the process so that 
entrepreneurs can market their product not only to the U.S. market, 
but to the international market.      
        Entrepreneurs in my district and state know how to sell their 
products to Nebraskans, however, the penetration for their products 
is not deep enough to grow if they sell solely to Nebraskans.  There 
is a growing debt of resources to assist in marketing products the 
international market.  
        Last winter I had the opportunity to travel to the Dominican 
Republic with my church.   I found the "Made in America" sign 
sells.  This is a country of 9 million people, where a quarter of the 
people live in extreme poverty.  And yet, the "Made in the U.S.A." 
label still means something to them.  People in the Dominican 
Republic will pay more to buy American and this is not a 
phenomenon unique to the Dominican Republic one country.  I 
came back from that trip committed to getting more "Made in 
America" brands to the international market.  There are markets 
throughout this world that want to buy American.  And the U.S. 
government can contribute to the success of American companies 
competing in the global market economy.
        Many of our fortune 500 companies have already made a 
successful transition into the international markets, which has only 
increased their accomplishments.  My concern on this issue is not 
with the fortune 500 companies; instead it is with the small and or 
rural businesses that have yet to reach their potential.  I believe it is 
evident that we are not doing enough to help our small businesses 
get their products into the global economy.  
        Does a small business owner in Omaha, Nebraska making 
widgets know of the services offered by the Department of 
Commerce? Does the Department of Commerce work with the 
Small Business Administration to ensure that our entrepreneurs 
across the country have all the tools to reach new international 
markets?  There are questions to questions that our small or rural 
businesses may not even know exist.
        Undeniably, the key to sustain healthy competitive markets is 
multifaceted. 
        Yes, there are tools that we could provide to help or small or 
rural businesses compete, but beyond that, there are tools offered 
now that are not being presented efficiently.  
        I look forward to hearing from Secretary Gutierrez on how the 
Department of Commerce is working to streamline the process so 
that my constituents in Omaha, Nebraska can grow their business.  

	CHAIRMAN BARTON.  Does Dr. Burgess wish to make an 
opening statement?
	MR. BURGESS.  I will submit it for the record.
	[The prepared statement of Hon. Michael Burgess follows:]

PREPARED STATEMENT OF THE HON. MICHAEL BURGESS, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

        Mr. Chairman, thank you for convening this hearing this 
morning.  And thank you, Mr. Secretary, for appearing before us 
today.  
        The Department of Commerce has one of the widest 
jurisdictions of all of the federal agencies -- which, of course, gives 
the Energy and Commerce Committee one of the broadest 
jurisdictions in the House.   Agencies under the umbrella of the 
Department of Commerce range from the Economic Development 
Administration to NOAA to the International Trade 
Administration.  
        Last year, I hosted an economic development summit in the 
Fort Worth portion of my district and then-EDA Administrator 
David Sampson delivered our keynote speech.  One of the things 
that I took away from the event was that we need to be sure that we 
are spending our economic development resources on those areas 
that are most in need of economic development.  I look forward to 
hearing from the Secretary about what the Economic Development 
Administration is doing to ensure that these resources are being 
allocated in this manner.  
        I also look forward to hearing from the Chairman regarding the 
strength of our economy, our current trade deficit and Free Trade 
Agreements that might be presented to the House for our approval.  
        Mr. Secretary, thank you again for appearing before us today.  
With that, Mr. Chairman, I yield back.  

	CHAIRMAN BARTON.  All right.  Does Mrs. Blackburn wish to 
make an opening statement?
	MRS. BLACKBURN.  I have an opening statement I will submit 
and I will look forward to the time where we can ask questions.  
Thank you.
	[The prepared statement of Hon. Marsha Blackburn follows:]

PREPARED STATEMENT OF THE HON. MARSHA BLACKBURN, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

        Mr. Chairman, 
        Thank you for having this important hearing.  I also thank the 
Secretary for testifying today.  It is a key responsibility of this 
committee to examine economic indicators and to promote policies 
that encourage economic growth.   
        Mr. Chairman, the state of our economy is good.  The facts are 
easy for even the most ideological to read.  
        - The unemployment rate in May was 4.6 percent - lower than 
the average unemployment rates of the 60's, 70's, 80's, or 90s. 
        - More than 5.3 million jobs have been created since August 
2003
        - Since January 2001, real after-tax income has risen by 7.3 
percent per person. 
        - At $53.8 trillion, household net worth is at an all-time high 
        - The Institute of Supply Management reported that May was 
our 36th consecutive month of manufacturing growth. 
        - Business Schools report classes in entrepreneurship are up

        The facts are clear -- eliminating regulations and lowering 
taxes unleashes American innovation and results in economic 
growth.  I look forward to the Secretary's testimony today.  I am 
particularly interested in intellectual property, copyright/trade 
issues that affect our entertainment and healthcare sectors.  I also 
care deeply about stopping the flow of illegal immigration.  Mr. 
Chairman, thank you for holding this hearing.  I look forward to 
continuing our work on these issues. 

	CHAIRMAN BARTON.  All right.  In order of appearance, Ms. 
Baldwin, I believe you were here after--
	MS. BALDWIN.  Thank you, Mr. Chairman, and, Mr. Secretary, 
for your appearance here today.  Today's hearing focuses on an 
incredibly important subject, American jobs.  For decades this 
country's economy has been the world's strongest, in part due to 
the bold commitment of previous generations of American leaders 
who supported our people and their potential.  Unfortunately, in 
recent years there has been a startling trend of disinvestment in the 
American worker as companies have shipped jobs overseas.
	And as you know, this trend has not been limited to the 
manufacturing sector but also includes service and information 
technology positions.  Estimates show that 14 million middle-class 
jobs could be exported out of America in the next 10 years.  I look 
forward to discussing steps the Department of Commerce is taking 
to assess and address the risks that off shoring poses to the 
American workforce and economy.  America can remain the 
world's strongest economy only if we prepare the world's best 
workforce, inspire innovation, and change policies that currently 
put American businesses at a disadvantage to others around the 
globe.  Thank you, Mr. Chairman.
	[The prepared statement of Hon. Tammy Baldwin follows:]

PREPARED STATEMENT OF THE HON. TAMMY BALDWIN, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN

        Thank you Mr. Chairman and Mr. Secretary for appearing 
before us today.  Today's hearing focuses on an incredibly 
important subject - American jobs.  For decades, this country's 
economy has been the world's strongest, in part, due to the bold 
commitment of previous generations of American leaders who 
supported our people and their potential.  
        Unfortunately, in recent years, there has been a startling trend 
of disinvestment in the American worker as companies have 
shipped our jobs overseas.  As you know, this movement has not 
been limited to the manufacturing sector - but also to service and 
information technology (IT) positions.  Estimates show that 14 
million middle-class jobs could be exported out of America in the 
next 10 years.  I look forward to discussing steps the Department 
of Commerce is taking to assess and address the risks that 
offshoring poses to the American workforce and economy.  
        America can remain the world's strongest economy only if we 
prepare the world's best workforce, inspire innovation, and create 
policies that put American businesses at an advantage to all others 
around the globe.  
        Thank you.  I yield back the balance of my time.

	CHAIRMAN BARTON.  Thank you.  Does Dr. Murphy wish to 
make an opening statement?
	MR. MURPHY.  Yes, Mr. Chairman.  Thank you.  It is good to 
see you, Mr. Secretary, to hear you tell us some of the truth on the 
aspects of what is happening.  I want to let you know as you are 
going through this, Pennsylvania has actually seen some 
tremendous job growth, I believe up to a record 5.7 million in non-
farm jobs, which is a record for us, and also new records for the 
number of jobs in the last 9 months.
	I know in my district what we have also seen is really a 
transformation or renaissance on jobs related to the energy sector 
as Westinghouse Energy is looking to build new nuclear power 
plants and energy, looking at coal jobs, and the list goes on and on.  
And I am hoping those are some of the things you are able to talk 
about today, about these new sectors of growth of jobs that will not 
export out of America because we have our energy sector here, and 
what we are going to do as well as some of the educational things 
we can develop on that.
	One last thing in my final seconds, I would love if you could 
come to my district and talk about some of these things.  I even 
have an invitation here for you so I hope your staff will come up 
and grab it, and I yield back the balance of my time.
	CHAIRMAN BARTON.  We thank the gentleman.  From the 
Alamo city, Mr. Gonzalez, 1 minute.
	MR. GONZALEZ.  Thank you very much, Mr. Chairman.  It is 
good to see you again, Mr. Secretary.  I really appreciate your 
views on so many different aspects of our economy, and I am 
hopeful that today we will be able to enter a responsible 
discussion.  Some of them we have not been able to accomplish on 
the floor of the House, and that is immigration policies and how 
they impact our economy.  And I know that you make reference to 
it in your statement and I hope that we will be able to expand on 
that.  Again, welcome.  Yield back.
	CHAIRMAN BARTON.  We thank the gentleman.  The gentlelady 
from Los Angeles, the City of Angels, 1 minute.
	MS. SOLIS.  Thank you, Mr. Chairman.  And, welcome, buenos 
dias, Mr. Secretary.  I am pleased to hear also in your statement 
that you are going to discuss the comprehensive immigration 
reform program, the guest worker program.  My question to you, 
and I hope you will be able to talk about this, is how do we 
reconcile the differences in enforcement only approach that will 
criminalize 11 million undocumented workers in addition to 
healthcare workers, child care workers, and people who assist the 
clergy, for example, that assist these individuals.
	And then secondly I just want to say that I note today the 
Senate is going to be debating the Oman trade agreement, and I 
have a lot of concerns with respect to that.  The treatment of 
women, particularly in the workforce in that country, we have not 
had, I think, an open debate on that issue.  That is one that is of 
great concern for humanitarian reasons, but also workers' rights, 
and the fact that in that country you are not even able to unionize, 
and when the sultan dictates what he wants, that is what happens.  
And so I would like to hear more about that, and welcome and we 
look forward to working with you.
	CHAIRMAN BARTON.  Thank the gentlelady.  From the Space 
City, USA, Mr. Green.
	MR. GREEN.  It is Space City but I am normally the one with all 
the energy production.  Mr. Chairman, I have a statement I will put 
in the record, and again welcome the Secretary here today.  Thank 
you.
	[The prepared statement of Hon. Gene Green follows:]

PREPARED STATEMENT OF THE HON. GENE GREEN, A 
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

        I'd like to thank Secretary Gutierrez for coming here to give us 
a report on the state of the economy because I believe people in 
our district back home see a much different picture than what the 
Secretary is going to tell us today.
        The manufacturing sector nationwide has lost 2.5 million jobs 
since 2001 and several manufacturing facilities in Houston's 
manufacturing sector have shut down over the years.
        Because of this, my District has an average unemployment rate 
of over 8 percent.  Our area is blue collar, and we have clearly 
been losing blue collar jobs.
        This situation is made more severe because the dollar doesn't 
buy as much as it used to.  The Federal minimum wage has not 
increased since 1997.  It takes a full days work at minimum wage 
to buy a tank of gas.  
        My constituents are clearly not doing well under this 
Administration.  The median income in our district is $36,000 a 
year.  According to the CBO, the top 1 percent of the population 
received 57 percent of all capitol income in 2003.  While capitol 
income for the bottom 80 percent of the population has dropped to 
12.6 percent.
        Allowing the rich to get richer while the poor get poorer is not 
sound economic policy when housing, fuel, and health care costs 
are increasing dramatically under this administration.
        I thank the Secretary for being here, but I'd like to see a 
stronger commitment from Commerce and the rest of the 
Administration to help the working-class people that comprise a 
majority of the people in our country.

	CHAIRMAN BARTON.  Mr. Stupak.
	MR. STUPAK.  Thank you, Mr. Chairman.  Our country cannot 
have a strong economy without a strong manufacturing base, yet it 
appears that this Administration has turned its back on American 
manufacturing.  We have lost 2.5 million manufacturing jobs, and 
manufacturing exports recorded the largest drop in 50 years under 
this Administration.  Meanwhile, the Administration repeatedly 
slashes funding for the Manufacturing Extension Partnership, a 
program that keeps smaller American manufacturers competitive 
that we have used successfully throughout my district.
	The Administration has also turned its back on the largest 
manufacturers with the President recently telling American 
automakers to make more relevant cars and canceling three 
successive meetings with the Big Three.  The Administration's 
trade policy has failed American manufacturers.  In 5 years the 
Bush Administration has made just 14 complaints to the World 
Trade Organization.  The Clinton Administration made 69.
	The Administration has refused to challenge China on currency 
manipulation which gives Chinese manufacturers an unfair 
advantage in global trade.  Finally, the Administration has no plan 
to help employers deal with skyrocketing healthcare costs which 
further hobble the competitive nature of our manufacturers.  I 
could go on but I am out of time, so with that, Mr. Chairman, I will 
yield back, and I look forward to asking questions later.
	CHAIRMAN BARTON.  We thank the gentleman from Michigan.  
Does Mr. Pitts wish to make an opening statement?
	MR. PITTS.  Thank you, Mr. Chairman.  Thank you, Mr. 
Secretary, for joining us today.  Our economy and how to keep it 
going, job creation, how to stimulate that is extremely important to 
our constituents.  We are in a very competitive world marketplace.  
Any thoughts that you can give us on how to make America's 
business climate better, and I would also be interested in the 
intellectual property rights, how to help China keep the agreements 
they have signed.  Thank you very much for coming today.
	CHAIRMAN BARTON.  I thank the gentleman.  Mr. Engel from 
the Big Apple.
	MR. ENGEL.  Thank you, Mr. Chairman.  You are in rare form 
this morning.  Welcome, Mr. Secretary.  I am pleased to have you 
here today.  I note that it has been more than a decade since the 
Secretary of Commerce appeared before this committee and that is 
obviously far too long.  I hope it is the beginning of a renewed 
oversight effort by this committee and the House overall.  I do not 
believe we concede discretion totally to the executive branch.  In 
my opinion, the Secretaries of Energy, Commerce, and Health, and 
Human Services should make an annual appearance before us.  I 
do not think it is too much to ask for.  We are indeed a co-equal 
branch of government.
	The truth is, as my colleague mentioned, I and the vast 
majority of my constituents are terribly disappointed and often 
angered by the failings of the Administration.  The statistics are 
staggering, 2-1/2 to 2.8 million manufacturing jobs lost, millions 
more Americans without health insurance and trillions more in 
debt.  All the while we provide tax cuts that are so slanted to the 
wealthiest among us.  There was a time when we rewarded work in 
this country but that is really not what we are doing today.
	We find time to extend tax cuts for dividends, but it is not 
expiring and only threw a bone of the middle class that is being 
drawn to the AMT over and over.  This does not bode well for the 
kind of future we are leaving our children, a lifetime of bad jobs 
and debts to pay off.  We need to leave our children better off than 
we were.  From my vantage point, I believe we are failing, and I 
welcome to hear what your initiatives are, and again I am happy 
that you are here before the committee.  Thank you.
	CHAIRMAN BARTON.  I thank the gentleman.  Let us see, I 
believe Mr. Allen of Maine was next in order of appearance.
	MR. ALLEN.  Thank you, Mr. Chairman.  I welcome this 
hearing on American competitiveness and thank Secretary 
Gutierrez for being here.  I believe that to keep America at the 
forefront of the global economy, we must invest in science and 
technology education from kindergarten through graduate school.  
We must also increase funding for the National Science 
Foundation and create incentives for businesses to invest in 
innovation.  I have introduced legislation to make permanent the 
R&D tax credit and increase funding for the Manufacturing 
Extension Partnership and the Advanced Technology Program.
	These agencies help the growing businesses bridge the so-
called "Valley of Death" between innovative concepts and 
marketable products.  I think the problem is that we are starving 
ourselves of funds.  Four major tax cuts since 2001 have slashed 
Federal revenues.  We have added $3 trillion onto the national 
debt.  Few, if any, of the 20th Century's greatest achievements, the 
Internet, interstate highway system, rural electrification, or the 
space program, were done without government support.
	The 21st Century will not be an American century if we turn 
from investing in the common good in favor of a philosophy of 
radical individualism and policies that enrich the few at the 
expense of all Americans.  Thank you very much for being here.  I 
yield back.
	CHAIRMAN BARTON.  We thank you.  We want to see if Mr. 
Inslee wishes to make an opening statement, but here is a copy of 
the coveted Roll Call baseball, and those of you who have not seen 
it this is Mr. Inslee flat on his back but he has caught the ball.  He 
actually made the catch, and the game is tonight.  I think we start at 
7:00, and if you want to come out and watch this distinguished 
gentlemen, plus Mr. Doyle who is managing the Democrats, which 
has got us in a sweat on the Republican side, we are very worried 
about Doyle's managerability.  The game is tonight at 7:00 at 
RFK.  Does Mr. Inslee wish to make an opening statement?
	MR. INSLEE.  I do, Mr. Chairman.  I want to note that I have 
made a couple of perhaps impolitic comments about the pitching of 
my good friend, John Shimkus.  I just want to repeat that I do 
respect him.  I do not respect his fast ball, however.
	CHAIRMAN BARTON.  We will wait for the photographer to 
catch another photograph of you flat on your bottom when it is 
right at your head tonight.
	MR. SHIMKUS.  And I will not even be concerned about you 
charging the mound either.
	CHAIRMAN BARTON.  Mr. Inslee for 1 minute.
	MR. INSLEE.  Mr. Secretary, I have a minute so I will not mince 
my words.  The science is so overwhelming on global warming.  It 
ought to be obvious to all of us.  The glaciers are melting and yet 
your Administration does nothing.  The hurricanes are blowing.  
Your Administration does nothing.  Our salmon and polar bears 
are on the path to extinction, the Administration does nothing.  
Scientists two weeks ago in the basement of this building told us in 
100 years there may be no coral reefs in the world due to ocean 
acidification when the carbon dioxide goes in the solution and 
acidifies our oceans, and yet your Administration does nothing of 
any real significance to deal with this problem.
	We believe that there are billions of dollars to be made by 
American companies and thousands to millions of jobs for 
Americans to create new energy sources that will be clean to deal 
with global warming.  I hope today you might comment on your 
efforts to convince the President not to be the last person on Earth 
who is willing to do something about global warming.  I ask you 
that as a father, maybe a grandfather some day, and I hope that you 
will talk about your efforts to turn the White House around on this 
issue.  Thank you.
	CHAIRMAN BARTON.  Seeing no other Member present who has 
not had an opportunity, all members not present will have the 
requisite number of days to put their opening statements in the 
record at the appropriate point.  We welcome you, Mr. Secretary, 
to such time as you may consume.  Welcome to the committee, and 
we are at your disposal.

STATEMENT OF HONORABLE CARLOS M. GUTIERREZ, SECRETARY, U.S. DEPARTMENT OF 
COMMERCE
	SECRETARY GUTIERREZ.  Thank you, Chairman Barton, and if I 
may, I would like to make an opening statement.  Chairman 
Barton, Ranking Member Dingell, and members of the committee, 
I am pleased to have this opportunity to discuss the President's 
pro-prosperity agenda.  As you know, the tax relief the President 
proposed, and Congress passed, has helped spur growth by keeping 
$880 billion in the hands of American businesses and workers, and 
today our economy is very strong, and we are very pleased that the 
President's plan is delivering results.
	Let me just highlight some of the numbers for you.  Our GDP 
per capita is among the highest in the world, higher than that of 
Japan, the UK, Germany, France, Italy, and Canada.  Last year's 
3.5 percent economic growth rate was the fastest of any 
industrialized nation.  The first quarter GDP, which was revised 
this morning so you may have not seen this number, was revised to 
5.6 percent.  The previous number was 5.3.  Over 5.3 million new 
jobs have been created since August of 2003.
	Our unemployment rate is 4.6 percent.  That is lower than 
Canada at 6.1 percent, lower than Italy at 7.7 percent, lower than 
Germany at 8.2 percent, lower than France at 8.9 percent, and 
importantly it is lower than the average of the past 4 decades for 
our country.  More Americans are working today than ever before 
in our history.  Since 2001, productivity has been growing at the 
fastest rate in nearly 4 decades, and the United States is the world's 
leading exporter of goods and services.
	CHAIRMAN BARTON.  It is just announcing we are having a 
series of votes.  As soon as the bells stop, continue your statement.  
We will try to get your statement in and we will go vote and then 
we will come back.
	SECRETARY GUTIERREZ.  Thank you.  Would you like me to 
continue, Mr. Chairman?
	CHAIRMAN BARTON.  Yes, sir. 
	SECRETARY GUTIERREZ.  Thank you.  So we are competing 
with the rest of the world at a time when we know that the world is 
becoming more and more competitive, and I am very pleased to 
report that we are doing it very successfully.  The challenge is this.  
How to sustain and advance the business environment, innovation, 
and talent that is driving today's dynamic economy.  President 
Bush has an aggressive strategy to further unleash the power of 
free enterprise and keep America the most competitive economy in 
the world.
	It focuses on three areas of policy.  First, we need a business-
friendly environment that encourages entrepreneurship and 
innovation.  The President's pro-growth agenda includes low taxes, 
open markets, responsible regulation, affordable healthcare, tort 
reform, alternative sources of energy, and universal access to 
broadband.  It also includes comprehensive immigration reform 
that provides for secure borders first and foremost, interior 
enforcement, it is very important to secure our border, and a 
temporary worker program that allows jobs to be filled when there 
are no available American workers.
	Importantly, a well-executed temporary worker program will 
be the most effective action we can take to protect the border.  We 
need to recognize the reality of having 12 million people in our 
country who do not have the documents they need to be able to 
work here, and who in turn have 3 million children who are 
American citizens by birth.  Comprehensive reform must also 
enhance our ability to attract and retain the best and brightest high-
skilled workers from around the world.
	We are competing in a global economy. Unlike some Western 
European countries, our culture is a melting pot.  America is a 
nation of immigrants, and this provides us with a real competitive 
advantage for the rest of the century, and I would hope that we can 
take advantage of that.  We do not need to choose between being a 
welcoming nation and a nation of laws.  With comprehensive 
immigration reform, we can be both.  
Second, we need to maintain America's innovative leadership.  
In January, the President announced the American 
Competitiveness Initiative.  It calls for doubling funding for vital, 
basic research in the physical sciences at three key Federal 
agencies over the next 10 years.
	That includes $535 million for core laboratory programs at 
Commerce's National Institute for Standards and Technology in 
2007.  NIST, with three Nobel Prize winners, has long been a 
center for high-impact basic research.  Additionally, the ACI calls 
for making the R&D tax credit permanent, strengthening math and 
science skills at the K through 12 level, and ensuring that we have 
a flexible worker re-training system.
	Third, we need an open and level global playing field for 
American companies and workers.  Ninety-five percent of the 
world's potential customers live outside of our borders, so the 
opportunities for commercial engagement are immense.  The Bush 
Administration has implemented free trade agreements with eight 
countries.  It has concluded negotiations with seven countries, and 
it is negotiating free trade agreements with 11 more.  Consider this, 
our free trading partners make up just 7 percent of the world's 
economy but they account for 42 percent of our U.S. goods 
exports, so we are making these trade agreements work for our 
workers and for our economy.
	Besides our ambitious free trade agreement agenda, the 
Administration is working aggressively to open markets globally 
for our exporters through the Doha Round.  Free and fair trade 
supports millions of American jobs, increases consumer choice, 
and is the foundation of peace and prosperity.  We know that 
American companies and workers are among the most competitive 
in the world if everybody is playing by the same rules.  At the 
Commerce Department, we are enforcing antidumping and 
countervailing duty laws that protect U.S. companies from unfair 
trade practices.
	We are also working closely with our colleagues across the 
Administration to enforce intellectual property rights through the 
Strategy Targeting Organized Piracy Initiative.  According to one 
study, 75 percent of the value of publicly traded U.S. companies of 
about $5 trillion comes from intangible assets such as brands, 
copyrights, and patents.  We cannot allow a world environment 
where the intellectual property rights of Americans do not mean 
anything.
	Mr. Chairman, the President has a bold agenda to keep 
America the best place in the world to live and to do business, and 
the Commerce Department has an active role to play.  I would like 
to thank you and the members of the committee for your support of 
Commerce programs and for this opportunity to appear before you 
today, and I would be pleased to answer any questions.  Thank 
you, Mr. Chairman.
	[The prepared statement of Carlos Gutierrez follows:]

PREPARED STATEMENT OF THE HON. CARLOS M. GUTIERREZ, 
SECRETARY, U.S. DEPARTMENT OF COMMERCE

        Chairman Barton, Ranking Member Dingell, Members of the 
Committee, I'm pleased to have this opportunity to discuss the 
President's pro-prosperity agenda.
        As you know, the tax relief the President proposed, and 
Congress passed, has helped spur growth by keeping $880 billion 
in the hands of American businesses and workers.
        The U.S. economy today is strong.   Look at the numbers: 
	 Our GDP per capita is among the highest in the world, 
higher than that of Japan, the UK, Germany, France, Italy 
and Canada.
	 Last year's 3.5 percent economic growth rate was the 
fastest of any major industrialized nation.
	 Over 5.3 million new jobs have been created since August 
2003.
	 Our unemployment rate is 4.6 percent. That's lower than 
Canada (6.1%), Italy (7.7%), Germany (8.2%) and France 
(8.9%).  And lower than the average of the past four 
decades.
	 Since 2001, productivity has been growing at the fastest 
rate in nearly four decades.
	 The United States is the world's leading exporter of goods 
and services.

        We are competing with the rest of the world, and we're doing it 
successfully.
        The challenge is this:  How to sustain and advance the business 
environment, innovation, and talent that's driving today's dynamic 
economy?
        President Bush has an aggressive strategy to further unleash the 
power of free enterprise and keep America the most competitive 
economy in the world.
        It focuses on three areas of policy:
        First, we need a business-friendly environment that encourages 
entrepreneurship and innovation.
        The President's pro-growth agenda includes: 
	 Low taxes;
	 Open markets;
	 Responsible regulation;
	 Affordable health care;
	 Tort reform;
	 Alternative sources of energy; and
	 Universal access to broadband.

        It also includes comprehensive immigration reform that 
provides for secure borders, interior enforcement, and a temporary 
worker program that allows jobs to be filled when there are no 
available American workers.
        Importantly, a well-executed temporary worker program will 
be the most effective action we can take to protect the border.
        We need to recognize the reality of having 12 million people in 
our country who don't have the documents they need to be able to 
work here, and who have three million children who are American 
citizens by birth.
        Comprehensive reform must also enhance our ability to attract 
and retain the best and brightest high-skilled workers from around 
the world.
        We're competing in a global economy.  Unlike some Western 
European countries, our culture is a melting pot.  America is a 
nation of immigrants.  This provides us with a real competitive 
advantage.
        We don't need to choose between being a welcoming nation 
and a nation of laws.  With comprehensive immigration reform, we 
can be both.
        Second, we need to maintain America's innovative leadership.
        In January, the President announced the American 
Competitiveness Initiative.
        It calls for doubling funding for vital, basic research in the 
physical sciences at three key Federal agencies over the next ten 
years.
        That includes $535 million dollars for core laboratory 
programs at Commerce's National Institute of Standards and 
Technology in 2007.
        NIST, with three Nobel Prize winners, has long been a center 
for high-impact basic research.
        Additionally, the ACI calls for making the R&D tax credit 
permanent, strengthening math and science skills at the K- 
through-12 level, and ensuring that we have a flexible worker re-
training system.
        Third, we need an open and level global playing field for 
American companies and workers.
        Ninety-five percent of the world's potential customers live 
outside of our borders.  The opportunities for commercial 
engagement are immense.
        The Bush Administration has implemented free trade 
agreements with 8 countries.  
        It has concluded negotiations with 7 countries.  And it's 
negotiating FTAs with 11 more.
        Consider this:  Our FTA partners make up just 7 percent of 
world GDP.  However, they account for 42 percent of U.S. goods 
exports.
        Besides our ambitious FTA agenda, the Administration is 
working aggressively to open markets globally for our exporters 
through the Doha Round.
        Free and fair trade supports millions of American jobs, 
increases consumer choice, and is the foundation of peace and 
prosperity.
        We know that American companies and workers are among the 
most competitive in the world if everybody is playing by the same 
rules.
        At the Commerce Department, we are enforcing antidumping 
and countervailing duty laws that protect U.S. companies from 
unfair trade practices.
        We're also working closely with our colleagues across the 
Administration to enforce intellectual property rights through the 
Strategy Targeting Organized Piracy Initiative.
        According to one study, 75 percent of the value of publicly 
traded U.S. companies - some $5 trillion dollars - comes from 
intangible assets such as brands, copyrights and patents.
        We can't condone a world environment where the intellectual 
property rights of Americans don't mean anything.
        Mr. Chairman, the President has a bold agenda to keep 
America the best place in the world to live and to do business, and 
the Commerce Department has an active role to play.
        I want to thank you and the Members of the Committee for 
your support of Commerce programs and for this opportunity to 
appear before you today.
        I would be pleased to answer any questions you may have..

	CHAIRMAN BARTON.  Thank you, Mr. Secretary.  We have 9 
minutes remaining in the vote, and we have this vote and two other 
votes so we are going to take a very brief recess, go do these series 
of three votes.  We are going to reconvene at 11:15.  It is almost 
11:00, so 11:15 to 11:20 we will reconvene.  The Chair will 
recognize himself for the first round of questions, and we will go 
to Mr. Dingell and alternate between the Majority and the 
Minority.  So we are in recess until approximately 11:15.
	[Recess.]
	CHAIRMAN BARTON.  The committee will come back to order.  
Right before the recess, the Secretary had finished his opening 
statement.  It is now time for questions, and the Chair is going to 
recognize himself for the first series of 5 minutes of questions.  Mr. 
Secretary, what do you consider the largest outstanding issue in 
your jurisdiction that the Congress needs to address in terms of a 
legislative solution, if any?
	SECRETARY GUTIERREZ.  Thank you, Mr. Chairman.  I would 
say that there are, if I may, there are two important issues that are 
in the boundaries of the Commerce Department that we are 
spending a lot of time on.  One is the American Competitiveness 
Initiative which the President announced in his State of the Union 
address, and that is very important to keep our economy growing 
and to keep creating jobs and to keep the great numbers that we 
have in the future at a time when we have such strong competition.  
That entails investing in our education system in K through 12.  It 
means doubling the R&D expenditures in three key agencies in the 
Government, and it also includes extending the number of visas 
that we issue to high-skilled workers and students.
	The second issue that I would say is very important to address 
at this time is the whole subject of comprehensive immigration 
reform, which I know is a very sensitive issue, but we believe that 
until we address the comprehensive aspect of reform, which means 
secure our borders, have interior enforcement, have a temporary 
workers' program, have a realistic and practical way of dealing 
with the 12 million people we have in the country, until we do that 
we are going to be delaying the inevitable and delaying something 
that we should be addressing, so I would suggest those are the two 
big items that are very high on our agenda.
	CHAIRMAN BARTON.  Okay.  This committee does not have 
direct jurisdiction on the immigration issue although we do have 
some sub-issues that would be a part of that debate.  Let me talk 
about something we do have jurisdiction over and that is the 
CFIUS process.  You are a member of the CFIUS review group, I 
believe.  Is that not correct?
	SECRETARY GUTIERREZ.  Yes, sir.  The Commerce Department 
is, yes, sir.
	CHAIRMAN BARTON.  What changes, if any, does the 
Administration support in the CFIUS review process?
	SECRETARY GUTIERREZ.  Well, we think it is important that 
whatever is done that we strike an important balance between 
national security concerns and to continue to have a way to put on 
hold or address any transactions that may hurt national security, 
but we also have to be cognizant that we want to welcome foreign 
investment, and I would be very careful of any message that we 
send out that would suggest to investors that they are no longer 
welcome.
	I do believe that the communication between Congress and the 
Administration is important so that we both know where we are in 
the process and what we are doing.  But we have a very robust 
process.  There are 11 agencies within the CFIUS process.  
Commerce plays a very vocal and important role, and we plan to 
continue doing that.
	CHAIRMAN BARTON.  We have, in the energy bill last year, last 
summer, a bipartisan agreement on the CNOOC proposal to buy 
Unocal, to slow that down and to make sure that it was reviewed, 
and subsequently while I do not think CNOOC withdrew their 
offer, I think the board of directors chose a domestic alternative to 
it.  So that is an issue that we have jurisdiction in this committee.
	My last question deals with the situation in Venezuela and their 
leader, Mr. Chavez.  What steps should the Congress be taking or 
the Administration be taking to temper some of the steps that Mr. 
Chavez has either done or at least threatened at doing?
	SECRETARY GUTIERREZ.  Well, as you know, Mr. Chairman, 
we have a very positive pro-growth agenda with Latin America, 
and we have a trade agreement with Canada and Mexico.  We have 
just passed a trade agreement with Central America.  We believe it 
is important to show countries that are like minded and that are 
embracing trade, embracing investment, embracing free enterprise 
that their road is the right road.  We have an agreement with Peru 
that is coming up that will be very important to show that region of 
the world that by aligning with the U.S., by continuing to work 
with the U.S., by trading with the U.S., that is the way to show 
results.  That is the way to create jobs as opposed to any other 
measures which we do not believe will generate results in that 
region of the world.
	So continuing to have a positive agenda with our like-minded 
partners who happen to be the majority of the countries there.  The 
countries down there that tend to be on the radical side of things I 
believe are the exception.  The rule is countries want to work with 
us and we should be very proactive with them.
	CHAIRMAN BARTON.  Thank you, Mr. Secretary.  My time has 
expired.  The gentlelady from California is recognized for 5 
minutes.
	MS. ESHOO.  Thank you, Mr. Chairman, and once again, Mr. 
Secretary, welcome to the committee.  It is my understanding that 
this is the very first time that you have testified before the 
committee.
	SECRETARY GUTIERREZ.  It is.
	MS. ESHOO.  So it is good to have you here.  On the 
competitiveness agenda, there were many of us that were really 
delighted that the President raised the issue in his State of the 
Union address.  In fact, when he talked about it, I stood up and 
applauded and looked around.  I think I was amongst the few that 
jumped to her feet.  It is my view that even if we were doing 
everything that we should be doing, we would still have enormous 
challenges to our number one position in the world on so many 
fronts.
	We cannot take our competitiveness and our number one 
position in the world for granted.  There is much that needs to be 
done.  I think that this is an area where you can really help make a 
difference because the Democrats, and I was deeply involved in it, 
worked to shape an innovation agenda.  The President has spoken 
about it.  The Commerce Department has a large responsibility for 
a piece in this.
	There are other academies and organizations.  Norman 
Augustine headed up a commission.  You all know that.  You 
know this very, very well.  The issues that are a part of this that 
make up this agenda are bipartisan.  They are nonpartisan.  And I 
think it is really going to take a push from the Administration to 
bring this all together.  Everything is fragmented in pieces in the 
Congress, the various jurisdictions, et cetera, et cetera.  So I want 
you to know that I will work with you on this.  I have the privilege 
of representing a place that is known for innovation and is a real 
driver of our national economy and the international economy for 
that matter.
	But we all have a stake in this.  We all have a stake in this.  So 
I just want to offer that to you.  
On the issue that I raised in my opening statement, this disaster 
on the West Coast, we need you in this.  Now it is my 
understanding that the NOAA Southwest Regional office did issue 
a memo calling for a disaster declaration to be made.  And I would 
like your commitment to share that, to have that memo shared with 
us.  I think that is important.
	The most important thing is that action be taken on this and 
that rests squarely with you.  This is really in your hands.  I want to 
underscore that this not only has the devastating effect on the 
fishermen themselves but there are a whole host of related 
industries, the packing houses, the local economies, the boat 
people that rent the boats--that is an industry in and of itself.  The 
hotel and motel industries along the coast side.  So as I said, there 
really is a domino effect.  And I know that today's hearing is about 
growth, opportunity, competition.  America goes to work.
	These individuals cannot go to work now, and so your 
leadership is going to make the difference.  The members that you 
met with before the hearing, we will all be available.  We will fax 
to your office the names of the members, the contact telephone 
numbers so that if you hopefully will do a conference call with us.  
We will be available.  No one is going out of the country.  We are 
all going to be in our districts.  We need you to declare a disaster 
for all of the reasons that were pointed out.  Now in terms of the 
memo, will you make this available to us?
	SECRETARY GUTIERREZ.  I have not seen the memo, and if 
there is such a memo I would be glad to share it with you.
	MS. ESHOO.  There is such a memo but it will not be shared 
with members and so I am asking you directly to secure that 
memo.
	SECRETARY GUTIERREZ.  I do not have a problem in sharing 
that with you.
	MS. ESHOO.  Thank you very, very much, Mr. Secretary.  And I 
will get that list to you, and on both of these issues you have my 
commitment to work with you.  And again on the competitive 
agenda this is something that if the President said to the leaders of 
Congress put a bill on my desk we could get this done.  We only 
have I think 39 legislative days left in this Congress, 39 legislative 
days left.  Imagine if this Congress would be a Congress that 
historians would write about very favorably on this piece if we got 
this through, so on both I look forward to working with you for all 
of these jobs and the people that are left in the lurch here we really 
need you, we really need you.
	SECRETARY GUTIERREZ.  I look forward to working with you, 
and I appreciate your leadership.  And I will look for that memo 
that you are talking about.
	MS. ESHOO.  Yes, please request it.  It is from the NOAA 
Southwest Regional office, and I will get the information to you 
for who you can send it to.  Thank you, Mr. Secretary, and 
welcome to the committee.
	SECRETARY GUTIERREZ.  Thank you.
	MS. ESHOO.  I hope you will come back more often.
	CHAIRMAN BARTON.  I thank the gentlelady.  The gentlelady 
from Tennessee, Ms. Blackburn, is recognized for 5 minutes.
	MRS. BLACKBURN.  Thank you, Mr. Chairman.  Mr. Secretary, 
thank you for being generous with your time this morning with us 
at Theme Team and again now.  I want to start talking a little bit 
about intellectual property and patents and trade because this is 
something important to my district.  It is important to our 
entertainers, to our creators, our innovators, our dream makers, our 
medical community.  I had read Peter Latman's Wall Street 
Journal blog, and he was talking about the backlog at the Patent 
and Trademark Office.  In '85 there were 126,000 applications for 
patents and in 2005 there were 409,000.
	Now I think this is due in large part to the fact that we are 
reducing regulation, reducing taxation.  Technology is taking off.  
We are being very careful in how we approach and police and 
work through this issue and leaving innovative areas clear for 
innovation, and that speaks to the good policies of Congress, also 
of the good policies of the President.  What troubles me is there is 
a 30-month lag to approve or reject initial applications, and there 
was one example where someone was told they had to wait 14 
years, 14 years, to hear back on a patent application.  So I would 
like to know specifically what you are going to do to address this 
backlog.  We get complaints in our Congressional office every 
single week on patents and trademarks.
	SECRETARY GUTIERREZ.  This is a very important subject for us 
especially at a time when innovation is so important.  And what we 
have seen, you are absolutely right, is an increase in the number of 
applications, increase in the number of companies, people, 
entrepreneurs, inventors asking for patents.  We are adding people 
very, very quickly and we are adding technology very quickly so 
that we can get that number down.  And we have metrics and we 
measure this, and it is very clear--
	MRS. BLACKBURN.  When do you think, sir, that we are going 
to see an improvement?
	SECRETARY GUTIERREZ.  We want to see an improvement, I 
would like to see an improvement as soon as possible.  There are 
probably some applications that come in that do not need to come 
in so I think we also need some discipline from those companies or 
entrepreneurs who are applying that perhaps are just taking up 
time, and that do not need to be applying for a patent, so there is 
discipline on both sides.  I can just tell you that from our end we 
are adding people as fast as we can.  We are getting them trained.  
We are adding technology because this is a very important 
advantage for us but I would be glad to share with you some of the 
things we are doing and even some of the metrics we measure.
	MRS. BLACKBURN.  I would appreciate seeing that.  You know, 
with the medical community--and I am watching this clock.  Mr. 
Chairman, I thought I had extra time because I waived my opening 
statement.
	CHAIRMAN BARTON.  We will give you an extra minute.  That 
is not a problem.
	MRS. BLACKBURN.  Okay.  New technologies, medical 
technology, that is a great pioneering area, and we see that in our 
district.  And foreign governments are increasingly restricting 
access to valuable new technologies that are needed in that field 
and frequently their policies constitute non-tariff barriers to U.S. 
products, so I would also like to know how you are going to deal 
with that issue when you respond to me with some of the metrics 
that you are using.
	And I think that the other thing too as we are looking at those 
medical technologies is that in the past we have had some success 
in opening Japanese markets with kind of a bilateral agreement.  I 
would like to know if you are going to pursue any of that bilateral 
framework with the EU when we are looking at medical 
technologies.
	The other question that I had for you pertains to the discussion 
earlier this morning that we had as well as going into your 
testimony here, and you chose to talk about the guest worker 
programs.  And this is something that we have done a lot of 
looking at, working on, and I've got a question for you.  It is kind 
of an assumed fact with you all in Commerce that we need a guest 
worker program, and I wanted to know if that assumption is based 
on any sound economic studies or if it has just kind of become 
more or less a mantra with you all that our economy depends on 
low-cost labor that arrives in this country illegally in order to be 
able to make the wheels turn.
	And I would like to know if you've got some studies there, I 
would appreciate seeing those studies if there is anything that is 
quantifiable, and if in those studies you have considered any of the 
other impacts, the social impacts, of illegal immigration, the 
impacts that it has on our communities, any of the other questions 
or if you are just looking at it from a corporate angle.
	SECRETARY GUTIERREZ.  Sure, I would be glad to share that 
with you.  Just for starters, our unemployment rate is below the 
average of the past 4 decades.  I do receive information from many 
industries who will suggest and will let me know that they have 
shortages.  They cannot find enough workers.  And we find that in 
the construction industry, transportation industries, some 
healthcare industries, so I would be glad to share that with you.
	MRS. BLACKBURN.  Well, I would enjoy seeing that as to 
whether there is a real impact, what the true cost is.  I have been 
intrigued with the--I think Robert Samuelson had had an editorial 
back in March, we do not need guest workers, and it actually cited 
the 1960s tomato farming Federal guest worker program that had 
been used in California, and when that ended the cost of tomatoes 
did not go up, but what we did see was that, yes, the tomatoes were 
picked and technology and innovation led to the same production 
productivity outputs.  So, indeed, anything you can reference 
would be appreciated.
	SECRETARY GUTIERREZ.  Sure.  Sure.  And if I may just say, 
Congresswoman, I think it is a great testament to our economy that 
there are jobs that are available, that Americans have moved on.  
They are not available to take, they do not want those jobs, and we 
moved on to other types of jobs.  And in order to fill these jobs, we 
are finding that we need foreign labor.  And I think it says a lot 
about how our economy has evolved and how it has grown.
	MRS. BLACKBURN.  Well, Mr. Secretary, I think it says a lot 
about American work ethic that many of us have done those jobs 
and still will do those jobs at a time when we need to do those jobs.  
Thank you for your consideration.  Mr. Chairman, I yield back.
	CHAIRMAN BARTON.  Thank you.  We are going to recognize 
Mr. Gonzalez.  Mr. Gonzalez, did you give an opening statement, 
because if you did not, you get six minutes and if you did you get 
five.
	MR. GONZALEZ.  I did welcome the Secretary, and I guess that 
could be an opening statement which is up to you.
	CHAIRMAN BARTON.  Well, we will give you 6 minutes.  Mr. 
Secretary, I have to go to a Texas delegation lunch on redistricting.  
We had a Supreme Court case yesterday that affirmed 31 districts 
but unaffirmed one, so we have to do a little strategizing.  I am 
going to turn the Chair over to Mr. Bass.  We appreciate you being 
here.  I will check back at 1:00.  Hopefully by then you will have 
answered to the satisfaction of all the members the questions and 
you will be on your way to the Commerce Department to have 
lunch yourself.
	SECRETARY GUTIERREZ.  Thank you.
	CHAIRMAN BARTON.  We appreciate you being here.  We do 
appreciate you making yourself available.  And I personally thank 
you for meeting with some of the members that had a concern of 
special interest to them.
	SECRETARY GUTIERREZ.  Thank you.
	CHAIRMAN BARTON.  We are going to recognize Mr. Gonzalez 
for 6 minutes.
	SECRETARY GUTIERREZ.  Thank you, Mr. Chairman.  
	MR. GONZALEZ.  Thank you, Mr. Chairman, and good luck on 
that meeting.  The Democrats will be meeting later on the same 
topic.  Mr. Secretary, you have pointed out in your opening 
remarks the issue of immigration and how we handled it and its 
impact on our economy, and I know that the Chairman correctly 
observed that immigration obviously does not come within the 
purview of this committee nor does border security and such.  But 
those practices that will be adopted will have a direct impact on 
American employers, American businesses, workers, and our 
economy, and we will have some connection somewhere along the 
way regarding the consequences and repercussions of either a good 
immigration policy or a poorly planned one.
	And so I am going to follow up with what is going on, and of 
course some of this is highly political because that has been the 
environment that has driven this particular debate and not anything 
that has been a good faith debate.  But this is a letter that has been 
circulated among the Democrats and that is the International 
Relations Subcommittee on Terrorism and Nonproliferation will be 
holding important field hearings regarding border security 
originally contemplated as part of a series of oversight hearings on 
terrorist efforts to enter the United States.  This hearing has now 
been made part of the Republican leadership's strategy of holding 
politically charged field hearings on immigration policy.
	The first hearing is in San Diego, California, on July 5, and 
then in Laredo, Texas, on July 7.  So we know what is going on out 
there, and the thrust of this thing will be all about border security 
and the threats to it by the undocumented workers and so on.  Have 
you been invited to testify at any of these hearings that will be 
held?  I do not know if it is just this particular subcommittee or 
other subcommittees of the United States House of 
Representatives?
	SECRETARY GUTIERREZ.  I am not sure, and I say that because I 
do not know, if there has been any communication coming in 
asking me to participate.  I think the positive thing is that I would 
hope that these hearings bring out the feelings of the American 
people once they know the facts and the reality.  Everyone agrees 
that we need more border security but what we need to understand 
as well is that we will not have the border security that we all want 
unless we have interior enforcement.
	MR. GONZALEZ.  That is the important point that I wanted to 
point out in your prepared statement because I do want you to 
expand on that.  First of all, I may disagree with the Administration 
on many things but I will say that I do not think the Administration 
or anyone that I really know would take a back seat when it comes 
to border security in securing the safety of the American people.  
We may all have different means of achieving that end but I think 
we all agree on that particular goal.
	Unfortunately, now this has been the attention getter and 
unfortunately all the attention is on that and it is not a realistic 
approach but nevertheless this is your quote, and again I am going 
to agree with you, importantly, "a well executed temporary worker 
program will be the most effective action we can take to protect the 
border."  So do you stand for the proposition that you can have 
border security but you can still have an immigration policy that 
somehow will have a pathway to legalization for those families 
that are here in the United States, definitely undocumented, illegal, 
whatever you want to say, and further providing for a guest worker 
program.  Again, without jeopardizing the safety or well-being of 
the American people from terrorist attacks, is that possible to do or 
are they just mutually exclusive?
	SECRETARY GUTIERREZ.  Ironically, I would say that you really 
cannot do one without the other so we will not have total border 
security until we are able to hold employers accountable.  In order 
to hold them accountable, we need to give them a practical 
workable guest workers program so the two are very much linked 
together.  And that is why the President has called for 
comprehensive immigration reform in order to ensure that, number 
one, our Nation is secure, and, number two, that we are being 
realistic about the jobs that are available in our economy that 
Americans do not want to do but that if we do not fill those jobs 
our economy will suffer.
	So we have those two goals and we need comprehensive 
reform in order to change that.  It will not be achieved by just 
looking at one dimension of the problem.
	MR. GONZALEZ.  Let us just say somebody waves their magic 
wand and we deport 11 million or 12 million undocumented 
workers and their families and we close off the border.  We do not 
have any guest workers.  What would be the implications to the 
United States economy?
	SECRETARY GUTIERREZ.  Well, of course it is difficult to have 
specific numbers.  What I hear around the country is that because 
there are shortages of labor that there will be jobs in our economy 
that need to get done that just will not get done.  And that could be 
different industries, different services that we like to see that we 
get on a daily basis that we may not realize how we are getting 
them but again we would not be talking about this problem if we 
did not have an unemployment rate of 4.6 percent or if we did not 
have an economy that just grew 5.6 percent in the first quarter.  We 
have a very strong economy and that is why we are having 
immigrants cross the border because they know the economy is 
strong and they know there are jobs here.
	MR. GONZALEZ.  And we know that we have these willing 
employers and many--well, actually there are really two illegal acts 
that take place when someone is hired here who is undocumented.  
One, by the undocumented worker that comes over here in 
violation of our immigration laws, and then by the employer who 
in many instances knowingly will hire the undocumented worker.  
And I agree with you--I guess I got 11 seconds and I would just 
like to just finish off with this particular question.  Do you agree 
that we have to have greater enforcement on the employer end?
	When we say enforcement, enforcement is good but it has got 
to be again at the sources of the problem, the border itself, guest 
worker program, then the individuals we have here, but also what I 
refer to as the demand will always determine the supply.  The 
demand is by the employer and until we have very aggressive 
employer sanctions, we will not get a real grip on this problem.  
What is your view regarding employer sanctions?
	SECRETARY GUTIERREZ.  I agree that we need enforcement.  
We need to enforce our laws with employers.  We need to make it 
easy for employers to follow the rules and we need to make it 
easier for us to hold employers accountable.  That is why we need 
a guest workers permit, a bi-metric card that everyone will know 
what it is and what they need to ask for, and the employees and 
workers will know what they need to have, and over time what will 
happen is people will know that if they do not have that permit 
they will not risk their lives crossing the borders because there will 
not be a job in this country.
	MR. GONZALEZ.  Mr. Secretary, thank you very much, and it is 
good to see you again.
	SECRETARY GUTIERREZ.  Thank you, sir.
	MR. BASS.  [Presiding]  The Chair recognizes himself for a 
round of questioning.  Mr. Secretary, thank you very much for 
being here today.  I also want to thank you for your willingness to 
travel to Atlanta in April to participate in the National FIRST 
Competition.  FIRST, as you may know, is an acronym, For 
Inspiration and Recognition of Science and Technology.  It is a 
foundation that was established in my home State of New 
Hampshire by one of our better known inventors, Dean Cayman, 
and his dream was to be able to provide for children in high 
schools mostly exciting opportunities in science and robotics and 
innovation, and to make science and engineering as exciting to 
young people as is baseball and football and other sports.
	And as you know, since you were there you saw the kind of 
excitement that this program generates.  There were over almost 
1,200 teams there.  There were 28,000 students, an equal number 
of parents and family members and teachers and so forth.  The 
program provided almost $8 million in scholarships for low 
income kids in depressed areas of the country.  Over 80 institutions 
provided donations and there were literally tens of thousands of 
volunteers.  The interesting thing about FIRST is that statistically a 
disproportionate percentage of people who participate in FIRST 
end up successfully going to higher institutions, becoming 
engineers, not failing in high school and so forth.
	I was wondering if you would be willing to comment for a 
minute or two on your experience there and also give me some 
indication if there is any role that your department might be able to 
play in either supporting or either through sponsoring teams or 
participating in the process through the competitive initiative of 
promoting such a program which at present does not use a single 
dime of Federal money, but yet provides so much wonderful 
opportunity for so many young Americans, many of whom would 
never have this opportunity otherwise.
	SECRETARY GUTIERREZ.  I think you are absolutely right, and I 
did have the opportunity to be there and it was an incredible sight.  
Students, teams were as excited about the innovations that they 
were creating and about making science work in ways that they 
had not thought about before as they would be about a World 
Series or about a Super Bowl game.  It was quite remarkable to 
see.  And it is a great model for other communities.
	What we are trying to do from the Commerce Department 
standpoint, working as well with the Department of Education, is 
trying to get that sense of what you said, to get students as excited 
about science and math and achievement and accomplishment 
scholastically as they would be about sports, and that entails 
having private-sector volunteers go into the classroom and 
showing children that there are some wonderful careers down the 
road if they get interested now in math and science.  And there are 
many, many careers.
	You can imagine folks will work on brands like the iPod and 
new technologies and video games.  That all requires math and it 
requires science so we would like to get those folks into the 
classroom.  And we have been working with companies to just ask 
them to do that to be volunteers and to spread the word among our 
students that they should be pursuing math and science as careers 
for their lifetime.
	MR. BASS.  Mr. Secretary, do you see, you can get back to me 
at a later time, any way in which the Commerce Department might 
be able to work to actually play some sort of a role be it small or 
larger in either the sponsoring teams, or sending--you know, the 
patent office was there as you well know, sort of partnering in 
some fashion to promote and provide more potential for the 
participants and so forth.  Do you see any role there possibly?
	SECRETARY GUTIERREZ.  What we have done, and it is a great 
question and I think it is a provocative question that we can think 
about and perhaps do more, but we have invited certain groups to 
come to Washington and just give their programs more exposure.  
Right now they have a local program so we travel often out to their 
communities.  What we are saying is come to D.C. and we will 
make it a bigger event and give it more exposure and just highlight 
how important it is.  And there are probably other things that we 
can be doing, and I will take that thought and take that with me.
	MR. BASS.  I have one other brief question on a different 
subject.  I have been advised that the Nation does not have good 
development labs anymore with the disappearance, if you will, of 
some of the bigger corporations like AT&T, the Bell Company, 
IBM and Xerox, and so forth are downsizing, that there is lots of 
research but there is not adequate development capacity in this 
country.  Are you aware or do you feel that this is an issue or not?
	SECRETARY GUTIERREZ.  I would not say that development is 
an area where we are lacking.  Today as always as anything we 
have to ensure that we continue to grow and progress and invest 
for the future, and we have to do it in both research and 
development.  And what the public sector--what we do very well is 
long-term research, basic research, inventing ideas that can be used 
across industries.  What private-sector companies do very well is 
develop new products, and we have to keep those two going.  
Right now if we add up all the R&D in the country, about one-third 
is research, about two-thirds is development, and we continue to 
see and what we are seeing evolve in the last several years and 
actually emerge is a partnership between the private sector, 
universities and the public sector.
	And we see a lot of private sector representation in university 
labs, and that we believe is a great trend of almost thinking about 
universities as an extension of our labs, so we have to keep it 
going, but I think there is a lot of activity and a lot of progress 
being made.
	MR. BASS.  Thank you very much, Mr. Secretary.  My time has 
expired.  The Chair recognizes the gentleman from Michigan.
	MR. STUPAK.  Thank you, Mr. Chairman, and welcome, Mr. 
Secretary.  I had to rush through my opening because we only had 
a minute, but I am sure you sensed my frustration.  Nothing 
personal to you but those of us in Michigan and other 
manufacturing regions of this country, we are frustrated.  
Beginning with the very first Secretary of Commerce under the 
Bush Administration, we have been writing letters and having 
meetings, and the letters go unanswered and there does not seem to 
be any focus on manufacturing in this country.  There has basically 
been no action so I can only conclude as I said in my opening 
statement that the Administration has turned its back on American 
manufacturers.
	And these are jobs that Americans do want and they do want to 
keep them here in this country.  One example that seems to me and 
to others that the Administration seems to disregard American 
manufacturers is the President's refusal to meet with the Big Three 
automakers.  Here is an article from the Detroit News, June 22.  It 
is titled "Big Three Rebuffed a Third Time by Bush."  The article 
goes on to say the Big Three were supposed to meet with the 
President on May 18.  That meeting was postponed to June 2.  
Then the June 2 meeting was postponed again and they were 
supposed to meet before the end of June.  Well, it is June 29.  No 
meeting has been set.  And from what we understand from this 
article nothing has even been set in July.
	So my first question is why wouldn't the President meet with 
the Big Three, and not meet with these CEOs who employ 
hundreds of thousands of U.S. workers across this country in good 
paying jobs.  Do you have any reason why the President will not 
meet with the Big Three?
	SECRETARY GUTIERREZ.  Congressman, I do not have access 
nor do I have any information on the President's agenda or 
calendar.  I do know that the President is concerned about every 
single job in the country, extremely concerned about keeping our 
employment levels growing, and ensuring that until every 
American who wants a job has a job that we will not stop.  That 
has been his direction.
	MR. STUPAK.  Well, would you encourage him to meet with the 
Big Three?  Frankly, this article is rather an embarrassment no 
matter who the President is to have headlines like that, and I think 
it is really sort of an insult to hundreds of thousands of employees 
in the auto industry, not just the Big Three, but even the spin-off 
jobs relating to the auto industry.  I know you mentioned a robust 
economy that you speak of.  We in Michigan do no see it.  In fact, 
our unemployment has always been right around the highest in the 
Nation lately, and it is over 6 percent.  And you can point fingers 
wherever you want, but all the polling we see they really blame the 
President, and when you see headlines like this that just reinforces 
that belief for whatever reason why he will not meet with them.
	Let me ask you this.  Earlier this year the President said the Big 
Three needs to develop a product that is relevant and GM has to 
learn to compete.  When you were appointed, does the President 
still stand by these statements or is that the policy of the 
Department of Commerce, that it is just the bad cars they are 
producing and they better produce different cars to get the auto 
industry moving in this country?
	SECRETARY GUTIERREZ.  Well, I cannot comment on that 
specifically.  I have not heard that statement.  I will say that what 
the President has urged us all to do as a Nation is to improve our 
competitiveness, to be more productive, to be more innovative, to 
ensure that our workers are getting training so that they have the 
skills for the challenges of the future.  Everyone has to be more 
competitive in the future.  I would not single out any industry.  
Every single company, every single organization needs to 
strengthen their competitiveness in order to grow and flourish in 
the future.
	MR. STUPAK.  I do not think Americans or manufacturers or the 
Big Three are scared of competition, but like I said starting with 
the first Secretary, Mr. Evans, we would write letters saying there 
are things we need in the auto industry, as I said in my opening, 
like relief from healthcare, enforcement of currency manipulations 
by China, India, and others that make our goods much more 
expensive overseas, which brings me to another question I 
mentioned in my opening.
	This Administration has only filed 14 complaints with the 
World Trade Organization.  The Clinton Administration did 69.  
So while we have to compete more, we see inequities, and one of 
the things we always bring up is enforcement of these trade 
agreements, but yet we do not see it from this Administration.  Are 
you currently looking at other WTO complaints?  Do you 
anticipate filing any more which really address the issue of unfair 
access?  I mean before NAFTA and before the trade agreements 
with China our trade deficit with China was like $18 billion a year.  
Now we are pushing what, $400 billion a year trade deficit.  We 
cannot get our products into China, the biggest consumer, but yet 
everything from China seems to flow into this country.
	So on WTO, are there things pending?  Can you assure us that 
there will be aggressive push to file complaints with the WTO to 
get a level playing field for our trade?
	SECRETARY GUTIERREZ.  We have filed two WTO complaints 
with China which have never been done before.
	MR. STUPAK.  What are those two on, sir?
	SECRETARY GUTIERREZ.  Auto parts and the first one was 
semiconductors.  We have more anti-dumping orders against China 
than we have ever had.  And I can assure you what you do not see, 
Congressman, on a day-to-day basis is that we are constantly 
meeting with trade officials whether it be from China or from other 
countries, and always with the agenda in mind that we want more 
market access.  We want the same access to those markets, and 
very specifically China, that they have to our market.  We want our 
intellectual property respected, and we want transparency of the 
rule of law.
	Those are three areas where the Commerce Department is 
absolutely focused and determined to achieve more market access 
for our companies and for our workers.  We believe that that is the 
path forward to export more as opposed to trying to deal with the 
problem by implementing protectionist policies that are not going 
to help our workers over the long term.
	MR. STUPAK.  We just want--you mentioned those points.  I 
agree with you on intellectual property especially the mass 
producer intellectual property with no enforcement from the 
Canadian--excuse me, the Chinese government.  So if we have 
orders, I would hope that they would be enforced stringently and 
fairly.  Thank you.
	SECRETARY GUTIERREZ.  Thank you, sir.
	MR. BASS.  The time of the gentleman has expired.  The 
gentleman from Florida.
	MR. STEARNS.  Thank you, Mr. Chairman, and welcome, Mr. 
Secretary.  How much do you think of our trade deficit if you can 
maybe quantify it, trade deficit is attributed to any energy imports?  
I mean how much of this trade--we see the trade deficit now and 
then we see the trade deficit changing because of the high price of 
gasoline and if it continues to go forward.  I am just curious.  If 
you could tell me today how much has it increased because of the 
energy cost and how much if we see gasoline get more expensive.  
It is probably appropriate because today we are going to vote on 
offshore drilling including in my State of Florida with a possible 
100-mile limit and 50 miles, a first moratorium, and then 50 miles 
with an opt in.  So I am just curious how you feel about trade 
deficits and the energy cost.
	SECRETARY GUTIERREZ.  I do not have the specific number, but 
I can tell you last time I looked at this it was over half of the 
growth of the trade deficit was related to petroleum-related 
products.
	MR. STEARNS.  Half, 50 percent?
	SECRETARY GUTIERREZ.  Yes.  Yes.  And I can get you the 
exact number because it is something that we look at but it is quite 
revealing that the increase in the price of energy products have 
driven up our trade deficit because we are so reliant on imports, 
which is why we need to increase our own supply of oil and also 
get on with a long-term agenda to develop alternative sources of 
energy.
	MR. STEARNS.  So if the price of gasoline was at $70 a barrel 
and it was at $35, if it doubled then you think it is sort of 
proportional.  The trade deficit would be 50 percent increase?  I 
mean could I say that the trade deficit would be 50 percent increase 
if the cost of oil doubles?
	SECRETARY GUTIERREZ.  In that case assuming everything else 
stayed the same.
	MR. STEARNS.  We are just trying to get a handle on it.
	SECRETARY GUTIERREZ.  That is right, but that is exactly the 
way the math works.  It increases and therefore imports are 
impacted.
	MR. STEARNS.  So the danger is if the energy, we do not do 
anything with the cost of energy increases until maybe it gets to 
$100 a barrel, then the trade deficit is going to soar again.
	SECRETARY GUTIERREZ.  Well, the trade deficit, and we of 
course worry about the impact on prices at the pump and what it 
does to consumers and what it does to working families.  So it is 
interesting because when oil was at $25 a barrel the President was 
talking about a long-term plan, but there was not a lot of signing up 
for a long-term plan.  Now that it is at $70, we would like a 
solution tomorrow.  Invariably, when you want an immediate 
solution to a problem that has evolved over the long term you can 
do some tactical decisions that are not going to pay off over the 
long term so we need to get to work on the long-term energy plan 
that the President has laid out.  That is the solution to the problem.
	MR. STEARNS.  Okay.  I am going to ask you a question here 
that maybe to take off your hat as Secretary and maybe put your 
hat on as a former CEO.  Tell me what do trade deficits mean to 
the large businesses, and what does it mean to America, trade 
deficits.  I have asked the same question to Greenspan when he 
was Chairman, and I like to ask people like yourself just to try to 
understand, do trade deficits matter because trade deficits are 
getting larger and larger and particularly with China, and if you 
could just give me sort of from a businessman standpoint what 
trade deficits mean.
	SECRETARY GUTIERREZ.  What I see in the number is that this 
economy is growing so rapidly that everyone in the world would 
like to sell us their goods.
	MR. STEARNS.  We are the big market.
	SECRETARY GUTIERREZ.  We are the big market.  There is 
nothing like it in the world.  We are not only the largest, but we are 
also the fastest growing industrialized nation.  And if you flip it 
around there are countries that have a trade surplus like Germany--
	MR. STEARNS.  And no business, high unemployment.
	SECRETARY GUTIERREZ.  But their unemployment is 8-1/2 
percent, 8 percent.  Their growth rate is maybe 1-1/2 percent.  I do 
not think we would trade that so the--
	MR. STEARNS.  Trade deficits are relative and do not matter?
	SECRETARY GUTIERREZ.  Well, I would not say they do not 
matter.  It is a number we have to look at, we have to pay attention 
to, we have to understand why it is occurring, but what really 
counts is our economy growing, are we creating jobs, are we 
keeping inflation in check, do Americans own more homes than 
they did before.  That is what really--
	MR. STEARNS.  So as a businessman I am talking now, you 
would be looking and saying as long as we have all these good 
factors and the economy and the trade deficit is not as important, it 
is important, but not as important, and you would not be concerned 
about an ever growing trade deficit with China, for example?
	SECRETARY GUTIERREZ.  Well, I would be careful about 
making it the most important number because my concern would 
be that we take actions that assume it is the most important number 
and those actions impact the other numbers that truly are the top 
three which is growth of the economy, growth in jobs, and keeping 
inflation in check.  We could reduce our deficit by putting up 
import barriers.  We tried that in the 1930s.  We cut imports in half 
but we also cut exports in half.  Our employment went to 25 
percent.
	So we just need to understand how we are going to address it.  
We believe the way to address the trade deficit is by exporting 
more so we are continuing to--
	MR. STEARNS.  So you think you want to sell your way out of it 
by being more competitive and selling overseas and cutting our 
trade deficit that way, and so a high trade deficit means that we've 
got to get going and be more competitive.  Is that a fair example of 
what you are saying the whole equation would be?
	SECRETARY GUTIERREZ.  We have to be more competitive, 
ensure that we have a level playing field, that our businesses are 
able to enter markets overseas, but not erecting walls.
	MR. STEARNS.  I understand.  Mr. Chairman, if you would 
indulge, I just have one last question.  What is the current state of 
foreign investment in the United States, is it increasing or 
decreasing and just reasons?
	SECRETARY GUTIERREZ.  Foreign investment, I will have to 
look at the number.  I would say it is increasing quite nicely.  And 
one number is the number of jobs created by foreign investors is 
5.3 million jobs.  So there are 5.3 million jobs in the country that 
are created by investors from overseas, and I find that to be a very 
high number and it says a lot about keeping our economy attractive 
to foreign investment.
	MR. BASS.  The time of the gentleman has expired.  The 
gentlelady from Wisconsin.
	MS. BALDWIN.  Thank you, Mr. Chairman, and thank you, Mr. 
Secretary.  As I said in my opening statement, over the past few 
years we have seen hundreds of thousands of American jobs 
shipped overseas and while many have been manufacturing 
positions the recent trend is off shoring of service jobs including 
software programming, call center operations, and medical record 
transcription services.  In 2003, I joined several members of 
Congress including several members of this committee, Mr. 
Dingell and Mr. Inslee, in requesting that GAO investigate the 
effects on our economy of off shoring of U.S. service industry jobs 
and IT jobs.
	The GAO reported back in September 2004, and in their report 
among other findings they indicated quite critically that federal 
statistics provide very limited information about the effects of off 
shoring on the U.S. labor force and the economy overall.  As a 
follow-up after receiving this report, I wrote to then Secretary 
Evans asking what steps the Administration would be taking to 
institute a method for measuring outsourcing and off shoring.  And 
the response that I received in my opinion was really inadequate, 
so I wanted to raise the question once again today to ask you, is the 
Department of Commerce tracking the number of businesses that 
are moving operations offshore?   What sort of new data collection 
efforts have you implemented as a result of this GAO study?  Why 
don't I let you start there, and I may have some follow-ups.
	SECRETARY GUTIERREZ.  Well, two things.  We have regional 
data that we look at very closely, which enables us to look at our 
unemployment rate by State, unemployment rate by community, 
which enables us to draw some conclusions.  We are also exploring 
ways to have more up-to-date information on the services sector.  
Services, as you know, represents a growing part of our economy, 
and we have more information about other sectors of the economy 
than we do about certain sectors of services, and we believe by 
drilling down and having more information, having more sector-
specific information, that we could draw more conclusions 
regarding where we are creating jobs in the country.
	MS. BALDWIN.  Well, let me just follow up briefly on your 
response.  I think that regional unemployment data existed when 
the GAO report was put together, and what they were really saying 
is that we had some major trends developing and that our 
Government was not adequately collecting data to inform 
policymakers and others how we need to respond and retool in this 
global economy.  And we need sound information.  We need data.  
We need those things to base good policies on.
	So let me just ask a series of questions and perhaps you can 
follow up as the Department looks at new ways of data collection.  
But I would, for example, want to know about the Department of 
Commerce tracking which industries are most affected by off 
shoring based on occupation, skill level and wages; whether the 
Department tracks which countries American companies are off 
shoring to; what about how many workers are affected by State or 
by industry specifically by off shoring rather than other trends in 
our economy; and whether the Department of Commerce is 
tracking the re-employment of American workers who are 
displaced by off shoring, and if employed are these workers 
generally making more or less money and what about their 
complement of benefits in their new role?
	And I realize that this is something in terms of data collection 
that you share with the Department of Labor, but the Department 
of Commerce certainly needs to know this type of information as 
do we as Members of Congress.
	SECRETARY GUTIERREZ.  Again, we are working on updating 
our information systems to reflect the world as it is today and as it 
will be in the future.  I would be glad to go back and see if we can 
get some of these points and whether we will be able to do so in 
the future.  But we are currently looking at how to update our 
information systems to reflect a changing world and a changing 
global economy.
	MS. BALDWIN.  Thank you.
	SECRETARY GUTIERREZ.  Thank you.
	MR. BASS.  The gentleman from Oregon.
	MR. WALDEN.  Thank you, Mr. Chairman.  Mr. Secretary, 
thank you and welcome.  I appreciated the opportunity to meet 
with you earlier along with some colleagues of mine from Oregon 
and California regarding a regional economic issue that while not 
specific to my district because we are inland, it is one certainly I 
think everyone in the region is concerned about and that is the 
reduction or elimination of any fishing harvest off the Oregon, 
southern Oregon, and northern California coast.  And I guess we 
are all struggling with timelines here on how we can help people 
who we know are in terrible situations financially as a result of this 
regulatory decision.
	And I want to ask you because the authority to declare a 
disaster rests in your agency, and I know your people have been 
working on that.  Can you give us some sort of update as to what 
can be done here?  My understanding is after Hurricane Katrina 
within 10 days or so a declaration of fishing disaster was able to be 
declared.  It looks to me like under the Interjurisdictional Fisheries 
Act of 1986 there might be a framework to do a similar 
declaration.  I am just curious if you can enlighten us.
	SECRETARY GUTIERREZ.  Thank you, sir.  The Magnuson-
Stevens Act requires us to have factual information in order to 
declare a disaster which is very much related to the fish stock 
levels or to declare a failure which is very much related to the 
economy surrounding that area.  We have been into the process 
and into the season for about 2 months.  Typically you need more 
information than that.  After our meeting today, and I have asked 
for some options, eventually sending someone from NOAA to 
expedite the process, but this is something we are concerned about.
	We share a deep concern about a fishing community that is 
being impacted in a negative way, and we need to address it so 
within the context of the current law, within the boundaries, within 
whatever restraints there are, we need to move forward as quickly 
as we can and provide you whatever help we can.  And we will 
work with you in that endeavor.
	MR. WALDEN.  Well, as you know, nobody is asking you to 
violate the law.  Clearly, you have to operate under it.  It appears 
that there may be ways to move in a more expedited manner than 
we have been led to believe in the past.  There is some discussion 
it might be February of next year, and I dare say any of us who did 
not get a paycheck for that length of time would not have much 
left.
	SECRETARY GUTIERREZ.  And I will check that, Congressman, 
and see how we can expedite that and what we can do.
	MR. WALDEN.  And I had some discussions with the chairman 
of the Resources Committee about including language that Senator 
Smith has in the Senate reauthorization of Magnuson-Stevens that 
would provide for a declaration of a disaster and economic 
assistance, and hopefully that is language the Chairman and the 
House Resources Committee might be able to agree to in a 
conference should our bill ever get there because we want to do 
everything we can.  Time is of the essence, and I know when the 
farmers in the Klamath Basin have the water shut off and their 
lives devastated by a similar type decision, Secretary Veneman at 
Ag at the time through their laws, which I realize are different than 
the ones you operate under, she was able to move within 10 days, 
get the declaration, and we were able to go to work here to get the 
funding.
	And I would just join my colleagues on both sides of the aisle 
and up and down the Oregon and Washington coast in making it 
clear we need to move as fast as possible within the guidelines of 
the law you have to follow--
	SECRETARY GUTIERREZ.  Yes, sir.
	MR. WALDEN.  --to accomplish this, so I appreciate your taking 
the meeting today and your interest, personal interest.
	SECRETARY GUTIERREZ.  I look forward to working with you, 
Congressman.  Thank you.
	MR. WALDEN.  We appreciate that.  Mr. Chairman, I do not 
have any other comments at this point.
	MR. BASS.  Thank the gentleman.  The gentleman from Maine 
is recognized for 6 minutes.
	MR. ALLEN.  Thank you, Mr. Chairman.  Mr. Secretary, the 
House just approved an approximately $500 million cut to the 
budget of the National Oceanographic and Atmospheric 
Administration.  Can you tell us what effect a cut of $500 million 
will have on NOAA's operations and its ability to carry out its 
functions?
	SECRETARY GUTIERREZ.  Well, I would have to look at the 
budget and the $500 million.  Obviously, we are talking about a 
budget that is probably close to 10 percent of what we deal with so 
a cut of that magnitude will obviously require us to go back and 
look at priorities, look at how we are spending money, how we are 
allocating money.  We have certain priorities that we have 
committed to already, whether it be the climate change research, 
whether it be the ocean policy recommendations, but obviously 
that would require us to go back and look at reallocation and what 
the impact would be.  I would be able to answer that after seeing 
what choices we would have to make.
	MR. ALLEN.  Would you consider that a substantial cut in 
NOAA's budget?
	SECRETARY GUTIERREZ.  Well, it is a substantial amount of 
money.  That is pretty simple, isn't it?
	MR. ALLEN.  But are you prepared to fight to restore that $500 
million?
	SECRETARY GUTIERREZ.  I need to go back, and to answer your 
question, I think it is a very good question, I would have to tell you 
what choices we would have to make in order to come up with that 
money.
	MR. ALLEN.  Were you involved in the preparation of the 
budget?
	SECRETARY GUTIERREZ.  Well, I approve the budget.  And 
what we would have to give up, so it would require making 
choices.  It would require giving something up for something else.
	MR. ALLEN.  Every budget requires making choices.  Every 
change in the budget requires making choices.  We know that.  But 
the real question is are you personally prepared to fight for the 
restoration of that $500 million?
	SECRETARY GUTIERREZ.  Once I have a chance to look at what 
choices we need to make, and if I think we are making a terrible 
mistake, and that it is the interest of the country and the President 
and the Administration, yes, I will.
	MR. ALLEN.  Let me ask a more general question.  You began 
by saying that we are in a very competitive global economy.  It 
was refreshing to hear that from this Administration.  We all take 
the State of the Union speeches as the clearest indication of where 
the Administration is going.  This year, 2006, was the very first 
time that President Bush ever mentioned the concept of global 
competition since he has been President, the first time.  It is as if 
the issue did not exist before then.  And so my question to you 
from the Department of Commerce is do you have a strategy for 
that that is not sort of bland generalities about GDP growth or job 
growth but is specific to those industries which are engaged in the 
global economy which evaluate how those industries do vis-ï¿½-vis 
other industries around the globe from other countries?
	And what are the specific industry-by-industry advantages or 
disadvantages that American companies have.  It seems to me this 
is not something you can do from 50,000 feet.  It has to be 
industry-specific just as I would add--if I can just finish this by 
saying when you were answering Tammy Baldwin's questions 
about data about off shoring and outsourcing you talked generally 
about updating data services and looking at the employment rate in 
different areas.  It seems to me again if you are going to study the 
effect of global competition, you have to zero right in on those 
industries that are engaged in intense global competition rather 
than doing some kind of broad overview.
	So the question is both data gathering and in your strategy, is 
there a document, is there something that would tell us the 
Department of Commerce has a coherent strategy for how America 
should compete in the global economy which is not just about 
cutting taxes and free trade, which we have heard before?
	SECRETARY GUTIERREZ.  Well, I am sorry to disappoint you 
because you have heard it before, but I would suggest that those 
strategies are working because our economy is doing extremely 
well in a very competitive global economy.  So I am glad that we 
cut taxes, and I am glad that we are opening up new markets, and I 
am glad that we are embracing free trade.  We are, by the way, to 
your point, and it is a good question, we are looking at industries, 
and I would agree with you that the economy is a sum total of 
industries and to understand the economy it would be very helpful 
to look at industries, and we are seeing how much we can do in 
that regard.
	I will also say though that we do not manage industries.  
Private-sector companies do.  Our role is to create an environment 
so that they can continue to innovate and compete and create jobs.
	MR. ALLEN.  That I understand.  I hear that.  I respect our 
private sector.  But what troubles me profoundly about this 
Administration is the absence of public leadership on public issues.  
Energy is a public issue.  Healthcare is a public issue.  Global 
competition is a public issue.  Climate change is a public issue.  So 
are our oceans.  And the inability of this Administration to take 
forceful public leadership on public issues is I think something that 
only the Government has to do.  The public sector simply cannot 
do that.
	So what I would ask just finally is if you would bring to us 
updated information on what you are trying to do industry-by-
industry as we go forward because I think that unless we look at 
global competition through those lenses frankly we are all up in 
some airy place where nothing much gets said.  And the only final 
comment I would have for us GDP growth is not the only measure 
of health of an economy.  I think you agree.
	SECRETARY GUTIERREZ.  I agree.
	MR. ALLEN.  Thank you very much.
	MR. BASS.  The time of the gentleman has expired.  The 
gentleman from Illinois.
	MR. SHIMKUS.  Thank you.  Thank you, Mr. Secretary.  Thanks 
for being patient.  And of course you know we were running 
around, and I apologize for missing a lot of it and actually hope my 
friends--because the questions on their side just drive me batty, and 
it shows you the differences between the two parties.  Mr. 
Secretary, who creates jobs in America?
	SECRETARY GUTIERREZ.  The private sector.
	MR. SHIMKUS.  The private sector does.  How do they do that?
	SECRETARY GUTIERREZ.  Well, they have an environment that 
is conducive to creating a company, investing capital.
	MR. SHIMKUS.  Where do they get that capital from?
	SECRETARY GUTIERREZ.  From banks and through--
	MR. SHIMKUS.  With the expectation of what?
	SECRETARY GUTIERREZ.  Of achieving a return.
	MR. SHIMKUS.  And what inhibits that return?
	SECRETARY GUTIERREZ.  Well, regulations are--
	MR. SHIMKUS.  What type of regulations?
	SECRETARY GUTIERREZ.  Well, I hope I am passing this test.
	MR. SHIMKUS.  You are doing well.
	SECRETARY GUTIERREZ.  You know, all necessary regulations 
that we--
	MR. SHIMKUS.  Give me some examples.
	SECRETARY GUTIERREZ.  Taxes would--
	MR. SHIMKUS.  Let me--we are debating--I think the rule just 
got postponed--not postponed.  We are going to vote on it.  We are 
going to have a vote on the floor today that is impacting job 
creation and growth in America, and that is going to be our ability 
to access more energy reserves on the Outer Continental Shelf.  
Would you not agree that energy cost affects the cost of doing 
business?
	SECRETARY GUTIERREZ.  The cost of energy is something that 
we are concerned with and that is why the President had laid out a 
long-term plan, which by the way he has had for 5 years.
	MR. SHIMKUS.  Let me continue.  I do not know the exact 
amount, I think 50 percent of future oil and gas reserves are in the 
OCS.  We do not have access to that now.  Understanding basic 
economics 101 and a supply and demand equation, if we can have 
access to more supply of natural gas and petroleum, crude oil, what 
does that do to the price of energy that our manufacturing 
companies have to pay?
	SECRETARY GUTIERREZ.  It helps.  The more we can rely on 
our own domestic production the better off we will be.
	MR. SHIMKUS.  So I really get tired of people looking at your 
agency or department and saying what are you doing and why isn't 
the Administration doing more or they are saying they have done 
nothing.  I would submit that the energy bill passed that is going to 
inspire new development and electricity generation will help lower 
the cost.  If we expand the transmission--Mr. Allen and I have had 
this continuing running debate on the energy bill.  I think I am 
right, he thinks he is right.  That is what makes the saying it takes 
two to tango.
	I would ask you to help us identify the environment that makes 
it more costly for us in rules, regulations, either workplace, 
environment, and you can look at energy costs.  You can look at 
sighting issues, litigation.  You know what meets with that on tort 
reform.  Now you manage a very successful company.  Was the 
cost of litigation and class action issues, was that a cost of doing 
business?
	SECRETARY GUTIERREZ.  It is a cost, and it also takes 
management's focus off what they should be doing, which is 
growing.
	MR. SHIMKUS.  In fact, I think we used as part of the debate the 
class action lawsuits against cereal manufacturers, and once they 
were eventually solved each person who could prove they bought a 
box of cereal got a 25 cent coupon after millions and millions and 
millions of dollars of court costs and litigation.  So as you respond 
to all these requests for what can you do to help educate us to make 
us more competitive, I hope you look at it from the cost of doing 
business in this country and the excessive regulations or the 
inability to get the needed energy infrastructure and the like 
because we can be competitive.
	But for all the protestations, they stand in the way of moving a 
lot of this process because we want to be competitive.  We want to-
-I have two--I am sorry.  I had to get that off my chest.  I chair the 
Baltic Caucus to deal with Estonia, Latvia and Lithuania, three 
great countries, great allies on the war on terror, always concerned 
about their neighbor, Russia.  I represent the State of Illinois 
although I am a down stater, great company up there called 
Motorola.
	We were over there after a NATO meeting in St. Petersburg 
and met with the American Chamber of Russia and particularly the 
St. Petersburg area.  Motorola was present.  By the time I left, I 
heard about this problem about the Russian government 
sequestering, seizing a lot of cell phones.  One, are you aware 
about it, and is there something that we can get resolved before the 
G8 Summit?
	SECRETARY GUTIERREZ.  I am aware of it, and it is something 
that I mentioned to the Russian Minister of Technology.  And, you 
know, we may be talking here about something that is in the tens 
of millions of dollars.  I think he may have even mentioned that it 
was $5 million or $6 million.  The point is that if our companies 
are being treated unfairly we are going to step in and mention it to 
the foreign governments.
	And in this case, it did not matter to us whether it was $4 
million or $5 million or $6 million, it was worth mentioning, and 
we expect the problem to be resolved, but the cell phones should 
not disappear.
	MR. SHIMKUS.  And I will just end on this statement.  The 
research and development tax credit is an important issue, and I 
hope you continue to push on that.  And as you respond to the 
questions on outsourcing maybe we can also understand and be 
educated on--everyone who complains about outsourcing you 
never hear a single breath about in-sourcing, and so I would 
encourage you to make both cases.  And I yield back.
	SECRETARY GUTIERREZ.  Thank you.
	MR. BASS.  The gentleman yields back.  Does anyone wish to 
be recognized for a second round?
	MR. ALLEN.  I would ask to be recognized.
	MR. BASS.  The gentleman from Maine is recognized for 5 
minutes.
	MR. ALLEN.  Mr. Secretary, you have to understand that Mr. 
Shimkus and I engage in a running debate but it is one we do 
enjoy, and it is fair to say that I have enormous respect for him and 
we work well together.  And I agree with some of the things he 
said.  Energy infrastructure is important.  Regulations can be 
excessive.  But when he asks you a question and you respond that 
only the private sector creates jobs you know I have got to say a 
couple more things.
	Almost every candidate for Congress and assuredly every 
candidate for Governor will campaign this fall making the claim 
that they have created jobs or at least that they have helped to 
create jobs.  But the point of the question for you is when you do 
your data on job growth in this country it includes both private-
sector and public-sector jobs, isn't that right, and there has been--
we can argue over the meaning of the word significant but there 
has been at the State and local level a significant increase in 
public-sector jobs, isn't that right?
	SECRETARY GUTIERREZ.  I am not sure about an increase.  I 
will have to check that, whether there has been creation of jobs.  I 
know there has been a creation of jobs through private-sector 
investment.
	MR. ALLEN.  Right.  Well, you can check, but I am positive that 
certainly during this Administration there has been an increase in 
the total number of public-sector jobs in the country.  The third 
point I wanted to make was the Manufacturing Extension 
Partnership, the SBA, Federal research and development, all of 
those the many CEOs would tell you are essential to the creation of 
jobs, and you support those kinds of programs, do you not?
	SECRETARY GUTIERREZ.  I believe that the Government should 
be involved in basic research that the private sector either does not 
have the time or the competitive circumstances to do, and usually 
research takes long periods of time.  I do not think we should be in 
the business of picking companies, picking winners, picking 
industries over another, and you can imagine the problem that 
would get us into if we started picking industries.  And so we have 
to be careful about these programs and whether they drive you to 
specific winners and losers.  I think our job should be the overall 
economy.
	MR. ALLEN.  Just the last thing I will say from my perspective 
is we are picking winners and losers all the time.  We have 
earmarks going to companies for R&D.  I mean just in my State of 
Maine we are picking winners and losers all the time, and some of 
the winners are spectacular.  Tom's of Maine which has just sold 
for $100 million really survived on a $30,000 SBA loan back in 
the early '70s.  And we have new technologies that are being 
developed today in laser welding and a variety of other things, and 
I would argue for a partnership.  But I thank you for being here.  
Thank you for allowing me, Mr. Chairman, to continue this 
ongoing dialogue with my friend, Mr. Shimkus.
	MR. BASS.  The time of the gentleman has expired.  Mr. 
Secretary, thank you very much for your appearance here today.  
We really appreciate it.  And if there is no one else wishing to be 
recognized for a second round, we will thank you, and the hearing 
is adjourned.
	SECRETARY GUTIERREZ.  Thank you, Mr. Chairman.
	[Whereupon, at 1:04 p.m., the Committee was adjourned.]
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