[Congressional Record Volume 140, Number 111 (Thursday, August 11, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 11, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                   ANOTHER PERSPECTIVE ON THE ECONOMY

  Mr. SAXTON. Mr. Speaker, I take this special order tonight because of 
several things that have happened in the recent past. Late last week, 
in my home town, Mount Holly, NJ, I got a call from a friend. He is a 
small real estate person, very small business. He has been in business 
for a number years, and he called me to tell me that he was closing his 
business.
  He said, ``I am closing my business because interest rates have begun 
to climb again. I remember what it was like last time during the late 
1970s and early 1980s when they climbed and I am not going through that 
again.'' He said, ``I just want you to know before you read it in the 
newspapers, hear it from somebody else, that I am going to close my 
real estate business.''
  Then I came here and earlier in the week a group of my friends from 
the other side of the aisle had a press conference out in the triangle, 
with the Capitol in the background, and the press conference was to 
tell the American people that the economy is wonderful, that everything 
is on the upswing, that there is good growth, and I think they said 
interest rates were down. And I said, somebody needs to add some 
perspective, because what my friend in the real estate business said to 
me earlier, late last week, was not the same as my friends from the 
Democrat side of the aisle said earlier this week.

  So I take this special order, and with the cooperation of Mr. Hunter, 
the Republican research chairman, Mr. Ramstad, from the Joint Economic 
Committee, Mr. Armey, from the Joint Economic Committee, and others, to 
add a perspective to this economic debate.
  I guess one could ask the question, is the economy growing and is it 
growing as much as my friends on the other side of the aisle would like 
to think it is? I guess we could say, what kinds of jobs are being 
created and what rate of growth is there in the economy? Americans 
would certainly be interested to know in an historical perspective 
whether the economy really is growing and what kinds of jobs we are 
producing and what that rate is.
  We might want to ask some questions about Bill Clinton's economic 
plan, ``Clintonomics'', as it has come to be called in recent times. 
What does it mean to have high taxes and interest rates growing are 
really legitimate questions that the American people should have some 
answers to.
  And, in an historical perspective, is what we are in now anything 
like what we had during the late 1970s during the Carter 
administration? That is a legitimate question to ask.
  To begin to answer the first question, these charts are helpful, 
because it shows in the red bars what the average growth during an 
economic cycle is when we are on the upswing, or better known in 
economic terminology, as a recovery. And so we took the average of all 
the economic recoveries since World War II and the rate of growth is in 
those, the average rate of growth is indicated by the red bars.
  This recovery is different. While we are in a recovery and while 
there is some growth, the blue bars indicate what that growth is.
  This chart happens to be job creation after a recession, the average, 
and job growth creation in this recovery, which is obviously much less. 
And so from an historical perspective, we can see that the jobs today 
that are being created are certainly not the same as they have been in 
recent history.
  The next chart shows something similar. It shows gross domestic 
product growth after a recession. Once again, the blue lines represent 
what the average has been since World War II and the red lines 
represent the growth in this recovery.

  Obviously, once again, these charts tell a pretty vivid picture. So I 
agree with my friends on the other side of the aisle, we are in a 
recovery. We are getting some growth, but it is certainly not what we 
have come to expect as acceptable levels of growth. During the 1980s, 
we grew at 4 percent or better, and in this recession, we are at 2.5 to 
3 to 3.1 percent growth, obviously cause for some concern.
  What kind of jobs are being created? We are creating temporary jobs. 
We are creating service jobs, lower paid jobs. And so there is some 
clause for concern. We should not be surprised by this because all of 
us were here in 1990 when a big tax increase took place.

                              {time}  1840

  I stood at this podium with a lot of the people who were here with me 
today. This was in 1990. We said ``To increase taxes by this amount in 
this kind of an economy will not help the economy, it will depress the 
economy.''
  In 1993 we came back here and said about Bill Clinton's tax increase, 
``Gee, we really should not do this, because if we increase taxes again 
for the second time, the biggest tax increase in our country's history, 
it will be bad for the economy.'' We as Republicans were not alone.
  The chairman of the Banking Committee in the other House said this, 
and I quote, and this was back in 1993, July 1: ``I have become 
concerned about the effect of the President's program,'' talking about 
President Clinton's program, ``on jobs and economic growth. I am very 
concerned about the possibility of falling back into recession as a 
result of the very restrictive fiscal policy we are about to adopt.'' 
That was not a Republican, that was a Democrat.
  He went on to say ``Congress is about to enact a $500 billion fiscal 
constraint. We are doing the same thing we did in 1990, tying our 
fiscal hands behind our back.''

  Then he said something very key, that is today very important: ``I 
worry what will happen if the Fed does not accommodate.'' Let me repeat 
that: ``I worry about what will happen if the Fed does not 
accommodate.'' Sometime later I will come back to that Fed issue here 
in just a moment.
  One of the other Members on the Democrat side of the Joint Economic 
Committee from the other House also was quoted on July 1, 1993, in the 
same forum, and said ``Our efforts to reduce the deficit may be of such 
dimensions as to trigger an economic downturn.'' So we see that, again, 
there was some concern, and there still is, I'm sure, among these 
individuals about what was happening.
  There is one other thing that has come to light, and remember, we are 
going to talk a little bit more about the Fed and printing money in a 
little while here. The President himself feared that his plan would 
produce downward pressure on the economy.
  Bob Woodward, who has since written the famous book ``The Agenda'' 
which talks about issues that went on inside the White House, Bob 
Woodward said and vividly describes a January 13, 1993 meeting between 
President Clinton and his economic team. At the meeting, Alan Blinder, 
a member of the President's economic committee who is now a member of 
the Fed, warned the President that his new taxes and budget proposal 
would cause ``a recession similar to the Bush recession.'' We have not 
seen that yet. There is a reason for it. It has to do with the Fed, and 
printing money.
  Woodward goes on:

       The effect on Clinton was electric. The dangers of the 
     emerging deficit reduction package seemed clear. If we do 
     this, we will bleed all over the floor, and if Greenspan 
     doesn't help, we will be * * * bleeding.

  There are probably some young people listening, so I won't say it. 
The Vice President added his view that the key was the Federal Reserve.
  What has happened is kind of interesting. Woodward's book points out 
that there was a tacit agreement made between the President and Alan 
Greenspan, the Chairman of the Fed. The deal was very simply that the 
President would raise taxes to try and do something about the deficit, 
and in order to accommodate economic growth, Greenspan would help keep 
interest rates down through the Fed.
  In order to help keep interest rates down--and this gets into a 
little bit of economic theory, but it is not too difficult to 
understand, interest rates are the amount of money that we pay to 
borrow money, it is just that simple. Money in this sense is a 
commodity. So in order to borrow money, we pay interest rates.
  Now, if there is a fixed supply of money, interest rates will be at a 
certain level. If we print more money and make more money available as 
a commodity, it means that there are more dollars available, and 
therefore, we do not have to pay so much to get them. That means 
interest rates are lowered.
  The theory was we will raise taxes and we will print more money to 
keep interest rates down. That worked for a while, but here is what the 
problem is. As we print money to keep interest rates down, the 
economists say expand the money supply, as we print money to keep 
interest rates down, something else happens. Because there is more 
money and it does not have as much value, it creates inflationary 
pressures, and prices begin to go up.
  As prices begin to up, people who are loaning money over the long 
haul, like a 30-year mortgage or a 20-year mortgage, or long-term 
bonds, they begin to look at what the future is going to be like and 
what their money that they are loaning today is going to be worth 
tomorrow. If it is going to be worth less tomorrow than it is today, 
they have to charge higher interest rates in order to get the return 
that they need.
  Mr. Speaker, unlike what the President and Greenspan anticipated, I 
believe as long-term interest rates started to rise because we printed 
more money, it began to have a deleterious effect on the economy. The 
Fed increases in short-term rates were soon to follow. Greenspan 
continued to try to follow through on his promise, and did keep short-
term rates down for quite some period of time, but now, as we all know, 
we anticipate that in the next few days the Fed is going to have a 
meeting, and we may see another increase in short-term rates as well.
  Now, Mr. Speaker, going back to the original plan here, increase 
taxes and keep interest rates low, we all know that today interest 
rates are growing again. This chart shows what has happened to the 
trend in interest rates since January 1989. You can see that they were 
fairly high in 1989, and as economic growth took place and as good 
monetary policy was put in place, when we were not printing more money, 
the general trend in interest rates was down.
  Then, Mr. Speaker, the Clinton tax hike occurred. The deal was made 
with Greenspan, and look at what happened to interest rates. They are 
spiking back up again.
  Mr. Speaker, what happens when we have high taxes and high interest 
rates, which were not in the President's plan, what does that do to the 
economy? I asked the question in my opening here, ``Is there anything 
similar about what we saw in the late 1970's and what we are beginning 
to see today?''
  In the late 1970's, taxes were high. They were high for a different 
reason than they are today. This House played a part in increasing 
taxes here today, or recently. However, in the late 1970's there were 
two other reasons that taxes were high.
  First was inflation, and marginal rates were not bracketed, so with 
inflation up went the amount of money that you sent to Washington.
  Second, the wage taxes to support Social Security and Medicare were 
increased dramatically during those years. We all remember what 
interest rates were in those years.
  Mr. Speaker, if the economy is doing as wonderful as our friends on 
the other side of the aisle might want us to think, then we want to 
look at these things very carefully, because we know that we are 
getting about 3 percent growth today. We know that during the good 
period of economic growth that we went through during the 1980's we 
were at 4 percent or above.
  We know we have high taxes today. We know we are getting high 
interest rates. We know that Carter had high interest rates and high 
taxes, and so at least, at least, I would say to the Members on the 
other side of the aisle, ask these questions of the American people. 
Let us make sure everybody understands this.
  Mr. Speaker, that is essentially how I wanted to kick this 60-minute 
special order off tonight.
  Mr. Speaker, I yield to the gentleman from Texas [Mr. Armey].
  Mr. ARMEY. Mr. Speaker, I thank the gentleman for yielding to me. Let 
me thank the gentleman from New Jersey for taking this special order at 
this time.
  Let me also thank the gentleman from New Jersey for the job of 
leadership that he is doing on the Joint Economic Committee. As you 
know, I have had the privilege of being the ranking Republican on that 
committee for 2 years, and the gentleman from New Jersey is doing an 
enormous job of keeping the work of that committee moving.
  Mr. Speaker, I have to tell the Members, this is extremely important 
that we get this question of the current performance of the American 
economy in perspective with respect to public policy. The President, 
just a few days ago, had quite an elaborate ceremony in the Rose Garden 
where he celebrated his good fortune in that the American economy still 
manages to sustain a, frankly, very modest economic recovery that was 
begun, very importantly, in March 1991.
  My Speaker, I also had the rather dubious distinction of having been 
quoted, I am told, by the President in that Rose Garden ceremony as one 
of the critics of his economic package that in fact had not yet been 
proven correct.

                              {time}  1850

  I was thinking about that the other morning as I was driving to work 
and I was listening to a commercial on my car radio about the person 
who got the Jump-the-Gun award for the year and the commercial ended 
with that person saying he had already claimed the award and written 
his victory speech for next year. I think in terms of the President's 
celebration of the economic performance under this administration this 
year at this time, he might be a very well qualified challenger for 
that Jump-the-Gun award next year.
  Let me tell Members what has happened here. At the time the President 
announced his economic recovery plan, quite frankly I was shocked. On 
February 17, 1993, I had the privilege of being at the White House when 
the President unveiled his plan that afternoon. It seemed clear to me 
that what we had was essentially the same plan that we had in 1990 
where we raise Government spending by 20 percent over 5 years and raise 
taxes.
  I told the President at that time that I felt that his plan would 
create very possibly the kind of economic malaise we had in the late 
1970's where we had this phenomenon called stagflation. As I looked at 
his plan and look now at what has happened, I now realize that the 
President frankly knew something I did not know and got lucky, and thus 
far my prediction has not taken place.

  What did he know that I did not know at the time? I now know after 
reading Bob Woodward's book ``The Agenda'' that the President had made 
a deal with the chairman of the Federal Reserve to continue an easy-
money, low-interest-rate policy and fund the struggling recovery.
  The chairman of the Fed knows and I know and you know that if, in 
fact, you have a rate of increase in the money supply that outstrips 
the rate of increase in the real performance of the economy, sooner or 
later we are going to achieve that phenomenon known as too many dollars 
chasing too few goods which of course is a principal cause of 
inflation. That, I think, is what we see happening now. The fact of the 
matter is the chairman of the Federal Reserve is not pushing interest 
rates up, the interest rates are going up in response to the market, 
and as they do, the Federal Reserve is being signaled to tighten down 
on the money supply. The question will be, can he react quickly enough 
and strongly enough to avoid inflation?
  So the inflation component of stagflation, I am afraid, is staring us 
right in the face today and it will be a question of nip and tuck, can 
the Federal Reserve reverse itself on easy money quickly enough to 
avoid that?
  Now what the President had in his package and where he got lucky was 
the President had a stimulus package of some $16 billion of additional 
Government spending that would have been funded with even additional 
Government borrowing and that stimulus package would most certainly 
have been inflationary. Since it would have come from borrowing, it 
would have come from a further monetization of the debt and, therefore, 
a further aggravated increase in the money supply, thus further 
aggravating inflation.
  Thanks to the Republican votes primarily but a generous portion of 
Democrat votes as well that were alert to the dangers of this, this 
stimulus package was taken out of the President's economic package, and 
he got lucky. He also had a broad-based energy tax, a Btu tax.
  One of the great cost drivers in the economy is the cost of energy. 
The fact is you cannot conduct any commercial enterprise at production, 
manufacture, wholesale, retail, or shipping without using energy. If, 
in fact, you slapped, as he had intended to do, a high tax on energy, 
you would have raised the cost of every good produced, every good 
shipped, every good retailed in America, and that would have had a 
multiplied effect, further aggravating a stimulus to inflationary 
pressure.
  So the President knew he had help in the short run from the Fed that 
was dangerous in the long run for inflationary purposes; he knew that 
he had, or thought that he had further stimulus which could only have 
been inflationary, which he was saved from by Republican votes 
primarily but also some very good discerning Democrat votes; and he had 
a Btu tax that could have been extraordinarily inflationary except that 
again the same discerning Members of Congress, Democrat and Republican, 
voted him out of his package. Even with that repair to his package, he 
only passed it by one vote.
  What we see happening today is the weak recovery beginning to 
dissipate as the Federal Reserve does what it must, which is respond to 
the excessive money supply, cut off the lifeblood of the modest 
recovery we have had with the hopes that we can avoid stagflation. I 
would still believe that the most likely outcome of this policy mistake 
will be a serious recession and very likely one accompanied by serious 
inflationary pressures next year. It is tragic.

  Ronald Reagan took in his first 2 years of his presidency with his 
first budget the necessary recession to break the back of inflation 
that had beleaguered the Nation since 1965. Even under those 
circumstances, he had a higher popularity than this President who took 
the easy road of false economic stimulus in the early 2 years of his 
presidency.
  Why? Why would Ronald Reagan have had a higher popularity in the 
first 2 years of his presidency when the economy was in a recession 
than this President does when it is in a modest recovery? Because the 
American people know when someone is doing the right thing for the 
right purposes and they know clearly the President's policy is the 
wrong thing written for a political purpose and cannot sustain the 
endorsement of the American people that Ronald Reagan sustained by 
having done the right thing for a necessary policy purpose.
  I want to thank the gentleman again for letting me address the 
issues.
  Mr. SAXTON. Mr. Speaker, I thank the gentleman for the further 
explanation of the role that the Fed is playing and has played in the 
President's economic plan here. Obviously it becomes very important 
that we all understand that.
  Mr. Speaker, I yield to the gentleman from Minnesota [Mr. Ramstad] 
for further comment.
  Mr. RAMSTAD. Mr. Speaker, I thank the gentleman from New Jersey for 
yielding.
  Mr. Speaker, I too applaud his leadership on the Joint Economic 
Committee. I also applaud the leadership of the ranking member, the 
gentleman from Texas [Mr. Armey].
  Both preceding speakers, Mr. Speaker, mentioned Bob Woodward's recent 
book. In that book Mr. Woodward says that President Clinton called his 
own tax plan ``a turkey.'' Well, the President apparently knows a 
turkey when he sees one and that bird has now come home to roost. The 
President's high-tax, high-regulation policies are an albatross around 
our struggling economy. I think the anniversary of the President's tax 
plan that we are marking today provides an excellent occasion to show 
through a frank and honest discussion of the results of this tax hike, 
the largest tax hike in the history of our country, that high-tax 
policies do not promote sustained economic growth. In fact, they cannot 
promote sustained economic growth. The President, as has been 
explained, has been the beneficiary of a normal business cycle 
recovery. I think we all agree on that.
  The recovery, albeit it a weak one, was well underway before 
President Clinton assumed office and it is interesting to note that 
economic growth has actually slowed since his inauguration. Let me 
explain. The last recession, the Bush recession, officially ended in 
March 1991. Substantial growth then began in 1992. In 1993, after 
President Clinton was inaugurated, we saw growth slow abruptly in the 
first half of the year and then surge at the end of the year. But 
despite strong fourth-quarter growth in 1993, annual growth in 1992 
outpaced that of 1993. So it is disingenuous at best for the Clinton 
administration to claim credit for an upswing in the business cycle 
that was clearly in place before Mr. Clinton became President.
  We all remember how our friends on the other side of the aisle 
claimed, at least some of them, that this largest tax increase in 
history would send a signal that Washington was serious about deficit 
reduction. We remember how they said this would result in a steep drop 
in interest rates.
  Let us look at what has happened. Bond yields began rising shortly 
after the tax bill was signed. Ten-year Treasury bonds rose from 5.3 
percent in September 1993 to 7.3 percent this past July. Yet even with 
these increased rates, the dollar continues to fall. The continuing 
fall of the dollar in world markets shows that the recent increase in 
interest rates both by the Federal Revenue and the markets have not 
restored confidence in the stability of the dollar.
  Mr. Speaker, all of us should be concerned that this free-fall 
further damages long-term economic prosperity for all Americans.
  We look back to President Carter's economic policies, because they 
clearly illustrated the presumed trade-off between inflation and 
unemployment, that that tradeoff is nonexistent. Both of these harmful 
economic results can and will unfortunately coexist.
  With inflation now as the gentleman from Texas explained so well in 
clear view, we face the real possibility of returning to the glory 
days, so-called, facetiously of Jimmy Carter.

                              {time}  1900

  We all remember the phrases malaise, the misery index readings, and 
stagflation. I am afraid we are headed that way again if we do not 
change the economic policy of this country.
  Economists agree our economy should grow, and this is a consensus 
among leading economists from both political parties and of all 
ideological stripes, leading economists agree our economy should grow 
at 4 percent a year on average in real terms, with price stability.
  While the economy has been growing at an annual rate of about 4\1/2\ 
percent for the three quarters, that growth has been artificially 
stimulated by an easy money policy that will launch us right back into 
Carter style economics.
  Even the president is skeptical of long-term economic growth. The 
OMB's midsession review of the budget forecasts growth at below 2.7 
percent in 1995 and next year and beyond 1995, 1996 and 1997 as well. 
OMB forecasts, in fact, project average annual real economic growth at 
only 2.6 percent between 1994 and 1999, a 5-year period of growth and 
real economic growth 2.6 percent. That should concern all of us.
  The American people cannot afford nor do they deserve this kind of 
stagnation, this kind of slow growth.
  We all know that the vaunted Clinton recovery is the weakest in the 
last 50 years, the weakest of any of the seven post-World War II 
recoveries. In fact, since World War II the U.S. economy has 
traditionally averaged 5.3 percent annual growth for the 3 years 
following the end of a recession. The current recovery though has only 
averaged 2.9 percent in the last 2 years, which is far below the 
average of the previous seven World War II recoveries. In fact, growth 
during the expansion has not even reached the average of 3.1 percent 
for all years since World War II. That is including the recession 
years.
  Economist Lawrence Kudlow recently estimated that our gross domestic 
product would have grown by an additional $1.1 trillion and over 5.5 
million new jobs would have been created if the economy had simply 
grown at the post-war average.
  Mr. Speaker, we must look seriously at the reasons why our economy 
cannot shake off its doldrums. It seems to most of us on this side of 
the aisle that the clear reason is the Clinton high tax, high 
regulation, high spending policies are a heavy anchor on the economy, 
and it is time to cut this anchor loose.
  Economist Larry Kudlow calls the difference between the weak economic 
growth we are now experiencing and the economic vigor seen in past 
recoveries, the performance gap.
  Clearly the Clinton tax increases have made a significant 
contribution to the performance gap. They have taken money out of the 
productive, capital-investing sector of our economy and given it to the 
inefficient bureaucrats here in Washington.
  But the real problem is the absence of the pro-growth reforms our 
economy so badly needs. We need a capital gains tax cut to stimulate 
investment and job creation. We need to look no further back than 
President Kennedy's era and look at what President Kennedy said and did 
in terms of cutting capital gains and look at the job creation and the 
economic growth that was resultant from that capital gains cut.
  We also need to lower burdensome regulations which are increasing at 
the highest rate since the Carter years. Regulations are killing our 
small business sector which creates 85 percent of the jobs for the 
American working people. We must review and reduce the burdensome 
regulations on the entrepreneurs of this country, and above all, Mr. 
Speaker, we need a rational tax policy that quits penalizing the 
productive and rewarding the parasites.
  Working with those of us who understand that economic growth comes 
from the private sector, nor from expanding government, this 
administration can close that performance gap. Congress and the 
President now need to work together to get the real economic growth, 
the real job growth that this country needs.
  It is high time, Mr. Speaker, we put jobs first. It is high time we 
roll up our sleeves and work together in a bipartisan, pragmatic way to 
deal with this problem.
  Finally, Mr. Speaker, I include for the Record the excellent article 
by our distinguished colleague, the gentleman from New Jersey [Mr. 
Saxton], entitled ``The `Clinton Recovery' Is a Study in Self-
Contradiction'' from yesterday's Washington Times.
  The article referred to follows:

       The ``Clinton Recovery'' Is a Study in Self-Contradictions

                            (By Jim Saxton)

       On this first anniversary of the largest tax increase in 
     U.S. history, President Clinton and his allies on Capitol 
     Hill are singing its praises.
       Using rhetoric that would make Clinton spin doctor Paul 
     Begala blush, all good things in the economy are now 
     attributed to Chairman Bill and his wonderful tax increase. 
     The liberal Democrats are frustrated because they know 
     practically no one in the real world believes their policies 
     have boosted the economy, as evidenced in the president's 57 
     percent disapproval rating on his economic performance. This 
     is not surprising. After all, even President Clinton himself 
     called his budget plan a ``turkey.'' This economic expansion 
     belongs to the American people, not to politicians and P.R. 
     consultants in the White House.
       Actually, the truth is that congressional Democrats 
     themselves don't believe the Clinton budget was good for 
     economic growth. In 1993, Democrats and Republicans were 
     united in the view that the Clinton budget plan would be a 
     drag on the economy. For example, the liberal members of the 
     Joint Economic Committee (JEC), in their 1993 annual report, 
     were very explicit in stating of Clinton's budget that it 
     ``will continue to exert downward pressure on economic 
     activity through the next five years.'' Earlier they said, 
     ``There is danger that the recovery could stall if monetary 
     policy does not provide the stimulus needed to counteract the 
     restraint imposed by contractionary fiscal policy.'' 
     According to these liberal members of Congress, the Clinton 
     budget plan was ``contractionary,'' a drag on economic 
     growth.
       The always opportunistic Clinton administration, guided by 
     budget war room chief Roger Altman, had crafted a different 
     message in support of the budget plan. The cornerstone of the 
     argument was that the Clinton budget plan would ``grow'' the 
     economy by lowering interest rates. Lower interest rates were 
     the key link defining exactly how Clinton policy would boost 
     the economy. The only problem is that interest rates 
     increased soon after the Clinton plan was enacted. For 
     example, the 30-year Treasury bond yield jumped from 6.3 
     percent to a current level of 7.4 percent. The central 
     linchpin of the administration's whole economic argument 
     actually went in the opposite direction from the one the 
     administration predicted. If lower interest rates from Mr. 
     Clinton's policy were to be the central component pushing the 
     economy forward, how can an increase in interest rates with 
     continued economic growth be casually linked to the Clinton 
     program?
       Mr. Altman, the administration's ``message czar'' and point 
     man on the budget, is presumably too preoccupied with other 
     matters to square all these circles. However, there are 
     certainly plenty of others following in his footsteps. 
     Consider, for example, the argument that the Clinton 
     administration promised to create 2 million jobs annually and 
     is already ahead of schedule. First of all, the Clinton 
     promise was recognized as bogus from the beginning, even 
     inside the White House. According to Bob Woodward's new book, 
     ``The Agenda,'' before passage of the Clinton package, a 
     marketing memo from Paul Begala stated, ``This bill will 
     create jobs--8 million of them.'' Mr. Woodward goes on to 
     say, ``In fact, the economy would create those jobs and the 
     economic impact . . . Begala was not fully comfortable with 
     the simplistic, happy-talk memo. He realized, somewhat 
     painfully, that he had become a salesman for a plan that 
     neither he nor Clinton really believed in.''
       Non-partisan economic forecaster Allen Sinai testified 
     before the House Budget Committee on the Clinton plan in 
     1993. His conclusion was simple: ``Overall, the Program does 
     not create more jobs than what would have occurred without 
     the Program.'' Moreover, the ``contractionary'' effects on 
     the economy, as the JEC Democrats described, cannot create a 
     basis for employment gain beyond those which would have 
     occurred anyway. Just as Clinton cannot take credit for 
     economic developments characterized by higher interest rates, 
     he cannot take credit for the employment growth generated by 
     the business cycle. The upside of the business cycle preceded 
     Mr. Clinton, and the real challenge will be prolonging the 
     cycle long enough to see Clinton exit the White House in 
     1997.
       Finally, it is true that inflation has reached fairly low 
     levels. However, past inflation is not the current worry, but 
     the potential for future inflation. Disinflation is a process 
     that has been under way for over 10 years. Even the most 
     ardent supporters of Bill Clinton do not have the nerve to 
     claim this as a result of Clinton policies. To the contrary, 
     the rise in interest rates indicates that inflationary 
     expectations have been stoked by Clintonomics' noxious mix of 
     tax increases and easy money policies.
       In conclusion, there was no partisan division in serious 
     analysis of the economic effect produced by the 1993 Clinton 
     budget. Both Republicans and Democrats correctly said it 
     would be a drag on growth. Some members in both parties 
     worried publicly about the possibility of a ``contraction'' 
     or recession. The White House put all its eggs in the 
     interest rate basket, and this argument turned out to be 
     wrong. By so closely identifying the Clinton budget with 
     lower interest rates, the White House cannot reasonably argue 
     that its plan boosted growth under higher interest rates.
       The business cycle that preceded Clinton's election 
     continues. We are all pleased that the economy is growing and 
     employment is rising. However, the American people know this 
     does not have anything to do with Clinton's 
     ``contractionary'' policies. The president is acting like the 
     rooster who thinks that it is his crow that causes the sun to 
     rise every morning. However, the sad truth that emerges from 
     ``The Agenda'' is that Mr. Clinton regarded his own budget 
     plan as a ``turkey'' that he did not believe in himself, but 
     forced the Democratic controlled Congress to adopt it for 
     political reasons.

  Mr. SAXTON. Mr. Speaker, I thank the gentleman for very cogent 
remarks. I was particularly taken by the fact that the gentleman has 
alluded on several occasions during his remarks that we Republicans 
would do things differently, and that is obviously very, very clear, 
and will become clearer here on September 27 when we say formally what 
those things are that we would do different.
  Let me say this in introducing our next speaker: The Clinton 
administration likes to hang its hat on the deficit and deficit 
reduction as a reason to increase taxes. I would like to point out with 
this chart that the statements that were made in 1990 about the deficit 
and how worried we were about it when the deficit was much lower than 
it is today, and of course in 1990 we had a major tax increase to do 
something about the deficit. In 1993 we had another increase that we 
did here in order to do something about the deficit, and at the end of 
1994 the deficit was significantly bigger than it was before either of 
those tax increases. As a matter of fact, I think it is fair to say it 
is not the taxes, it is the spending. In other words, we have not put a 
cap on spending.
  Our next speaker is an expert at knowing how to put a cap on 
spending. He is from New Hampshire, and he has become a household word. 
If I said he is author of the ``A to Z program'' everyone would know it 
is Bill Zeliff from New Hampshire, and I yield to the gentleman from 
New Hampshire.
  (Mr. ZELIFF asked and was given permission to revise and extend his 
remarks.)
  Mr. ZELIFF. Mr. Speaker, I thank my colleague from New Jersey for 
yielding.
  Mr. Speaker, this week marks the one-year anniversary of the 
President's tax bill which was the largest tax increase in the history 
of the United States.
  It is an especially memorable time for me since it was also the week 
I initiated what has now become known as the A to Z spending cuts plan. 
Believe it or not, folks, it has been a year.
  The original letter to Speaker Foley that Rob Andrews and I sent out 
outlined our plan which was bipartisan. It was dated August 6 of last 
year, and we asked for additional spending cuts. This was the week 
before the vote on the economic plan, and we stand here today on the 
brink of discharging the resulting legislation, H.R. 3266. All we ask 
for in this legislation is a 56-hour debate on setting spending 
priorities, allowing every Member of this body to make a difference, to 
offer an amendment and to have a full discussion and up or down vote.
  We stand just 14 signatures short of bringing A to Z to the floor. 
There are a group of Members who stand ready to sign on in case the 
Democratic leadership fails to follow through on their promise of 
having a full day of entitlement cuts before the August recess.
  Tomorrow we will consider some legislation aimed at trying to fulfill 
that deal, but it has nothing to do with entitlement spending or real 
spending cuts.
  We spend weeks debating the California Desert Protection Act, but 
according to the leadership, we just do not have the time to debate 
cutting spending, particularly entitlement spending.
  This is what is driving the deficit, and this is what is dragging the 
country's economy down. But somehow the leadership prefers to keep out 
of control entitlement spending on auto pilot.
  But we are here tonight to mark the one-year anniversary of the 
Clinton tax bill, a celebration for some and a deep concern for most of 
us.
  Never in our history has a tax increase led to a strong economy. On 
the contrary, they have led to further destruction of the economy. We 
saw that happen in the Carter administration as well and yes, in the 
Bush administration in 1990. President Bush gave in to a tax increase 
of some $164 billion and put an end to the largest peacetime expansion 
in American history.
  The facts are there, Mr. Speaker. The White House's own numbers show 
that growth and job creation are way behind schedule, and the numbers 
of my colleague from New Jersey show that for this stage in the 
business cycle.

                              {time}  1910

  The economy has been growing between 3\1/2\ and 4 percent for the 
last three quarters, but this growth is due to inflationary monetary 
policy, not any great economic wonders of the Clinton administration. 
The policy being used by President Clinton and Alan Greenspan over at 
the Fed has been to raise taxes and print more money. This is not a 
sustainable policy to insure long-term growth. You cannot keep printing 
money and expect real growth to continue.
  There is a threshold, and as soon as we hit that threshold, even this 
mediocre recovery will fizzle into high price inflation and high 
employment.
  Further evidence of this is in interest rates. Contrary to what 
people believe, the Fed is not leading this increase in rates. It is 
merely following market pressures. This is driven primarily by fears of 
inflation because of the Clinton-Greenspan policy of raising taxes and 
printing lots of money.
  About 3 weeks ago, Louis Rukeyser wrote in the ``Wall Street 
Journal'' a full-page letter to President Clinton and talked about the 
falling dollar, talked about the lack of confidence in the world, and 
basically, primarily indicated that the falling dollar is the result of 
our inability to settle and make a difference in terms of getting 
control of entitlement spending.
  The bottom line is that this is a failed monetary policy, because we 
are just dragging money away from the private sector and into the 
public sector. There is no way that a free-market economy can insure 
long-term growth if the Government keeps eating up such a huge chunk of 
the gross domestic product. The Federal Government keeps spending and 
spending. The President and Congress are fooling the American people by 
saying they are bringing down the deficit. This is untrue because all 
we are doing is adjusting the deficit numbers to inflation under a 
baseline budgeting system that many of us think is a gimmick.
  Sure, we can add a new category that shows the real budget, and we 
will talk about that tomorrow, by comparing this year's spending 
against last year's. This is the way we do it in the business world, 
but still allowing a baseline will continue to give the Democrats 
ammunition for fooling the American people.
  I find it incredible that the President is taking credit for these 
policies which will raise the Federal debt $1 trillion over the next 5 
years. The President and the Congress do not even mention that. They do 
not mention it for political reasons, and the end result of their 
continued failed policies will kill this country's economy. We cannot 
let this happen. We have to turn these policies around. We have to cut 
taxes and not increase them, and we need to bring Government spending 
under control.

  The American people are no longer being fooled. It is here that we 
see the importance of A to Z, and this is not a gimmick, as the 
leadership in this body has claimed on an irresponsible basis. It is a 
serious program to cut Government spending in the face of increased 
taxes and inflationary policies.
  A to Z is the very least that we can do and the very best we can do 
to start bringing this economy under control. There is a long way to go 
to pay off a $4.7 trillion debt and controlling the deficit and start 
living within our means, but we can start with reining in Government 
spending and getting the Government out of the hands of bureaucrats and 
into the hands of the private sector.
  Many of us believe the private sector is where the job creation is 
and where the real growth potential for our country's future is. It is 
about time we understand low taxes come from, guess what, low spending. 
That is the way we do it in New Hampshire, and this is the State where 
there is no income tax and no sales tax. We keep our taxes down as a 
result of low spending. President Clinton believes that more taxes and 
more spending will reduce the deficit.
  The American people know that this does not make sense, and they are 
not going to buy into this little gimmick. If President Clinton wants 
to brag about his failed economic policies, well, so be it. That is his 
privilege. But for this Member of Congress, I am very proud to have 
been one of many who voted against that plan which increased our debt 
$1 trillion over the next 5 years.
  I thank my friend, the gentleman from New Jersey, and I appreciate 
being involved.
  Mr. SAXTON. Mr. Speaker, I would like to thank the gentleman for his 
very articulate explanation of A to Z and other related matters.
  The one thing the gentleman mentioned which I would just like to talk 
about here just for about 30 seconds, part of the press conference that 
I made reference to earlier that was held out in the triangle earlier 
this week was about the deficit and how wonderful it is the Clinton 
economic recovery tax program has somehow begun to reduce the deficit. 
That is simply not true, and the reason it is not true is because, 
while the deficit is coming down, there are some very good reasons the 
deficit has come down. We anticipated, for example, about $20 billion 
more in expenditures for the S&L bailout than we had to make, and, 
therefore, we did not spend that money.
  As has been pointed out several times, the last three quarters of 
growth that have been 4 percent or better as a result of this loose-
money policy where we are printing money has spurred the economy; we 
have gotten more economic growth and, therefore, we have seen money 
come into the Treasury. But that is not because of the President's 
economic plan. It is because of the deal that he has made with Alan 
Greenspan which, on this chart, shows very clearly that interest rates 
are on the rise again.
  When interest rates get too high and taxes are correspondingly too 
high, we get into all kinds of problems.
  Mr. ZELIFF. If the gentleman will yield further, I would just like to 
end my end of this by saying that, you know, we do this a lot in town 
meetings up in New Hampshire. If we came before this body or any group 
in this country and we talked as if we were talking to a banker and we 
said that we were $4.7 trillion in debt, soon to be $6 trillion over 
the next 5 years, our interest debt is $212 billion this year and will 
soon be $272 billion in the year 2002, and if we go further on to say 
that our average debt is a little less than $200 billion this year and 
projected to be that way throughout, can we borrow more money? The 
banker would normally say no. The problem we have with the management 
of this House, the leadership, they are saying that is OK, ``Trust us, 
we are on automatic pilot. We do not need to deal with entitlements. We 
do not need to have a foolish A to Z thing that takes 56 hours of 
debate to cut spending and set priorities.''
  I think, frankly, they are wrong, and we are right. I think the day 
is going to have to come, and we certainly wish that President Clinton 
would take the initiative on this; we need to cut spending to start 
living within our means, and then the policies will start to work.
  I thank the gentleman very much.
  Mr. SAXTON. I now turn to the gentleman from Texas [Mr. DeLay], the 
chairman of our Republican Study Committee, a gentleman who has been 
involved in many economic matters in the 10 years that we have served 
here together.
  I yield to the gentleman from Texas [Mr. DeLay].
  Mr. DeLAY. I thank the gentleman for yielding.
  Mr. Speaker, I must say that the gentleman from New Jersey has been a 
stalwart in bringing the truth to the American people.
  The studies that he has initiated in his side of the Joint Economic 
Committee have been well-done studies that show that the reality does 
not match the rhetoric that is coming out of the White House. The 
gentleman has been incredible in proving that, unfortunately, we have a 
media in this country that just refuses to challenge the President on 
the things that he says.
  During the campaign we may remember that the President said he was 
going to end welfare as we know it, and he comes out with a welfare 
reform package that expands welfare as we know it.
  Just recently, just today, we sent the crime bill back to the 
conference committee. You remember this time last year the President 
did not support the crime bill in the Senate, and all of a sudden he 
jumped out in front of the parade and claimed it was a great bill. Then 
the bill got worse and worse, and he took credit for the bill that has 
been rejected by the People's House.
  I think the gentleman from Virginia [Mr. Goodlatte] put it 
beautifully when he was speaking on the rule on the crime bill when he 
said the President is trying to look like Dirty Harry, but he is 
turning out to be Barney Fife with this crime bill. The same thing is 
happening in the economy.
  The gall of the President of the United States to stand out there and 
take credit for an economy that he had nothing to do with is beyond me. 
He ought to start writing fairy tales, because the myths that he is 
perpetrating on the American people are unbelievable, and what kills me 
is really interesting and funny to watch, the American people do not 
believe the myths that he is putting out.
  For instance, the gentleman was talking about the first myth that the 
administration's economic policy has actually restored economic growth, 
and here we are now falling prey to economic revisionism by this White 
House, when your own study, the study by the gentleman from New Jersey, 
reports that the campaign of economic revisionism implies those who 
benefited from the 1980's did so improperly, even though an objective 
analysis of the data revealed that income gains were enjoyed across the 
board.
  The administration is taking credit for the economy's 3 percent 
growth rate in 1993, and a 7-percent growth rate surge in the last 3 
months, when anyone who has had Economics 101 knows that it takes more 
than a year to see the effects of new policies.
  Myth number 2, the administration's economic policy has helped create 
new jobs. This one I just cannot believe that they would try to support 
such a myth. The President has said that his economic program has 
produced almost 4 million jobs in just 18 months, when the truth is, as 
we all know it, the economic recovery was well under way long before 
his economic program took effect.

                              {time}  1920

  And studies show that since the inauguration 84 percent of the jobs 
created have been in the lowest paying categories as compared to 69 
percent during the Reagan and Bush years. I can remember Member after 
Member coming to this floor claiming that the Reagan and Bush jobs were 
nothing but hamburger-flipping jobs. Yet they run from that statistics 
when you find that the jobs that are claimed to be created by this 
administration are low-paying jobs.
  According to the Bureau of Labor Statistics, right there on that 
chart, manufacturing jobs have actually decreased by 56,000 since 
President Clinton has taken office.
  Mr. SAXTON. I would like to make reference to this chart. This chart 
shows the length of the average work week beginning in 1984 and coming 
through 1993. We can see that in 1993 the average work week for 
manufacturing jobs is significantly longer than the average has been. 
One might ask why is that? Is it because we are producing so much more? 
We all know that is not true. Is it because the economy is growing 
faster than it was during these years? We know that is not true. The 
answer has to be that employers would rather hire people to work longer 
and hire fewer people than they would to hire more people and work the 
average work week that we used to work.
  I might digress here for just one other point. The reason, in my 
opinion, employers are doing this is because they do not know where to 
turn next, in terms of taxes, in terms of health care reform, mandates, 
additional responsibilities for employers. So, fewer workers mean less 
overhead and we just work a little longer.
  Mr. DeLAY. I think also, if the gentleman would yield, the opposite 
is true, workers are willing to work longer because they are having to 
work longer in order to maintain the same standard of living that they 
had in the years past.
  In my district I know people are working two jobs just to pay for the 
standard of living that they enjoyed 5 to 10 years ago.
  Why is that? It is because the Government is taking--the cost of 
Government is well over 51 percent of their income. The Government is 
taking more and more of the labor American workers in this country, and 
certainly it has been shown to be so in this.
  Let me just say it is also interesting, other than the study the 
gentleman is laying out, that the Washington Times reported that since 
last year an average of about 170,000 jobs per month had been created, 
and compare that to between 200,000 and 250,000 jobs during same 
expansion period of the 1980's, per year.
  So when they claim they are creating all these jobs, what they are 
claiming is creating all these jobs at a slower rate than had been 
created in a good economic expansion.
  I might just say in April, when President Clinton's retroactive tax 
increase and the wealthy owning at least one-third of the tax hike that 
raised their rates from 31 to 39.6 percent, personal consumption 
expenditures fell and the personal savings rate dropped to its lowest 
level since 1987.
  The problem is that 20 to 25 percent of all consumer spending comes 
from the wealthiest 5 percent of the population. Arnold Moskowitz of 
Moskowitz Capital Consulting of New York predicts that Clinton's scheme 
to soak the rich will actually slow the entire economy from 3 percent 
growth to 2.5 percent growth.

  I just want to say that the American people are not buying these 
myths that are coming out of the White House. Fully 57 percent of the 
American people disapprove of the President's handling of the economy, 
while only 36 percent approve. Another 81 percent of the American 
people disapprove of the President's handling of the deficit, while 
only 28 percent approve. And 61 percent of the people disapprove of the 
President's handling of taxes, while only 31 percent approve.
  This President is not doing anything to improve the economy; in fact, 
as the gentleman from Texas [Mr. Armey] said, he has just been lucky 
that it has not landed in the toilet.
  Mr. SAXTON. I thank the gentleman for his statement, and, as always, 
an articulate and fine statement.
  I would like to turn quickly to the gentleman from Illinois [Mr. 
Manzullo].
  Mr. MANZULLO. Let me just make a few comments on the economy.
  I am not going to stick to my text on this. I do not think most 
Americans realize the extent of what this huge $4.7 trillion to $5 
trillion debt, what this means in terms of ordinary day-to-day life.
  Buried in the budget that was passed is something called generational 
forecast. We received an interesting article from Paul Tsongas and 
Warren Rudman, head of the Concord Coalition which analyzes different 
problems with the budget and gives their suggestions for putting this 
country into some type of financial order.
  That is that for every child born in the year 1992 and thereafter, by 
the time that child is in the work force he or she will have to pay, 
because of the huge, growing national debt, an income tax rate equal to 
88 percent, that is 88 percent. And that says nothing about State and 
local and county taxes.
  When I talk to the folks back home in Illinois at our town meetings, 
in grocery stores, walking from business place to business place, it is 
apparent that people know this deficit is horrible but do not realize 
that we are just really the width of a whisker away from financial and 
economic collapse, if the debt and spending in this Nation continue.
  That means we are going to reach a point where there will not be 
enough revenues to pay the interest on the national debt, and at this 
point the Government does one of two things: It either monetizes, which 
simply means it prints up or cranks up money; or, two, it declares all 
Government obligations to be fulfilled and paid in full without doing 
it.
  Now, you can imagine collapse of the economy.
  I just wanted to share that with the gentleman from New Jersey to 
sort of bring to a focus point the concerns that the gentleman has been 
sharing here during these special hours.
  Mr. SAXTON. I thank the gentleman for bringing out what a serious 
issue the national debt poses to us as well as the fact that, you know, 
if you plotted out the revenue that we have had coming into our Federal 
Treasury over the last 10 years and you plotted out on the same graph 
or chart, the line representing the expenditures, you would see a 
revenue line down here, an expenditure line that goes like this, and 
they are simply getting further and further apart. Hopefully, we are 
seeing some tipping back together here during the last few months, 
again for some good reasons.
  But if I may, I would like to yield to the gentleman from California 
[Mr. Baker].
  Mr. BAKER of California. I say to the gentleman I certainly 
appreciate being here this evening.

  We ought to leave the economy to the economists because politicians 
have done a poor job.
  During the 19-million-job-creation 1980's, the Democrats told us 
these were just hamburger-flipping jobs and nothing substantial was 
occurring.
  Then we found out those people were paying taxes, the economy was 
growing, and revenue was increasing to the Federal Government. Instead, 
the Government is flat, the private economy is flat. What have we said 
about it? We said, ``This is wonderful, Bill Clinton has said he has 
created all these jobs and things are just rosy.''
  Then we step to the microphone and say these are just hamburger-
flipping jobs, these are not real. Probably half is about true. But 
why? What is it wrong with the economy? Why is it flat? Why is it not 
growing? Because we raised taxes over $100 billion a year ago today.

                              {time}  1930

  That is what the problem is, and everyone knows when you raise taxes 
and suck that much money out of the economy you are not going to be 
able to create jobs. The Government has to get out of the way so the 
private sector can lead. That is true in health care; it is true in the 
economy. So, we are not going to debate whether or not he has created 
so many jobs because we know that they had to raise in January 1993, 
the day Bill Clinton took office, the Labor Department had to raise, 
estimates of jobs created in that terrible year of 1992 under George 
Bush; 158,000 jobs, meaning that we have actually lost 58,000 jobs 
since then in manufacturing.
  So, we can debate numbers, but what the American people want to know 
is are we leaving business alone? Are we giving the American public 
enough money to invest, to save, and to create thos jobs? And the 
answer is no, this Government is growing like Topsy, and the real 
problem is more debt and more Government.
  The reason the crime bill failed today was because it was $33 
billion. That bill started out in the House at $22 billion. It went to 
the Senate at $28 billion. It came out of conference at $33 billion. If 
every cent of that was for crime control, we still could not have 
afforded it. So, that bill is now going back to conference for a quick 
diet, and it will come back a toughened, lean, and mean crime bill that 
puts police on the street instead of sensitivity trainers at the other 
end of the 911 call.
  I say to the gentleman from New Jersey, It is a pleasure to be here 
tonight. Let's let Government get out of the way. Let's encourage the 
private sector to invest, to risk, and to create those jobs. Let's 
create the incentive to save in the minds of the American people, and 
we'll put this country back in order.
  Mr. SAXTON. Mr. speaker, I would like to thank the gentleman very 
much for being with us here this evening to discuss threse very, very 
important issues, and I would also just like to say to all the Members 
that these issues are things that we are going to be dealing with in 
the future, and I hope that this special order tonight has shed some 
light. I tried not to be too partisan about it, but there are 
differences in the thought process or in the basic approach that, I 
think, that the two parties have here, and I hope that we have been 
able to point them out in an objective, in an objective way.
  Mr. Speaker, the hour is growing late, and I know there is more 
business in the House, so at this point, I guess with very little time 
left. I conclude.

                          ____________________