[Congressional Record Volume 141, Number 6 (Wednesday, January 11, 1995)]
[House]
[Pages H211-H218]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NAFTA AND U.S. ECONOMIC POLICY
The SPEAKER pro tempore (Mr. Johnson of Texas). Under the Speaker's
announced policy of January 4, 1995, the Chair recognizes the
gentlewoman from Ohio [Ms. Kaptur] for 60 minutes.
Ms. KAPTUR. Today, Mr. Speaker, we are going to spend some time
focusing on a very important issue that came before the Congress about
a year ago called NAFTA, the North American Free Trade Agreement, or as
some of us would like to say, the agreement that some would call ``no
more taking American jobs away someplace else, especially south of our
border.''
If you have been reading the newspapers, though it is sometimes
buried on page 17 or 25, you will note that in Mexico there is a severe
financial crisis currently going on in that nation. the purpose of
today's colloquy will be to discuss with my good friend, the gentleman
from Oregon [Mr. DeFazio] and others who will join us, what this means
for the American worker and what it means for the American taxpayer, as
well as the citizens of Mexico, because this week we are introducing
legislation which the gentleman from Oregon [Mr. DeFazio] will talk
about in just a second.
For those of us who opposed NAFTA, it is difficult to get up here and
say ``I told you so,'' but if the pain were not so great for thousands
of people in our country and thousands of people in Mexico, we would
not be so compelled as we are today.
There is a new kind for foreign aid afoot in our land. It is called
NAFTA. Because of the instability in Mexico, our taxpayers, with no
vote occurring here in the Congress of the United States, our taxpayers
are being asked to foot a multibillion dollar bail-out of the Mexican
peso. We do not even get a seat at the table.
Congress has no vote. The taxpayers in my district have no vote. The
players who are at the table are giving the whole set of transactions a
very fancy name. They are calling it debt swaps. They are calling them
peso bail-outs. They are calling it teso bonos.
The average person that lives on my street in Ohio doesn't know what
all this is. Only people connected with Wall Street and the Federal
Reserve are supposed to understand this. So today we are going to try
to clear the air a bit, because what this deal is actually doing is
asking our taxpayers to back up a minimum of $9 billion of loans to
Mexico, and through the Federal Reserve an additional $5 billion plus,
we don't know quite how much.
But of course it is the deposits of our people in our banks, that
then make payments into the Federal Reserve, that creates Federal
Reserve, so we are all connected to that system. And then there are
additional funds coming from some of the commercial banks in this
country that are having a whole lot to worry about at the moment.
Over this past year, if you think about it, our Federal Reserve has
raised interest rates on the American people seven times. All of the
press has been wondering why are they doing that, because wages aren't
going up in America. There is no inflation. What is going on over at
the Fed? In fact, some group of citizens demonstrated against a Fed a
couple of weeks ago.
We understand what the Fed is up to. When you have got to discount
losses that you are going to be taking on loans that went bad through
the commercial banking system to countries like Mexico, and when you
have to monetize $150 billion of trade deficit, you have a problem on
your hands. They are taking it out in higher interest rates on the
American people.
As my colleagues and I predicted, just 1 year after NAFTA, NAFTA has
meant a worsening of America's trade position with Mexico. In fact, it
has been cut in half. We were told, for example, in the auto industry
that we would sell 60,000 more cars to Mexico, but if you look at this
charter, this is the truth about what has been happening since NAFTA
passed.
{time} 1440
Prior to NAFTA passing, this red arrow represents how many cars and
trucks Mexico was sending to the United States. Over the years we have
only been sending a trickle into Mexico, represented by this little
arrow.
But after NAFTA, which was supposed to make this arrow look better
for our people and this arrow look worse, what do we have? We have more
vehicles coming up from Mexico into the United States, and the trickle
from the United States down to Mexico continues, largely automobiles
going down to rental car agencies in Cancun and Yucatan and Mexico City
where our people vacation. There has been no real growth of the middle
class in Mexico.
With what has been happening in Mexico, what have we seen? Their
currency, called the peso, has been nearly cut in half. It has been
devalued by nearly 40 percent since the end of December.
What does this mean? That means that their goods will be cheaper on
export, which means this number, whether it is cars or whether it is
electrical wiring harnesses, whatever, it will be cheaper for them to
send more into our marketplace and it will be much harder for the
United States to send goods down there because our goods will become
more expensive in their market.
Mr. DeFAZIO. If the gentlewoman will yield on that point.
Ms. KAPTUR. I yield to the gentleman from Oregon.
Mr. DeFAZIO. I think I recall that during the debate over NAFTA, the
gentlewoman from Ohio, myself and others raised the point that we
thought the Mexican peso had been artificially propped up and
overvalued in order to try and sell the NAFTA agreement. In fact as I
recall, we said we thought it was about 20 to 25 percent overvalued. Of
course we were wrong. Apparently it was 40 to 50 percent overvalued.
This was clearly on the part of the financiers on both sides of the
border and some of the highest political officers in both countries an
attempt to distort the ultimate impact of this agreement. In fact, the
Mexican opposition party has filed criminal charges
[[Page H212]] against their former president for concealing and
manipulating the value of the peso, which has now crashed.
What this means, of course, is that the average Mexican worker, who
has seen their wages decline rather dramatically over the last 20
years, will see another 40 or 50 percent decline relative to United
States goods. Instead of having an average of $1,600 a year in buying
power, that is, if they used all of their disposable income they could
buy $1,600 worth of our goods, which was always the fallacy of NAFTA,
it was never designed to sell goods to Mexicans, it was always designed
to get cheap labor in Mexico to ship the goods here, now those Mexican
workers will have total incomes in United States dollars of $800 or
$900 a year. So if they save really hard, they might be able to buy a
pair of running shoes at the end of the year from United States
manufacturer based in Mexico, but not likely.
I think this is really key for us to explain to the American people.
Not only has this happened, and not only are we now being asked to put
up U.S. taxpayer dollars to prop up the peso.
This is the free market? It seems to me the free market is saying,
``The peso is worthless, let it drop.'' No, we are going to prop it up
with $9 billion out of our Federal treasury with no review by the U.S.
Congress. Apparently Mexico can just draw on that $9 billion whenever
they want.
Beyond that what is even more outrageous is the Federal Reserve Board
which controls the deposits and the currency in this country has
extended a secret line of credit to Mexico under secret conditions for
a secret amount.
When my staff contacted the Federal Reserve, we were just told,
``That's none of your business. We don't tell Members of Congress what
we're doing.'' But if a bill comes due, if the Mexican Government
declares bankruptcy or defaults, we will get the bill, the same way we
did in the savings and loan crisis.
The American people are being played for suckers here again and this
is what we need to communicate today. We are not going to let this keep
happening without bringing the light of day to these secret deals.
Ms. KAPTUR. I want to compliment the gentleman for his leadership on
this and for his introduction this week, along with several cosponsors
including myself, of legislation to revoke NAFTA, until we can fix all
the major missing pieces that are causing the continual job loss in our
country and the tremendous instability in Mexico.
In a few weeks, we here in the Congress are going
to be asked to vote on a balanced budget amendment. What is going to
be very interesting about this whole debate is an issue like this one,
when our taxpayers can be held hostage through our own U.S. Treasury
Department and the Federal Reserve. When the private sector gets in
trouble they receive special treatment at the doors of the Federal
Reserve and at the doors of the U.S. Treasury. None of that is voted on
here. It happens through a private set of relationships, but ultimately
they get our taxpayers on the hook.
I have felt for a long time that if we are going to have requirements
for certain types of budget balancing here in the Congress, we ought to
put some additional restraints on the Federal Reserve and on our own
U.S. Treasury Department which has all these sets of special
relationships which in the end hold our taxpayers hostage and they
cannot do anything about it.
It is the same thing as the savings and loan crisis. It is amazing
how that stealth bomber got through here. We hardly had any debate. It
came through at 2 in the morning. When the private sector's big
financial interests really want something done here, they can certainly
achieve it without any amendments to the Constitution. It just happens
through sleight of hand.
Mr. DeFAZIO. I do not want to get too far afoot on the Federal
Reserve, but I think it would be interesting for people watching to
know that now this Congress has subjected itself to all laws. Yet the
one entity now left in this country that is exempt from virtually every
law, of conflict of interest, public disclosure, freedom of
information, is the Federal Reserve Board. They have these
extraordinary powers.
I can call and say, ``Excuse me, I'm elected, I represent the Fourth
District of Oregon, and I understand you are taking United States
dollars and shipping them to Mexico to prop up the peso. I would just
like to know what kind of collateral you got, what the terms of these
loans are, and what you think the prospects are of repayment and how
much money we're shipping to Mexico,'' and the Federal Reserve says to
me, ``That's none of your business, and we don't have to tell you. This
is national security.''
National security? National security when we are now paying to ship
our jobs to Mexico? That is the bottom line here. We can document that
there has been a net job loss through the first year of this agreement.
That was not predicted by the proponents but was predicted by us.
The gentlewoman has demonstrated it very graphically with the
automobile sector. In fact, autos were the No. 3 loser. The No. 1 loser
was machinery and electric parts, which was going to build things in
Mexico that will be shipped back here. They are a loser. Optical and
photo was a big loser, and autos were No. 3.
We had a few winners. Tobacco. We exported more tobacco products to
Mexico, we exported more articles of cork, and the Mexicans bought a
lot more antiques and art from the United States during the last year.
How many jobs does that produce in America versus the deficit we are
running in autos and other critical manufacturing sectors and a growing
deficit and one that is going to grow astronomically with the
devaluation of the peso?
These are questions that need to be asked and I really appreciate the
fact that the gentlewoman has the guts to stand up here on the floor,
because there is a lot of pressure, and you know it, for us not to talk
out about this.
Ms. KAPTUR. I appreciate the gentleman's courage in doing so as well,
and I find your statistic on art very interesting.
Because at the same time as we are losing jobs to Mexico, and our
people's wages are not going up, art would be one of the major exports
from the United States to Mexico. In 1991 there were only two
billionaires in Mexico. Today there are over two dozen.
At the same time as the average Mexican citizen has lost buying
power, if they were lucky enough to have $100 in savings in a local
institution there, it has just been cut to $60. but somebody down
there, and I have a hunch who it is, has been purchasing very expensive
items, and I would guess it is those families that traditionally have
owned everything in that country and command the wealth and the real
political power inside that nation
One of the questions we are asking, in fact, we are sending a letter
today to the U.S. Treasury Department in the Clinton administration
asking them about this $18 billion bailout of Mexico. Some of the
questions I would just like to read, because I think the American
people should be thinking about these as well:
The first one is that in view of the fact that our banks in this
country are earning historic profits, and they have been for several
months now, why is our Government's intervention in the form of this
currency swap and special Government loans necessary? If the private
sector gambles and loses in a country like Mexico, why should those
losses not be borne by the private sector? Why do we allow these people
who are buying art to get off scot-free and then run right up to the
door of our treasury and ask the American taxpayers to back up loans to
bail them out?
Back years ago this happened again when the Brady bonds were created,
if people have long memories back in the late 1980's. That debt that
was accrued by Latin American nations in those days, what happened to
it?
{time} 1450
Well, folks, it is still out there. It is now in the form of Brady
bonds, and in 1990 Mexico had to convert $33 billion of its debt to
Brady bonds, and guess that the interest rate is on those bonds? Forty
percent.
When Mexico pays or is supposed to be paying off all of these debts,
who is earning the 40 percent? One of the questions we are asking the
Treasury is we would like to know does anybody on my street have a
right to buy those 40 percent bonds?
[[Page H213]] Mr. DeFAZIO. Would it not be nice if some of these
interest earnings, extended with the backing of the U.S. Government,
went to help defray our own deficit here in the United States? Would it
not be refreshing if for once the American taxpayers did not just
extend guarantees and send taxpayers' dollars but in effect they were
getting a return?
I know that is not the case. The 40 percent interest is going to
private investors, the largest banks in the country who are now
desperately knocking at the doors; actually they are inside. We are not
allowed in, but they are inside saying we would like another $10
billion for Mexico. Please send it now because we are worried out our
investments and our payments. They are not worried about the American
taxpayers.
Ms. KAPTUR. When we are sending this letter, and I am glad you led me
in to it here, the second question in our letter to the administration
is to what specific banking and corporate interests does Mexico's first
$26 billion in outstanding obligations that come due this year, in fact
$10 billion of that comes due in the first quarter of this year, go?
Specifically we want to know names of institutions and bond holders
largely in this country that Mexico owes money to. It would be very
interesting to see who they are.
Mr. DeFAZIO. Now we are going to lend them taxpayer dollars under
this line of credit to repay the loans made by private interests in
this country.
Ms. KAPTUR. Would it not be great if every American who owned a home
mortgage could do the same thing? In other words, rather than paying
their mortgage payment next month, all they have to do is call the
Federal Reserve, sit around the table, and rather than paying the
mortgage payment they give them a loan to pay it off. Great concept.
Mr. DeFAZIO. And it comes from other taxpayers.
Ms. KAPTUR. That is right. And one of the issues here, the third
question we are going to ask of those business entities incorporated in
the United States to which Mexico is indebted, we would like to know
which ones of these business entities hold voting rights at the
district Federal Reserve offices and in which regions of the country. I
would sure like to know how the Midwest compares to the Northeast and
to the Northwest and to the South of this country. It would really be
nice to know who has special favors at the Fed.
Mr. DeFAZIO. Mr. Speaker, I would just like for the people who are
watching to know this is not an ``I told you so.'' And we are going to
go through the list of things we predicted would happen with NAFTA that
have come to pass, including the peso devaluation. But there are a lot
of short memories in Washington, DC, and a short attention span in the
media when it comes to these very critical issues. But ``I told you
so'' is not going to be enough in this case because thousands more
American jobs such as the ones the gentlewoman talked about are at
risk, and now tens of billions of U.S. taxpayer dollars are at risk and
``I told you so'' is not an adequate response. And that is why we are
speaking here today and that is also why we will be introducing, this
week, legislation to trigger the repeal provisions of NAFTA. There was
a 6-month option out of NAFTA and we are introducing legislation to say
this has worked as poorly and as badly and even worse than we ever
anticipated. It is a loser for the American taxpayers, it is a loser
for the American workers, it is a loser for the Mexican worker, and a
loser for the environment along the Mexican border and the United
States border, and it is time to repeal it and put in place an
agreement that will benefit people on both sides of the border and help
raise standards of living rather than depress them and bankrupt the
Treasury.
I will have to step off the floor but I will be back because I want
to continue the discussion. And I believe the gentleman from Vermont
[Mr. Sanders] will step up and take my place.
Ms. KAPTUR. Thank you very much, Congressman DeFazio. I think it is
important for the audience to know this is a bipartisan effort. In
fact, conservative Republicans, conservative Democrats and moderate
Democrats, mainline Democrats are all supporting this particular
effort.
Today in the Washington Post on page A-13 there is a story that talks
about what is happening in the Mexican stock market as a result of the
rippling effects of this devaluation of the peso, and one of the
Mexican bankers said, ``This is really a meltdown of catastrophic
proportions. So we have the United States offering us loans. Eventually
you get yourself another $20 billion in debt, and how are you going to
pay for it?'' And that is really the reason we are very concerned and
why we have asked for NAFTA to be revoked because we would like to
know, and we have asked this question in letters we are sending to the
Treasury, if Mexico defaults, as nations have had trouble paying their
debts in the past, is it the intention of our Treasury Department to
enlarge the assistance? And what about the Federal Reserve? We are very
concerned that the commercial banks that are involved in these lines of
credit, that in the peso bailout their lines of credit are
uncollateralized. That is how we got into trouble back during the last
Latin American debt bailout, they were uncollateralized loans. Why are
our commercial banks, from what we have read in the paper, since the
Fed will not talk to us directly on this, why are they being allowed to
have uncollateralized loans?
I know the gentleman from Vermont, who has been such a leader on
this, is on the floor, and it is a pleasure to welcome him on our side.
Mr. SANDERS. Mr. Speaker, I thank the gentlewoman very much for her
leadership over the years. It is a pleasure to work with the gentleman
from Oregon, Pete DeFazio, as well as other Members of the Congress. I
am delighted to join with my colleagues today in supporting legislation
which would repeal the NAFTA agreement that Congress passed last year.
When Congress passed NAFTA last year we were told that this trade
agreement would be a step forward for both the economy of the United
States and the economy of Mexico. We were told that it would be a win-
win situation.
Unfortunately, 1 year later it appears to be a lose-lose agreement.
Today up to 50,000 American workers have lost their jobs as a result of
NAFTA and have filed for NAFTA trade-assistance benefits. The Mexican
economy today is staggering and wages in Mexico are plummeting. Most
alarmingly, is in the last
few weeks the United States Treasury Department has opened up a $9
billion line of credit in order to shore up the sinking Mexican peso
and they have encouraged United States commercial banks to lend
additional billions of dollars to shore up the peso, all of which could
very well lead to a disaster for the American taxpayer who ultimately
could be asked to pick up the damage.
It seems to me that what NAFTA is about is a continuation of a trade
policy in this country which has been very unfortunate for the average
American worker.
Today in this country, and we do not talk about this terribly often,
we have a $150 billion trade deficit. With NAFTA that deficit is
becoming worse. I feel that GATT will only accelerate that problem.
Economists tell us that for every $1 billion in trade we create some
20,000 jobs. That means that with $150 billion trade deficit we are
looking at the loss of 3 million jobs.
Second of all, when we look at the economy in America today, there
are people who say the economy is doing fine, we are creating new jobs.
The point to make is what kind of new jobs are we creating, what kind
of old jobs are we losing?
The new jobs that we are creating are, by and large, low-wage, part-
time, temporary jobs that often have no benefits at all. The
manufacturing jobs we are losing, in agreements like NAFTA, are decent-
paying jobs that have good benefits.
{time} 1500
That process of losing decent-paying manufacturing jobs and replacing
them with low-wage, part-time, service-industry jobs is one of the
reasons that the average American worker is seeing a major decline in
his or her standard of living. It seems to me that the beneficiaries of
the NAFTA agreement, and as you will recall, I say to the gentlewoman
from Ohio [Ms. Kaptur], the
[[Page H214]] people who pushed hardest for this agreement will be the
major multinational corporations in America who will take our jobs to
Mexico where they can pay people a dollar an hour, or today with the
devaluation of the peso even less.
Who are we kidding? Why will large corporations pay American workers
$10 an hour, provide decent benefits, have to protect the environment,
when they can go to Mexico and get the unfortunate and desperate
Mexican workers to work for substandard wages, when they can go to
China and hire people in an authoritarian society at 20 cents an hour?
I think it is absolutely appropriate that we in Congress demand the
repeal of NAFTA, that we make certain that the American taxpayers are
not stuck with a billion dollar bill in trying to shore up the peso or
protecting American banks who are lending the Mexican Government money,
and I also think it is very appropriate that we begin to take a
fundamental and hard look at our entire trade policy, which has worked
to benefit large corporations but has worked detrimentally to the needs
of the average American worker. So I think that we are doing something
that is important.
I hope that we will gather more and more support from Members of
Congress to stand up, to repeal NAFTA, and to reverse our trade
policies.
Ms. KAPTUR. I appreciate the gentleman joining us today, and your
leadership on this throughout our country has just been tremendous, I
say to the gentleman from Vermont [Mr. Sanders], and your people are
very lucky to have you as their Representative, for sure. I am sure you
are as distraught as I am that people like ourselves receive phone
calls from the administration, whether it is this administration or the
prior administration, anytime we try to question when the big interests
are able to get special access at the U.S. Treasury Department or at
the Federal Reserve, it is amazing to me how quickly the administration
responds.
So, for example, if it Mattel Corp. or the Big Three or some of the
big investment houses stand to lose anything, right away they get
invited over to the Fed. They get welcomed. In fact, we were called by
the Treasury Department very concerned about our saying anything about
this whole question of the peso bailout here in Congress today. Yet
when we tried to call them over a year ago and tried to get them
interested and get the administration interested in workers across this
country who would lose their jobs, they would not even come over and
meet with us.
We wanted to put provisions in NAFTA to pay the kind of attention
that is being paid to the investment community to the workers of our
country, and we were given short shrift. In fact, we were not even
welcomed into 1600 Pennsylvania Avenue, those of us concerned about
what is happening to workers across this country. Yet we know there has
been one factory a day closed in this country as a result of NAFTA.
We have a list in our office of thousands and thousands of U.S.
workers losing their jobs, 50 jobs here, and in Horsham, PA, 40-some
workers who used to make bridal and bridesmaids gowns, at Alfred Angelo
Co., in Bennington, VT, your home State.
Mr. SANDERS. That was the Johnson Control factory in Bennington, VT,
and that was a very painful situation, very serious loss to our
community and to the hundreds of workers who were affected.
The only word I want to add to what you are saying, I say to the
gentlewoman from Ohio [Ms. Kaptur], as important as it is to document
the loss of jobs, there is another process going on as well, and that
is the lowering of wages of workers whose jobs remain in existence.
Very clearly when you have a process by which jobs are going to
Mexico and China, when workers go into their employers and say, ``We
want a decent wage increase,'' what the employers are saying is, ``Hey,
you better take a 10-percent decrease in wages or we can take your jobs
to Mexico or anyplace else.'' So this whole process in putting
continuous pressure on the decline of real wages in America. That is a
very important point to keep reaffirming.
Ms. KAPTUR. The gentleman from Pennsylvania [Mr. Klink] has joined us
here today, such a strong voice for industrial and manufacturing
America. We are thrilled to have you as a cosponsor and welcome you
here this afternoon.
I yield to the gentleman from Pennsylvania.
Mr. KLINK. Mr. Speaker, I was very pleased, sitting back in my
office, to hear that you have taken this time to have this discussion.
As a relatively new Member just beginning my second term, you both
know how hard we all fought and the message we carried during that year
1993, and we said that these things that have happened were going to
happen. I sat on the Banking Committee. We knew there were problems
with the peso. We knew there were problems with integrating the Mexican
banking industry with the United States banking industry. Yet all of
this was ignored when NAFTA came to the floor. It passed and became the
law of the land.
Actually being rather new at this legislative business, I told those
people who live in my district, a very blue-collar area around
Pittsburgh, I put a lot of my heart, soul, and blood and sweat into my
first year here into defeating something that I felt was very wrong not
only for the workers in my district but very wrong for the workers
across this Nation. That is NAFTA.
I would very much prefer that I be wrong. I want to be wrong. I want
someone to say, ``It is because you are new; you do not understand
trade, Congressman Ron Klink. This is going to work. All of these
promises. All of these jobs are going to be created. And you know what,
the 160,000 manufacturing jobs that you lost in southwestern
Pennsylvania over two decades, that whole thing is going to be reversed
now because we have passed NAFTA, and we are now going into GATT and
the trade policies, the gurus who have run trade for our country under
Republican Presidents and Democratic Presidents, are all right, and we
are all wrong. We will go back and get educated and we will learn later
on.''
It is very painful to me, my fellow Members who have fought very hard
against NAFTA with me, to stand here today. We do not want to say we
told you so. We would prefer to be here taking up another issue,
enjoying the prosperity, having our workers making a very livable wage,
having them be able to have additional free time in the evenings and
weekends to be with their families, creating safe and secure
communities. But instead what has happened is all of those people who
rushed down to Mexico to make investments are now asking the people who
live in our districts to bail out the peso, to bail out the
investments that they have made in Mexico over the past year, because
they have lost 40 percent on their investments.
The peso was being propped up before the NAFTA agreement. It was
being propped up falsely before this NAFTA agreement was ever secured.
Ms. KAPTUR. Just for a second, it interested me at what point the
Government of Mexico decided to devalue the peso. You know, they have
their Presidential elections in August, so everything was quiet up
until August. Then we had a GATT vote here, and that was right after
elections. We delayed it. Nothing was said. Nobody wanted to upset the
applecart.
Then we had the vote on GATT here late in November, and, boom, right
after that, when everything was set and secure, then the decision was
made to devalue the peso, and our Government knew for a long time this
was coming, the officials over at Treasury and the Fed.
So it was all orchestrated at the highest levels, no debate down
here, no discussion, and now, as you say, our people have to foot the
bill.
Mr. KLINK. If the gentlewoman would yield further, I will say that we
brought up, and I remember all of us being on the floor during the
GATT, that we knew that there were problems. Now we have got small
staffs that deal with trying to solve problems that our constituents
have with the Federal Government. We have legislative staffs that help
us to do whatever our legislative assignments are on whatever
committees and subcommittees we serve. But we do not have the ability,
none of us, as Members of Congress, have the ability to be able to
[[Page H215]] monitor each and every one of these agreements and each
and every piece of legislation we vote on. Oh, but that we could. But
we know there was a rotten apple in the barrel. We knew something was
going on, no hearings, mock hearings they call it, on GATT, no real
hearings. You are right, the Mexican elections went by the board. But
what happened unfortunately again was that immediately after the
passage of NAFTA we saw an uprising in Chiapas and, unfortunately,
those people from Mexico, those scholars and those people working on
the Mexican side, also against NAFTA, told us this unrest was going to
occur. We knew there was going to be a problem in Mexico.
It did not take a week for bloodshed to begin to occur, and we have
seen the problem of illegal aliens exacerbated.
My own State of Pennsylvania, No. 1 in the Nation with NAFTA trade-
adjustment assistance applications, so it did not take long for these
things to begin to happen.
The gentleman from Oregon is now here who has really been one of our
leaders in the anti-NAFTA movement, the gentleman from Oregon [Mr.
DeFazio], and who really has authored this bill that we are here as
proponents of today.
It is time, I say to the gentleman from Oregon [Mr. DeFazio], and I
thank you for your leadership, it is time that we pull off the mask,
that we stop the charade and say this NAFTA has been a failure, it has
been a failure to us as legislators, to the administration, to the
American workers, and to the American investors, and even those
corporations who have gone down there thinking they were finding tall,
green grass and found out instead there is deep red ink.
I think deep red ink would be a polite description of what they are
into in Mexico.
But what the gentleman said, and I thought this is something, these
issues are so awesome; talk about the Federal Reserve Board, talk about
the secret transfers of billions of dollars, the Treasury extending a
line of credit of $9 billion of our dollars. A lot of people listening
do not know what trade adjustment assistance is. What the gentleman is
talking about it that in his State more people have lost their jobs and
are now unemployed and have applied for a special Federal program set
up under this legislation paid for this program. So when we passed
this, we must have anticipated Americans were going to lose their jobs,
because we set up a special program for people who lost their jobs.
Mr. KLINK. Absolutely.
Ms. KAPTUR. It is a $9 billion figure. They had a few millions of
dollars to accommodate American workers. Here now we have a $9 billion
bailout that we are not even aware of. I am sure it is more than that
when you count the $5 billion that the Federal Reserve is putting into
that. It is amazing how quickly, how quickly our Government jumps to
the tune of those who have a lot of money, investors and bankers, but
when it comes to workers who need attention, he and she got no
attention in the body of the agreement.
Mr. DeFAZIO. Further on that point is, those 30,000 who have applied,
many are lost in the Federal redtape. They have to prove beyond a
shadow of a doubt that they can identify where their jobs moved to in
Mexico. I believe the figure is 12,000 have been approved. That means
that 18,000 are in need of special assistance. As the gentlewoman
points out, out of a few hundred dollars a week for people whose jobs
moved or were shifted back to Mexico, changed by United States policy,
and yet at the snap of a finger, the Federal Reserve can spend billions
of dollars with no Federal disclosure and the Treasury can pony up a $9
billion line of credit somehow, but the workers who are out of jobs are
still waiting in line at the unemployment office, hoping, begging for a
bit of help so they can get retrained.
Ms. KAPTUR. I yield to the gentleman from Vermont.
Mr. SANDERS. I think one of the questions we have to ask ourselves in
this whole debate is who are the forces in America, who are the groups
who pushed us into NAFTA? The answer is virtually, virtually every
large multinational corporation.
Who are the forces who were opposed to NAFTA and who raised over a
year ago many of the same concerns that we are raising right now? Those
were the groups who represented the American workers, those were the
groups who represented family farmers, those were the groups who were
concerned about the environment.
What about the media? The gentleman from Oregon [Mr. DeFazio] made an
interesting point, the gentlewoman from Ohio [Ms. Kaptur] made the same
point: We are talking about a $9 billion line of credit from the
Treasury Department and a line of credit that we do not know from the
Federal Reserve. Even in Washington, that is a lot of money.
Now, every day you turn on the television and you hear about welfare
reform. Well, AFDC, aid to families with dependent children, is $12
billion, a lot of money. That is on the front pages every day. How much
public discussion has this untold billions of dollars been receiving on
the front pages of the paper? Money which is not going to poor people
in America, money which is not going to the hungry children in America,
money which is going to shore up the peso and perhaps to protect
American banks which are investing in Mexico.
People in Vermont do not call me up and say, ``Bernie, I want to use
my taxpayer dollar to shore up the peso.'' I do not think I have gotten
one call on that issue yet.
People are concerned about our deficit, they do not want to spend
billions of dollars shoring up the peso. They would like that money to
go to retire our deficit, they would like to see that money go to feed
hungry children, they would like to see that money going to deal with
the homeless.
The second point that I want to make on this discussion: After NAFTA
was passed--and everybody in this room knows that it was a tight vote,
both parties split and the American people were split right down the
middle, and we checked--we were concerned about the nature of the
reporting that we saw during the NAFTA debates and that I am seeing
right now. We checked through every large newspaper in America--the New
York Times, pro-NAFTA; the Wall Street
Journal, pro-NAFTA; Gannett, pro-NAFTA; and so on and so forth; 17 of
the largest papers in America were all pro-NAFTA. We did not find one
that was anti-NAFTA.
So I would urge and request that the corporate media pay attention to
this issue, maybe admit that they were wrong, and start giving some
coverage to the fact that American taxpayers may be on the line for
tens of billions of dollars in bailing out the Mexican economy.
Mr. DeFAZIO. If the gentleman would yield, I have five daily
newspapers in my district and an untold number of weeklies. Every one
of those five newspapers endorsed NAFTA.
Now just a little, tiny bit of history. I am from Oregon. We are
famous for Willis Hawley. Everyone who has studied economics 101 hears
about the disaster of the Great Depression having been caused by the
Hawley-Smoot Tariff Act was passed 9 months after the crash of the
stock market. So it is hard to say that somehow those tariffs triggered
the stock market crash or the Great Depression. But they become a
convenient whipping boy.
Now, if anyone raises reasonable concerns about our trade agreements,
the fact that we do not have reciprocity with Japan, the fact that we
are giving away sovereignty with GATT, or the fact of the case of the
North American Free-Trade Agreement that we are now obligated to prop
up the Government of Mexico with billions of United States taxpayer
dollars, you are called a protectionist. I do not call that a
protectionist.
We are told that this is a national security issue. Yes, it is a
national security issue. We are talking about American jobs and
American taxpayer dollars, and we want to protect our national security
by revising and rewriting wholesale this agreement because it is a
loser for the people of this country and for the people of Mexico.
Ms. KAPTUR. Would it not be interesting to have a meeting, and I
would challenge our U.S. Treasury Department and the Federal reserve.
If you have ever been over to the Federal Reserve, they have the
largest board room meeting table you have ever seen in your life. I do
not know where they
[[Page H216]] got lumber for it. It is absolutely gigantic. On one side
of the table we would have all the claimants who want our taxpayers'
money, right? Would that not be great? And then on the other side we
would have the representatives of every single company that has shut
down in this country, and the workers that worked in those plants on
the other side of the table; would that not be a great meeting over
there? They would have more fun.
We would finally get the American people inside that board room and
take them up to the Treasury Department, with the big room that they
have over there with all the chandeliers. Would it not be an
interesting meeting of all the bankers, Wall Street investors, the
multinationals, the big banks who want loans and money from our
taxpayers, putting our taxpayers at risk, and then the very people they
put out of work in the same room? I think it would be one of the most
exciting meetings in Washington.
Mr. KLINK. I think it is an interesting point that both of the
gentlemen make with respect to the newspapers and their coverage on
this issue. I come to this from the standpoint of having been in the
news media for 24 years as a reporter myself. I think it is interesting
now, and I made this point at a press conference earlier today, now
that these reporters themselves are going to be asked to dig into their
own pockets and take their tax dollars that are going to go to Mexico
to prop up the peso, maybe all of a sudden there would be some interest
in the fact that this NAFTA agreement is not working as promised.
The other point made just a few moments ago, again I think I have
heard no one in my time in Congress who has been a better spokesman on
corporate welfare than the distinguished gentleman from Vermont [Mr.
Sanders]; that is exactly what we are talking about. At a time when we
have need for welfare reform, we all agree that the system is flawed,
we need to make some changes to it, but we are talking about all of the
welfare, 1 percent of the Federal budget. Now here we are talking about
untold billions of dollars, not only in the corporate welfare that
occurs in this country, but not to go offshore to prop up the peso so
that this frivolous investment, this get-rich-quick scheme that pursued
the signing of the NAFTA agreement, can be propped up and that they
will not have to face the consequences that their investments have led
them to, their faulty investments have led them. These are the same
people you hear, ``You have got to prop these companies up because we
can't let those people who own stock in those companies be hurt by
this, because
these are companies that also provide jobs here in the United
States.''
The point of the matter is the reason they are in trouble is because
they have not made their investments there.
{time} 1520
They have not made their investment in American workers. They have
decided to leave us behind, walk offshore, wherever the cheapest labor
is, and they got caught, and now they want us to pay to get their
fingers out of the cookie jar.
Ms. KAPTUR. I want to say something on that to the gentleman.
As my colleague knows, this talk about job training for American
workers? I support all kinds of skilling up of the American work force
and our kids in school, and vocational programs, and after-school
programs, and college programs. But the point is, if we have got
companies taking those jobs someplace else, why care how much training
we give people? When they are finished with their education, there is
not going to be a good-wage job with benefits there for them, and I
yield to the gentleman.
Mr. SANDERS. I can remember on the floor of this House, in my first
term 3 years ago, sometime around 2 o'clock in the morning, some $2
billion that some of us had managed to put in the budget in order to
feed hungry children and take care of the needs of the millions of kids
in this country who are doing without. It was taken out of the budget,
my colleagues. We could not afford $2 billion to take care of hungry
children in America. Big debate.
What really concerns me is not just that we are putting $9 billion
into a line of credit from the Treasury Department, an untold line of
credit from the Fed; what really gets me is there is no debate at all
on this issue.
Now where are all of those people who ran for election in November
who talked about accountability in government, who talked about the
$200 billion deficit, who talked about the balanced budget amendment?
Where are they now? I am listening; I do not hear anything.
I guess that when we talk about money for hungry children, when we
talk about Federal aid to education, affordable housing, we cannot
afford it. But when it comes to bailing out corporate America, when it
comes to shoring up the peso, not only can we afford it, there is no
debate, no discussion, not one word on the floor of the House.
Now our honorable new Speaker, very articulate gentleman, very clear
about what he believes in; some of us are eagerly awaiting his words of
wisdom on this important issue.
Last point on the issue:
In this last election 38 percent of the American people voted; 62
percent of the people did not bother to go to the polls. Tens of
millions of people no longer believe that they have a voice in what
happens in government, no longer believe that the U.S. Government is
here to respond to their needs. They are boycotting American politics
and government, and one can understand why people give up on the
political process.
People are working in my State of Vermont 50, 60, 70 hours a week to
keep their families afloat. They are paying too much in taxes, and now,
without any discussion, we have the Government talking about a $9
billion line of credit, and that is why people are giving up on the
political process.
Mr. DeFAZIO. Mr. Speaker, if the gentlewoman would yield for just a
moment, I would just like to go back to a point that came up during the
press conference, and I noticed that the gentlewoman was a bit
beleaguered by a reporter from her district who did not seem to
understand the difference between a net trade balance and shipping a
few cars to Mexico, and he would point to the representation of 2\1/2\
cars going to Mexico and say, ``Well, look, that's an increase from one
and a half cars symbolized there going to Mexico. That means we send
another 10,000 cars to Mexico.'' Unfortunately he was totally ignoring
the other side of the ledger which showed another--I believe it is
200,000 cars coming from Mexico to the United States.
So, what this means is the United States actually entered into a
deficit, a trade deficit, with Mexico for the first time in recent
history of $81 million in October, and that is just the beginning. We
are going to run trade deficits with Mexico.
Now I come from Oregon, and everybody says Oregon is a free-trade
State, and, by gosh, we benefit from trade.
Well I met with Dr. Charles McMillan, Ph.D., contributor to the
Harvard Business Review and scholar, a member of the Clinton transition
team, to talk about trade issues yesterday. He said, ``Isn't it
interesting?'' He said, ``In the GATT debate and the NAFTA debate we
heard how every State is running a surplus and benefits from trade, but
somehow the United States of America is running a $160 billion trade
deficit,'' and in fact he recalculated those numbers and found out that
my home State of Oregon is a net loser in trade, as is virtually every
other State in the Union, and for Mr. Clinton's State, big-time losses.
Thousands of jobs from his State have been shipped overseas in the last
year.
Now these are points we have to make because my colleagues will read
the headline. It said, ``Detroit Thrilled.'' They shipped 10,000 more
cars to Mexico. It does not say Detroit really thrilled, they built
250,000 more cars in Mexico and shipped them here with dollar-an-hour
labor. That is what the headline should be, but the press will not run
that headline. They only run the one that comes out of the boardroom.
Ms. KAPTUR. The gentleman raises such an important point because
those interests in our country, those monied interests, only want us to
focus on one part of the equation, this part, the products going from
America to Mexico which are----
Mr. DeFAZIO. Awful hard from here. I can hardly see it.
[[Page H217]] Ms. KAPTUR. Very, very small--and they say, ``Wow, we
are sending 20,000 cars. We are doing real well. We didn't send any
before.''
Of course they are sending them to rental car companies in Cancun and
in Mexico City where Americans can vacation. They never talk about this
number, the 277,000 cars and trucks coming the other way. It completely
obliterates this, and that is why America's trade advantage with Mexico
has been cut in half and, in October, went into the red. I say to my
colleagues, you have to read the fine print so carefully.
It is just like articles in my own local newspaper back home when
they talk about wages and they talk about the economy in our area. The
last paragraph at the bottom of the page on the insert says, ``But
wages didn't go up. There is job creation, but there is no wage growth,
and the reason is because we are cashing out our good jobs with good
benefits to the low-wage nations of the world that are largely
undemocratic in nature whether it's China, whether it's Mexico, whether
it's many of the nations that repress their work forces and do not in
their laws provide for the dignity of work.''
It does not surprise me why our wages are going down.
Mr. DeFAZIO. And, if we use the other interesting statistic, maybe
getting less esoteric here, Treasury has two sets of numbers, and that
is for goods exported to Mexico that were made in the United States,
and in the second is for goods that were transshipped.
We have become a point of entry for European goods that have shipped
a container to New Orleans, and then will ship from New Orleans to
Mexico in order to avoid the customs and tariff on European goods, and
they add that into our balance of trade. Maybe one dock worker checks
that container for 1 or 2 minutes of his or her day, but that was the
total American contribution to that effort. But that counts as part of
our exports to Mexico. It is, as my colleagues know, it is a
transshipment.
I mean it is amazing, the lengths to which our Government has gone to
try--and even when they get all done with that, they still have to show
a deficit in October, and that was before we got to the devaluation,
and does any American believe, or do any of those muckamucks really
believe, that we can go on, year in, year out, running a trade deficit
with the rest of the world of $120, $140, $160 billion, and someday the
piper will not come due. We are not only exporting those jobs this year
by running those trade deficits. Someday someone is going to ask us to
cough up those dollars that we are shipping overseas. We have more than
$1 trillion of Federal debt now. From 1917 until 1984 the U.S.
Government was the largest creditor in the world, and now we are the
largest debtor in the world. We owe more money to the rest of the world
than all of those problem nations combined. Add them up, Brazil,
Mexico, everybody else. Our trade debt is greater than every other
nation in the world----
Ms. KAPTUR. If the gentleman will yield, I think that is why the
Federal Reserve has been hiking interest rates in this country and
taking it out of the hides of our people, not because inflation is a
major issue in this country, not because our people's wages are going
up, because in fact they are not except for those at the very, very
top. But I think that is why the Fed is raising interest rates, because
they are having to monetize the traded goods sector, and we have held
these huge deficits with the rest of the world. I think with China it
will be over $40 billion more of Chinese goods coming into this country
than United States goods going over there this year. With Japan it will
be a similar number. For the last 15 years we have not had any kind of
trade balance with Japan. I do not think we have ever had one in fact.
Now with Mexico the advantage we had is just disappearing overnight.
{time} 1530
So I think that is why interest rates are really going up in this
country.
Mr. SANDERS. The absurdities pile on top of the absurdities. Not only
is everything that you are saying true in my opinion, but on top of
that, we are spending tens and tens of billions of dollars to defend
Asis against whom I am not exactly sure.
Some years ago we were told that it was necessary to spend huge
amounts of money defending freedom against the Communist Chinese
dictatorship. Well, surprise, surprise. The last I read, the Chinese
Communist dictatorship still exists. But now they are OK because they
are, for the first time, and have been for a number of years, welcoming
tens of billions of dollars of American corporate investment. So we are
spending huge amounts of money defending somebody in Asia, I am not
exactly sure, against a country which now welcomes American corporate
investment, and in fact many of the corporations like China, because it
is very difficult for the Chinese workers to stand up and defend their
own rights.
So the absurdity piles on top of the absurdity.
Ms. KAPTUR. Last week, we had the swearing in of Members of Congress,
and there was a performance in the afternoon by a group called the
Power Rangers, which is a very popular toy where they have these
animated shows that they take around the country and around the world.
And most Americans do not realize that that particular toy, which sold
over 300 million dollars' worth in our marketplace last year, there is
not a single one made in this country.
In fact, the Power Rangers is owned by Bandai Corp., which is a
Tokyo-based company. They employ about 700 people in Tokyo only in
marketing. They employ all of their workers in Asia, especially in
China and Thailand, and they pay them nothing. They then take those low
wage produced goods and they sell them over here from $29 all the way
up, there are some $5.95 figurines. But if you go into your local toy
store, which I did and I turned over every toy that was there, they
were all produced in China, they were produced in Thailand. And
somebody is making the money off of the out sourcing of production by
these big multinationals, whether it is Bandai or Mattel, which is
located in our country. And most young girls do not know that there is
not a single Barbie doll made in America. Mattel has out sourced all of
its production, and yet the children, these companies look upon our
children not as children, but as a market, as a market. And they buy
time on all these television shows and all of the rest. And none of our
workers are working, yet parents and grandparents go to the store, they
want to buy that for their child or their grandchild, and they pay top
dollar, $29 all the way up to $200.
Mr. DeFAZIO. If the gentlewoman would yield on that, because this is
a point that occasionally a constituent brings up with me. And they say
look, if we didn't have this free-trade agreement with Mexico,
consumers would suffer. I said wait a minute, do you think that
Chrysler, which is building a new large Dodge Ram truck plant, a truck
that sells for a minimum, I think, of $15,000, some of them sell for as
much as $30,000, I said do you think Mexicans with their former average
earnings of $1,700 a year, this week reduced to about $800 or $900, are
going to be buying many of the Dodge Rams which they build? And they
say, well, no.
I said, have you noticed that since Chrysler or other United States
firms started building these trucks in Mexico, that the price has come
down? Oh, no.
Have you noticed that the profits have gone up, but the price has not
come down?
Well, now that you say that, yeah, I guess I did notice they had
their most profitable quarter ever.
I say that is the point. Even if you can argue that we should produce
goods overseas because we can exploit cheap labor and it will be
beneficial to the American consumer, the bottom line is that does not
happen. The prices do not go down. The profits go up.
Nike Corp., based in Portland, OR, they don't make anything in
America anymore. They used to manufacture shoes here.
Ms. KAPTUR. If the gentleman will yield, I read that Nike, it costs
them $8 to make a pair of sneakers in China. They have some white
collar workers up there in Oregon that are marketing people, just like
the Bandai Corp., in Tokyo with Power Rangers. It costs them $8 because
they pay their workers 10 cents an hour in places that you and
[[Page H218]] I have never been in China. The American public doesn't
see it. They ship the shoes over here, and we are charged $66.99 all
the way up to $150, but they pay Charles Barkley $20 million to make us
all feel good through advertising when we buy those shoes. And there
are very few shoe manufacturing companies, most of those were located
in Congressman Sanders' region of the country, very few shoe
manufacturing companies left in this country.
So our people are really being put over a barrel. And you are right,
prices do not go down, but corporate profits go up. Prices go up and
our wages are coming down. And there are some pretty significant
reasons for it.
Mr. KLINK. If the gentlewoman will yield, I had the distinct honor
last year to chair a hearing in Wilkes-Barre, PA, it was a company by
the name of Leslie Fay. This gets us back to NAFTA. Because you
understand at the time when we are being asked to prop up the peso, the
administration and others are taking a look at how can we expand this
NAFTA agreement to Central America and to South America.
This hearing was because the Leslie Fay Company wanted to pull out
thousands of jobs from Wilkes-Barre, garment workers, and they wanted
to take these jobs down to Central America. And we had two blouses
there. One was made in Central America, and it was a $50 blouse, and
the workers were paid 35 cents an hour. The other one was made by
Leslie Fay workers in Wilkes-Barre, PA, and it costs $48, and the
workers were paid over mininum wage for certain. So there is no savings
on this.
Ms. KAPTUR. I believe that our time has expired. I just wanted to
thank the gentleman here, the gentleman from Vermont [Mr. Sanders], the
gentleman from Pennsylvania [Mr. Klink], and the gentleman from Oregon
[Mr. DeFazio], for their leadership in speaking for up for the people
of the United States, the people of the continent, and the people of
the world, not just those investors in large multinational corporations
who have access to the media and to our own financial centers.
____________________