[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.

                          ____________________