[Congressional Record Volume 141, Number 9 (Tuesday, January 17, 1995)]
[House]
[Pages H288-H294]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     THE ROLE OF UNITED STATES IN SOLVING MEXICO'S MONETARY CRISIS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 1995, the Chair recognizes the gentlewoman from Ohio [Ms. 
Kaptur] for 60 minutes.
  Ms. KAPTUR. Mr. Speaker, while America was celebrating Martin Luther 
King Day yesterday and the long weekend, officials over at the White 
House and here in the Nation's Capitol buildings were running around 
frantically trying to figure out how to bail out Mexico with your 
taxpayer dollars, without calling it a bailout. They say ``It won't 
cost us a penny because Mexico will pay it all back.''
  However, Mexico has never pad back its debts. That is why it is in 
the fix it is today. The powers that be here in Washington, therefore, 
have devised a multibillion dollar taxpayer bailout plan to prop up 
Mexico after the recent peso meltdown.
  Listen to this. It will conveniently be placed off budget, through 
some fancy manipulations of lawyer's words that will make it sound like 
our taxpayer's don't end up holding the bag. First, there was an $18 
billion loan package with a $9 billion line of credit from the U.S. 
Treasury and our Federal Reserve.
  You know what the Federal Reserve is. When you put money in your 
local bank, it then goes up in the chain and the local banks end up 
owning the district banks which then own the Federal Reserve, so it is 
your money to begin with.
  But that was not enough of our taxpayer's money last week, so now we 
are being asked to put up an additional, are you ready, $40 billion, 
that is with a B, dollars in loan guarantees in Mexico. But of course 
we are being told it is just a safety net and we will probably never 
really have to pay it, because surely Mexico will not have any problems 
paying off these new loans.
  This is really getting interesting. How ironic that during the very 
month when Congress is about to consider a balanced budget amendment to 
put our taxpayers in a vice, we are being asked to close our eyes to 
this unprecedented back door version of foreign aid that holds the 
potential to bust any budget that we pass here. Off budget? Off budget 
means the bill will be on your budget, that taxpayers' budget. Don't 
you just love it?
  Mr. ABERCROMBIE. Will the gentlewoman yield?
  Ms. KAPTUR. I yield to my distinguished colleague, the gentleman from 
Hawaii.
  Mr. ABERCROMBIE. Would the gentlewoman characterize the reaction 
perhaps in her district as I find in my district, that people are under 
the impression that we may be giving this money to the Mexican 
Government? And would it be a fair characterization to say we may in 
fact be doing exactly that, because if they default, won't we in fact 
be giving it to them by taking it from our own people?
  Ms. KAPTUR. We absolutely will. In effect, our people become Mexico's 
insurance company.
  Mr. ABERCROMBIE. Would the gentlewoman kindly explain what that 
means, if we become their insurance company? What obligation does the 
taxpayer in America have if there is a default by the Mexican 
oligarchy?
  Ms. KAPTUR. If there is a default--and as I say, Mexico has never 
paid back its debts. It owes $89 billion it is not paying off right 
now. It means that we pledge the full faith and credit of the people of 
the United States to pay the debts of Mexico.
  Mr. ABERCROMBIE. Is it a correct assumption that if they have not 
paid any of the debt that you have mentioned so far and are unable to 
pay anything on that which we are going to advance them, that they will 
be combined and the taxpayers in America will have to take up all of 
that obligation?
  Ms. KAPTUR. That is the way it looks to me, my friend.
  Mr. ABERCROMBIE. I thank the gentlewoman.
  Ms. KAPTUR. I thank the gentleman.
  Now the new ``leadership,'' I put leadership in quotes, of this 
institution is turning cartwheels over one another trying to push this 
through real fast, real fast. I just love it.
  Where is the new Committee on the Budget? Where are the new Members 
who said that they were going to finally balance the budget of our 
country? What a joke. Instead of a Contract With America, this Congress 
is falling over itself to pass a new contract with Mexico. Who is 
kidding who?
  Members like myself understand the power of Wall Street, and 
megabanks, and multinational corporations. We understand the power of 
the media to keep this crisis under wraps at their bidding and hope the 
taxpayers miss this one.
  Last week in Washington over a dozen Members of Congress held a major 
press conference here in the Press Gallery. There had to be over 100 
press people. The rooms were overflowing. I asked my friends around the 
country, ``How much did you read about that in your newspapers?'' Who 
was it that made the telephone calls from the other end of Pennsylvania 
Avenue, that suppressed the press releases and the messages that we 
tried to get out to the people of the United States? I have a hunch who 
it was.
  We understand the power of the White House. We understand the power 
of the leadership here in this Congress. We do not like it, but we 
understand it. We know they want to slip this baby through with as 
little public scrutiny as possible. There is a lot of money at stake 
for their friends.
  After all, it would be embarrassing to them, all those high-flying 
speculators that gambled with mutual funds in this country, the ones 
who are always complaining about how they want Uncle Sam off their 
back, until they need to put their hands into our taxpayers' pockets to 
get them out of another one of their expensive binds.
  To them I say, look out, because once the American people figure out 
the magnitude of what you are trying to do, they are going to be 
outraged.
  Mr. Speaker, I ask, please do not tell us this will be good to the 
people of Mexico. That autocratic state will not be one whit more 
democratic when this is all over. Its citizenry will not have any 
greater standing in that legal system, nor will our businesses, who do 
business down there.
  All that will happen is that the vise around the necks of Mexico's 
people will continue to grow tighter. Mexican wages will decrease even 
more. Life that is already tough for the majority of Mexico's citizens 
will become even more unbearable. Inflation will be even tougher to 
manage than it is now.
  But get this, Mexico's super-rich families took their money out of 
that country before the peso meltdown. How convenient.
                              {time}  1740

  Why are they not being held accountable? Why should United States 
taxpayers put their money on the line when Mexico's 3 dozen ruling 
families have their billions safely tucked away offshore?
  If we remember back to 1984 and Mexico owed commercial banks in 
those 
[[Page H289]] days, Mexican funds by these families in United States 
banks exceeded the amount that Mexico owed to our banks by somewhere 
between $40 billion and $60 billion. Very interesting. Not small 
potatoes.
  They got themselves into this mess. Let them bail out their homeland 
by repatriating and bringing home their own money and let the big 
business interests in our country in cahoots with them eat their own 
losses.
  That is free enterprise. That is what free enterprise is supposed to 
be all about, taking a risk and then being willing to meet the piper.
  Just last week when most of America was not looking, the House 
Banking Committee here on this side of Congress renamed itself and 
passed new rules under its so-called new leadership mandated by what I 
call the ``Contract on America'' that will permit this bill to subvert 
normal committee procedures. No hearings will be held in the 
subcommittee of jurisdiction. Don't have to under the new rules they 
passed.
  This will be a real railroad job. Only the full committee will have 
some sort of lightning speed session, because if you ask too many 
questions and the public begins to understand what is going on here, 
somebody in America might actually object. I bet you a dime to a 
doughnut when that bill gets to this floor, it will be the fastest ball 
you ever saw come down the pike.
  So, what is so new about this Congress? The idea is to hide the truth 
from the American people once again. Hold as few hearings as possible, 
limit floor debate, don't let the public know any of the grimy details. 
So let me ask again, what is so new about this so-called new Congress, 
anyway?
  And let me say to the real gamblers in all of this--you know who you 
are: The megabanks, the multinational corporations, and the speculators 
who pushed through NAFTA, there are a few of us who understand. You put 
our taxpayers now at the helm for your mistakes and for your greed. We 
are angry. We resent what you have done.
  My own feeling is that when you gamble, you should eat your own 
losses and not come whining to the American people to foot the bill. 
You are all big boys. You love this kind of free enterprise gamble. So 
practice some of it. Don't come running home to Mama in the Government.
  Let me just say even gamblers have rules. If you go to Las Vegas and 
consistently lose money, the casinos won't let you play at their tables 
anymore. It is a good rule. Mexico has consistently lost money and 
never paid back the principal on its loans from us. Why should we let 
them play again?
  Remember the Brady bonds? They keep flipping around like fish on a 
deck. If you go to Las Vegas, there are also table limits. In other 
words, there is a certain ceiling on how much you can lose. Even 
gamblers have a code. But with this Mexico deal, there is no limit.
  A week ago, the administration first said it needed $6 billion. Then 
it raised it to $9 billion, then to $18 billion, then to $25 billion. 
Then by the end of the week, it became $40 billion, and that is on top 
of the $18 billion line of credit already in place. How's that for 1 
week's work?
  I have an idea and I thought about this all weekend. Since American 
taxpayers are being asked to bail the gamblers out on the faulty 
assumption that Mexico will pay back theses new loans, which would be 
an historical first, let me humbly suggest to the Secretary of Treasury 
and Chairman of the Federal Reserve, that what is fair is fair. If the 
American people have to pay, give them something in return. Let them 
earn the money off your gambling with their money. How about creating a 
new short-term bond for American taxpayers backed up by Mexican oil? 
Call it the oil bond. Its benefits will flow to each family in America 
bankrolling you, not just to a dozen well-connected bond houses and 
investment banks on Wall Street. Ask Mexico to pay us back in goods, 
not promises. Then let those oil barrels start rolling north. Call it 
cash on the barrelhead, using the current price at delivery.
  Since this bailout is putting citizens at a $49 billion risk to start 
off with, I figure with over 100 million households in America, for 
each family in our country we are talking about a minimum of one $600 
oil bond per family, not counting the interest due them over the life 
of the debt instrument.
  So let me challenge those creative geniuses over
   at the U.S. Treasury and Federal Reserve who have gotten us into 
this mess--you know who I am talking about--the ones who as a result of 
GATT just stopped guaranteeing average Americans a decent return on 
their U.S. savings bonds. We used to have a 6-percent floor which said 
you cannot earn less than 6 percent. Then they lowered it to 4 percent 
for our people. Now they have even taken out the 4-percent floor. I am 
asking those same folks over at Treasury to go back to the drawing 
board. If U.S. taxpayers are going to bankroll you and your speculative 
buddies, let our people share in the wealth.

  Imagine, the oil bonds could be sold through every Federal Reserve 
regional bank. The Federal Reserve could establish an 800 toll-free 
number that citizens could call, 1-800-O-I-L-B-O-N-D. How simple and 
straightforward it would be. Each American would immediately be an 
owner of 40 barrels of Mexican oil. For the first time in our history, 
it would democratize the gambling done by our Treasury Department and 
Federal Reserve at the expense of our taxpayers.
  The more I think about it, the more I really like it. Citizens with 
credit cards could call right in. The IRS could mail special envelopes 
back to each taxpaying family after April 15 of this year containing 
the family's oil bond. All taxpayers would benefit directly, again with 
goods, not promises. Is this not one of those ideas, the more you mull 
it over, the more it really grows on you?
  In conclusion, I would just like to say, let's stop this clever 
taxpaying bailout of Mexico. Let's stop this new budget-buster that 
will completely abrogate any work we do on a balanced-budget amendment 
here this month. Let's get rid of the biggest unfunded mandate in the 
history of our country. Let's put our taxpayers back in the driver's 
seat and let them earn the money for a change.
  Mr. Speaker, I yield to the gentleman from Pennsylvania.
  Mr. KLINK. I thank the gentlewoman from Ohio again for taking the 
lead on this issue, and I will tell you when we were on the floor last 
week, the discussion was about an $18 billion line of credit which 
somehow has more than doubled.
  I am very troubled given the history of what has occurred in my own 
district and I know the gentlewoman's district of Toledo, OH is very 
similar.
  We are being told that all this is going to be done off-budget, that 
there is some magical way of being able to leverage this money and to 
get it down there so that they can draw down on it, and that, in fact, 
$40 billion is more than they will ever need.

                              {time}  1750

  What about Ohio and Pennsylvania and Oregon and New York? Can we not 
do the same thing for those States where our industries have fallen 
apart? Can we not do the same thing for our own Federal debt that we 
are very much discouraged over and we have got all kinds of plans about 
trying to do something about? We are being told that if something does 
occur, if we do not do this, that there is going to be all sorts of bad 
ramifications, and I understand what some of those risks are. But one 
of the things we are being told is that we will discourage investment 
in Third World countries like Mexico, Chile, Brazil, and Argentina. My 
question is: Does that encourage investments in firms that are 
employing people here in our country, because I firmly believe that all 
of those dollars that have moved offshore, many of them going across 
the Rio Grande to Mexico, that those are dollars that are not being 
invested to put Americans to work.
  I have seen factory after factory, manufacturer after manufacturer 
that have moved from my district and districts around me and Volkswagen 
is one of them. They used to have 5,000 employees in New Stanton, PA. 
They are now making those same cars just
 outside of Mexico City.

  But as I listened today to some of the explanations from the Fed and 
from the Treasury Department, a few of their ideas really bother me. 
No. 1 was 
[[Page H290]] the fact they said the Mexican worker can never truly be 
competitive.
  As I listened to that, I go back to our discussion on NAFTA and I 
remember discussions with people from Volkswagen and General Motors and 
Ford and Sony and Zenith. They obviously do not agree with that because 
they have made hundreds of millions of dollars in investments and they 
are getting their dollars back because the Mexican workers truly are 
creative, they are very capable, and they can manufacture. And in fact, 
I have heard Members of our own Congress talk about companies and firms 
saying they are getting the same productivity from the workers in 
Mexico as they are getting from the American workers. So that is a 
wives tale and it just does not wash.
  If ideas like this that we know are false are going into this plan to 
give a $40 billion line of credit to Mexico, what else is faulty that 
we do not know about? I think that there probably is a lot of it. If 
this is such a good deal, if there is not a lot of risk, I think the 
gentlewoman's idea is correct. Why do we not privatize this debt? Why 
do we not let those same people who went to Mexico wanting to invest 
money and making millions of dollars, let us let them invest in that 
$40 billion debt rather than the American taxpayers who quite frankly 
have already invested in the debt that we have run up in this country. 
They have invested in their own consumer debt because their salaries 
and their wages have not kept up with the cost of living in this 
Nation. So why should we ask them to make that kind of a bailout? Let 
us let the big money interests go ahead and make those investments.
  Ms. KAPTUR. If the gentleman will yield on that point, I just want to 
point out that when any person goes into a financial institution in our 
country, whether it is a credit union, whether it is a savings and 
loan, whether it is a commercial bank, there is a little sticker in the 
window and it says insured by the full faith and credit of the 
Government of the United States. You do not see that when you go into a 
securities office or an investment bank on Wall Street. There is not 
any kind of taxpayer backup of the gambling, professional gambling in a 
sense, that is done through those investment banks.
  What I find really reprehensible about this proposal is that those 
individuals who chose to gamble, they knew what they were doing. Now 
whether they explained it to the people who used those institutions to 
place their money in private instruments, that is another question. But 
we have no obligation by the taxpayers of this country to prop up the 
investment banks of this country or the world.
  Mr. KLINK. If the gentlewoman will yield on that point, I think she 
makes a very valid point and I would say this to Members of this U.S. 
Congress, many of whom I hope are watching on TVs from their offices. 
If we go down this path with this loan, with this line of credit to 
Mexico, we can never say no again. We are breaking new ground. We are 
saying that the taxpayers of the United States will stand behind this 
type of loss and this type of loan and this type of a run on a nation. 
And once we make this exception, once we start down this road, how do 
we turn our back the next time and say well, we could do it for Mexico, 
but we will not do it for Argentina, we will not do it for Brazil or 
Thailand or for India or France, you name the country, and fill in the 
blanks. This is precedent setting.
  This is not Chrysler Corp. which this United States of America and a 
lot of our workers have a great amount of investment in. This is not 
New York City, which is a vital city and an important part of our 
Nation. This is an investment by the American taxpayers in foreign debt 
where the big money-grabbers went in and when the heat got turned up 
too tough, they turned around and grabbed their money and ran off 
shore, including those who are big money people in Mexico.
  Mr. DeFAZIO. If the gentlewoman will yield, I think the interesting 
thing for our colleagues to realize for those listening is that what 
Alan Greenspan, head of the Federal Reserve Board, and Robert Rubin, an 
ex-managing partner of Goldman, Sachs, now Secretary of the Treasury 
said to us, representing the people in Congress: ``What are you 
concerned about? This is only a loan guarantee. There is no risk to the 
United States. In effect we are only a cosigner.''
  Well, wait a minute. When I go to the bank to buy a car, they do not 
ask me to get a cosigner. When somebody with bad credit goes to the 
bank asking to
 buy a car, they want a cosigner. We are cosigners because we know 
Mexico does not have good credit. There is nothing underlying these 
massive loan guarantees except the full faith and credit of the U.S. 
Treasury, which is part and parcel the taxpayers of the United States 
of America, $40 billion at risk for the taxpayers of America. For what? 
So we can continue to encourage United States corporations to move 
manufacturing jobs to Mexico, so we can run a trade deficit with 
Mexico.

  If we assume that Mexico can meet these obligations, we have to 
assume there will be a massive turnaround in their current accounts 
deficit. They had a $28 billion current account deficit this year. They 
say next year they will cut it in half. There is only one place they 
can get that. They are assuming by saying that they will be running a 
trade surplus with the United States of America of tens of billions of 
dollars in coming years, and we all know when you run a trade surplus 
with someone, you are profiting and your people are working. When you 
are running a deficit, you are exporting jobs.
  We are about to enter into the same category, in fact we did in 
October, with Mexico as we have with every other one of our trading 
partners. That is, we are going into deficit, and we cannot keep on 
piling deficit upon deficit in our balance of international trade any 
more than we can the Federal Treasury.
  It looks like with the balanced-budget amendment we are finally 
waking up to fiscal reality here in Washington, DC, with the domestic 
economy. But what about the foreign economy? How can we run a trade 
deficit and expect to have jobs and accumulate wealth and an increased 
standard of living? How can we run a trade deficit with Mexico and 
export our manufacturing jobs and expect to increase wages and better 
working conditions and have jobs for people here, and we are going to 
pay $40 billion for this privilege? It is outrageous.
  Ms. KAPTUR. If the gentleman will yield, I am reminded of a sad irony 
in all of this. When you think with the very companies, big companies, 
we are not talking about little fish now on Main Street, we are talking 
about big fish that can move their production anywhere in the world to 
take advantage of cheap labor, those very corporations as well as the 
big banks, the investment banks, the speculators who supported them got 
in trouble, and now the very ones who divested investment from the 
United States and went elsewhere and got their tail caught in the 
wringer are coming back to the U.S. taxpayers to bail them out. I think 
it is one of the saddest ironies, and I really feel I almost want to 
say, you know, if you are going to be a man, be a man, stand up for 
your investment, at least eat the loss and do not come back to the very 
people you turned your back on in the first place.
  Mr. DeFAZIO. If the gentlewoman will yield, I was in the elevator, 
kind of in the back, there was a big crowd a little while ago. A number 
of conservative Members, Republicans, got on the front, and they were 
talking with some concern saying, you know, what this is about is, you 
know, we are putting the U.S. taxpayers on the line and really we are 
going to stick it to the peasants in Mexico because their standard of 
living is going to go down under their amendment. It is all to bail out 
the big banks. But the good thing is it is being identified as a 
Democrat program because it is the President and the Secretary of the 
Treasury who are so visible on this.
  I piped up from the back and said, ``You can't pass it with 
Democratic votes in the House.'' So it is not something for our 
Republican colleagues to be listening and saying they are going to be 
able to pass blame to the White House and to the Secretary of the 
Treasury because they are out to lunch on this issue. It can only pass 
in the House and the Senate if the Republicans support it, because they 
are in 
[[Page H291]] the majority and they run this institution.
                              {time}  1800

  So if there is a bailout of Mexico, it is the Republican 
congressional bailout of Mexico, hand in complicit with the Secretary 
of the Treasury and the President of the United States who happen to be 
Democrats on some days.
  Mr. KLINK. If this passes, there is enough blame to go along for both 
parties. I agree with the gentleman.
  We are being told there are three things ultimately that led Mexico 
to be in this position. No. 1 is the fact they have had the civil 
unrest in Chiapas. We have no guarantee that situation is going to 
change, in fact, the Mexican Government will not continue the military 
operation against the rebels in Chiapas and the rebels will not 
continue their action against the Government.
  Also, the assassination of then Presidential candidate Colosio; we 
have no information, again, the political situation in Mexico has been 
remedied. Indeed, the same party is in power now as has been in power 
for some 80 years.
  The whole question then is that we are also being told, well, there 
is an uncertainty having to do with NAFTA. At the risk of saying, ``We 
told you so,'' we told you so. And the fact of the matter is if you 
just took a look at the first 6 months under NAFTA, imports from Mexico 
to our country increased by an unprecedented 21 percent. In the same 
time period, we had a 32-percent decrease in the same period of time in 
our overall trade surplus with Mexico.
  Now, all of a sudden the peso is devalued. What does that do? 
American goods in Mexico become more expensive. The Mexicans cannot 
afford them. Their salary, because they are being paid in pesos, is now 
40 percent less than it was. Their goods and services become cheaper to 
sell here. We are already paying the price.
  Yet we have no guarantee the situations which led Mexico to this 
financial crisis are going to be remedied. We have absolutely no 
guarantee at all.
  Ms. KAPTUR. I am glad the gentleman brought up that point. We just 
came out of a meeting with the Secretary of the Treasury of our Nation 
along with the chairman of the Federal Reserve.
  One of the questions I asked them, as a democrat with a small ``d,'' 
I really do believe in democracy, I really believe in every single 
person being able to
 develop to their full human potential whether they live in the United 
States, whether they live in Mexico, whether they live in China, 
whether they live in Cuba, wherever they live, I believe in people 
first. That used to be somebody else's motto. I have not heard it 
talked about a lot.

  We ask the question, ``Look, if the United States is going to be 
giving this big bailout of guarantees to Mexico, what conditions are 
being put on this money to expand democracy in Mexico?'' I asked the 
question really in this way: I said, ``Which political parties down 
there are sitting around a table talking about the stabilization 
plan?'' And basically we were told the ruling party may be talking to 
some of the other parties, ``But, of course, we haven't been in any of 
those meetings,'' so it is business as usual.
  That nation will not only suffer those huge wage decreases because of 
the peso devaluation, but whose productivity has been increasing 
because they work under very, very difficult conditions, they have been 
working very hard, and their wages have consistently been cut and cut 
and cut in 1993 and 1994, and now this cuts it by another 40 percent. 
Who is the voice for those people?
  I believe in democracy so much; I believe the President of our 
country and the leadership of this Chamber should be a voice for 
democracy not just in the United States but in all of these other 
nations that want to talk about trade, because after all, America and 
this continent should be more than just deals, deal after deal by 
private companies. It should be about using whatever power we have to 
build democracy and to treat people fairly, to treat them right, to 
treat them with respect.
  So I am glad that the gentleman brought up that particular point.
  Mr. DeFAZIO. On that point, if the gentlewoman, I know she remembers, 
during our discussions leading up to NAFTA, we were told one reason so 
many U.S. corporations were avid for the NAFTA agreement was because 
there were no labor limitations on it. In fact, they were assured by 
the ruling party they would not allow free labor unions. They would not 
allow collective bargaining for wages. In fact, they guaranteed that 
they would cap wages or depress wages, as they have done over the last 
decade. Now, this is the biggest drop in wages they have managed so 
far, a 40-percent drop in wages.
  Yet somehow, as I recall, I believe his last name is Salin, the 
largest billionaire in Mexico, somehow he knew the day before the 
devaluation to change his pesos to dollars. A few of the other 
billionaires in Mexico somehow, they had really good advice. Of course, 
they were not getting it under the table from the authorization party 
which they financed with $500 million in contributions last year. No, 
of course not. This was the free market at work.
  Ms. KAPTUR. What is really very interesting that our people should 
know about, when we say the smart money left Mexico before the peso 
devaluation, we are talking basically about the 30 or so ruling 
families and their friends. So they take the money out of Mexico which 
helps to contribute to the problem of that banking system in that 
nation, and if you look back in 1991, there were two billionaires, and 
that is with a ``b'' in Mexico. Today there are 24 billionaires in 
Mexico as best as we can calculate after NAFTA locked in, which means 
some people have been getting very, very, very rich, and the majority 
have actually had a downward pressure on their wages and their life 
style has been made much more difficult.
  And I think what is interesting, if you look, and the gentleman may 
want to go into this, if you look at what Mexico has been importing 
from the United States over the last year, what really surprised me, 
when you went over those figures, the other day that the third highest 
import from us was art.
  Now, I am a member of the Toledo Museum of Art. I think I can draw 
pretty well myself. I love artists. I love music. I am not speaking 
against artists here. It surprised me in a nation where the average 
family earns under $1,500 a year that art would be the No. 1, in the 
top three.
  Mr. DeFAZIO. The big winner was tobacco. Our tobacco exports went up 
dramatically. They had the largest percentage increase. Art, 
collectibles, antiques, and precious jewelry and so forth were No. 3. 
Now, that may put a few people, you know, who have got expensive 
boutiques and stores in Manhattan and a few places to work and make 
them happy, but I do not think it is putting very many Americans to 
work. I do not think it is helping very many average artists or 
craftsmen.
  Could I just get parochial for a moment? Last year the Pacific 
Northwest's entire delegation,
 Republicans and Democrats alike, had a lengthy series of discussions 
with this administration about refinancing the debt of our regional 
power authority, the Bonneville Power Administration, because we have 
had and seen political calls by the Reagan administration, the Bush 
administration, and now this year the Clinton administration to do a 
punitive refinancing of our debt.

  So we said, ``OK, fine, we will go to the private sector and finance, 
refinance, this debt,'' and we got the entire delegation, Democrats and 
Republicans, to agree.
  The Office of Management and Budget would not let us do it. They said 
they could not count it as a plus under the budget rules, so we could 
not do this.
  But somehow Mexico wants $40 billion of loan guarantees, and that is 
OK; we are not worried about the budget rules here anymore, because 
this is national security, folks. Those little people up in the 
Northwest, well, gee, sorry, we could not help you out with your 
refinancing of EPA, but Mexico, $40 billion, no problem.
  Ms. KAPTUR. Reclaiming my time, I come from one of the highest-cost 
energy areas in the United States of America, and the reason is because 
in our region we never had federally subsidized power, and we built 
nuclear power plants. They were built with private money, private-
sector investments. They are investor-owned utilities. We have been 
trying to figure out 
[[Page H292]] a way to help reduce energy costs to our people, and it 
has been a heck of a problem for us to get our hands around, and we 
always get the door shut in our face. Well, maybe not shut in our face; 
people treat us very nicely when we talk to the Department of Energy 
and even the Vice President's office, but when it comes down to really 
getting help so we can maintain our manufacturing base and reduce these 
energy costs as a percent of doing business, we get absolutely no 
Federal help.
  And I am so glad you brought up that point, because I would say that 
is the chief reason that we are losing jobs from our part of the 
country, because of power costs, and yet our own Government would not 
respond to us.
  But within 1 week in this Capitol when Mexico needed help, the Chair 
of the Federal Reserve, who never comes out of the building, has been 
all over the Congress, has been up at the White House, up at the 
Treasury, the Secretary of the Treasury running all around here. It has 
been very interesting to see what it takes to get the attention of the 
top officials of this Government.
  Kind of sad.
  Mr. KLINK. If the gentlewoman will yield, it reminds me, and we can 
go back further; I remember back in the early 1980's, and I mentioned 
it on this floor many times, of the 150,000-plus manufacturing jobs 
that were lost in southwestern Pennsylvania in the steel industry and 
many other industries. But as factories were closing and there were 
other countries that wanted to come in because of the work force, 
because of the infrastructure, because of the transportation system, 
they wanted to keep some of those factories open.
  Now, granted, you may have a steel mill that was employing 2,500 
people. We may be able only to save 1,000 jobs.
                              {time}  1810

  So we are going to have a net loss of 1,500 versus a net loss of 
2,500 if that plant shuts down. At that time we were told, ``Well, it 
really doesn't behoove the company that owns it to sell it because they 
are better off under our tax laws to just close that plant, scrap it, 
and take the writeoff.''
  Now, we could not react to that. We could not change something to 
save thousands of jobs, and I know in Midland, PA, that actually did 
happen. There Colt wanted to come in and buy up a steel mill that was 
being shut down. Nothing could happen. Yet Federal dollars came in a 
year later for job training, and the community fell apart--in fact, 
today those students in Midland, PA, have to go to school in Ohio 
because their school district shut down because of the dwindling tax 
base. We could not do anything for our people. Again there is not a 
problem here with going down to Mexico and getting $40 billion that we 
found, off-budget. We could do it. This is a question the people of my 
district and, I hope, across this entire country have about this $40 
billion bailout. How can you change the rules? Why all of a sudden are 
we protecting those who rushed down there to make investment?
  I think that is what is really going on. Those of us who oppose 
NAFTA-- and I do not want to speak for all of us--it was not because we 
were against the idea of a North American Free-Trade Agreement. We were 
not the isolationists that everybody wants to portray us as. This is 
just a bad agreement. I think history, in a relatively short period of 
time, has shown us that it was a bad agreement. But the fact of the 
matter is that we were told, at that time, we cannot have protections 
for the workers in Mexico, we cannot have environmental protections, we 
cannot push for political reforms. It is the wrong thing to do. We 
could have these side agreements that really do not hold water, that 
really do not amount to anything, that really were not actually voted 
on on this floor, in this Chamber. Now we are being told that even 
though they are coming to us with this $40 billion, ``Well, we can't 
attach too many protections. We can't really go off-line with this. We 
want to keep this strictly financial because there are so many 
different opinions politically throughout the House and the Senate and 
across this country.''
  Why not? If Mexico is in such dire need, if they really need this 
line of credit, if it is to their national interest as well as our 
national interest, why not, when you are in a position to bargain, 
bargain?
  We are being told that we cannot muddy the agreement, this has to be 
a clean deal, it has to be $40 billion, there is no risk. It is not on 
budget, but the Government has to do it because the private investors 
will not do it. Why will they not do it? Because it is not such a good 
deal.
  Ms. KAPTUR. Reclaiming my time for just a second, I want say to both 
gentlemen I think the point that the gentleman from Oregon [Mr. 
DeFazio] raised is an important one, as well. Remember now the Congress 
is in control of the Republican Party, and if this deal passes, it is 
on their doorstep.
  I often ask myself why is it so difficult for our message to get out? 
We are using this time on C-SPAN because we know we can reach some of 
the American people. When we try to get on the evening news or try to 
get on those Sunday morning talk shows, they do not invite us on. Even 
when you call in and you want to speak on this, you are not invited.
  Why do we not have a right to have our opinion heard in this country? 
Only those who have one position are being heard.
  So I challenge the American public, try this sometime when you are 
watching the evening news or you are watching those talk shows on 
Sunday morning, when you are trying to learn about your country and the 
decisions facing your elected officials, see who the advertisers are.
  Do you know that to buy one of those national ads--I know in my 
district, to buy 30 seconds costs $3,000. When you buy one of those 
national ads, it must be megabucks.
  I was listening over the weekend to the people who say we should do 
this, people in our Government who were on the news saying this is 
something America should do. All I did was I sat there during the 
commercial breaks, and I said, ``OK, which big corporations, 
multinationals, are sponsoring this show?'' Then I know what opinion 
would be heard. I never used to be that cynical, but I have become that 
cynical about what information leaks out of Washington, simply because 
it has proven to be true. You get only one side of the story which gets 
told.
  I yield to the gentleman.
  Mr. KLINK. If the gentlewoman would yield for just one moment, I have 
spent 24 years in broadcasting. I was the newscaster on the other side 
of the camera, and I saw something which was very disturbing in my 
later years in broadcasting, when, all of a sudden--and I began 
broadcasting back in the 1960's--then there was always a line of 
demarcation between the sales office at the radio or television station 
and the newsroom. That line evaporated completely sometime during the 
early 1980's.
  All of a sudden there was communication as to the ramifications of, 
``Well, we are all in this together; if the moneys don't roll in, you 
understand, Ron, we will not be able to pay your contract for the next 
couple of''--those kinds of things were being said gently. Believe me, 
I think it has an impact.
  I would imagine that in some instances it is not quite that subtle. 
But the fact of the matter is our story has not gotten out. We have not 
had access, not only to the broadcast media but to the major newspapers 
as well. We had a press conference last week, and the gentlewoman was 
there, one of the key people, along with the gentleman from Oregon [Mr. 
DeFazio]. I challenged the people, ``Now, your tax dollars are going to 
begin to pay this.'' At that time it was only $18 billion. Now it has 
more than doubled. Yet their tax dollars are going for it, and yet they 
still are not getting out, even in counterbalancing the story.
  Now, you still want both sides. If we are wrong, at least report our 
side of the story and say that we were wrong. But we get absolutely no 
coverage at all.
  I think the gentlewoman put her finger on it because I believe the 
advertising executives and reporters are talking a little--if not the 
reporters themselves, their editors are talking and having lunch with 
those advertising executives.
  Mr. DeFAZIO. I think it is extraordinary; we did have a lot of press 
in the room when we made the announcement. Certainly, I guess, they did 
not 
[[Page H293]] have much else to do because they killed about 40 minutes 
filming us and photographing us. But it did not run in any of the 
national media when we were talking about the problems with the 
bailout, the problems with the NAFTA Agreement that came to pass. But 
what did run, the lead--and I happened to watch some of the
 networks--was President Clinton handing the Prime Minister of Japan a 
basket of apples to say everything is now going to be OK in trade 
because the Japanese finally are buying United States apples.

  I am happy for my fiends in Washington State that their apples are 
going to Japan. That is great. But at 50 cents an apple, with a $60 
billion trade deficit with Japan, all we have to do is sell the 
Japanese 120 billion apples this year and we will be in trade balance. 
That is a great deal. Now, that is going to be a lot of apple-eating 
for the Japanese.
  Mr. KLINK. If the gentleman will yield, only if those apples are 
computers can we make up the difference.
  Ms. KAPTUR. I would just say--and this will probably get me in 
trouble--but one of the big advertisers on this past Sunday morning, I 
ask the American people to check me out if this is not true, there is a 
company in Illinois called Archer-Daniels-Midland Co.
  The SPEAKER pro tempore (Mr. Weldon of Pennsylvania). Will the 
gentlewoman suspend? The Chair will remind all Members' remarks should 
be addressed to the Chair. It is not in order to direct remarks during 
the proceedings to persons viewing the proceedings in the galleries or 
on television or even other Members who are not being present in the 
Chamber who might be viewing the proceedings on television.
  The gentlewoman may proceed.
  Ms. KAPTUR. I thank the gentleman.
  This particular show was one of the major news shows, and I sat there 
and I listened, and I thought, ``No wonder we cannot get our story on 
out on why NAFTA had flaws, and who is going to actually end up holding 
the bag on this peso bailout of Mexico.''
  Archer-Daniels-Midland was one of the biggest promoters of NAFTA, 
without the side agreements that we wanted in there. They are a sponsor 
of the show. Why would a sponsor want anyone to say anything that did 
not agree with their own private interests? This is all a matter of 
news record.
                              {time}  1820

  Right after NAFTA was passed, the Prime Minister of Canada, who was 
one of the biggest proponents of NAFTA, Mr. Mulroney, was appointed to 
the board of ADM. This is amazing. It would be like the President of 
our country being appointed to a major corporate board that was 
supporting this kind of an agreement, and to get a seat on that board 
you are paid between $37,000 and $100,000 a year. I was really--I 
thought, in terms of the ethics that I agree with, there should be a 
cooling-off period. The chair was still warm. The ink on the agreement 
was not even dry, and I just used that as an example because that 
happens to be a very powerful corporation in our country with very 
definite interests, including that you hear the news in a certain way. 
I really--I never realized how significant it was, but it absolutely 
does color public opinion.
  Last week we sent a--I wanted to mention to the gentleman also in 
talking about the power interests in the Northwest, ``When I watched 
our Government get all worked up over the past couple of weeks and, 
with lightning speed, come up with this loan guarantee to Mexico, I 
thought about all of the problems in my district.'' The gentleman said 
he wanted to become parochial.
  I cannot get a loan guarantee to clean up the Ottawa River in Toledo, 
OH. It is a multi-billion-dollar cleanup problem that we have with all 
the toxic sites along that river, and we are told by our Government, 
``Sorry, Congresswoman, we can't take care of your district because 
frankly we don't have the money.'' They will not give me a loan 
guarantee so that our mayor, and our local officials and our county 
officials can clean up that toxic river that flows into Lake Erie.
  We are trying to get a radio control tower built out at our airport. 
We have had some pretty close calls, and we are told we are not high 
enough up on the priority list, so our pilots and our passengers, our 
private pilots and so forth, have to keep coming into that airport. I 
cannot get them a loan guarantee to guarantee the construction of that 
tower.
  We have a railroad station we have been trying to fix up with dribs 
and drabs of Federal money plus a lot of local support from our port 
authority back home. We want to build a parking garage, a secure 
parking garage, next to this railroad station so that people can park 
their cars there if they go on a 3-day weekend to Chicago, or Toronto, 
or wherever they go, and feel secure. I cannot get a loan guarantee 
from Washington to help my people back home.
  So, part of the reason I ran for office is I want to help people. I 
want to help my people, the people who sent me here, and decisions like 
this do not go down very well when you cannot do as much for your 
people back home as certain very powerful interests can do in this city 
for people who do not even live here, for interests in Mexico, for 
people who have absolutely no interests in my district, and if I were 
to give Mexico one gift, first it would be the gift of democracy, to 
use the relationship with this country, be it political, be it 
business, be it cultural, to help the people there finally gain a 
voice, because I believe you can only have free trade when you have 
freedom first, and that politics does matter, and that it has to be a 
precondition for any kind of economic assistance or trade. We could 
never get that in the NAFTA accord as it was originally signed.
  So, as we stand here tonight, a lot of the people call my office and 
say, ``Why are you standing down there on the floor talking when 
legislative business
 is largely complete for the day?''

  I guess the answer is ``Because it's the only way we can really reach 
the public.''
  Mr. KLINK. If the gentlewoman would yield, again I thank her for her 
leadership on this matter. I say, ``You have helped us--again I speak 
as a relatively new Member--you have helped to guide me through this 
process,'' and, ``It's also very nice,'' I say this also to the 
gentleman from Oregon, ``to know that you're not the only one who 
thinks this way.''
  We have lost the initial battle on NAFTA; we have lost the battle on 
GATT in a lame-duck session of Congress. The gentlewoman pointed out 
those Americans out there that have invested in United States savings 
bonds have no idea what the GATT agreement meant to them, and so I 
would simply say that we have got to persist, we have got to make sure 
that those parochial projects, like all you have talked about that 
affect the lives of taxpaying American citizens, that impact the 
creation of jobs in the United States of America, the wealth, the 
security, the lifestyle of American citizens, is in fact the day-to-day 
business of this House, and we also need to understand, and I do not 
want to repeat something I said earlier, but once we go down this 
pathway, the pathway that has been laid out for us to guarantee these 
loans to Mexico, when could we ever say no again? It is historical, it 
is setting a precedent, and I hope that the taxpayers will react, and I 
hope, as Members of Congress, we react.
  Mr. Speaker, I just hope that this House will not lend its OK to this 
inane idea.
  Ms. KAPTUR. I wanted to just reclaim my time for a second.
  I found it almost laughable today as I sat there and I listened to 
the Federal Reserve talk about taking our taxpayers' dollars to prop up 
Mexico in this little mechanism that they have set up when the very 
same Federal Reserve testified up here in Congress last week and said 
to every senior citizen across this country, ``One way we can save 
money here in America and balance the budget is give you $10 less in 
your Social Security this next year.''
  Now I find it amazing that the same words could come out of the same 
institution's mouth in the same week; in other words say to our people, 
and believe me I have a lot of seniors in my district. They like to be 
close to their family. They did not move away. They depend on that 
Social Security check. Sure, there may be some at the top that earn a 
lot of money, but the average Social Security recipient in my district 
receives $400 to $600 a month. It is not a whole lot of money.
  [[Page H294]] So, we have a lot of need among our seniors, and yet 
the Federal Reserve can so--it just shows me how far away they are from 
the public that they could actually come up here and say to our 
seniors, ``We want to take $150 billion from you, but then out of this 
pocket we're going to put up $40 billion of your dollars for Mexico.'' 
It was appalling to me.
  Mr. KLINK. If the gentlewoman would yield, it was my understanding 
today from the people from the Fed and Treasury that this has been 
going on for at least a year in Mexico, the bad monetary policy. Is 
that the gentlewoman's understanding?
  Ms. KAPTUR. That is correct.
  Mr. KLINK. Yet in 1 year Mexico did not make any attempt to go 
through a devaluation of the peso. I think the gentlewoman in past 
discussions has made some wonderful points about the timing of this 
devaluation.
  Ms. KAPTUR. Well, you know it is very
   interesting, and I think those in the know in Mexico were very aware 
of what was going to happen, and that is why they took their money out 
of the country, because the elections in August--the elections in 
Mexico were in August. So they did not want any problems in the market 
before August, so they propped up the peso through August. Then we were 
considering GATT, the General Agreement on Tariffs and Trade, here, and 
they did not want any trouble in America. So we delayed that vote until 
we got back after elections in December, so they kept delaying it, and 
delaying it, and delaying it.

  Then Mr. Salinas left office. The new President was sworn in. GATT 
was finished, and that is when they devalued the peso. But by then 
their friends knew, the 30 ruling families down there; they had already 
taken their money out of the country. They bought art to insulate 
themselves against any currency fluctuations, and Members of this 
House, and I will put on the record the gentleman from Buffalo, NY [Mr. 
LaFalce] because he worked so hard to get currency provisions in the 
original NAFTA. Nobody tried harder than he did. He educated all of us. 
He tried to help to make that agreement a stronger agreement to avoid 
this kind of catastrophe and was unable to finally get provisions in 
the final agreement. In my estimation he has some aspects of heroism in 
what he tried to do there, but there were plenty of people that cashed 
in, and now our people are left holding the bag.
  Mr. DeFAZIO. And they are saying we could not have possibly 
anticipated this.
  Well, it is strange. It is strange that we stood on this floor 14 
months ago, backed by credible economists who said, ``Today, as you 
vote on the NAFTA agreement the Mexican peso is overvalued by 20 to 25 
percent to make them look more attractive as a partner for the United 
States, to make them look as though their currency is stable. But it's 
inevitable after the passage of NAFTA they will have to devalue the 
peso by 20 to 25 percent.''
  And now we are told by the Secretary of the Treasury, a former 
partner in one of the major investment firms in this country, that no 
one could have anticipated this. Well, the economists we talked to, who 
gave us a very critical analysis of NAFTA, could certainly anticipate 
it, did, and we are right on the money. In fact, they were a little bit 
overly optimistic about Mexico because we are talking the free market 
says the Mexican peso should actually go down 40 to 50 percent, and 
whatever happened to free-market forces? Where is the free market when 
we need it? If the market says the Mexican peso should be worth half as 
much, should the United States Government intervene to artificially 
prop it up?
  Ms. KAPTUR. Will the gentleman yield on that point because last week 
I sent the Secretary of the Treasury a letter signed by several of our 
colleagues, including yourselves, and one of the questions we asked him 
is: ``Because you are artificially propping up the peso because Mexico 
owes money, to whom does Mexico owe money specifically?'' In other 
words, it can't make $26 billion worth of debt payments, $10 billion in 
this first quarter. Those sound like big numbers. We want to know which 
banks, which corporations, if it is part of the Eurodollar market, to 
whom is this money owed? If it is investment banks, speculators in the 
market, which ones are they? This is not just owed in general. This is 
owed in specific, and there are huge banking profits this year and last 
year. They have been doing real, real well. Why do they not have the 
capacity to eat their own losses? What about these big investment 
banking houses? The speculators? And I appreciate risk-takers. But that 
is what risk is. Risk is taking the loss if it does not go your way, 
and you take the gain if it does go your way.
                              {time}  1830

  So which investment houses? I want to know specifically, before we 
vote here on this floor, who is this $26 billion owed to? And there is 
another $89 billion that Mexico owes payments on for their full public 
debt. To whom is that owed? You are talking about $40 billion, 
Congressman Klink. There is the first $18 billion from the currency 
swap and the line of credit last week. Then there is this $40 billion. 
Then there is the $89 billion that they still owe. Now, to whom is that 
owed? And why should our taxpayers be propping up those corporations, 
those megabanks, those multinationals that moved jobs out of this 
country. I mean, what is the sense of it? If they are making profits 
and if they have cash, why don't they pay it off themselves? That is 
what you do, you write off losses.
  Mr. KLINK. If the gentlewoman would yield, we are being told this not 
propping up the peso but that we are restructuring short-term loans, 
30, 60, 90 days, to 5 and 10 years. Why can't that be negotiated with 
those same people or institutions the gentlewoman is talking about? Why 
do the American taxpayers have to become a party to this? If we are 
just taking short-term debt and transferring it over to 5 to 10 years 
to make it long-term debt, why can't Mexico just renegotiate that with 
the people to whom it is owed, because certainly renegotiating on 
longer terms is better than absorbing the loss.
  Ms. KAPTUR. I think the gentleman raises a good point. I cannot tell 
you, with interest rates going up in this country, I have had builders 
and title people in this country complaining, gosh, there aren't any 
real inflationary pressures. Why are interest rates going up? I would 
posit maybe one of the reasons interest rates are going up is because 
your money is being taken to prop up the bank of another nation.
  We thank the Speaker for this time this evening, and I thank 
Congressman DeFazio and Congressman Klink, Congressman Abercrombie and 
all those who have joined us this evening.


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