[Congressional Record Volume 141, Number 11 (Thursday, January 19, 1995)]
[House]
[Pages H383-H390]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           FOREIGN TRADE POLICY RELATIVE TO BAILOUT OF MEXICO

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio [Ms. Kaptur] is recognized for 60 minutes.
  Ms. KAPTUR. Mr. Speaker, I listened with great interest to my 
colleagues on the importance of keeping our national accounts in order. 
I have come to this well over the last decade of my service in the 
Congress echoing those very [[Page H384]] same concerns, especially as 
it relates to our people's ability to earn decent incomes in America 
and to benefit their families through their hard work as well as 
through gain-sharing in the workplace, where people in our country work 
very hard, they should gain from the productivity that they have been a 
part of increasing, and, therefore, I am a great supporter of all types 
of programs, for employee stock ownership, for worker gain-sharing so 
that people in our country can become self-sufficient. For too long 
Washington has turned a cold ear to so much of what has been happening 
across our country in the streets and blocks of our neighborhoods.
  This evening I come to the floor to talk about the connection between 
people's jobs and their incomes and our foreign trade policy, because 
one of the biggest budget-busting items that is likely to come before 
us next week has to do with the bailout of Mexico that will be put on 
the backs of our taxpayers, and of all things they want to put it off-
budget, which means that as we consider this vote next week, and as I 
understand it, no hearings are going to be held in the House of 
Representatives on this issue. This bill is going to be moved only 
through the Committee on Rules at the will of the Speaker and will be 
brought here to the floor without any of the hearings that are normal 
procedure for a measure of this magnitude which already has cost our 
people over $18 billion--that's with a B--in lines of credit extended 
to Mexico, largely to hold up, to prop up the speculators on Wall 
Street who wanted to make big money in Mexico but now are not willing 
to eat their own losses, and we are told a bill is going to come here 
next week ringing in somewhere over 40 billion additional dollars, 
pledging the full faith and credit of the taxpayers of this country. 
Yet we cannot even have hearings in the subcommittees and full 
committees of jurisdiction in this Congress.
  What is wrong? What are people afraid of? How can we even think about 
having a debate on a balanced budget amendment when we can exempt major 
expenditures such as the bailout of the Mexican peso and the Wall 
Street speculators who now want to reach into the pocketbooks of our 
people?
  I want to put on the Record tonight that for 1994, last year, the 
latest bad news unfortunately has come in on our Nation's continuing 
trade hemorrhage with the world. This means we are still sucking in 
billions of dollars of imports more than we are exporting goods abroad. 
In fact, the 1994 ledger is dripping with even more red ink and more 
good jobs lost in our country.
  In fact, just in the month of November, America had a trade deficit 
of 10.5 billion additional dollars--that means more imports coming in 
here than our exports going out--and just in that month alone, over 
200,000 more jobs lost in America.
  For those who listened to my remarks yesterday, yesterday morning, 
7:30 in the morning, in Medina, NY, Fisher-Price/Mattel Co. gave the 
pink slip to 700 more workers in our country who were told, ``It's time 
to go home. Your jobs are moving to Mexico.''

                              {time}  1700

  Fisher-Price/Mattel does not make one Barbie doll in the United 
States. Yet they have millions and millions and millions of dollars of 
sales in our marketplace, and their product is not cheap, $29 to $200 
for one of those little dolls. Each little girl in American owns 
between 8 and 12 of those today. They basically have shut down their 
production in this country.
  The trade deficit is related to your job, my friends, because if you 
do not have production located in your community and you have 
essentially out-sourced the real productive wealth of your community, 
you will have lower-wage jobs, you will have jobs without benefits, you 
will have part-time work, you will be downsized, you will be out-
sourced. Until you understand the connection between international 
trade, your job and your pocketbook, 1994 will be known as the year in 
which the United States suffered the worst trade deficit in history. 
And for every billion dollars of trade deficit we lose an additional 
20,000 jobs in this country. So that means for 1994 over 3 million more 
good jobs slowly disappeared.
  Probably, unless you live in these communities, you do not even know 
it happened. It is like death by pin pricks as companies shut their 
doors, like Mattel did yesterday in New York, and the list goes on and 
on and on.
  Nineteen ninety-four will be remembered as the year that NAFTA was 
implemented, and that trade agreement really kicked in and continued to 
put the tourniquet around the workers of the United States. It was the 
year GATT was signed and we will continue to lose more jobs. And the 
year that we ran up over $155 billion more in trade deficits, more 
imports coming in here than exports going out.
  It is hard to find anything made in America. In fact today I had a 
rather humorous experience if you want to think about it. People here 
in Washington are running around with little pins on that say Contract 
With America. But look at the button, it was made in Taiwan. I just 
shook my head. We do not even make buttons in this country anymore.
  Over 3 million Americans could have been more productive in our 
country last year if the trade deficit had not been so bad. And, you 
know, the amazing thing about it, prices are not going down in our 
country; profits are going up, prices are going up. The only thing that 
is coming down is workers' wages and their buying power.
  Something pretty fundamental is happening to the economic wealth, 
productive wealth of this country, and Washington better understand it, 
because it is at the nub of the unrest across our country.
  The latest trade data that has come in has special significance as 
Congress considers a bailout of the Mexican peso. And it is really a 
bailout of the Wall Street speculators because our former trade 
advantage with Mexico, which is what they said we had to pass NAFTA 
for, because America would continue to make money off of that deal, as 
that trade deficit got worse last year, guess which country we began 
moving into the red side of the ledger with? Our third largest trading 
partner, Mexico.
  In the month of October, for the first time in a generation, America 
accumulated a negative trade debt with Mexico. And in November the red 
ink quadrupled to over $370 million in the red, just in November.
  America's trade advantage, my friends, with Mexico, has now 
disappeared. The advantage has disappeared in less than a year, and now 
Mexico has its hand out to us to prop up that country's debts that are 
owed to our Wall Street investors.
  When the peso fell 40 percent in December in value, the United States 
is going to see a continued slide into red ink with Mexico as their 
exports and the prices of those exports become more attractive in our 
market and our goods down there become too expensive for them to 
purchase. Mark my words, the slide is slickening every single month.
  Let me now tell you more about the biggest budget buster that this 
Congress is going to be asked to vote on next week, with no hearings in 
the committees of this Congress, which essentially means you as a 
people cannot know. And it is going to hit our taxpayers very, very 
hard, in the wallet, with the jobs that they will lose to a much 
cheaper wage environment. You are going to pay in higher interest 
rates; you are already paying in higher interest rates because the 
market has discounted those losses. And you are going to pay in 
continuing obligations in increasing long-term debt that you will have 
to pay, because in effect what they are asking is for our people to 
become Mexico's insurance company, for the North American Free-Trade 
Agreement, NAFTA, sure is not free. We have lost a company a day to 
that nation since the agreement went into effect.

  Most Americans did not realize that, when NAFTA passed, at its heart 
was an investment guarantee to the Wall Street speculators, the 
multinational corporations, and the megabanks that in fact you as 
taxpayers now have to back up.
  If the gamblers went belly up in Mexico, the United States 
essentially had pledged your full faith and credit, and now the bills 
are coming due. Fifty-eight billion dollars for beginners.
  In fact U.S. taxpayers are now going to pay dearly and not just in 
more lost jobs. That is bad enough. But without a [[Page H385]] vote of 
Congress, last week our U.S. Treasury and Federal Reserve opened our 
lines of credit to Mexico to the tune of $18 billion, your tax dollars, 
your deposits in the institutions of this country already sent to prop 
up the paper investments that the gamblers on Wall Street love to play 
with. And as far as the Government of Mexico is concerned, what this 
really amounts to is a new backdoor multibillion-dollar version of 
foreign aid, but they do not want to call it that, they do not really 
want you to see it as that, so they are using all kinds of fancy names, 
figuring most people have not gone to business school, most people do 
not have a degree in finance. So the $18 billion they extended they did 
not call what it really is, they called it a line of credit, they 
called it a swap.
  Now they are coming up here next week with a bill they are going to 
call a guarantee, and backing up the guarantee will be fees. There will 
be a commitment fee, a basic fee, a supplemental fee. There are so many 
different fees, but essentially all it is putting debt on top of more 
debt on top of more debt on top of more debt with higher interest 
rates, and more debt with higher interest rates that you back up with 
your tax dollars.
  No matter what you call it, you essentially are Mexico's insurance 
company. But ask yourself what is the collateral? What are your chances 
of getting your money back?
  Last week the Clinton administration and the Federal Reserve started 
bailing out Mexico with that $18 billion of our currency through the 
U.S. Treasury, our Federal Reserve. It took no vote of Congress to do 
that, they do not have to come here for 6 months under the current law. 
Now the administration is asking us to guarantee this additional $40 
billion in loans and there will be no hearings here in the Congress. 
Believe me, it is a bottomless pit.
  The troubling fact about these speculators from Wall Street is they 
are the very same people who gave us junk bonds back in the 1980's, the 
very same people who put all of these leveraged buyouts together, who 
threw white collar workers, blue collar workers, pink collar workers 
out of work across America because these very same people were so 
greedy that they cashed out corporations, they bought companies, they 
dried up their pension funds, they diversified those holdings, they 
essentially bled out the wealth of this country, they put it in 
different nations around the world where there is no cheap labor and no 
democracy. And notice now they are sending those goods back here, and 
now they are trying to do the same thing as a result of this Mexican 
deal.
  The troubling fact about being this kind of a banker, and I even hate 
to call it a banker, it is really a speculator form Wall Street, is 
that they can create money; I wish each of us could, even when there is 
no collateral to back it up. They have got powerful friends. Let me 
tell you, my friends, they have powerful friends in the Clinton 
administration, and they have very powerful friends inside this 
institution. They like to talk about free enterprise, and being 
beholden to the rules of the private sector.

                              {time}  1710

  But basically they are now coming and running to the Government 
because they are about to lose a big chunk of money. So when they have 
gotten in trouble, they have not followed the rules of the marketplace 
which is when you take a risk to that extent and you lose, you are big 
enough to eat the losses yourself and not come running to the taxpayers 
of our country.
  The Clinton administration is doing this along with the top 
leadership of this institution and taking this unprecedented action and 
doing it very quickly so that you do not really understand it, so you 
cannot complain and really have input through your elected 
Representatives here because the value of Mexico's currency has fallen 
by so much.
  Basically Mexico cannot pay its bills. It never has, and with the 
peso meltdown, keep this in mind, if you think about what is the 
collateral, its workers' wages have also been cut by 40 percent; the 
value of its people's savings accounts have been cut by 40 percent. Do 
you think they will be able to pay back what they owe us on top of all 
of the old debt that they still owe us?
  And I see our colleague from Vermont has joined us, the gentleman 
from Vermont [Mr. Sanders], and we are so happy to have him here this 
afternoon without question, and I know he has traveled the world, as I 
have; the pain of our people who have lost their jobs, the pain of our 
families who are worried about affording their mortgages and affording 
sending their children on to college, when they need help, they do not 
have the Secretary of the Treasury running around the corridors up 
here. They do not have the Speaker of the House running around the 
corridors for them. They do not have the Chairman of the Federal 
Reserve running around the corridors up here. They do not even return 
phone calls.
  But for this particular deal where their friends, and I underline 
friends, on Wall Street stand to lose $40 billion and should eat their 
own losses, believe me, they have worn out the carpets of reception up 
here. We may have to have a little congressional expenditure to replace 
the mats that have been worn out over the last 2 weeks as these 
meetings have occurred behind closed doors.
  Why should the Mexican people and the people of our country have to 
pay for the mistakes made by the Wall Street kingfishers and their 
friends around the world? Why?

  I yield to the gentleman, and I am so happy to see him here tonight.
  Mr. SANDERS. I want to thank the gentlewoman from Ohio [Ms. Kaptur] 
for her leadership role in this whole issue.
  You know, when we talk about the beltway mentality, and we talk about 
the degree to which Washington, DC, and the U.S. Congress are separated 
from the pain and the anguish of middle income America, I think you 
could not give a clearer example of that separation than this $40 
billion bailout for Mexico.
  Now, two things are happening at exactly the same time. The President 
and congressional leaders are talking about a $40 billion bailout. For 
a start, what we are hearing is that because we have a terrible deficit 
situation, it may be necessary to destroy our Social Security system 
upon which tens of millions of senior citizens exist. There is no 
question but that the Republican leadership has in mind massive cuts in 
Medicare, in Medicaid, massive cuts in nutrition programs for hungry 
children.
  So on one hand, what we hear every single day on the floor of this 
House is we have a terrible deficit situation; therefore, we are going 
to have to cut back on the basic needs, the substance, the substantive 
needs of some of the most desperate people in this country, because of 
the deficit. Then in the same breath what we hear is, well, we have got 
to protect Wall Street who are making investments in Mexico, and, 
therefore, we are going to have to cosign a $40 billion loan guarantee. 
That is No. 1.
  And the second line of rhetoric that we hear is that we are entering 
into an era of so-called personal responsibility. What we are saying to 
hungry children in America, we have 5 million kids who are hungry, we 
are saying, well, you know what, in the new United States of America do 
not expect the Federal Government to provide you with basic nutrition, 
and we say to the elderly people who have paid into Social Security and 
Medicare for their whole lives, do not expect the Federal Government to 
stand with you in your time of need. Personal responsibility. You have 
got to do it on your own. Right? No free lunch.
  But at exactly this same moment, we have investors who are interested 
in buying bonds from Mexico, bonds by the way which are paying 19- or 
20-percent returns.
  Ms. KAPTUR. One of the interesting points here is how people get hold 
of these bonds. You know, part of what Mexico owes is money that is 
owed on the old Brady bonds. For those of you who are TV junkies, maybe 
you know this, back in the 1980's, the early 1980's, there were all 
kinds of debt Mexico could not pay back. Then part of it was turned 
into these Brady bonds. The yield on Brady bonds was 40 percent.
  Can you imagine, just think if you owned those bonds. So part of 
these are [[Page H386]] being rolled over as a part of this new debt 
that Mexico has to pay to its creditors.
  Now, with this new group they are paying 20 percent at the moment, 
but, of course, it could go up. Would we not love for the depositors in 
our communities to be able to earn a 40-percent interest rate at their 
bank?
  Mr. SANDERS. But what I get a kick out of is in this era of personal 
responsibility it is not enough that you may very well, and probably 
likely, will earn a 20-percent rate of return on your investment, but 
we are saying to these very brave investors, ``Well, if you do not make 
that 20 percent, if the Mexican economy does not improve, if by some 
chance they are not able to pay you back, do not worry about it, Uncle 
Sam and the taxpayers are here to bail you out.''
  The irony, and I know you and I have discussed this earlier, the 
irony that some of the people that we are protecting are exactly the 
same people who have thrown American workers out on the street, taken 
their jobs to Mexico, now they are going back to these unemployed 
workers and saying, ``We want you to provide guarantees to the 
companies that are investing in Mexico today.''
  To say that is absurd would be, I think, a massive understatement.
  Ms. KAPTUR. If I might just reclaim a moment, last week I sent a 
letter along with several Members of Congress to our Secretary of the 
Treasury asking 14 very specific questions, since we are not going to 
have hearings here in Congress on this major bailout.
  I will not read all 14 questions, but just the first two, asking him 
to, please, expeditiously reply to these questions. No. 1, in view of 
the fact that U.S. banks are earning historic profits, why is this U.S. 
Government intervention in the form of a currency swap and lines of 
credit, this was the $18 billion from last week, necessary? When the 
private sector gambles and loses, should not those losses be borne by 
the private sector? That is question one.

  Question two is: To what specific banking and corporate interest does 
Mexico owe the $26 billion in outstanding obligations that come due 
this year, $10 billion due in this first quarter of the year, and $16 
billion of which is allegedly owed to United States interests, the rest 
being owed to Japanese interests and German interests? Which means our 
people's tax dollars would have to pay for foreign creditors to Mexico. 
And how much in additional obligations come due in 1996 and 1997?
  But the bottom line is specifically, not in general, to whom is it 
owed? Which Wall Street investment houses, which speculative investors 
that are out there in our country and elsewhere? If our people are 
going to pay this off, all we are asking is let us know who we owe the 
bills to.
  Mr. SANDERS. You are absolutely right. And I think the point that has 
to be made over and over again is that at a time when America, for 
working people, is becoming a poorer and poorer country, at a time when 
the gap between the rich and the poor is growing wider, when so many 
middle-income people need help, what an absurdity, what an outrage that 
the U.S. Government today, the President and leaders of Congress are 
proposing not to stand with middle income people, not to stand with the 
poor or the working people, but they are going to provide $40 billion 
of loan guarantees to very, very profitable Wall Street investors.
  And if that does not tell you who controls the U.S. Congress, then I 
think you may never know it.
  I would hope very much that we can turn this process about.
  I think, I say to the gentlewoman from Ohio [Ms. Kaptur], it is going 
to come to the floor next week?
  Ms. KAPTUR. That is what we are told, Friday, when everybody is worn 
out and wants to get home to meet with their constituents over the 
weekend. So they are going to bring the balanced budget amendments up 
early in the week, and all the discussion on that, so all the people 
will be all vented out by the end of the week. There will have been no 
hearings in the House. They will just slip it in here from the 
Committee on Rules.

                              {time}  1720

  Mr. SANDERS. I will just say to the American taxpayers that if you 
think that the best use of your money now is to guarantee loans to 
Mexico, money that is going to be made by large investment houses and 
big banks, why, then, you should call the President of the United 
States up, you should call your Member of Congress and, say, ``That is 
exactly how I want to see my tax dollars being spent. Go for it. We 
think it is a great idea.''
  But if you are concerned about a $200 billion deficit, if you are 
concerned that there are people here in Congress who say that because 
of the deficit we have got to cut back on Medicare, on Medicaid, on 
nutrition programs for hungry kids, and you think that a $40 billion 
loan guarantee for Mexico is not how you want to see your tax dollars 
being spent, then I think also you should get on the phone, you should 
call up Speaker Gingrich, you should call up my office, Ms. Kaptur's 
office and the office of your Representative in Congress, your United 
States Senator.
  Mr. Speaker, we can defeat this thing if millions of Americans stand 
up and say, ``No, let's get our priorities straight. We have other 
things to do with our tax dollars other than to bail out Mexico and 
protect investments from large banks and investment houses.''
  So let us get our priorities straight, let us flood the U.S. Congress 
with calls, with letters, and say to the Members of this institution, 
``No bailout for Mexico. Protect American taxpayers.''
  Ms. KAPTUR. And not surprisingly, because this has happened before, 
but Mexico has many wealthy families, and they have billions of 
dollars' worth of deposits. Now, you might ask yourselves, where is 
that money? If you look back at 1991, there were two billionaires in 
Mexico, according to Fortune Magazine. Now there are over 2 dozen.
  Where do they have their money? Do you know what happened back in the 
early 1980's when Mexico got into trouble before when it owed several 
billion dollars? There was between $40 and $60 billion dollars worth of 
money from citizens in Mexico deposited in United States banks, the 
very same banks that Mexico owed money to. So being very simple-minded, 
I said just let them take their money back home.
  What happened in this particular situation--and it was carefully 
orchestrated--the smart money left Mexico before the peso meltdown. If 
you look at the trade figures for the last year, you will see one of 
the top three exports to Mexico from the United States after NAFTA has 
been in two or three interesting areas: art, antiques, and 
collectibles.
  Now, who would buy art, antiques, and collectibles to hedge against a 
possible devaluation? So they took their money out of the country, 
brought into the country goods that will sell anywhere in the world. So 
part of our job should be to drive it back in the country rather than 
put the money out.
  Mr. SANDERS. The gentlewoman is not suggesting that the patriotic 
billionaires in Mexico are not going to themselves reinvest in their 
own country? She is not suggesting that they might take their own money 
out of their own country and put that money into American banks so that 
the working people of the United States who are losing jobs because our 
jobs are being taken to Mexico should bail out these investors and 
these big banks? The gentlewoman is not suggesting that, is she?
  Ms. KAPTUR. This is why we asked the Secretary of Treasury which 
specific interests, which banks, which investment houses, which 
corporate interests are Mexico's creditors at this point. We would like 
to see who owns those firms. We would like to see who the depositors 
are, we like to understand who we are giving our money to, because it 
is likely, based on past history, that Mexico will default again and 
the taxpayers of the United States, the new insurance company to 
Mexico, will help to bail them out. We just would like to know who we 
are bailing out. Do you not think that the American people have the 
right to know?
  Mr. SANDERS. I think that they might, given the fact that they are 
putting $40 billion on the line. I think what people throughout this 
country should appreciate is that very often when the President, any 
President, when the leaders of Congress want to get something done that 
benefits the [[Page H387]] wealthiest 1 or 2 percent and puts it to the 
average American, what they do is move very, very quickly, because 
their feeling is that the less information the average American has 
about the situation, the better they are able to pull off the swindle. 
I think that is exactly what we are seeing right now.
  It is astounding to me that when some of us say, ``Let us do 
something about 5 million children in America who are hungry, provide 
help to them,'' there is never a sense of urgency. But when we talk 
about changing our trade policies so that we do not encourage American 
corporations to take our jobs to China or to Mexico or to poor Third 
World countries, there is never a sense of urgency. But suddenly, boy, 
are things flying around here--$40 billion, even in Washington, DC, is 
a lot of money.
  Loan guarantees of $40 billion can rebuild communities from one end 
of America to the other, could put millions of American people back to 
work at decent wages.
  Suddenly, however, for some reason, that discussion never takes place 
here. But now, because Wall Street and the investment houses want to 
make sure they are not going to lose any money on their Mexican 
investments, wham, like a bullet, is that process flying through here.
  Ms. KAPTUR. What is really sad here is, if you look at the people who 
get appointed to our U.S. Treasury and to the Federal Reserve, not that 
they are not intelligent and hardworking Americans, but their mindset 
comes from, especially this group over the last several years, from the 
speculative Wall Street sector, which means that when they have been 
used to creating all this debt around the world, they are pretty well-
heeled themselves, when they get appointed to a top Government 
position, they forget they are not just dealing with their own 
customers' funds anymore, they are dealing with taxpayers' public 
money. There is a difference.
  I think one of the problems we have is that when you have this 
revolving door between Wall Street and some of the institutions of the 
people of the United States, sometimes I think people forget where they 
are and they start gambling with our peoples' money rather than the 
private investors' and speculators' and gamblers' money. There is a big 
difference.
  Let me say to the gentleman from Vermont that I see the gentleman 
from Illinois [Mr. Lipinski] has joined us here. I am sure that both of 
these gentlemen face the same situation in their own districts. But I 
cannot get loans for my congressional district from the U.S. Treasury 
in order to clean up the toxic waterways in my community. They told us, 
``Well, wait 5 years, wait 10 years, wait 15 years.'' I said, ``Wait a 
minute, I only get elected for 2 years. I cannot wait for 15. I came 
here to make it better.'' I cannot get money to build a new tower out 
at our airport field so that the airplanes do not crash into one 
another while landing because we have such an old tower that it is on 
the wrong side of the runway. Well, we cannot get that built. I cannot 
get a loan from the Treasury backed up by the taxpayers of the United 
States to do that. I cannot get money for an enterprise community in 
the center of our city because there was not enough to go around to 
every major city in Ohio. I could not get the attention of the Federal 
Reserve or the U.S. Treasury.

  I cannot get more money out of this Government to add to the new 
police class being hired in my district, in my major city and many of 
the rural communities in my State that are trying to hire policemen, 
police officers, because of the drug problem. Do you know the transit 
route, the chief transit route to Toledo, OH, in terms of the drug 
trade, is direct from Mexico, comes up direct to our community. And I 
cannot get a loan from our Government to help us deal with the crime 
situation in our community.
  So it gets pretty discouraging when you see the enthusiasm of these 
former Wall Street speculators down here helping their friends, but I 
cannot deliver as fast as I want to for the people of my home district, 
as hard as we try.
  I want to acknowledge that we have been joined by Congressman Bill 
Lipinski, a most esteemed Member from the great city of Chicago, which 
I like to call the capital of the Midwest. I know how hard he has tried 
to help not only his own city but this entire Nation through his work 
here and his years of service. I yield to the gentleman.
  Mr. LIPINSKI. I thank the gentlewoman for those very kind words and 
for the time that she is yielding to me in this special order.
  It is always a pleasure also to be associated with the gentleman from 
Vermont [Mr. Sanders] because certainly no one fights harder for the 
American working man than he does.
  Mr. Speaker, it appears that the North American Free-Trade Agreement 
is anything but free. Let us look at the facts. Under NAFTA, thousands 
of Americans have been put out of work. Under NAFTA, the Sara Lee Corp. 
intends to cut 8,000 jobs during the next several months and move their 
operations to Mexico.

                              {time}  1730

  Under NAFTA, Honda, BMW, Volkswagen, Toyota, and Samsung all 
announced plans to build new or expanded production facilities in 
Mexico, not here in the United States of America Under NAFTA, United 
States automobile makers exported approximately 22,000 vehicles to 
Mexico. The United States however, imported 221,000 from Mexico, a huge 
imbalance in Mexico's favor. I ask, ``Can you imagine the jobs that 
would have been created here amongst the United States Auto Workers if 
the 221,000 vehicles that were manufactured in Mexico had been 
manufactured here in the United States?''
  Ms. KAPTUR. Mr. Speaker, let me reclaim my time for a second.
  I had somebody divide it out for me. What it works out to is that 
every 28 cars that come up from Mexico to the United States, we send 
down 2 cars, and in trucks it is even worse. For every 33 trucks that 
are built by these companies sent into our market, we send down there 
about a third of a truck. It is absolutely upside-down.
  Mr. LIPINSKI. Certainly, and to me the No. 1 issue in last November's 
election was the fear, the concern, the insecurity that the American 
middle class has on their shrinking standard of living, not only for 
themselves, but for their family, for their youngsters, and here with 
NAFTA, with GATT, and now this $40 billion bailout, we are not only 
shipping out middle-class jobs, we are also now putting an additional 
burden on the middle class to subsidize another country.

  To return to my prepared remarks, under NAFTA United States imports 
from Mexico have been increasing at a rate faster than United States 
exports to Mexico. This distinction is important because in order to 
create jobs, U.S. exports must be expanding faster than imports. This 
is not happening.
  Under NAFTA the peso's value has dropped fantastically. This 
represents a dramatic wage cut for Mexican workers. Consequently United 
States exports to Mexico will slow while Mexico's exports to the United 
States will rise, wiping out what little trade advantage we had. Under 
NAFTA, Mexico is experiencing a severe financial crisis, and the 
American taxpayer is being asked to foot the bill. I say, ``Enough is 
enough.''
  The Clinton administration wants to provide 40 billion in loan 
guarantees to help Mexico. But as reported in yesterday's Washington 
Post, this multibillion-dollar bailout will only help United States 
speculators, those who have invested money in Mexican stocks and bonds 
and not contributed to Mexico's long-term economic stability. Any way 
you look at it, taxpayers are being forced to prop up the pesco and 
assume the financial risk of the investors.
  Mr. Speaker, it is not their risk to take. We should be offering 
support for our citizens, but instead our Government chooses to help 
every other group except the American working man and woman.
  Last week I joined my colleagues, two of which are here tonight, in 
introducing legislation to pull the United States out of NAFTA. Given 
the current circumstances, such action is indeed timely and long 
overdue. During the debate on NAFTA, supporters promised jobs and 
economic growth. I and others, however, warned that NAFTA would only 
hurt our trade position and cause an increase in the loss of American 
jobs. After a year of [[Page H388]] NAFTA, I think today's reality 
speaks for itself.
  Mr. Speaker, repealing NAFTA is essential if we are to restore 
justice to the working people of America. This issue, to me, is an 
enormously important issue and goes right to the heart of the stability 
of this Nation, not only the middle class, but everyone in this Nation. 
We have to produce jobs in this country for all our citizens. We have 
to come up with what is a dirty word around here quite often, but a 
national industrial policy. We have to have Government, management, 
labor, the universities, working together to develop an economic 
strategy to put our people to work. If we do not, there is going to 
come a day when they are not going to be able to purchase these 
products from Mexico, from Japan, from Germany. This economy is going 
to go down the drain, and numerous other economies are going to go down 
the drain.
  I am really very thankful for the opportunity to participate in this 
special order tonight, and both of you have my totally complete support 
in this effort to try to rebuild the American middle class and to try 
to create jobs in this Nation.
  Ms. KAPTUR. I thank the gentleman from Illinois [Mr. Lipinski] for 
his heartfelt and enlightened statement, and I know that probably in 
Chicago, as is true in Toledo and Vermont, the fastest growing category 
of jobs are temporary jobs, part-time jobs, with no benefits. We have 
some restaurant work jobs being created. We have some health care jobs 
being created. In our factories what has happened is some people, 
because of the uptake in the auto industry, and I come from automotive 
America, we have been able to bring some people back into the plants. 
But we have not seen the kind of massive hiring that we would have 
expected with the kind of profits that are being made because people, 
extra people, are not being hired. What we are seeing is workers 
working 6 days a week. They have been doing this now for over 2 years, 
and they are making good money, but they are exhausted because they had 
a lot of overtime. But the benefits are not shared, and imagine if you 
can put 1,000 more people, 2,000 more people, to work in our plants, 
and we continue to see in our country declining buying power because 
essentially what these money traders are doing is they do not 
understand the difference between money and wealth and the fact that 
there is a difference between piling debt up and creating real 
investment that produces things, be it agricultural or industrial, that 
creates real wealth in our communities.

  There is a book, I think, that has been written, ``Barbarians at the 
Gate,'' that talks about how these folks on Wall Street behave, and 
they think that money, and paper, and piling up this debt really means 
something, and they miss the most important question, and that is the 
wealth-producing capacity of our country, and we have about had it with 
their kind of thinking, trying to make money for the few, but not 
wealth for the many, and I know how hard the gentleman has worked in 
his capacity on the Committee on Public Works to try to improve the 
climate for business in America, our ports, seaports, airports, 
roadways, railroad beds, to try to make us the most efficient producer 
in the world, and I know the problems you have run into.
  Imagine if your committee had had the chairman of the Federal Reserve 
and the head of the Treasury come in and say, ``OK, Chairman Lipinski, 
how about $40 billion in public works for America?''
  I ask the gentleman, ``Wouldn't that have been a great feeling?''
  Mr. LIPINSKI. Fantastic.
  Mr. SANDERS. If I could just interrupt.
  If the gentleman from Illinois [Mr. Lipinski] had made that request, 
they would have said, ``What are you smoking? Are you out of your mind? 
Forty billion dollars; we can't afford that.''
  Right?
  Mr. LIPINSKI. No question about it, no question about it.
  Mr. SANDERS. But these guys come in a few weeks ago, and we are 
supposed to pass this thing with virtually no committee debate, I 
gather no committee debate whatsoever, bring it onto the floor of the 
House, because the big money people want to be protected. It is really 
quite incredible, and the other irony I would point out is the 
gentleman from Illinois [Mr. Lipinski] quite correctly talked about the 
impact of NAFTA 1 year later--loss of jobs, lessening of the trade 
balance.

                              {time}  1740

  Fourteen months ago when we were debating that issue here, who would 
have believed it, after hearing all that the proponents told us, right? 
It is going to improve the standard of living of Mexican workers. It is 
going to create untold jobs in America; 14 months come and go, and what 
we are talking about now is the collapse of the Mexican economy, the 
decline in the volume of the peso by 40 percent, and a $40 billion 
bailout. You know what gets me? Where are all the editorial writers? 
Every major newspaper in America told us what a great thing it would 
be. Remember that?
  Mr. LIPINSKI. I remember it very, very well. No question about it.
  Ms. KAPTUR. We should cut those articles out, all this was supposed 
to do for America, with the name of the author right there.
  Mr. SANDERS. We were the crazy protectionists. At worse we were 
racist, anti-Mexico. Fourteen months have come and gone. Where are the 
editorial writers today telling us what a good deal NAFTA was? What 
they are telling us now, these same exact people, is well, excuse us, I 
guess we are going to have to pony up another $40 billion to protect 
Mexico.
  Ms. KAPTUR. You know Congressman Sanders, one thing I think we would 
all be interested in, I call the NAFTA deal and deals like it death by 
pin pricks, because you have companies shutting down like Mattel-Fisher 
Price did yesterday in Medina, NY. But the workers from Medina, NY, do 
not always let us know they have lost their jobs and their production 
has been outsourced. I think it is very hard to get this information. 
We collect some of it, but there are just hundreds and hundreds of 
small companies, some of them employing under 50 people around our 
country, that have shut down.
  I am hoping if those citizens of our country who are listening who 
have been really put out of a job this past year, in fact some of them 
have had to go down to Mexico and train their replacement worker, I 
hope you will call our offices. I hope you will let us know who you 
are. We will be your voice here. We need to be your voice here. You do 
not have voices from Wall Street placed in high positions. You do not 
have people in some of the major financial instruments of this 
government who are your voice.
  We can be your voice, if you will let us know who you are. Some of 
you who are in union shops, you are organized, you know how to get to 
us. Many of you are in nonunion shops, 85 percent of you. We need to 
know who you are. We will be your voice here in the Congress of the 
United States.
  Mr. LIPINSKI. I wanted to say that I have nothing against people in 
this economy becoming millionaires, becoming billionaires. But I 
believe that it is really the duty and the responsibility of the 
executive branch of government and the legislative branch of government 
to try to create an economy that improves the standing of living of all 
the citizens of this country. That should be our No. 1 priority, to 
improve the standard of living of everyone here.
  We should see to it that there are some kind of checks and balances 
so that one segment of our society does not benefit more than another 
segment of our society, particularly when it seems to me that the laws 
we often pass and the trade treaties we often pass here benefit a much 
smaller segment of our society at the expense of one of the largest 
sections of our society, the middle class. I really believe that that 
should be the top priority, creating jobs in this country, as I say, 
not only for the middle class, but for everyone. If you can become a 
millionaire, wonderful. If you can become a billionaire, that is 
wonderful also. But we have to give the opportunity to people to 
continually improve their standards of living, continually improve 
their jobs, so that they can raise their family, educate their family, 
so they [[Page H389]] can buy homes, so they can buy automobiles. This 
is really what the American dream is about. Not a few people becoming 
billionaires or millionaires.
  Ms. KAPTUR. If the gentleman will yield on that point, on the Food 
Stamp Program, which is not a popular, politically popular program, I 
think it is important in my district to put on the record, half the 
people in my northwest Ohio area who are on food stamps, half are 
working people. They are working families who earn such low wages with 
such low benefits because their jobs have essentially been cashed out, 
they have to be in the embarrassing position, and I have seen some of 
them, of applying for these food stamps, because they can no longer 
earn a living wage in the United States of America. Frankly, I think 
that should be unconstitutional. I think these people should be able to 
earn a decent wage.
  I met a woman the other day, I went into one of the stores to buy 
like these muffins in the morning. I met a woman working three part-
time jobs. She was a divorcee, and she must be putting in 60 or 70 
hours a week just to support herself. It is sobering to meet these 
families, and there are millions of them across our country. They have 
very little voice here.
  We have been joined by our distinguished colleague from the State of 
New York, from Buffalo, NY, Chairman John LaFalce, Committee on Small 
Business, chairman of subcommittees on the Committee on Banking, 
Finance and Urban Affairs, and someone who was right month and months 
ago and they would not listen to you, Chairman LaFalce. They would not 
listen to you. And I hope that the citizens of Buffalo understand what 
kind of voice they have here in Washington, not just for themselves but 
for the Nation and the world.
  There are few Members of this body that understand as much about 
finance, and I think you talked yourself until you were blue in the 
face to try to get provisions in the NAFTA accord to deal with this 
very crisis, and they would not do it. They tried to ride their 
tractors right over you. You probably still got skid marks on your 
spine. Yet you were right. As I said a little bit earlier, this is one 
of those instances where it hurts to have been right.

  We welcome you this evening. I yield you time.
  Mr. LaFALCE. Thank you very much. First of all, I want to 
congratulate the gentlewoman from Ohio for the tremendous leadership 
she has shown, not simply on this issue, but on all issues affecting 
the industrial manufacturing service sector within the United States, 
especially as international trade impacts on those issues and our 
domestic workers.
  I have long been concerned with the problems of Mexico and the 
problems of the Mexican people. I remember well August 1982, when the 
debt crisis first erupted, and I engaged in a great many meetings at 
that time with the point man for the Reagan administration, Tim 
McNamara, who was also a fellow graduate of Villanova University, 
Deputy Secretary of the Treasury. I believed firmly at that time that 
we had a responsibility to help the Mexican people in Mexico. I 
believed firmly that we should engage in leadership on the issue of 
debt relief. And we pretty much ran up against deaf ears.
  I remember in 1982 going to a meeting of the World Bank and the 
International Monetary Fund in Toronto in order to discuss these and so 
many other issues. Again, I remember the speech that President Reagan 
gave at the time. We must rely on the magic of the marketplace. Beryl 
Sprinkel was quite active in the Treasury Department too. He presented 
a good many difficulties in dealing with a human, considerate, 
responsible way with the problem.
  In 1986 I was able to get two provisions in the omnibus trade bill 
that we passed at that time. One dealt with exchange rates, and one 
dealt with debt relief. Unfortunately, President Reagan vetoed that 
bill, and in vetoing the bill, he cited four specific provisions. Three 
of them were provisions that I had authored and it would be the 
exchange rate provision and the debt relief provision.
  Fortunately, I was able to get those provisions back in the omnibus 
trade bill of 1988, and they then became the law of the land.
  So I have a long history of concern for the problems of Mexico in 
extending debt relief to them, and for the whole question of 
sustainable exchange rates as they impact trade and the rights of 
capital and the rights of labor between and amongst trading countries 
of the world.
  I was very dissatisfied with the approach taken by Secretary of the 
Treasury Jim Baker when he came up with the Baker plan. It was a half-
hearted effort. It just did not go nearly far enough. And I remember 
when Nick Brady came in as Secretary of the Treasury, he called me into 
the office before the November 1988 election and said we are going to 
go way beyond Baker, but after the election, we will come up with 
something new.

                              {time}  1750

  We will come up with something new. This turned out to be the Brady 
plan, which basically was what I had called for in the 1988 
legislation. I remember going down and talking with the leaders of the 
Central Bank in Mexico at the time, still there. I remember going down 
and talking with the chief debt negotiator, Angel Gurria, who is the 
foreign minister of Mexico. I remember being invited by the President-
elect Salinas to attend his inauguration on December 1, 1988.
  But then we came up with a lot of new ideas, too. Despite the fact 
that Mexico was a greatly underdeveloped country, we were going to 
treat it as a fully-developed country. And because we wanted to fulfill 
somebody's grand vision of a free-trade agreement for the Americas, we 
would enter into a free-trade agreement with Mexico, called NAFTA.
  I had strongly favored the free-trade agreement with Canada, although 
even then I said we ought not to enter into that agreement without 
having provisions for exchange rates. Although I did not think that 
necessity of a provision for exchange rates was that imperative for 
Canada, because the swing in exchange rates, in currencies evaluations 
was not that great between the United States and Canada.
  But with respect to Mexico, I said it was absolutely imperative. 
There were a number of other things that were absolutely imperative if 
we were to approve NAFTA and have a good agreement.
  I used my Small Business Committee to have a good many hearings on 
some of those conditions that I thought had to be dealt with before we 
approved NAFTA. And so in 1992, I had hearings on the problems in 
Chiapas. I brought up so many of the human rights activists from 
Chiapas to discuss their problems. I said, these problems are festering 
and will soon erupt and NAFTA may make them erupt unless we do 
something about it beforehand.
  Shortly after that, in early 1993, 2 years ago, I had a hearing on 
something that I thought was perhaps the most important issue that we 
had to deal with and could deal with within the NAFTA, and that was the 
issue of the valuation of the peso. I had a hearing entitled ``Whither 
Goest the Peso.''
  We brought in some of the leading economists from around the world. 
And there was pretty much a general consensus at that time that the 
peso was overvalued by from 15 to 20 percent and that a devaluation was 
going to have to take place, not the trickle type of devaluation that 
was taking place on a day-by-day basis, but something much more 
significant at some point in time. And the only question was when and 
how harmful such a devaluation would be.

  I argued that it was imperative that we anticipate that problem, deal 
with it in advance. And so I sent many letters. I sent, first and 
foremost, a letter to President Clinton, but also to the Secretary of 
the Treasury, at least at that time, to the present Secretary of the 
Treasury, who was then Chairman of the National Economic Council, to 
the U.S. Trade Representative Mickey Kantor, to the head of the 
Business Roundtable's section on NAFTA, who at that time was the 
chairman of Eastern Kodak, Kay Whitmore.
  I said, if NAFTA is going to pass, it ought to be a good NAFTA. It 
ought to be a NAFTA that protects American workers, and we cannot have 
a good NAFTA unless we have a provision dealing with exchange rates, 
something [[Page H390]] that will call for consultation, coordination, 
and corrective measures in the event of some type of devaluation.
  Well, as the gentlewoman pointed out, my early warnings 2 years ago 
fell on absolute deaf ears. The problem is at that time the peso was 
about 3.2 to the dollar or 3,200 of the old pesos to the dollar. Of 
course, there had been a devaluation from 1982 to 1992 of 1,000, 2,000, 
3,000 percent. We were not talking about modest devaluations. We were 
talking about volatile, extreme devaluation.
  Let me just make this point. We have to be very careful before we go 
ahead and approve a $40 billion loan guarantee. The administration and 
the Congress, Democrat and Republican, are dedicated to doing this by 
next Friday without congressional hearings, without satisfactorily, 
without exposing this to the crucible of examination, cross-
examination, public opinion.
  We have to be very careful. Otherwise we are going to freeze that 
exchange rate in the vicinity of 5.5 or so to the dollar. And if we 
thought we were going to have difficulties at 3.2 pesos to the dollar, 
we will be unable to export to Mexico at 5.5. There will be a huge, 
tremendous incentive to establish American plants and other plants from 
around the globe in Mexico at that valuation, and this administration 
and this Congress does not seem concerned about it.
  The only thing they seem concerned about is ensuring that there be a 
loan guarantee for a restructuring of the existing loans; a 
restructuring that in my judgment would be done without the guarantees, 
because the lenders have no option but to extend the maturities.
  If a lender gives $100,000, the lender owes the borrower. If a lender 
gives $40 billion, the borrower owns the lender.
  We ought to be very, very careful before we proceed. To do it without 
hearings, to do it without examination and cross-examination debases 
the democratic process.
  What they are saying is, this is so important and so big that we 
cannot have hearings, we cannot have it tested in the crucible of 
public opinion, which is the committee hearing process process of the 
House of Representatives and the Senate. That does not wash, not in my 
district in any event.
  Ms. KAPTUR. The gentleman should be the very first person to be a 
part of such a hearing, because there is no one in this body that knows 
more about the internal debt structure of Mexico. It is an outrage, it 
is an outrage to this Congress and to the new leadership in this place 
that they would try to muscle the minds, not just of the people here, 
but also of the American people and not permit them to know what this 
is all about when they have to foot the bill.
  It is absolutely outrageous. You have, to me, a special right to be a 
part of those hearings. I think you would make a positive contribution 
to putting Mexico on a sounding footing toward the future.
  I personally do not believe this is the way to do it, because you 
cannot have free trade without free countries. I think Mexico needs a 
good dose of democracy as a basis for economic growth in the future. I 
know the time of our special order has expired, and we thank all of 
those who have been a part of this this evening, especially the 
gentleman from New York [Mr. LaFalce], the gentleman from Illinois [Mr. 
Lipinski], the gentleman from Vermont [Mr. Sanders], those who joined 
us to inform the American people.

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