[Congressional Record Volume 141, Number 23 (Monday, February 6, 1995)]
[House]
[Pages H1271-H1278]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       THE MEXICAN RESCUE PACKAGE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 1995, the gentlewoman from Ohio [Ms. Kaptur] is recognized 
for 60 minutes as the designee of the minority leader.
  Ms. KAPTUR. Mr. Speaker, we are holding this special order this 
evening because our various offices here on Capitol Hill have been 
inundated with telephone calls and inquiries regarding the Mexican 
rescue package, and many questions are being asked by constituents and 
citizens of our country that we can not, in fact, answer.
  I was asked today how much money has already left our U.S. Treasury 
as part of the drawdown on the deal that was announced last week by the 
Secretary of the Treasury and the President. The facts are that we 
cannot tell you.

                              {time}  2020

  Therefore tomorrow morning, likely after the morning business, there 
will be a special resolution brought up here in the House, and it will 
be a privileged resolution. In that resolution we will be asking for a 
vote of the House and a ruling of the Speaker so that we can obtain the 
information that we cannot give you this evening about the terms of the 
arrangement that was made by our Government with the nation of Mexico. 
Our resolution requires that the Comptroller General of the United 
States report back to us within a 7-day period.
  So, we would try to draw to the Members' attention that this vote 
will likely occur tomorrow morning after the regular morning business, 
the 1-minutes and, perhaps, a vote on the Journal, and we will look 
forward to that moment.
  It is likely that in the way that the resolution will be brought up 
there will be very little time for debate. There may actually be an 
effort by certain interests in this Chamber to table the resolution, 
and we would ask the Members to vote against tabling the resolution so 
that, in fact, we will have an opportunity to get the facts that we 
really want.
  Mr. Speaker, I yield to the gentleman from Oregon [Mr. DeFazio].
  Mr. DeFAZIO. So, the situation we are confronted with is the 
Treasury, in concert with the Federal Reserve Board, agencies of the 
Federal Government of the United States, have extended, as far as we 
know, in excess of $40 billion of credits, loan guarantees, currency 
swaps and other instruments to Mexico, that our questions regarding the 
source of these funds, the exact amount and the terms of these funds, 
whether or not these funds are somehow secured--you know, what 
authorization exists for extending these funds without coming to 
Congress for appropriations; the gentlewoman saying that there is a 
possibility that this House will not ask to have those questions 
answered, that we could just be shut down here on the floor by ruling 
of the chair, and we will have no opportunity for debate, no 
opportunity to go forward and ask these questions.
  I, for one, as a Representative of a district from the Far West 
United States, feel that my constituents--this is not the greatest 
issue before them, but they would certainly like to know what authority 
the President, the Secretary of the Treasury, and the Federal Reserve, 
have, if it was extended to them by Congress, what amounts of money are 
controlled, what risk are involved, what collateral are involved. I 
mean all sorts of things we would like to know about even a small 
business transaction let alone one of this magnitude.
  [[Page H1272]] But in this ruling we could just be shut down and not 
have any opportunity to discuss that?
  Ms. KAPTUR. That is really what the vote tomorrow is about. We know 
that the constitutional authority of the House as the place within the 
Congress; that is, the first to authorize and appropriate dollars 
through the U.S. Treasury, was essentially shut off. Our Members were 
muzzled. We were not privy to information that should be ours in 
relation to the dollars of our taxpayers being put at risk either 
inside the United States or outside the United States, and we thought 
we were going to have full debate and disclosure on this matter when a 
decision was made without the involvement of the legislative branch of 
the United States of America.
  We now have to resort to special parliamentary tactics in order to 
bring this measure to a vote on the floor, and the gentleman is 
correct, that there are so many questions we want answers to that we 
are being asked, which are impossible for us to obtain, and we think 
that that is not what the Constitution intended, that in fact this is 
not a monarchy, this is not a parliamentary government. We are not an 
arm of the executive branch. We have our own status within the 
Constitution, and our constituents have an absolute right to know when 
their tax dollars are at risk, as they are, in this agreement, what the 
terms of that agreement are, what the terms of repayment are, what the 
nature of the collateral is. We need to know how fast money is being 
drawn down. Otherwise you cannot make a judgment as to what might 
happen in the future.
  What type of precedent does this set? It is our understanding that 
never has the authority of this particular set of institutions within 
the Government of the United States been used to such a degree, and, 
therefore, we think there are some very serious constitutional 
questions to be asked, as well as questions to be asked about the 
nature of the agreement itself.
  You know, I say with some humor this evening, ``I hope the Mayor of 
Washington DC, will take it in the
 humor that I offer it, but, you know that the District of Columbia 
here in our Nation's Capital has been having a lot of difficulty with 
its finances and is about to go bankrupt. It has been on all the pages 
here in the Nation's Capital and in other parts of the country, and we 
know that it's going to cost the District of Columbia real money to 
bail itself out, and it's money that we don't have in this Congress.''

  So I had an idea over the weekend that what we ought to do for the 
Mayor of Washington and the citizens of the Nation's Capital is to get 
the executive branch involved because they obviously are very creative 
in figuring out how to make things happen and make it seem as though 
you are not spending any real money, and they ought to work up a 
Mexico-type deal for Washington.
  Mr. DeFAZIO. Perhaps, if the gentlewoman would yield, I like that 
idea, and perhaps what the Government of the District of Columbia could 
do would be similar to what Wall Street has been doing.
  They can go down to Mexico, get a bunch of pesos, which are declining 
rapidly in value, and then they can take and exchange them to the 
Federal Reserve Board for United States dollars at a preferred rate, 
and by arbitraging this they can probably earn up to a billion quite 
readily, and they can pay off their debts.
  I mean, if we can do this for the Government of Mexico and the Wall 
Street speculators, why would we not do it for the District of 
Columbia?
  Ms. KAPTUR. I figure, if the capital of Mexico can draw on the 
taxpayers of the United States, why should not the Capital of the 
United States be able to draw on the taxpayers of the United States? I 
agree with the gentleman, and, knowing that those pesobonos are paying 
anywhere between 20 and 40 percent interest rates, the Mayor of 
Washington would certainly be well advised to get in on that because he 
could probably get the money he needs in a flash.
  Mr. DeFAZIO. I bet, if the gentlewoman would yield further, I would 
imagine, if the city were to engage, perhaps, Goldman Sachs as their 
financial adviser, perhaps they could do very well on this matter 
because, if I could go back to the questions the gentlewoman is asking, 
as I recall, the gentlewoman from Ohio and a number of us signed a 
letter with a series of questions probably 3 weeks ago----
  Ms. KAPTUR. There were 13.
  Mr. DeFAZIO. To the Treasury and the Secretary of the Treasury and 
asked many of these same questions in a just straightforward and 
friendly manner. We thought it was things it was essential we know 
before any sort of bailout go forward.
  Have we had any response?
  Mr. KAPTUR. I am glad the gentleman put that on the Record.
  We asked over 12 questions, over a dozen questions; the first one: 
Who are the creditors that Mexico was paying off, seeing as how they 
were going to be borrowing the money from us to do it. We wanted to 
know specifically. We did not want to know some sort of general answer.
  We have received no reply from the Department of Treasury to our 
questions.
  Mr. DeFAZIO. So, if the gentlewoman would yield further, it is not 
exactly like we are sandbagging them with this resolution of inquiry. 
We have been waiting 3 weeks on issues of national concern involving 
tens of billions of taxpayers dollars, and we have had no response to a 
group of Members of Congress who have asked these questions.
  Ms. KAPTUR. That is correct.
  I yield to the gentleman from Ohio [Mr. Brown].
  Mr. BROWN of Ohio. You know, as bad as we thought, as bad an idea as 
we thought the bailout was 3 weeks ago, in the last few days, with Alan 
Greenspan and the Federal Reserve raising interest rates in this 
country, it only exacerbates the problem in Mexico. If you remember 2 
weeks ago, 3 weeks ago, Mr. Greenspan was all over the Congress, 
lobbying, talking to Republicans, talking to Democrats, meeting with 
Speaker Gingrich, talking to the President, everybody he could, about 
this Mexican bailout on the one hand. Then on the other hand we began 
to hear stories that he was leaking out that the Federal Reserve is 
about to increase interest rates.
  When that happens, when interest rates are increased in this country, 
which happened late last week, in addition to what it does to home 
buying, homebuilding, the cost of credit, the costs to borrowed money 
for small businesses, all the hurt that puts on the economy, what it 
does with the Mexico situation is simply pull the rug out from under 
this whole bailout situation whereas the price, the cost, as the dollar 
gets stronger, the peso by definition gets weaker, which means that the 
$16 billion or so that Mexico already owes back to western investors 
gets more expensive so that it decreases the chance of pay back. It 
means those loan guarantees and direct loans may in fact not be paid 
back, but increases the chances there, and at the same time it 
undercuts the whole ability of the Mexican Government to get back on 
its feet in the Mexican society.

                              {time}  2030

  It simply does not make sense that the Federal Reserve did both of 
those things, or the Federal Reserve Chairman did both of those things 
the same month.
  Ms. KAPTUR. If I might reclaim my time just for a second, does it not 
interest you that over the last year the Federal Reserve of our country 
raised interest rates six times, and during that period of time, of 
course, it became more lucrative for funds to be drawn into the United 
States and away from Mexico? This was all going on at the same time. We 
were asking ourselves why are interest rates going up in the United 
States when there is no inflation.
  Mr. BROWN of Ohio. American investors were benefiting. There were 
incentive for American investors to pull their money out, and that is 
what accelerated the whole downward plunge of the peso. You couple the 
politics of NAFTA, that the Mexican Government and the American 
Government did not want any peso devaluation during NAFTA, the Mexican 
government did not want any peso devaluation, although it could have 
been done in small increments during their own Presidential elections. 
So the politics of Mexico and the easy availability of money sent to 
Mexico, and the American bankers and American investors 
[[Page H1273]] sending their money there, the Mexicans glad to receive 
it, certainly with the NAFTA stamp of approval, yes, our Government was 
saying it is OK to invest there, all played into this.
  Ms. KAPTUR. If I might yield time to the gentleman from Vermont [Mr. 
Sanders].
  Mr. SANDERS. I thank the gentlewoman from Ohio. We are back together 
again, right.
  Mr. DeFAZIO. After hours.
  Mr. SANDERS. Fourteen months ago many of us, all of us, and many 
other of our colleagues told the American people that we thought the 
NAFTA Agreement was going to be a disaster. On the other side we had 
the President, we had the Republican leadership, we had virtually every 
major corporate newspaper in America, who were telling us what a 
wonderful deal NAFTA was going to be for American workers, for Mexican 
workers, and for the people in general.
  Fourteen months have come and gone, and sadly, sadly, virtually every 
concern that we had at that time has proven to be true. And after the 
14 months,
 instead of our friends who supported NAFTA coming forward and saying, 
``OK, we admit it, we made a mistake, we were wrong, everybody is 
wrong, they were wrong''; but instead of coming forward and saying they 
were wrong, what they now come forward and say is, ``Hey, we need a 
$40-plus billion loan guarantee to Mexico, becuase NAFTA has been such 
a success that the Mexican economy is disintegrating, their Government 
is extremely unstable, and therefore, at a time when small business in 
America is in trouble and we do not offer them loan guarantees, family 
farmers in America, we do not offer them loan guarantees, we have a 
$200 billion deficit.''

  And what irritates me very much is every single day on the floor of 
this House Members of Congress say, ``Hey, we have got to cut back on 
Social Security, on Medicare, on Medicaid, on nutrition programs for 
hungry children and hungry senior citizens. We have got to do that.'' 
We do not have enough money. And yet apparently there is not quite that 
concern for putting $40 billion of taxpayers' money at risk for this 
bailout.
  The first point I would like to make this evening in terms of this 
bailout is it is very interesting who is for it and who is against it. 
Polls indicate, I think the latest poll I saw is that some 80 percent 
of the American people are against this bailout. Maybe some of the 
viewers would say, well, obviously all the Mexican people are for this 
bailout.
  Wrong. Polls indicate, as I understand it, that a healthy majority of 
Mexicans are against the bailout because they are concerned about the 
sovereignty of their nation.
  Mr. BROWN of Ohio. If the gentleman will yield, including one of the 
major presidential candidates in Mexico who has come out against and 
spoken at a rally of literally tens of thousands of Mexicans, I would 
add.
  Mr. SANDERS. So you have the American people against the bailout, you 
have the Mexican people against the bailout. And one of the 
frustrations that all of us share is that we know that, if that vote 
had come to the floor of the House, the U.S. Congress, House and 
Senate, Republicans and Democrats, and the only independent, were all 
against the bailout.
  Mr. TAYLOR of Mississippi. How did the gentleman vote on this issue?
  Mr. SANDERS. Well, that is a very interesting question. I was about 
to vote no for the bailout. Unfortunately, it never came to the floor 
of the House. I have not yet voted on it.
  Mr. TAYLOR of Mississippi. How did Ms. Kaptur vote on the issue?
  Ms. KAPTUR. On this bailout issue, we have not had a chance to vote 
on it.
  Mr. TAYLOR of Mississippi. How did the Speaker of the House vote on 
the issue?
  Ms. KAPTUR. The Speaker of the House has not had a chance to vote on 
this matter.
  Mr. TAYLOR of Mississippi. The chairman of the Committee on Ways and 
Means, the chairman of the Committee on Appropriations?
  Ms. KAPTUR. The chairman of the Committee on Appropriations I spoke 
with the other day. There has been no bill referred to his committee. 
There is not a bill that has been brought up here to the Congress.
  Mr. TAYLOR of Mississippi. Twenty billion dollars of American tax 
dollars, and there was not a vote in the Congress of the United States. 
Is that what you are telling me?
  Ms. KAPTUR. There has not been a vote here in the Congress of the 
United States.
  Mr. TAYLOR of Mississippi. When will Congress get a chance to vote on 
this?
  Ms. KAPTUR. We were trying very hard to get a vote, hopefully 
tomorrow. We introduced a bill on Friday. Because the Speaker will not 
bring up the bill, we have to use very unusual procedures to force a 
bill on the floor, which we expect will come up tomorrow sometime after 
11 o'clock, under very prescribed rules where we will have very little 
opportunity to debate. But we have not been able to get any hearings in 
the committees of any significance. We have not been able to get a 
bill. The executive branch did this completely on their own, without 
the Congress being involved.
  Mr. TAYLOR of Mississippi. Ms. Kaptur, is it really fair to say the 
executive branch did this entirely on their own? Let us go back the 13 
months that my friend Mr. Sanders made reference to. What was then 
minority whip, now Speaker of the House Gingrich's position on NAFTA?
  Ms. KAPTUR. Mr. Gingrich was a very strong supporter of NAFTA, and in 
fact when NAFTA got in trouble, he ended up rounding up the votes to
 ultimately pass it. There were I think 43 votes that were switched at 
the end.

  Mr. TAYLOR of Mississippi. So again going back to what Mr. Sanders 
had to say, what incentive then does Speaker of the House Gingrich have 
to bring this to a vote? After all, his folks got their $20 billion. 
The American people are left holding the bag. Four hundred and thirty-
five Cngressmen never voted on it. Folks back home do not know if they 
were for it or against it. What recourse is there for a Member of 
Congress who feels like his constituents have gotten the short end of 
this stick, and that his constituents' children have gotten the short 
end of the stick? After all, they have already lent $20 billion. But it 
is my understanding, please correct me if I am wrong, there is $35 
billion in this fund. That means there is $15 billion still to be left 
at the whim of the President. To put that as a reference to the 
citizens of this country, $35 billion is roughly what this Nation will 
spend on its veterans this year. Yet, you are telling me without a vote 
in this body, up to $35 billion can be pledged by the United States, 
with little or no guarantee that it will ever be repaid. As a matter of 
fact, I have heard the Mexicans have only made one debt payment one 
time in the past dozen years of so.
  Ms. KAPTUR. If the gentleman will yield, what has been very 
interesting is if you look back over the decade of the 1980's, this 
fund was used every once in a while, especially around the 1982 
Presidential elections in Mexico, to prop up that Government. There 
were loans made from this fund, $500 million, $1 billion. Then you went 
up to 1988 when there was another Presidential election in Mexico, and 
they used $1.1 or $1.2 billion out of the funds to prop up the existing 
Government there.
  Now the Presidential elections of this past August 1994: The fund was 
used again over these numbers of years. Mexico has never really paid 
back its money. It has refinanced its debt, which is getting larger and 
larger and larger.

                              {time}  2040

  That is like if you had a credit card and you never paid the 
principal and you just kept adding more and more debt and then you were 
charged a higher interest rate.
  Mr. TAYLOR of Mississippi. So if you would explain to the Members who 
might still be watching, what is it that you are trying to accomplish 
tomorrow?
  Ms. KAPTUR. What we are trying to accomplish tomorrow is to give the 
435 Members of this House a chance to vote against the Mexican rescue 
package. We have essentially been muzzled. The executive branch, in 
conjunction with the leadership of this institution, went around the 
other 434 Members of the Congress of the United States.
  We want our chance to vote.
  [[Page H1274]] Mr. DeFAZIO. Mr. Speaker, if the gentlewoman will 
continue to yield, I would like to clarify, I think that we do not even 
have to characterize it in exactly that fashion. We are asking the 
basic questions regarding the extension of these credits to Mexico. How 
much money is involved? What risks are there for the U.S. taxpayer? And 
the series of interrogatories, someone could vote in support of our 
resolution tomorrow, not having made up their mind but saying as a 
representative of the people they need more information.
  So I would say that the Members who would support our resolution 
would be both Members who already feel that they have enough 
information to say no to the bailout for Mexico, but I would say for 
the other Members of this body, I cannot imagine that any single person 
in this body who has not had those questions answered could vote in 
support of it.
  I can see where you could still have an open mind and say, I would 
like to know what risks we have, how much it is costing, what the terms 
are, what our exposure is. But we do not have that. So I would 
characterize the vote tomorrow a little differently.
  Ms. KAPTUR. The gentleman is correct. If one reads the resolution, it 
asks for us to have the constitutional authority retained here as we 
would hope we could tomorrow, and then it asks the Comptroller General 
to report back on the specifics of the package that was negotiated by 
the administration. I think the gentleman from Mississippi would like 
to comment.
  Mr. TAYLOR of Mississippi. I wanted to get back to something the 
gentleman from Vermont mentioned, when he said that Wall Street was all 
in favor of NAFTA and Wall Street was all in favor of the bailout.
  In fact, former U.S. Trade Representative, Ms. Carla Hills, who used 
to come regularly up to Congress and tell us what a great deal NAFTA 
was, has written an article for the Washington Post saying we have to 
bail out these poor people.
  It was funny that just 1\1/2\ years ago, when Ms. Hills came before 
the Merchant Marine Committee and I brought to her attention that a lot 
of shrimpers in the gulf coast, a lot of people in the garment plants 
would probably lose their jobs as a result of NAFTA, she said, ``that 
is economic Darwinism. You just have to have some people who are going 
to suffer when things like this happen, but it is for the benefit of 
everybody that this happens.''
  Would someone explain the wisdom to me why it is OK to let somebody 
who makes $5.50 an hour working at a sewing machine all day lose their 
job, but when some Wall Street investor loses a couple of bucks on his 
investments down in Mexico, or maybe a lot more than a couple bucks, 
that it suddenly becomes the responsibility of the working people of 
this country, the very same working people that you may have put out of 
work to bail them out, to go on the line and cosign that loan? And 
above all, why is it right that this huge expenditure, the equivalent 
of the Veterans Administration budget, is being made available for the 
President alone to spend and the Congress of the United States, which 
is given the constitutional duty, not privilege but the constitutional 
duty to see how our money is spent, what kind of debts we incur, where 
is the Speaker? Where is the minority leader? Is this not crazy that 
neither party's head is demanding a vote on this and that 6, 7, 12 
Members have to be the ones to come forward and, by using the rules of 
the House, demand a vote on this? It is just not right.
  Ms. KAPTUR. It is interesting, because I come from the Midwest, 
midwestern part of our country, as did the gentleman from Ohio, 
Congressman Brown, who has joined us, the gentleman from Vermont, 
Congressman Sanders, comes form the northeast, the gentleman comes from 
the Deep South in Mississippi, the gentleman from Oregon, Mr. DeFazio, 
it has been very interesting to me to see the breadth of support inside 
this institution on this issue.
  Mr. TAYLOR of Mississippi. If I may interrupt, on both sides of the 
aisle.
  Ms. KAPTUR. On both sides of the aisle.
  Mr. TAYLOR of Mississippi. There are, I believe as many Republican 
sponsors of this resolution as Democrats. I think that is very 
important, because I think a number of the Republicans are at odds with 
what their leadership has done, which is, again, to deprive the 
majority of the Members of this body just expressing this sentiment, 
yes or no, this is a tremendous obligation.
  I know it is more than three times the State budget for a whole year 
of my home State.
  Mr. DeFAZIO. If the gentlewoman would yield further, I was talking to 
a freshman Republican Member today, and that freshman stated 
unequivocally that they had done a whip of their own group and there 
were 3 Members of the 73-Member Republican freshman class who were 
prepared or leaning toward voting for the bailout of Mexico.
  So I think what has happened here is the leaders on both sides can 
count, and they did count. When
 they counted, they found probably out of this entire institution, the 
representatives of the people of the United States of America, duly 
elected and all equal under the Constitution, that probably less than 
100 were willing to vote for this bailout.

  Now I guess what we are being told is we just do not know, we just do 
not know the facts. Well, then, give us the facts. That is what we are 
asking here. If there are facts that would change my mind, bring them 
forward. But there is an absence of fact and we are being treated as 
though we, as elected representatives of the people, well, we just do 
not know better. This is something that the big folks on Wall Street, 
the Federal Reserve decided in secret, Robin Rubin, managing director 
of Goldman, Sachs and the President behind closed doors, and public 
discussion is foreclosed and votes of the people are prohibited.
  Mr. SANDERS. My friend from Oregon is exactly right, as is my friend 
from Mississippi.
  My friend from Mississippi makes an interesting point, if he will 
allow me to amplify his statement a little bit, that all over this 
country there are people who work for $5 an hour and $6 an hour and $8 
an hour. And they go to work every day and many of them do not have any 
health insurance, and we are told that the Government does not have the 
money to provide health insurance. Their jobs are uprooted and taken to 
Mexico or to China and we are told, ``Hey, that is the way life goes, 
that is what the market system is about, no security, you are out on 
the street.'' They pay unfairly too much in taxes, that is the way the 
system goes.
  And nobody is hearing their pain. And then suddenly our friends from 
Wall Street, who by the way, let us be honest about this, in the last 
few years have made out like bandits in their investments in Mexico. In 
the city of Burlington, VT, people put their money in the savings bank 
to make 3 percent, 4 percent, 5 percent, safe investment; in Mexico 
people were making 50 percent, people were make 100 percent of their 
investments. And then suddenly, for reasons that we do not fully know, 
we know some of them, the economy of Mexico took a tumble and their 
investments went sour.
  And how amazing it is, and I remember this when I was mayor of the 
city of Burlington, it was not the poor people and the working people 
who came into my office to ask for help. It was always the powerful and 
the wealthy who tell us, ``What can you do for us?'' and they are back 
again. These people who have the money, who have made out like bandits, 
have suddenly taken a loss.
  Well, when you invest in a risky proposition, that is the nature of 
the game, is it not? You stand to win a lot if things go well, you 
stand to lose if things go badly.
  I absolutely agree with my friend from Mississippi that it is an 
outrage to go back to the working people in this country, some of them 
who have lost their jobs from these very same folks who have taken 
their plants to Mexico, and then to ask working people of America to 
bail them out.
  To pick up on the point from my friend from Oregon, what makes me 
really sad is not only the horror of this whole agreement, but in fact 
as a result of it there will be even more people giving up on the 
democratic process. We just had an election recently and 62 percent of 
the people did not come out to vote. They no longer believe that the 
Government of the United States represents their interests. 
[[Page H1275]] What do you think this action on the part of the 
President is going to do to the political process?
                              {time}  2050

  You are standing up from Oregon, you are standing up from 
Mississippi, you are standing up from Ohio, many of us are standing up 
and the people are saying ``What difference does it make? Thanks for 
standing up for us, but you don't have any power. We send you here to 
represent us but you can't do anything about it. Why do you want me to 
come out and vote for you or vote for anybody else?''
  I think one of the other aspects about this agreement which disturbs 
me is not only the agreement itself, which we disagree with, but the 
process which denies the elected officials of this country to stand up 
and do what is best for their districts.
  Ms. KAPTUR. Mr. Speaker, I think the gentleman raises some excellent, 
excellent points. I know that there are working people across this 
country who feel that they have lost voice at the highest levels of our 
Government.
  What is equally disturbing to think about, Mr. Speaker, is that for 
the people of Mexico who have no voice, the working people of Mexico 
who have no voice, if our Government, and I think they were in cahoots 
with the top leaders of Mexico, has now caused the standard of living 
in Mexico to be cut by half, and it wasn't very high anyway, there are 
people who are hungry and there are people who are streaming across our 
borders now because our Government was too greedy for some of the 
interests that supported it and some of the top leaders in the 
Government of the United States, then shame on us as the most powerful 
economic force on this continent.
  I yield to the gentleman from Mississippi [Mr. Taylor], who wanted to 
make a comment.
  Mr. TAYLOR of Mississippi. The only point I wanted to make, Mr. 
Speaker, and I wanted to get back as to the very eloquent delivery by 
the former mayor of Burlington, could he not just vote against the 
appropriation for this when it comes up?
  Mr. SANDERS. If the gentleman knows, Mr. Speaker, if I had the 
opportunity to, I could and I would, but I do not have the opportunity. 
Unfortunately, as we have been discussing, we do not have that 
opportunity.
  Mr. TAYLOR of Mississippi. Mr. Speaker, isn't it interesting that 
every group--there are groups like the National Taxpayers Union, Common 
Cause, groups that represent the defense industry, groups that 
represent the homeless, everyone has a score card on how you voted. You 
hear the Nation has incurred at least a $20 billion liability and there 
was not even a vote on it, and there will not be a vote on it next year 
or the following year or the following year, unless something happens.
  Mr. Speaker, I think the point all of us are trying to make, and 
maybe not saying as well as we can, is that the reason we need the 
information, the reason for the vote tomorrow morning, is that, No. 1, 
we find out just how far our liability goes with this; just what kind 
of assets, if any, the Mexicans have pledged. I have heard they pledged 
oil revenues that have already been pledged to pay other bills, so, 
therefore, they are really not available to get our money back. What 
kind of track record do the Mexicans have in paying things back? Where 
did this money come from?
  Isn't it interesting, Mr. Speaker, that while everything comes before 
this body, from the amount of money we will have to mail letters home 
to our constituents, the amount of money we will spend on B-2 bombers, 
the amount of money we will spend on housing and urban development, the 
amount of money we will
 spend on veterans, all these things, sometimes much, much smaller 
amounts dealing in just tens of thousands of dollars, we will get an 
up-or-down vote on, but for $20 billion, neither the President of the 
United States nor the Speaker of the House nor the minority leader even 
though we ought to have a vote. The only chance we get to rectify that 
starts tomorrow.

  Mr. SANDERS. If the gentlewoman will yield further, Mr. Speaker, the 
gentleman makes a very important point. There almost seems to be an 
inverse relationship between the amount of money that is being spent 
and the level of discussion that takes place here.
  We are seeing a whole lot of discussion on the National Council on 
the Humanities and Public Broadcasting, right? Every day people are 
down here, some on one position, some on the other. It is a matter of a 
few hundred million dollars.
  What we are talking about is more than $20 billion, and as of this 
moment, we do not have a vote on that, and that is clearly an outrage.
  Mr. DeFAZIO. If the gentleman will continue to yield, Mr. Speaker, in 
an answer to the gentleman's earlier inquiry, there has not been a vote 
on an appropriation for the Economic Stabilization Fund since 1934, 60 
years since an appropriation has been voted for, yet the fund has 
continued to garner money through Treasury withdrawals, through having 
money printed, and they exchange some sort of bizarre notes which they 
obtain from the International Monetary Fund. They give them to our 
Treasury in exchange for dollars which the Treasury orders printed at 
the Mint.
  If you want to talk about creating something out of nothing but 
obligating the American people, and if Alan Greenspan is concerned 
about inflation, how about the inflation that is caused when you just 
run the presses overnight, running out whatever the largest 
denomination of bills is, I don't know, a thousand $10,000 bills, so we 
can shovel that money over to the Economic Stabilization Fund, so we 
can send it to Mexico, or so that we can secure the loans of Mexico?
  Also, Mr. Speaker, the gentlewoman put together an excellent list in 
response to your query here. I have heard a little bit about this ``We 
will guarantee these funds with the oil revenues.'' There is a list 
here put together by the gentlewoman from Ohio [Ms. Kaptur].
  The gentleman is right, those funds are already 100 percent 
committed. In fact, they are so committed that the Mexican oil company 
has not been able to invest any money in exploration or maintenance, 
because their funds are so over committed already.
  You go through the list: Pemex bonds, 7.75 percent; French francs, 
$750 million; Euro notes, Pemex, 8.375; $400 million, Austrian bond, 
dated July 23, 1993, due 1998. The list goes on and on and on. They are 
already well in hock for any oil they can pump until their supplies are 
exhausted, and we are going to take security out of this? You can't get 
blood out of a turnip.
  Ms. KAPTUR. If the gentleman will yield on that, Mr. Speaker, Oil and 
Gas magazine also reported about that by the end of this decade, by 
1997, 1998, 1999, Mexico will be a net importer of oil because the 
number of barrels she has been able to produce has been cut in half, 
and because capital investment has not been able to be made in capital 
plant, and because of instability among the workers in the oilfields in 
Mexico, where conditions are just terrible.
  Mr. Speaker, I think any wise investor would question that, oil being 
used as collateral.
  If I might respond to the gentleman from Vermont
   [Mr. Sanders], who raised a good point, when it is a small item 
involving the budget, we get tied up in knots here, right?

  When we are talking about $20 or $40 billion or however much the 
American people will be on the line, it is like the Stealth bomber. It 
goes through here, nobody saw it, we didn't vote on it. It happened, it 
is a happening in America, but we didn't have anything to do with it.
  Mr. Speaker, I remember when the President came up here with his 
State of the Union speech. He didn't like the fact that the Department 
of Agriculture had spent a few thousand dollars trying to eliminate 
ticks. He spent a long time talking about ticks.
  If you come from a rural area, a lot of my district is rural, that 
can be a pretty significant problem for people. In fact, we had one 
gentleman here in Congress, Berkeley Bedell, who had to leave Congress 
because he got Lyme disease. If you know anything about what can 
happen, it is a pretty serious area to be doing research on, so I 
didn't quite understand why he picked that particular few thousand 
dollar expenditure out.
  [[Page H1276]] Here we are talking about an enormous amount of money, 
and the gentleman from Mississippi [Mr. Taylor] said ``Could we vote on 
it in the Committee on Appropriations?''
  I asked one of the subcommittee chairs of Appropriations, ``Will this 
come up before your subcommittee this year? Will we get a vote? How do 
we get a vote on this?''
  He said ``Well, you know, yes, the Treasury Department is under our 
subcommittee's jurisdiction, but this particular fund, I guess it is 
more like foreign aid, so we don't think it would come under us.''
  This is the kind of fund, it is like mercury. If you have ever seen 
mercury and you try to put your finger on it, it keeps moving around. 
You can't pin it down, really; $20 billion, maybe $40 billion, and it 
is rising every day.
  So here we stand, at 9 o'clock at night Washington time, trying to 
say it is our responsibility to vote on this kind of money, and putting 
our taxpayers at this kind of risk.
  I yield to the gentleman from Mississippi.
  Mr. TAYLOR of Mississippi. Again, Mr. Speaker, I would like to point 
out that in the past couple of weeks this Chamber has taken some steps 
toward getting our financial house in order.
  Regardless of where you stand on it, the House has passed a line-item 
veto. The Speaker as we speak is holding a press conference bragging 
about how that is somehow going to save the House of Representatives 
from itself, but we passed it.
  A few weeks ago we passed the balanced budget amendment, which I 
supported, because I think we have to be accountable. We passed earlier 
on the first day a resolution calling for an audit of every single 
House office and every single budget within the House of 
Representatives.
  But going back to what Mr. Sanders says, if it makes sense, and the 
Speaker will support an audit for a congressional office that has a 
budget of about $600,000, don't you think he would support an audit of 
a fund that has $35 billion in it; we think $35 billion, because no one 
really knows for sure, and it is the taxpayers' money. It is not the 
Speaker's money, it is not the money of the gentleman from Vermont [Mr. 
Sanders], and it is certainly not my money.
  But don't the taxpayers deserve to know where it came from, where it 
is going, and don't they deserve an up-or-down vote of their elected 
representative on how this money ought to be spent, especially when our 
Nation's veterans are being told ``There is not enough room in the 
military hospitals for you;'' especially when every university within 
short order in the continental United States is going to get a letter 
saying ``Don't ask for as much money as you got last year, money is 
tight;'' especially when highway funds are getting ready to get cuts; 
especially when everybody's State's budget, at least the money they 
receive from the Federal Government, is going to get cut?
                              {time}  2100

  How on Earth can we say domestically we want all you people to share 
in the pain, but if you are south of the Rio Grande, or if you happen 
to be a big shot up on Wall Street, here is a blank check for $20 
billion, and here is $15 billion more when you need it? And the vote 
tomorrow morning is the only chance the people in this body are going 
to get to have an accounting on that.
  I hope the Speaker will rule that this resolution is in order. But if 
he does not rule it is in order, then we have got to wonder whose side 
is he on. Is he on the side of accountability or is he on the side of 
hiding all of this from the public?
  I had an interesting call today from an Under Secretary of the 
Treasury, and he will meet with a number of us tomorrow morning. 
Interestingly enough, he said, ``You know, I can't give you all that 
information publicly.'' Why? I can understand a military secret being 
kept from the public, we would not want our enemies to know our 
capabilities of our weapons or troop strengths, but why should not the 
public know how their money has been invested and where it has been 
invested and what kind of return they have on it, and what kind of 
promise we have to get this money back? That troubles me. That is sort 
of like the old Washington mentality, ``We know it all and those folks 
back home don't know.''
  Tomorrow morning, the Members of this body will decide who they are 
with, whether they think the people of America are smart enough to know 
and ought to know where their money is coming from, and where it is 
going, or whether they just think a couple of guys, the Speaker, the 
President, the minority leader, a couple of guys from the Treasury 
Department, whether they think they alone ought to have the 
responsibility for $35 billion. That is really what the vote tomorrow 
morning is all about.
  No. 1, I would certainly encourage the Speaker to rule that this 
resolution is in order so that we can have a vote on it. But, No. 2, if 
he decides that he will not rule it in order, then I think he ought to 
at least be man enough to give us an hour to decide, to make our pitch 
in front of the full body before any sort of a motion is made to table 
it, because the people of America deserve to know what in the heck is 
going on, and they deserve an opportunity to fix this problem.
  I want to thank the gentlewoman and both gentlemen for their time.
  Ms. KAPTUR. I want to thank the gentleman from Mississippi for being 
the lead sponsor of this privileged resolution. The people of 
Mississippi should be very proud of the gentleman, an independent, 
strong-minded Member who stood up to the most powerful interests in 
America, both political and economic.
  In response to something the gentleman said, let me just mention that 
I received a letter this week from a woman from Coral Gables, FL. She 
supports us in our efforts to get a vote on this measure tomorrow. She 
sent this beautiful letter really saying the people of America 
understand what is going on and encouraging us in our efforts to get at 
the truth and to get the figures for the American public.
  But it was very interesting. She attached a letter to her letter to 
me that had been written to her by the chairman of the Banking 
Committee in the House 2 years ago, Congressman Henry Gonzalez. In this 
letter, and she even highlighted it in yellow ink for me, she quotes 
some of his statements which I think are so instructive I wanted to 
read them tonight, in which he said that during NAFTA, the NAFTA 
debate, that he endeavored to bring out that NAFTA was
 more than just a trade agreement. It is a free trade and finance 
agreement. And he underlined finance. And he was concerned that the 
finance and banking portions would turn out to be the driving force, 
backed by the largest banks and financial interests in this hemisphere. 
And he said NAFTA will have profound implications for the safety and 
soundness of the U.S. banking and financial services industries, the 
integrity of the basic banking laws of this country and counteraction 
against international money laundering.

  Now that NAFTA has passed he said the stage may also be set for 
another savings and loan style bailout as United States bankers pursue 
risky investments in the unregulated Mexican market.
  To his letter he then attached even more lengthy hearings that he has 
held in his committee. I just want to read one paragraph here by two 
gentlemen, Mr. Niko Valance and Mr. Andres Penaloza, who testified 
before his committee that the omission of an exchange rate 
stabilization mechanism in NAFTA was deliberate and a mistake. Mr. 
Valance argued that without an established exchange rate, stabilization 
mechanism, it is possible for foreign corporations to exert pressure on 
the Mexican Government to devalue the peso, thus lowering wages in 
terms of other currencies.
  In addition, Mr. Davidson cautions that the relatively volatile 
currency in Mexico poses increased potential exchange and interest rate 
risks to U.S. financial institutions. The fact that these issues are 
not addressed in NAFTA was of considerable concern to many of the 
witnesses.
  Mr. DeFAZIO. If the gentlewoman will yield, it is interesting to hear 
those statements from 2 years ago, because we have heard most recently 
from the proponents of NAFTA, the apologists for NAFTA, the Secretary 
of the Treasury and others, that no one 
[[Page H1277]] could have anticipated the circumstances. But yet the 
gentlewoman is saying that letter from the chairman of the Banking 
Committee, a neighbor to Mexico who lives just over the border, who 
understands that country well and is sympathetic to the needs of that 
country, he discerned these problems. What was the date on that letter?
  Ms. KAPTUR. The date on the letter was December 6, 1993, but the 
respective sections from the Congressional Record were dated November 
15, 1993, remarks by Mr. Gonzalez on NAFTA, page H9661.
  Mr. DeFAZIO. That is absolutely extraordinary. So perhaps a rational 
person could have anticipated that the peso was overvalued, that there 
were problems with political manipulations of the currency values in 
Mexico and, in fact, that inextricably tying the fate of our economy to 
Mexico, which seems to be what our administration is telling us, was a 
mistake.
  I would ask the gentlewoman if she noticed the statement in the 
Washington Post last weekend where the Speaker said there was a 
relationship between the minimum wage and the value of the peso in 
Mexico and Mexican workers, and said he was hesitant to support an 
increase in the minimum wage in the United States of America for people 
who work in this country because that would probably drive more jobs 
across the border.
  So we have just seen the value of the wages in Mexico, which were 
pitiful to begin with compared to U.S. wages, dropped by 50 percent, 
and now we have to withhold any increase in the standard of living for 
the people of the United States because be might lose yet more 
manufacturing jobs to Mexico.
  What happened to the promise of hundreds of thousands of jobs in 
America as we sold goods to the Mexican people? I am puzzled.
  Mr. SANDERS. Mr. Speaker, if the gentlewoman will yield, in Sunday's 
Washington Post Raul Avila, president of the National Maquiladora 
Industry Council, said that during the first 10 months of 1994 
maquiladora employment increased 6.2 percent, over 600,000 employees, 
and importantly enough, as the gentlewoman has just indicated, ``The 
industry forecasts the opening of another 600 assembly plants this 
year.''
  Mr. DeFAZIO. If the gentlewoman will yield, that, I believe, was 
because of the drop in the value of the peso.
  Mr. SANDERS. The gentleman is exactly right. With cheaper labor it 
becomes a better investment in the maquiladoras, and we can expect more 
American companies to be going down there.
  The gentleman and the gentlewoman raised interesting points a while 
ago. I am a member of the Banking Committee that dealt with the S&L 
fiasco, and as my colleagues will recall the concept ``too big to 
fail.'' Do my colleagues remember that concept? What too big to fail 
means is that the taxpayers of America were obligated to bail out very, 
very large banks because if they failed, the repercussions of that 
failure were supposedly so great that it would have been worse than 
bailing them out.
  I would like my colleagues to comment on this thought. It seems to me 
that that is precisely what is happening with regard to Mexico. We are 
now asked, well, not asked, but the President is proposing to put $40 
billion of loan guarantees into Mexico. Maybe the President is right 
and we do not know. Maybe, in fact, this will improve the Mexican 
economy, everything will work out well, and there will not be a loss of 
taxpayer money. That may be true.
  But let us look at the other side of the story. Maybe in fact the 
Mexican economy will not improve and we will lose that $40 billion. 
What I would like to ask my colleagues is this: Is it not possible that 
a year from now or 2 years from now a President will come back and say 
we have got to provide even more loan guarantees to Mexico because we 
already have $40 billion in the hopper there; we cannot afford to lose 
that. We have to protect that investment and, therefore, we need to put 
even more money into Mexico?

                              {time}  2110

  And I think the implications of that are very, very frightening. This 
Congress and this President are having a difficult enough time running 
the American economy that we know something about on behalf of American 
workers. We are not doing very well at that.
  The idea that we have the knowledge or the ability to sustain the 
Mexican economy, upon which we are dependent, is really quite beyond 
me.
  But I am afraid that we are going to have this too-big-to-fail 
concept once again. Then we are going to have to pump more and more 
money into Mexico, because if it fails, then we have lost all the money 
we put into them last year.
  Mr. DeFAZIO. I guess to bring it down to something smaller than 
billions, I think I heard very early on in my life and the old saw, you 
know, ``If you owe the bank $1,000 and you cannot pay, you have got a 
problem. If you owe the bank $100,000 and you cannot pay, the bank has 
got a problem.'' That is where we are at here.
  It is not only ultimately an obligation of the economic stabilization 
fund, and it does admit in here
 that losses can be incurred, and those losses would have to be made 
up, but also the interest earnings, gains or losses of the economic 
stabilization fund are reflected in the budget of the United States of 
America. So if the economic stabilization fund loans to Mexico, $20 
billion or so to Mexico go bad, then suddenly we are told that not only 
do we have to come up with the money but that counts as $20 billion 
more deficit for the United States of America.

  Ms. KAPTUR. On that point, if you look at what we are spending on as 
a Nation, the very first set of categories have to do with Social 
Security, and especially Medicare, the cost that the taxpayers 
subsidize Medicare. Defense is a large expenditure. Then comes interest 
rates. Right after that, the fourth largest category of spending in 
this Government is to pay the interest on the savings and loan bailout 
which totals over $1 trillion. Our children's children will be paying 
for that.
  So when we get in these debt financing arrangements, what we are 
talking about is obligating the people of our country so far down the 
road you can hardly even see the end of it.
  But in this situation with Mexico, we are not talking about money we 
own to ourselves. We are talking about money that is owed to investors 
and creditors to foreign nations. This is a very different animal than 
that exchange stabilization fund was meant to be used for in the past.
  I think what we are seeing is a different form of foreign aid, which 
does not have to be voted on here in the Congress, and that is not how 
a democracy should function or a democratic republic should function. 
We should have the debate here. We as a people must make a decision 
about what our relationship is to various countries around the world.
  Mr. SANDERS. My recollection--and help me out here--is that foreign 
aid that we do vote on is about what, $15 or $16 billion?
  Ms. KAPTUR. That is right.
  Mr. SANDERS. There is lot of debate. Many people throughout this 
country think that is too much.
  Ms. KAPTUR. Half of that is weapons.
  Ms. SANDERS. All right. What we should appreciate is that this loan 
guarantee to Mexico puts us at risk for over double what our entire 
foreign aid package is today. Is that correct?
  Ms. KAPTUR. That is correct. The gentleman is correct. I kept 
listening to the President when he said, ``Oh, this is not anything 
serious. This is just cosigning a loan.'' I would say to the gentleman 
from Oregon and the gentleman from Vermont what if someone came up to 
you and said, ``Would you sign a loan with me for $50,000? Right now, 
sign it?''
  Mr. SANDERS. For you, Mr. Kaptur, absolutely.
  Ms. KAPTUR. But maybe you do not know what my finances are like. I 
mean, would you not want to know the credit history of that person, 
what kind of assets the person had? And there is absolutely a risk that 
something might go wrong. Cosigning the loan does not absolve risk.
  Mr. SANDERS. I was on a national television program the other day and 
one of the proponents of his bailout was saying, well, the Mexican 
economy is basically in good shape; they are having a short-term cash 
flow problem. But basically it is strong. One of my 
[[Page H1278]] colleagues here talked about the national debt of 
Mexico. Is, in fact, the Mexican economy strong and stable?
  Ms. KAPTUR. The Mexican economy is not strong and stable, and the 
nation is not politically stable, which is why there is all of this 
moving up and down of the
 value of the peso. Mexico owes somewhere between $160 and $200 
billion. That is with a ``b.'' That is in public debt that is owed to 
other creditors. This is only one small piece of it. This is probably 
the piece that they thought they might be able to bite off without too 
many people disagreeing, but there is a lot more money owed, and then 
inside Mexico, because of the strange relationship between their 
private sector and their public sector and their banks, there are all 
kinds of debts internal to Mexico, and with interest rates going up 
there and with the inflation rates going up, it is a very unstable 
economic situation inside of Mexico.

  The value of their money has just been cut in half. Lots of 
businesses there have loans. The relationship of those businesses to 
their banks, to the inflation rate, et cetera, is a very unstable 
situation, and the largest revenue generator to the Government is 
Pemex, the oil company.
  Over, I think, nearly half the revenues of that Government are 
generated by Pemex, so that is another place that the oil revenues are 
pledged as collateral to their own Government.
  I happen to believe that Mexico's main problems are not economic but, 
rather, social and political; in other words, if you could get a system 
there that operated in a more democratic fashion, could you begin to 
put the pieces in place of an economic order that shared the wealth 
with the vast majority of people rather than just at few people on the 
top.
  Mr. SANDERS. The main point I wanted to make very briefly is that it 
is not for sure that this $40 billion loan guarantee is without 
significant risk, and that is the main point I wanted to make.
  Ms. KAPTUR. It is absolutely with significant risk.
  Mr. DeFAZIO. I think this was a question I asked very early on when I 
was contacted, when I filed my legislation to withdraw from NAFTA. They 
brought up all of these concerns about how it would further destabilize 
the economic situation. They said we are only cosigning, and I said, 
well, I understood if someone had impeccable credit they would not need 
a cosigner. Usually you get a cosignor because no one else wants to 
extend you credit, and they think maybe you would not be good for it. 
If Mexico's credit is so great, I suggest they go to the same Wall 
Street financiers who have made 20- to 50-percent interest, nice rate 
of return, and perhaps say, ``Look, you have been making a lot of money 
down in Mexico, how about extending some loans on favorable terms, 
maybe only 15-20 percent interest per year as opposed to what we have 
been paying you, still better than you can get generally in the United 
States stock market, S&P index, United States Treasury, better than you 
can get anywhere else.''
  I would assume the Wall Street financiers, thinking there is no 
problem, if they want the Government to cosign, why do they not just do 
it directly. Why do not they do it themselves? They are telling us we 
will make money on this. The taxpayers might make money on it. Might 
lose $40 billion on it, but, this is a river boat gamble. We are river 
boat gamblers with $40 billion of assets of the United States of 
America that belong to the people of this country. I do not think so. 
That is not our role here. Let the people on Wall Street be the river 
boat gamblers, not the people on Main Street.
  Ms. KAPTUR. I am telling you, if those people on Wall Street and in 
the banks around this country made as risky investments as this group 
did down in Mexico, our entire banking system would be in a state of 
collapse.
  Mr. SANDERS. Essentially what we want is two things. We need far more 
information about this bailout and, second of all, and most 
importantly, we want the U.S. Congress, which presumably was elected to 
represent the American people, to be able to vote this thing up or 
down, and in my view, the Congress would vote it down.
  Now, I think if the American people are upset about this process, it 
is terribly important that they stand up, they tell the President and 
the Republican leadership that they understand what is going on, that 
they want a vote on the floor of the House, they want the Members of 
Congress to represent their interest and not put $40 billion at risk.
  So we hope very much that the people will stand up, fight back, and 
start callng their Members of Congress, the President's office, and the 
leadership to demand a vote on this important issue.
  Ms. KAPTUR. I want to thank the gentleman from Vermont [Mr. Sanders] 
for joining us this evening, the gentleman from Oregon [Mr. DeFazio], 
the gentleman from Mississippi [Mr. Taylor], and the gentleman from 
Ohio [Mr. Brown].


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