[Congressional Record Volume 141, Number 124 (Friday, July 28, 1995)]
[House]
[Pages H7977-H7978]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



[[Page H 7977]]


                             TRADE DEFICIT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio [Ms. Kaptur] is recognized for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, tonight, in the few minutes allocated, I 
would like to talk a bit about why our people, the American people, are 
working harder, but in fact, they are finding that their dollar buys 
less.
  They are working longer hours, more hours; some families 2 and 3 
jobs, and yet when they go to pay the bills at the end of the week, or 
at the end of the month, the dollar just does not stretch as far as it 
used to stretch. In fact, both Newsweek and Time magazines have had 
tremendous articles in the last month on wages in America and what is 
happening to the American family as a result.
  Today, Mr. speaker, the Commerce Department announced very 
disappointing economic statistics for our country: basically, that the 
economy is stuck dead in the water. There was a story on the front page 
of the New York Times today which I am going to put in the Record that 
reads in the first paragraph that the economy really had extremely 
paltry growth in the second quarter, and we, as a country, are stuck at 
the 50-yard line. We just cannot seem to move forward.
  The article also talks about the stagnation of wages and the job 
insecurity felt by millions and millions of our American families. One 
wonders why we do not hear more about it here in Washington because 
this is the reality of what our friends and neighbors are living with 
every day.
  Mr. Speaker, tonight I want to talk a little bit about what I call 
the ``trade drag'' on our economy, the trade deficit drag that is 
really helping to hold down the ability of our people's wages to grow. 
If we think about the car races we might see at the Indianapolis 500, 
where they have to slow down and that big parachute comes out the back, 
and even a car that is going 150, 200 miles an hour stops almost in 
place. That is how a trade deficit works in terms of the ability of 
this economy to move forward.
  Over the last decade, our Nation has lost over $1 trillion, $1 
trillion of economic growth, to other places in the world. We have been 
amassing gigantic trade deficits, more imports coming in here than our 
trade deficits, more imports coming in here than our exports going 
abroad, and that has created pressure on the companies and the workers 
in our country because of low wages and working conditions.
  There is no environmental enforcement in these other places around 
the world where these goods come from, and all of a sudden we find our 
workers in competition with the lowest-wage workers in the world in the 
most undemocratic places we could ever imagine living in.
  Let us look at some of the results of that. If we take a look at this 
year alone, we expect that we will have $184 million more of 
merchandise coming in here than we are sending off shore through our 
exports.
  This year we will have an increase over last year, when that deficit 
was $166 billion. When we figure every billion translates into 20,000 
lost jobs in this country, all of a sudden we begin to think about 
things that are happening in our own communities back home and we begin 
to understand the dynamic of what is happening in 1,000, 2,000, 5,000, 
10,000 places across this country where we are essentially exporting 
abroad our manufacturing productivity and importing goods from low-wage 
places around the world.
  We were told that NAFTA, the agreement with Mexico, would be a good 
thing for America. I would sure like to see some of the proponents get 
back on television; we have not heard a word from them lately because, 
in fact, the numbers are working exactly in reverse.
  If we look at the figures of both the United States and Mexico, prior 
to NAFTA signing we always sent more exports down there than imports 
were coming in from Mexico. But just in May of this year, we had a $1.6 
million deficit with Mexico. That is just in 1 month; that is over 
25,000 jobs. We have lost one plant a day to Mexico since NAFTA was 
signed.
  Mr. Speaker, our trade deficit with Mexico this year is expected to 
reach over $20 billion. That is an exact reversal of the trade figures 
prior to the signing of NAFTA. In fact, we are also amassing gigantic 
trade deficits with Canada for the first time. It is projected this 
year to be over $14 billion. So as a result of NAFTA, this year, the 
United States-Mexico-Canada combined, we will have over $34 billion 
trade deficit just with those two countries.
  Mr. Speaker, part of the reason for the fiscal drag on the people of 
this country is that our trade policies are absolutely backward and do 
not benefit our people here at home.
  Mr. Speaker, I submit the following for the Record:
                [From the New York Times, July 27, 1995]

                        Clinton and the Economy

                          (By David E. Sanger)

       Washington, July 27.--On Friday morning, the Commerce 
     Department will issue a figure that until very recently the 
     White House was dreading: an accounting of the economy's 
     paltry growth in the second quarter of the year, a grim 
     statistic that for much of the year looked as if it would be 
     the first step off a steep cliff.
       The number will likely be around five-tenths of a percent, 
     a long, long fall from the economy's spectacular performance 
     last year. But now there is a growing consensus among 
     economists and traders that the figure will likely be the 
     year's worst and that a rebound is already under way.
       They are basing their optimism on the usual hodgepodge mix 
     of home sales, the pace of exports, inventory levels and 
     other straws in the economic wind that recently suggest that 
     the worst is probably over. At the White House, officials are 
     already declaring that the much talked-about ``soft landing'' 
     has arrived.
       The second-quarter figure is coming out at a time that the 
     second quarter seems no longer relevant,'' Treasury Secretary 
     Robert E. Rubin, who has predicted publicly for several 
     months that the rebound would start in the second half of the 
     year, said today. ``The question now is how strongly do we 
     resume growth.''
       The political import of all this is lost on no one in 
     Washington: It has been more than 40 years since a Democratic 
     incumbent ran for the Presidency with the economy seemingly 
     strong, inflation under control and unemployment off the 
     front page. Against all the speculation just a few months 
     ago, Bill Clinton now looks as though he may break the spell.
       What that means in concrete political terms--the first 
     primary is still seven months away--is anyone's guess. Even 
     if the economy does bounce back in the coming months, it is 
     far from clear that there will be corresponding political 
     gains for Mr. Clinton.
       Growth was strong and inflation was low last November, and 
     the result was a Republican seizure of both the House and the 
     Senate. In the postwar era, growth had to average more than 
     4.6 percent in the year leading up to an election for a 
     Presidential incumbent to be re-elected.
       And the stagnation of wages and the job insecurity felt by 
     millions of Americans remain a major economic problem, and an 
     even bigger political one, a point Mr. Rubin and other 
     Administration officials acknowledge.
       But an economy in downturn as the primaries approach seemed 
     probable just a few months ago, and Mr. Clinton's economic 
     advisers are delighting in the fact that the business cycle 
     seems unlikely to give the Republicans any fresh ammunition.
       ``This gives tremendous momentum to the Clinton re-election 
     candidacy,'' Secretary of Commerce Ronald H. Brown, the 
     former chairman of the Democratic National Committee who 
     until a few months ago was considered a likely candidate to 
     run the campaign, said in his office today. ``We ought to 
     take the quotes from all those guys on the Hill who were 
     predicting doom and gloom and throw them back in their 
     faces.''
       The Republicans, of course, will retort that the man who 
     brought about the soft landing was not Bill Clinton but one 
     of their own: Alan Greenspan, chairman of the Federal 
     Reserve. Last year he was regularly portrayed by the White 
     House as the lurking force of evil in the economy, raising 
     interest rates last year to head off inflation.
       On several occasions the White House forgot its stated 
     policy of never arguing in public with the Federal Reserve, 
     carping about its approach and saying that it would cost jobs 
     and growth. More than a few times Mr. Rubin had to call his 
     colleagues in the Cabinet and ask them, politely, to shut up.
       Now, after a considerable amount of revisionist thinking, 
     Mr. Greenspan has become something of an economic hero in the 
     White House. The interest-rate increases are now viewed in a 
     kinder light, in part because they choked off inflation but 
     especially because rates began to come down again last month.
       Suddenly the most likely successor to Alan Greenspan, whose 
     term runs out next March, is Alan Greenspan. (The reality is 
     that probably no one else could get confirmed: The Republican 
     leaders of the Senate would probably hold up the nomination 
     of any other candidate until after the next election.)
       Certainly not all the news has been good, and anyone 
     wanting to construct a pessimistic outline for the months 
     ahead has plenty to work with. In May, personal income 
     declined slightly, the first fall since January 

[[Page H 7978]]

     1994. In June, a leading index of manufacturing purchases 
     declined for the second consecutive month, after nearly two 
     years of growth. Car sales plunged alarmingly in the spring, 
     leaving the chief executives of the Big Three shaken. 
     Mortgage applications are down, even though interest rates 
     have dropped nearly two points in eight months. the savings 
     rate continues to fall.
       Some economists maintain that any good news is simply a 
     delay of the inevitable. ``If the economy survives 1995 
     without a recession, next year will offer no respite from 
     hazards,'' the Jerome Levy Economics Institute at Bard 
     College wrote last week in one of the blitz of newsletter 
     analyses that has preceded Friday's report on gross domestic 
     product. ``The probability of a recession beginning either 
     this year or next is 60 percent.''
       If so, Mr. Clinton could find himself in exactly the 
     condition he managed to exploit brilliantly against George 
     Bush.
       But inflation seems increasingly unlikely to be an issue as 
     the election approaches; it is not only down in this country 
     but around the world. The job market has remained 
     surprisingly strong, an impression bolstered today when the 
     Government announced a large decline in claims for 
     unemployment benefits. Retail sales are up, though much of 
     that comes from huge promotions that car makers are using 
     after they were caught by surprise by slow sales early in the 
     year.
       There are three major issues that seem to bother the 
     Administration's top official when they talk about the 
     economy: What will happen to personal income, whether a 
     showdown with the Republicans over the budget sends the 
     markets into a tailspin and what happens if the country's 
     export boom suddenly dries up.
       All the economic indicators in the country can turn up, but 
     if income stays stagnant, Mr. Clinton's advisers agree, he 
     will be unable to convince voters that much has changed, 
     ``It's the problem the President works on the most,'' Mr. 
     Rubin said today, referring to proposals in his budget for 
     training and education. ``Because median real wages have not 
     behaved well, too many Americans can't feel in their own 
     lives what has happened in the economy.''
       The second concern is that the battle over the budget will 
     bring the Government to a standstill in October, with all 
     kinds of hard-to-predict economic fallout. ``We've had the 
     Government close for a day or two in the past; but what we 
     are worried about is something much longer and worse,'' a top 
     Administration official said recently. ``And it is unclear 
     who would be blamed for that, Bill Clinton or Newt 
     Gingrich.''
       And the third concern is that the hidden miracle of the 
     economy--exports--will finally cool off. Just how much 
     exports are rising is a matter of how you measure, but the 
     trend is pointing to a 15 percent increase over last year, 
     fueled by the weak dollar. That is a remarkable achievement 
     at any time, but particularly when the country's No. 2 and 
     No. 3 trading partners, Japan and Mexico, are in the most 
     dire economic trouble they have suffered in years.
       Whether the country's economic growth can be sustained even 
     if the domestic economy slows further, then, depends in large 
     part on keeping up a huge flow of goods to Europe and 
     Southeast Asia. And that means depending on economies over 
     which Mr. Clinton has virtually no control.
       ``What no one has noticed in the past year or so is that 
     now fully 50 percent of our exports go to the Pacific 
     Basin,'' said Mickey Kantor, the United States trade 
     representative and another potential candidate to run Mr. 
     Clinton's compaign. ``That is why we have such a critical 
     interest in continuing the market openings there and building 
     those relationships.''
       But Asia is also where the United States has its biggest 
     trade deficits, and they, too, have widened over the year. 
     That could be the wedge the Republicans turn to first.

                          ____________________