[Congressional Record Volume 141, Number 172 (Thursday, November 2, 1995)]
[Senate]
[Pages S16565-S16568]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             CLASS WARFARE

  Mr. DORGAN. Mr. President, yesterday, I was on the floor of the 
Senate discussing the reconciliation bill and discussing some other 
issues, including trade issues, and I was confronted, once again, with 
the rejoinder that a discussion of the type that I was having was class 
warfare. I responded to that at the time. But I was thinking about this 
last night as I was reflecting on the discussion we had.
  I thought to myself that it is interesting because every time you 
talk about the economic system in this country and who it rewards and 
who it does not reward, who it penalizes and who it does not penalize, 
somebody says you are talking about class warfare. What a bunch of 
claptrap, to call a discussion about economic strategy in this country 
and who benefits ``class warfare.
  Here is what I said yesterday. I was relating it to the 
reconciliation bill, a bill that, not me, but a Republican strategist 
said largely takes from those who do not have and gives to those who 
do.
  I was reading an article written by John Cassidy, which I thought was 
interesting. He talks about the economic circumstances in our country. 
He said that if you were to line up all Americans in a row, with the 
richest American far on the right and the poorest American far over 
here on the left--line all Americans up in one row--and then go to the 
middle American, the one right in the middle, the average, and that 
middle American standing in the middle of that line would be a working 
American, who earns, on average, $26,000 a year.
  His article pointed out something I pointed out to the Senate 
previously, which I think relates to why people are sour in this 
country and why they are upset about where we are headed. He pointed 
out what that person making $26,000 a year, that working family there 
making $26,000 a year, has experienced in this country.

[[Page S 16566]]

  In September 1979, this person was earning $498 a week. In September 
of 1995, if you adjust for inflation, this worker had lost $100 a month 
in income. Let me state that again. This is a person working in this 
country--a country we always expect to have an economy that provides 
opportunity, growth, and advancement--a person who works for an income 
of $26,000, in 16 years, discovers he is $100 a month behind.
  Why is that happening? Because our economic system in this country is 
one where we are saying to the American workers, ``We want you to 
compete on a different level.'' Other people in this world are willing 
to work for pennies an hour. People putting shoes together in Malaysia 
work for 14 cents an hour. They hire kids in India to make rugs. They 
hire cheap labor in Mexico to make products that used to be 
manufactured in this country by people who had good manufacturing jobs.
  It is because those jobs increasingly have moved out of our country, 
because wages in this country have diminished, because we have decided 
to allow foreign competitors to access our marketplace with a product 
of cheap goods, which are the product of cheap labor, people earning 20 
cents an hour making shoes in Sri Lanka, or shirts from China. The list 
goes on and on and on. Is that good for the consumer? Yes, because in 
the short run they can buy cheaper goods, presumably. In the long run, 
American jobs are gone.
  That middle-income wage earner, who loses $100 a month in earnings in 
16 years, discovers that this kind of global economics hurts middle-
income wage earners.
  The same article made a different point. The top 1 percent of the 
families in this country in 1977 were earning an average of $323,000 a 
year. In 1989, the year for the comparison of the top 1 percent, that 
was up 78 percent; they went from $323,000 a year in income to $576,000 
a year in income.
  So while the person right in the middle in this country has lost $100 
a month, we have the upper 1 percent, whose incomes per person go up to 
half a million per year, with a nearly 70 percent to 80 percent 
increase in income.
  My purpose was not to say that the people at the top are not worth 
it. I do not know whether someone making half a million is worth it. I 
do not know what they are doing. My purpose is not to say they do not 
deserve it. They may well deserve all of it.
  My purpose is to say an economy that provides enormous rewards to the 
small group of people at the top but penalizes--because of its economic 
strategy--the middle-income families in the middle by saying to them, 
``Work 16 years and you will be $100 less a month and you will be 
farther behind,'' something is wrong with that strategy.
  That was the point I was making. I was equating that point to the 
strategy in the reconciliation bill that says to 50 percent of the 
American families--and guess which 50 percent--the bottom half will pay 
more as a result of this bill; and then says to the top 1 percent--
guess what--it is time to smile. When you get your envelope, it will 
have good news because you get a significant tax break.
  That is the point I am making--not class warfare, just the facts, the 
facts that describe why a lot of people are upset about which economic 
strategy. Why do we see a $26,000-a-year wage earner work hard for 16 
years and lose ground?
  Let me give examples. Here is a company that makes pants--slacks. On 
July 19, they filed a form down at the Department of Labor that says 
280 of their workers now apply for trade adjustment assistance.
  What does that mean? In plain English, they had 280 people working 
for them that are not working for them anymore because of foreign 
competition. That means this company moved their company to Mexico, 
fired the American workers, the American workers go on trade adjustment 
assistance. Then this company, after the taxpayers pay trade adjustment 
assistance for unemployed Americans who lost their job and takes its 
production to Mexico where it can hire cheap labor, makes the same 
product, and ships it back into this country.
  The net result? More profits for this company, more profits for the 
pants maker, but 280 people out of work.
  Are these slothful, indolent people who do not want to make their way 
in life? No, working families that had a job but cannot compete with 
people who make 70 cents an hour or $1 an hour and should not be 
expected to compete in those situations because it is not fair 
competition.
  This company, by the way, that has 280 of its people receiving trade 
adjustment assistance says the following: ``They perform most of their 
sewing and finishing offshore to keep the production costs low.'' 
However, the finishing of garments sewn by third-party contractors is 
conducted either in one of its U.S. facilities or in the offshore 
facilities. The offshore plants pack the finished garments and ship 
them back to the United States for U.S. customers.
  Here is what it says in the financial report. Certain of the 
companies that formed subsidiaries had undistributed retained earnings 
of $21 million on November 4, 1994. No U.S. tax has been provided on 
the undistributed earnings because management intends to indefinitely 
reinvest such earnings in the foreign operations. In other words, they 
made $21 million by moving the jobs outside of this country and pay 
zero tax.
  What about their competitor? If their competitor across the street 
stays in this country and makes the same kind of pants and makes $21 
million, they pay a $7 million tax to the U.S. Government. Said another 
way, this company gets a $7 million tax break for moving its jobs 
offshore.
  Last week, I offered an amendment here in the U.S. Senate--very 
simple. No one could misunderstand it. It said at the very least we 
should stop penalizing the companies who stay in this country and keep 
the jobs in this country, get rid of the tax incentive that says if you 
close your plant in America and move it overseas, we give you a tax 
break.
  Stop this perverse, insidious tax break for companies who decide they 
will close their American plant and move the jobs overseas, giving them 
an advantage over the people who stay here and produce here and work 
here in this country. My amendment failed on a party-line vote. It 
failed on a party-line vote. I say if we cannot close this loophole, we 
cannot close any loopholes. We will have a chance to vote on this 
again.
  Let me give another example of why that $26,000 family is working 
harder and losing ground. This is from a Fruit of the Loom news story, 
October 31, 1995. That is the day before yesterday. Fruit of the Loom, 
the Nation's largest underwear maker said today it would close six U.S. 
plants and cut back operations at two others, laying off 3,200 workers, 
or 12 percent of its work force.
  What you are seeing, said their spokesman, is the cumulative impact 
of NAFTA and GATT, our trade agreements.
  This company will lay off 3,200 people. It does not mean much, just a 
statistic. A statistic is sterile, antiseptic, and does not mean 
anything to anybody.
  One of the 3,200 is a person that has a name, went to school, had 
some hopes deep in their chest for themselves and their family and 
their future, who are called in some place and told, ``Guess what? We 
have some news for you. This job you had at our company does not exist 
anymore. We are moving that job to a foreign country where we can buy 
labor for 50 cents an hour, 14 cents an hour or $1 an hour. We think 
having to pay you $5, $7 or $10 an hour is way too much money. So we 
will access profit by obtaining foreign labor and doing overseas what 
we used to do here.''
  This $26,000 worker or one of these 3,200 people that have lost their 
jobs might ask the question these days: If productivity is up--and it 
is--productivity is up in this country; the stock market is up--it is 
at record levels; corporate profits are up--at record levels; if 
America is doing so well, why is this middle-income family losing 
ground?
  I spoke yesterday about part of the reason for that. It is a combined 
strategy that says in this country that we measure economic health by 
what we consume, not what we produce. There is no premium on 
production. If we have not learned anything by studying several hundred 
years of economic lessons, we certainly have not learned the 

[[Page S 16567]]

lesson of the British disease--slow economic decline. Once you decide 
that production does not matter, consumption is what counts.
  You measure consumption every month forever and talk about how good 
things are going in this country and have your production facilities 
leave America, you weaken this country forever. You inevitably weaken 
America's ability when you weaken its productive sector.
  Now, I talked about all of that yesterday in the context of needing a 
new trade strategy, especially a new trade strategy. We cannot compete 
with one hand tied behind our back and should not be expected to 
compete with people making 14 cents an hour or we do not want to 
compete with those kids who are paid 12 cents an hour working 12 hours 
a day. American workers should insist that competition be fair in 
international trade.
  I also said yesterday that not only is our economic strategy and 
trade strategy desperately in need of reform so that it responds to the 
needs of those who stand in the middle of the line of the income 
earners in this country. At a time when those on the upper side of the 
line are doing handsomely, the people in the middle are losing ground. 
Not only do we need a new economic strategy to address those issues as 
we discuss issues like the reconciliation bill in Congress, we also 
need to understand what all the statistics mean.
  When we decide that the philosophy we pursue is one that says let the 
bottom 50 percent pay more and let the top 1 percent be handsomely 
rewarded, it is not any wonder that people are sour about the 
priorities here.
  The earned-income tax credit, as an example in the reconciliation 
bill, the earned-income tax credit changes are the result or are the 
reason why the bottom half will largely pay marginally more tax after 
this reconciliation bill is passed.
  What is the earned-income tax credit? It is the earned-income tax 
credit that goes to people that work at the low end of the income scale 
that provides incentives for them to work, the very thing we have 
debated for months.
  We want to get people off of welfare rolls and onto payrolls. We need 
to provide incentives for people to go to work. People who are working, 
often at the bottom of the scale, need those incentives.
  This reconciliation bill says, by the way, these incentives are 
unimportant to us, so what we will do is limit the earned-income tax 
credit. And what is important to us? Building B-2 bombers nobody asked 
for, building a star wars program nobody wants, buying F-16 and F-15 
airplanes nobody ordered, buying two amphibious ships for $2 billion 
that the Defense Department said it did not need, and spending $60 
million, without a hearing, for blimps.
  I am still asking, and I am asking again today, if there is anybody 
in this Chamber who knows who wrote in the $60 million in the defense 
bill to buy blimps, please raise your hand or come to me in the coming 
days so I can give proper credit where credit is due. Who in the Senate 
thinks we ought to buy blimps in the American defense bill? Somebody 
does. Somebody wrote it in. Nobody now will claim credit.
  This is all about priorities. It is not about class warfare, not 
about one group of Americans versus another. It is all about trying to 
make sure the American wagon train moves ahead without leaving some 
wagons behind. It is about the priorities in this economic strategy, a 
strategy that actually encourages American corporations to move jobs 
out of this country, move them overseas, through this perverse tax 
incentive that rewards them when they do it. It's the economic strategy 
that says we do not care about those who stay here. We will not offer a 
minimum level of protection against unfair competition by 12-cent labor 
or 12-year-old laborers, or stuff produced by companies overseas that 
pump pollution into the air or water.
  It is not a strategy that makes sense for this country's future. We 
must find ways, not only as we discuss this strategy on trade but also 
as we discuss the reconciliation bill, to merge our interests and make 
sure that all Americans move ahead. This country succeeds when we make 
sure that we provide opportunities for everyone. The private sector, 
the job base, the opportunities that exist must exist for all 
Americans, not just a select few Americans.
  Most people I know want an opportunity to succeed and want an 
opportunity to do better. Most people are willing to get training and 
get education and go search for jobs. Regrettably, these days, fewer 
and fewer good jobs are available. The good manufacturing jobs, they 
are going to Mexico, going to Sri Lanka, going to Bangladesh, Malaysia, 
and Indonesia. Those are jobs that used to be in Phoenix, yes, some in 
Bismarck, El Paso, Denver, Chicago, and Pittsburgh.
  This country needs to rethink its economic strategy. It needs to 
rethink the strategy in the reconciliation bill, which is wrong. It 
needs to rethink its economic strategy in trade policy and have a 
broader economic game plan to try to encourage, persuade and retain an 
aggressive, thriving production industry in our country.
  Not our country, not any country, will long remain an economic power, 
a world-class economic power, if it exports its productive base.
  I asked a recent Trade Ambassador, who shall remain unnamed--Carla 
Hills--is there any area at all, any area of productive capability, 
steel, autos, any area that you think that we must not do without, that 
would hurt our country if we lose? No answer. Apparently, there is 
nothing the loss of which would hurt our country.
  I could not disagree more. No country will remain a strong economic 
power unless it has an auto industry that thrives, a steel industry, a 
transportation industry. The storm clouds are overhead. The small craft 
warnings are out already.
  People who do not study these issues, including international trade 
and the broader economic strategy, and who wins and who loses, and 
people who do not study the consequences of the reconciliation bill, I 
think only add to the aggravation that a lot of American families feel 
about a system that says to them: Work harder and you will achieve 
less. Work 15 years and you will be $100 a month behind, if you happen 
to be in the middle of American wage earners.
  We have a lot of debate ahead of us on the issue of reconciliation 
because the President, justifiably and predictably, will veto this 
bill. This is a terrible piece of legislation. There will be a veto and 
then this country, in the tradition of 200 years of democracy, must 
come together and reach a compromise.
  Republicans and Democrats may disagree on some things, but the fact 
is, it is required for us to compromise. That is the way the system 
works. One side or another may not like it, may not want to, but we are 
required to do that.
  This stuff about default, train wreck, shutdown, is fundamentally 
irresponsible. No one in this country expects any thinking or any 
thoughtful legislator to believe that any of those strategies would be 
in America's best interests.
  It is my hope in the coming days and in the coming next several weeks 
that Republicans and Democrats together will think through the common 
elements of a plan that makes sense for this country. Can anybody, 
anybody ever believe it is in our interest to provide a tax break to 
move your plant overseas? Anybody? I understand we have had a couple of 
votes on it. Both times I have lost. But one of these times it must not 
be political. One of these times people need to look at that and say: 
Is there a reason to provide a tax break to say to somebody, ``Close 
your plant in America, move it overseas, kill those jobs in America, 
hire some foreign workers for pennies an hour, and we will give you a 
reward; in this case, we will give you $7 million; close it up--a $7 
million benefit''?
  We will not give that benefit to an American plant operator, some 
owner of an American business or some workers in an American business. 
We will not give that to them for staying there. We will just give it 
to somebody who decides to move the jobs out of our country.
  I need to explain that vote to a number of constituents, honestly. We 
are going to vote on it again. That is just a small, baby step in the 
march of a better economic strategy that makes sense for this country 
in terms of the growth of the productive center, growth of good jobs 
and opportunity for all Americans.
  Mr. President, I yield the floor.

[[Page S 16568]]

  Mr. President, I make a point order a quorum is not present.
  The PRESIDING OFFICER (Mr. Coats). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. THOMAS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________