[Congressional Record Volume 142, Number 29 (Wednesday, March 6, 1996)]
[House]
[Pages H1755-H1756]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 JOBS IN AMERICA AND THE 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, I rise tonight on the topic of jobs in 
America and the trade deficit, an issue which, after 10 years of very 
hard work, has finally made it into the headlines during this 
Presidential primary season, and it could not have come too soon.
  Last week, in our local newspaper, the Toledo Blade, one of the 
headlines read, ``Trade Deficit Highest in 7 Years.'' In fact, last 
year, 1995, the amount of imports coming into this country versus 
exports going out ballooned to over $111 billion, the worst performance 
of this economy since 1987, and, in fact, last year's goods deficit, 
that means the part of the trade deficit that deals with hard 
merchandise, grew to $175 billion, an increase of over 5 percent from 
the prior year. That means we are digging ourselves deeper in the hole.
  Trade deficits like these have turned our country from being the 
largest creditor in the world, that means that people borrowed from us, 
rather we have become the largest debtor nation in the world, importing 
much more than we export and having to monetize, pay for those imports 
with our hard-earned dollars. Is it any surprise that the kind of 
lingering trade deficit has served to act as a downward push on wages 
in this country, contributing as well to the loss of millions of jobs 
across our country as we see not just low-skilled jobs but high-skilled 
jobs moving abroad and a general decline in our own living standards?
  And if you think about that for a second, with interest rates even at 
the level that they are today, is it not harder for you to afford a car 
than it was for your parents? That is because goods cost more here now.
  I just want to show you a chart, I will put it up here, which in the 
red, which is the part I want to reference here, shows what has been 
happening for the last 20 years in our country. We have not had a year 
where we have had more exports going out of our country than imports 
coming in here. In fact it has been getting worse and worse. Last year, 
1995, will be worse than the year of 1994. In fact, if you look at our 
entire balance of payments, the measure of all of the inflows and 
outflows of capital, goods and services to and from our country, our 
position has been deteriorating, as this chart indicates, since the 
1970's, largely as a result of a lack of domestic savings and 
investment here at home, but more important, the rising penetration of 
foreign imports into this country and the literal displacement of jobs 
in our country.
  I cannot tell you how many Members have come up to me on this floor 
since NAFTA's passage, which we fought so hard against. They said, 
``Marcy, we lost 3,000 jobs in northern Alabama. We have lost 2,000 
jobs in east Tennessee. We have lost 14,000 jobs in Florida,'' and the 
automotive parts companies of my State of Ohio, 1,000 jobs gone already 
just as a result of that one trade agreement and as well as the lack of 
access we have into other closed markets in the world.
  Much attention has been put on the impact of a long-term budget 
deficit in our country, and that is important. However, very little has 
been said about this structural trade deficit, the other pillar of the 
twin deficits on which our economic house and our futures stand. And I 
am very happy this has become a Presidential issue. It is being talked 
about in the Republican Party. It is being talked about in the 
Democratic Party.
  I guess it just goes to show that when you run for President, 
probably the most important power you have is to focus attention on 
something important.
  The trends are not encouraging. Since 1990, even though we cut our 
budget deficit by 23 percent and further cuts are expected in the 
coming years, our trade deficit has grown by 54 percent. At this rate, 
the trade deficit will overtake the budget deficit within the next 2 
years, and, in fact, it already has.
  The same logic that is used to support cutting the budget deficit 
could be equally applied to the argument for cutting this trade 
deficit. Any borrower or buyer of a foreign good knows that debt has a 
price. The U.S. trade deficit technically represents a liability on our 
national balance sheet, a loan from a foreign seller or creditor that 
must be financed.
  As noted economist Wynne Godley has stated, the main causes for 
concern are the financial constraints that occur when countries become 
heavily indebted and the loss of national income that results from 
rising interest payments.
  In the past, even though you may go and buy a car and it may come 
from another country, you purchase it with your credit card, when you 
make those interest payments, those go to the foreign manufacturer. 
This is what I talk about when I say monetizing that debt.

  In the past, increased flows of foreign investments into our country 
as well as their purchases of our securities, our Treasury bills, were 
necessary to pay for our trade deficit. Now the willingness and 
capability of these foreign creditors, especially Japan, to continue 
these investments and purchases is on the wane. As foreign direct 
investment and purchases of our securities decrease, the United States 
will still need to attract foreign capital to pay for this deficit.
  If the trade deficit remains at the same level, by the year 2010 we 
will be paying the equivalent of 2.5 percent of the entire amount of 
goods and services produced in this country and interest payments and 
capital outflows to foreign countries.
  Now, the 2.5 might not sound like a lot, but it represents the amount 
by which this economy is growing. It is

[[Page H1756]]

not enough to catapult us into the high standard of living we would 
hope for our people.
  Only with the goal of cutting our exploding trade deficit and making 
sure it remains a part of the Presidential race this year will we be 
able to cure the other part of the twin deficit that is causing the 
downward pressure on wages and living standards in this country.

                          ____________________