[Congressional Record Volume 144, Number 129 (Thursday, September 24, 1998)]
[Senate]
[Pages S10937-S10938]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

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                 CONSUMER BANKRUPTCY REFORM ACT OF 1998

 Mr. BAUCUS. Mr. President, I rise today to address an issue 
the Senate addressed yesterday, amendment #3616 by Senator Harkin. 
While I cast my vote against tabling this Sense of the Senate, I must 
admit I did so with great personal reluctance. I respect the 
independence of the Federal Reserve Board, and I particularly respect 
the judgement and ability of its Chairman, Alan Greenspan.
  Our country has experienced an unprecedented period of economic 
growth and stability. Congress took the politically difficult step of 
putting our financial house in order by enacting the 1994 budget 
reconciliation legislation. But the steady hand of the Federal Reserve 
Board and its Open Market Committee has helped that seed grow. With the 
able leadership of Alan Greenspan, the Fed has helped guide our country 
from the brink of recession to an unprecedented period of economic 
growth.
  But even the Fed is looking at the current economic conditions and 
re-evaluating its interest rate policies. We have a problem with 
liquidity of capital in this country, which makes it harder for other 
countries to stabilize their currencies. As they try to acquire 
dollars, two things happen.
  First, our foreign trading partners find it increasing more difficult 
to purchase American goods. Just ask any farmer in Montana whether this 
has negative economic consequences for our country and you will get an 
earful. If farmers can't sell their products in the export market, they 
cannot survive economically. Communities that are economically 
dependent upon farmers find themselves in their own downward spiral, as 
businesses who rely on farmers to buy their goods are also squeezed 
economically. This same pattern can be repeated in other communities 
around the country, whether their economic health is tied into farm 
exports or any other kind of exports.
  The second consequence of tight capital is that it can lead to what 
is known as deflation. It has been a long time since we have had to 
worry about a deflationary spiral in this country, but it certainly 
seems to me that this

[[Page S10938]]

time has regretfully arrived. Our foreign trading partners need dollars 
desperately because of the devaluation of their own currencies, so they 
try harder to sell their goods to American consumers. The lower price 
of these goods drives down the price of domestically produced goods 
too. American companies cut production, which forces them to also cut 
employment. As unemployment begins to edge up, consumer confidence and 
purchasing drops, which causes further drops in price.
  So whether we can't sell our products abroad, or too many lower-
priced foreign goods are being sold here, the result is the same--a 
deterioration of our own domestic economy.
  I believe the signs all point to an inevitable lowering of interest 
rates by the Fed. Whether it is done at this next meeting or at some 
future one, I cannot see another alternative. So while this is a hard 
vote for me, because of my natural inclination to defer to Mr. 
Greenspan and the other members of the Federal Open Market Committee, I 
truly believe it is the right answer not only for our domestic economy 
but for our global economy as well.

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