[Congressional Record Volume 149, Number 52 (Tuesday, April 1, 2003)]
[House]
[Page H2559]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    AMERICA MUST NOT ALIENATE ITSELF

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas (Mr. Paul) is recognized for 5 minutes.
  Mr. PAUL. Madam Speaker, this week we will be working on the $75 
billion supplemental appropriations to pay for the war. Financing the 
war is not as simple as it appears. It involves more than just passing 
a piece of legislation labeled as support for the troops.
  It has now been fashionable to bash France and Germany and other 
friends if they are less enthusiastic for the war than we think they 
should be. Yet foreign corporations provide millions of jobs for 
American citizens. French companies alone employ over 400,000. There is 
a practical reason why offending the French and others may backfire on 
us.
  In 2002 we earned $11.9 billion less from our investments overseas 
than foreigners did here. This is not a sign of financial strength. A 
negative balance on the income account contributes to the $500 billion 
annual current account deficit. Since 1985 when we became a deficit 
NATION, we have acquired a foreign debt of approximately $2.8 trillion, 
the world's largest. No nation can long sustain a debt that continues 
to expand at a rate greater than 5 percent of the GDP. This means we 
borrowed more than $1.4 billion every day to keep the borrowing binge 
going. This only can be maintained until foreigners get tired of taking 
and holding our dollars and buying our debt. Bashing the French and 
others will only hasten the day that sets off the train of economic 
events that will please no one.
  In thinking about providing funds for the war and overall military 
expenditures, not only must every dollar be borrowed from overseas, but 
an additional $150 billion each year as well. The current account 
deficit is now 44 percent greater than the military budget and 
represents the amount we must borrow to balance the accounts. The 
bottom line is that our international financial condition is dire and 
being made worse by current international events.
  It is true that military might gives a boost to a nation's currency; 
but this is not permanent if fiscal and monetary policies are abused. 
Currently, our budget deficits are exploding, as there is no restraint 
on spending.

                              {time}  1645

  No one can guarantee permanent military superiority.
  The dollar has already significantly weakened this past year, and 
this trend will surely continue. A weaker dollar requires that we pay 
more for everything we buy overseas. Foreign borrowing will eventually 
become more difficult, and this will in time cause interest rates to 
rise. Be assured that domestic price inflation will accelerate. 
Economic law dictates that these events will cause the recession to 
linger and deepen.
  My humble advice, consider being nicer to our friends and allies. We 
need them more than we can imagine to finance our war efforts. There is 
more to it than passing the supplemental appropriation. Besides, we 
need time to get our financial house in order. Antagonizing our trading 
partners can only make that task that much more complicated.
  The day will come when true monetary reform will be required. 
Printing money to finance war and welfare can never be a panacea.

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