[Congressional Record Volume 150, Number 41 (Monday, March 29, 2004)]
[House]
[Pages H1630-H1636]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
OUTSOURCING OF JOBS
The SPEAKER pro tempore (Mr. Carter). Under the Speaker's announced
policy of January 7, 2003, the gentleman from Washington (Mr. Smith) is
recognized for 60 minutes as the designee of the minority leader.
Mr. SMITH of Washington. Mr. Speaker, I want to talk this evening a
little bit about a subject that has been on everyone's mind and
certainly being talked about throughout the country, and that is the
issue that has come to be known as outsourcing or offshoring, the
concern that many Americans have about the number of jobs that used to
be done in the United States that are now being done overseas.
The best way to think about this issue is to think about our entire
economy. It is not really just about outsourcing or offshoring of jobs.
It is about the future of the U.S. economy and, most specifically,
where the jobs are going to be. That is the fear that I hear expressed
by my constituents and by people throughout the country. They are
worried about what jobs are going to be here for them in the future and
for their children and for their grandchildren. What should they
prepare for? What type of economy are they going to have? Are we going
to have enough good jobs across the board so that the people of our
country can be employed and employed at a standard of living that we
have all come to expect?
I think, when I look at the debate, we have to be very careful about
how we approach this issue; and I am pleased in working with the new
Democrats and also with other members of the House Democratic Caucus
that we are working on a series of proposals and a series of issues to
try to address this issue in a serious and intelligent manner that will
help us create the type of economy that we all want.
Right now, there are sort of two directions that we see being taken
by the majority of folks, and neither one of them is particularly
helpful. On the one hand, I do not think it makes sense to take a full-
scale protectionist approach, to basically say that we need to stop
trading with other countries that do not have the same labor and
environmental standards that we do, that we need to cut off immigration
and, in essence, we need to adopt a policy that says we are going to do
whatever we can to protect every job that currently exists, regardless
of the consequences. History has shown us that sort of approach leads
to less economic growth in the future, and that is what this is all
about, is long-term, sustainable economic growth for the benefit of all
of us.
I would point out that the most protectionist economy in the world
right now is, arguably, Japan. They have done just about everything
they can to protect all of their existing jobs, all of their existing
businesses. They subsidize industry. They erect tariff barriers to
outside countries coming in and competing with them. They protect bad
loans even long after they are no longer obviously going to be paid.
They do everything they can to protect that economy, and it has led to
a decade-long recession in Japan.
One needs to be able to change. One needs to be able to grow. One
needs to be able to not just protect the bulk of the jobs they have
but, most importantly, to be prepared to take advantage of the future
economic opportunities that are to come.
That is what we do better than any other country in the world. We
have a higher capacity for change than any other country in the world.
We have consistently seen the next trend, gotten there first, and
benefited economically. Most recently, we have seen this in technology,
in the Internet, in software and hardware before that. We prepare
ourselves for the new trends in the economy, take advantage of it, and
get out front and have a leadership role, and we need to do that again.
As much as protectionism is not the best way to go on this, I think
it is an equal mistake to take the approach that far too often the
current administration has taken, which is to say that there is not a
problem, basically outsourcing, offshoring, it is just the natural
economic dynamic at work, creative destruction, it will all work itself
out, we do not need to do anything. That, I think, is an equally unwise
approach. There are policies that we need to adopt in this country to
be prepared to deal with globalization, to deal with the economic
changes.
They will point to past times when it looked like our economy was
challenged throughout the 1980s. People thought that Japan and other
countries in Asia would take over and we would never be able to compete
with them. That certainly did not happen as we came into the 1990s.
With each economic change, there has been this concern that somehow we
will not be able to compete, and we have risen above and competed. And
that is true, but it is wrong to say that we did that effortlessly,
that we did that without adopting policies to confront it.
In the 1950s and 1960s, we adopted policies to deal with the space
race that we had going on with the Soviet Union. We set up the National
Science Foundation. We did a lot of things to encourage people to study
and get education in the areas where we thought the jobs and the
economy would be in the future. We built the interstate highway system.
We passed the GI Bill to make sure that all the people coming out of
the service could have access to education.
We made policy decisions to deal with these changes. We did not just
take a step back and say economics will take care of it. We adopted
policies that made sense to move us forward. That is what we need to do
today, and we have some specific ideas amongst the new Democrats and
the Democratic Caucus to do that.
First and foremost, there is nothing more important than education
and job skills in competing in the global economy. The more skills we
have, the more education we have, the more we will be able to compete,
particularly for those high-end jobs that are so important in keeping
our economy strong and giving American families the opportunities that
they deserve.
There is some despair out there about job training. We can see
stories about people who were trained for jobs and then wound up being
outsourced and they did not have access to them. But for every one of
those stories, there are hundreds, if not thousands, of other stories
of people who have used the advanced skills training and the advanced
job training and education they have received to be employable, to be
employed in many cases in better jobs than they had before.
That is why I and a number of other folks have introduced a bill on
trade adjustment assistance to the number of people who are eligible
for those benefits because we believe that trade adjustment assistance
works. It would work a lot better if we fully funded it so everybody
eligible for those benefits got all the benefits, but it works when it
is used, and we need to use it more, not less. So our Trade Adjustment
Assistance Bill would expand the number of people covered to include
service sector workers who now increasingly face the same sort of
competition that manufacturing sector workers have faced.
We also expand the bill to expand the number of countries to which,
if they lose their job, they are eligible for these benefits.
Currently, it is restricted to very few countries that we have specific
trade agreements with.
[[Page H1631]]
We have lost many jobs to countries that do not fall into that
category. We need to retrain those workers as well. We need to make
that investment.
But when we look at the education and jobs skills issue, it is not
just about retraining. It is also about basic education. We hear a lot
of scary economic statistics out there, but for me the scariest
statistic right now has to do with education and specifically with
education in the area of math, science, and engineering. Those are the
degrees and skills that are going to most create jobs in the future,
that are going to most take advantage of the trends in everywhere from
biomedical sciences to energy to the new ideas. It is math, science,
and engineering that will grow our economy.
Right now, in China, 70 percent of all undergraduates get degrees in
math, science, or engineering. That is what the Chinese are doing. What
we are doing here in the U.S. is 5 percent of our undergraduates get
degrees in math, science, and engineering; and, furthermore, the real
number of degrees that U.S. students are receiving in those three key
areas, math, science, and engineering, have gone down every year for
the last decade. We are putting out fewer people with the skills that
are desperately needed, and there are changes that we can make in our
education system from the K-12 system forward that will help us deal
with that and compete better. We need to set high standards. We need to
place emphasis in the K through 12 level on math and science to get our
students interested in it.
Too often right now, and I have visited just about every school
district that I represent and many of the schools, when I talk to the
students and the teachers there, they cite the same problem. By about
the seventh or eighth grade, someplace between the seventh and eighth
grade and 11th or 12th, students lose interest in math and science. It
is happening to somewhere between 50 and 75 percent of our students. We
lose them before they even have the chance to get into a university and
get the advanced degrees that they need in these areas. We have to
change that, and we have to increase the emphasis in those areas.
I am pleased to say that that is happening in a lot of States in the
Union. Certainly in Washington State we have adopted higher standards.
We have made math and science priorities. We have made those basic
skills fundamental, and we are starting to see some changes. But we
need to aggressively approach that. We need to do whatever we can to
make sure that we get as many degrees in math, science, and engineering
as is possible.
But it is not just about education. There are other issues that are
important, and certainly trade is important. I mentioned that
protectionism is not the way to go, and I believe that. We need to open
overseas markets, get access to those markets so that we can sell our
goods. But that does not mean that we need to lay back and do nothing
in the trade area. We need to make sure that our trading partners live
by the same rules that we do.
One of the biggest mistakes that this country has made certainly in
the last 3 years is to not aggressively enforce the trade agreements to
our advantage. Certainly other countries are coming after us. Europe
sued us over our manufacturing tax credit. Now we have to totally
change that, possibly to the detriment of U.S. companies. We have dealt
with many different issues where other trading partners have come after
us for what they perceive to be trade violations on us. We, on the
other hand, stand idly by while other countries do not give us the same
access to their markets that they have to ours.
Most specifically, we have a huge problem with other countries,
primarily China, stealing our products. And it is not just software and
intellectual property like movies and books and recordings. It is
everything. It is the basic manufactured product that some small
businesses made where the Chinese come over, copy it, take it back,
sell it as their own. We should issue trade actions to stop that.
We should also aggressively go after nations that unfairly manipulate
their currency to gain a trade advantage. That is against the WTO. We
voted, I think correctly, to bring China into the WTO, to make them
part of a rules-based economy. That is great. But to bring them into a
rules-based economic system and then not make sure that they follow
those rules is ridiculous. It is not taking advantage of what we put
out there. We have numerous opportunities to make sure that our trading
partners' markets are as open to our goods as ours are to theirs. We
should be much more aggressive in enforcing that. We cannot afford to
lay back and assume that somehow we are always going to win these
competitions.
The final issue I want to talk about is investing in research and
development, basically making sure that we have the investments made
with our companies and with our university system so that we can
develop the next best thing first. That is what economic growth is
really about, is being at the cutting edge of new inventions, and that
is all about investments in research.
One issue of particular concern, when we look at economic growth, a
lot of people will tell us that health sciences, biotech, biomedical,
that is where the future is. When we look at what is going on with the
human genome, with DNA, with a variety of different issues, with the
development of pharmaceuticals, there is massive potential for growth
in these areas. We have several advantages in being the leader on that.
But one of the ones that we are giving away right now is in the area
of stem cell research. It is a critical factor in developing in the
area of health sciences. We have limited the funding for stem cell
research in the United States, and a lot of those projects have gone to
other countries. They are getting ahead of us in that technology.
In numerous other technology issues we have the ability to change our
policy to make sure that we are making the investments in research and
new technology to be the leaders. We need to make sure that we do that
and move forward.
Overall, there is no question in my mind that the United States of
America can figure out a way to create long-term economic growth so
that we can compete in a global economy and create the kinds of jobs
that we want. But we cannot sit idly by and pretend that that is just
going to happen naturally. We have to make smart policy choices to help
the workers, to help the people of our country in their efforts to
compete in an increasingly challenging world. We can do it, no doubt
about that whatsoever, but not if we are not smart as public policy
makers about helping our workers in their ability to compete and create
a strong, long-term, sustainable economic growth in this country.
I am pleased to be joined by one of my colleagues who has been
working with me and others on this issue, very knowledgeable in
economic policy issues. I yield to the gentleman from Florida (Mr.
Davis).
Mr. DAVIS of Florida. Mr. Speaker, I thank the gentleman for yielding
to me.
Let me elaborate on some of the points that the gentleman has raised
about the outsourcing issue that we are experiencing throughout the
country, in Washington State and my home State of Florida. Forrester
Research, Inc., has predicted that American employers will move over
3.3 million white collar service jobs amounting to about $136 billion
in wages overseas over the next 15 years.
{time} 2130
There are clearly sectors of our economy that are among the most
vulnerable. About 14 million jobs, or 11 percent of the U.S. total that
have been identified at risk, are jobs that involve telephone call
centers, computer operator, data entry operators, business and
financial support, parallel and legal assistants, diagnostic support
services, and finally, accounting, bookkeeping and payroll.
This is a phenomenon which we are experiencing right now throughout
the country, Democrats, Republicans, Independents. There is no nobody
who will escape this. The question is, how will we deal with it? We
have to be honest. We cannot bring a lot of these jobs back. We can
offer the Trade Adjustment Act, which the gentleman from Washington
(Mr. Smith) has introduced with a growing number of Members of
Congress, Democrats and hopefully Republicans, that will provide
support for people who are displaced by trade or
[[Page H1632]]
outsourcing. But what we really need to do, as was mentioned earlier,
is try to get to this problem at the source.
We cannot promise anybody that having the highest level of education
will guarantee them that they will not be competing against somebody
from another country, but what we can guarantee to them is the best
fighting chance they have of protecting themselves and their family.
We will be debating, hopefully, in this Congress changes in the tax
law that assure that the United States taxpayer is not subsidizing
companies to go overseas and to compete against the domestic workforce.
But at the end of the day, our best weapon is the American worker and
his or her job skills and work ethic.
One of the areas that we should be emphasizing as a Congress to deal
with the problem of encouraging more students to enter math and science
and engineering, as was mentioned earlier, is to attract more teachers
into those fields.
There are ideas that abound in congressional districts and
communities around the country, and it is the job of Congress and
Washington to provide the funds to the community colleges, to the
school districts, to the private sector, the not-for-profit sector that
will come together for the good of the communities and attract people
into the teaching profession and create the kinds of programs that will
work in individual communities.
In every community in this country, there is an enormous amount of
graduate school education that is occurring in these fields, math,
science and engineering; yet the painful fact is that the vast majority
of students that are entering these programs now are students who are
entering here from other countries and helping us build bridges with
those countries that are important; but ultimately many of these
students are choosing to return to their homes and to benefit their own
economies. We need to be getting more of our students into these
graduate courses to become professors, to become inventors, to become
some of the best forward-thinking engineers for the next generation of
this country.
Ultimately, what we also need to focus on is a way for Congress,
Democrats and Republicans, to write a tax credit that will provide an
incentive to employers to invest in their workers. Not just to meet the
needs of the employer, but to provide a lifetime of learning, to
provide trainability for a worker, so that as more competition is
experienced from other countries, that worker is able to adapt through
additional training, whether they are doing it on their own or going
back to a college, university, community college or vocational
training, so, again, our workers have a fighting chance, they have the
tools they need and the ability they need to sharpen those tools, to
broaden their job skills, to compete in this increasingly global
economy.
This is a time where Democrats and Republicans in Congress should be
coming together trying to find solutions in education and job training
to help our workers face this onslaught of competition from overseas.
The agenda from the President and from this Congress so far has been to
simply provide tax cuts that have gone to the most affluent Americans
in this country.
It is time for us to acknowledge as competition heats up in the
global economy that is not a solution for most of the people in this
country who want to work, who want to succeed, who are prepared to go
back to school, who are prepared to do some additional job training,
but want us to support them, to help them do that.
So I hope that there will be other Members that will come to the
floor here in the days ahead and join us in trying to identify how we
write a bill that provides a constructive, positive agenda with
confidence in the work ethic and the skills of the American worker, to
help us ultimately succeed, as we have done throughout the history of
this country.
Mr. SMITH of Washington. I thank the gentleman.
I want to follow up with a couple of the tax policy points. As I
mentioned, job training and worker skills, the best way to do that is
obviously to have the companies train their workers, because companies
know what specific skills they need. Increasingly, in having job
skills, it is not just a matter of knowing a certain computer
programming skill or a certain scientific skill. It is knowing what a
specific company needs, and the only way to do that is to get training
from the companies, or I should say the best way to do that.
So tax credits that encourage companies to give training to their
workers so that they can improve those skills and stay employable in
those companies is an excellent idea, and also just overall developing
the Tax Code to make sure it encourages businesses to create jobs here
domestically.
We have a situation now in the Tax Code where if you have a plan, let
us take a call center as an example, that is one of the ones that has
been off-shored, and you are here domestically in the U.S. employing
workers and making profits on that call center, you pay taxes on it.
Now, if you take those same workers and move them overseas, even if
they are still servicing U.S. consumers, U.S. customers, all of a
sudden they do not pay taxes anymore in the U.S. on that. There is a
proposal by Senator John Kerry to change that, to make sure that if you
are performing services here in the U.S., you continue to perform them
for U.S. customers in a different country, you still have to pay taxes
on that. That would discourage or take away one of the incentives the
companies have to move jobs overseas.
The second idea within that area that Senator Kerry has introduced,
which is a positive incentive, would be to allow companies that have
subsidiaries overseas and subsidiaries that serve overseas markets, not
U.S. markets, whether it is in China, India, Vietnam or wherever, if
they are doing that and making profits over there, right now if they
want to bring those profits back to the U.S. from their subsidiaries,
they have to pay taxes on them. If they leave them overseas, they do
not.
It makes sense to reduce that tax rate to give them an incentive to
bring the money back and invest here in the U.S., and that is another
tax idea that Senator Kerry has supported. I think it is a pretty good
contrast with the general approach of the Bush administration, which is
just give tax cuts to the people who make a lot of money and hope that
they invest that money here. We know there is no guarantee of that.
They can invest that money any place they want to, and increasingly
they are investing it overseas. So our tax policy needs to be smart to
help grow jobs here domestically.
I want to now turn it over to the gentleman from Michigan (Mr.
Stupak), another of my colleagues who has worked extensively on this
issue and understands the importance of job creation.
Mr. STUPAK. Mr. Speaker, I thank the gentleman for yielding. I am
pleased to join the gentleman from Washington (Mr. Smith) and the
gentleman from Florida (Mr. Davis) in just talking a little bit about
jobs and what needs to be done.
Those of us who have worked in many different aspects within the
Democratic Party, we like to see different things done. It is not just
simply a free trade issue, or it is not just a tax issue. It is a
combination of things that are hurting this economy and hurting our
States and the people we represent.
I come from the State of Michigan. We have already lost many, many
jobs in Michigan, about 128,900 manufacturing jobs. Michigan is known
as a manufacturing State because of the auto industry. But we have a
total job loss of about 336,000 jobs, 128,000 in manufacturing alone.
Michigan continues to struggle. We need some help from the Federal
Government; and we have to take a look at our fair trade agreements, as
we call them. We also have to take a look at the tax structure in this
country and what incentives are there to keep jobs staying here in this
country.
Michigan, in the last few years, we have offered close to $1 billion
to try to retain corporations and jobs in my home State of Michigan.
Nationwide, we have lost 2.8 million manufacturing jobs. Some analysts,
as I believe the gentleman pointed out, believe we may lose as many as
14 million jobs in the U.S., or be at risk of going overseas.
To stop that hemorrhaging of job loss in this country, for whatever
reason, the Committee on Ways and Means really should report out the
Job Protection Act of 2004, also known as H.R.
[[Page H1633]]
3827, a bill with really strong bipartisan support.
Whether you are a Democrat or a Republican, we are seeing these
manufacturing jobs leaving this country, so we have put together a
bipartisan bill. There are 182 Members who have signed on to a
discharge petition. If the chairman of the Committee on Ways and Means
does not allow the bill to come before the House for a vote, the only
way we can change that is to have 218 Members sign a discharge
petition. We have 182 signatures right now.
We would like to see the Job Protection Act of 2004, a strong
bipartisan bill, come before the floor. This bill would amend our tax
laws to comply with the recent World Trade Organization rulings on the
Foreign Sales Corporation benefit.
The Foreign Sales Corporation, that is a tax break for those
corporations who sell their product overseas. When they come back to
this country, it is not taxed. The World Trade Organization has said
that is an unfair subsidy and should cease and desist. So we take care
of that situation with the Foreign Sales Corporation, plus there are
other tax benefits in there that do not encourage jobs to leave our
shore, but actually keep them here in the United States.
It would revitalize our manufacturing base by lowering tax rates on
all domestic producers, including small businesses and farms, by 3.5
percent. So as long as we keep it in the United States, keep them
producing jobs here, we can lower some of that tax rate by 3.5 percent.
The proposal is fully paid for. We have enough deficits. We do not
want to add to the deficit. We pay for this proposal, and it would not
increase the deficit. We need to pass this bill, as millions and
millions of Americans are relying upon it. Again, it is H.R. 3827,
strong bipartisan support. We would like to see the bill moved.
The gentleman from Washington (Mr. Smith) mentioned Senator Kerry. He
has been on this issue. In fact this past weekend, Friday and Saturday,
he was in my home State of Michigan. He has put forth a proposal to
create jobs and stop the shipping of our jobs overseas.
He basically said, why do we continue to give tax rates to
individuals and big multinational corporations in hopes they will
create jobs? Why do we not give the tax break after you create the job?
Produce and show results of a job, and we can then look at a tax break
for your training, for your research, to put those people to work, give
you back something for putting them back to work.
We spent a lot of time on manufacturing. Why is that so important?
Recent studies have shown that a manufacturing job in this country pays
on an average $44,000 a year. Now, service industry jobs, which we hear
a lot about, it is a good profession, but, unfortunately, they are only
paying about $24,000 a year for a job. Then, of course, you have the
retail industry, that pays about $19,000.
So what happens to these people after they lose their manufacturing
job at about $44,000 a year? Well, there is service industry at about
$23,000, or $24,000, and then there is the retail industry at about
$19,000. How do you ever make up for that lost income?
So Senator Kerry's plan addresses the problem in the tax system and
makes sure we do not reward those companies that ship jobs overseas.
You take the Maytag Corporation. I was in Illinois about 2 years ago.
Their profits were up 24 percent. Their profits for the year were $360
million. That is their profit after paying everything. But still
Maytag, which made refrigeration units for refrigerators and freezers,
still thought it was so important to go to Mexico, where you pay about
$1.50 an hour; and our Tax Code, which Senator Kerry wants to change,
would actually pay them $30 million in tax credits if they shipped or
moved to Mexico.
So, first of all, their profits are $360 million; they were up 24
percent from the previous year. It is not that they were hurting. But
still they felt it necessary to move out of Illinois, probably paying
$15 or $18 an hour, to Mexico, where they are paying about $1.50, and
then our government is going to give them another $30 million tax break
on top of that. That is just plain wrong.
So Senator Kerry's plan would end these tax breaks that allow these
companies to keep their earnings overseas and avoid paying U.S. taxes.
The indefinite deferral of paying taxes amounts to the U.S. taxpayer
of about $8 billion a year to these companies investing abroad. That is
according to the conservative American Enterprise Institute.
So think about it. We are using taxpayer money and giving them $8
billion to invest overseas, plus we are left with people who lost good-
paying jobs with no recourse where to go with it. So the taxpayers are
paying for them to go invest overseas, plus we have to take care of the
unemployed workers.
The tax system has ability in incentive to ship jobs overseas. That
has to change. We need to help out manufacturers and small business.
Unfortunately, we have just seen the President's budget. We had debate
on it last week.
The Manufacturing Extension Partnership Program, which has been used
greatly in my district for Horner Flooring up in Dollar Bay, or
Jacquart Fabric Products over at Ironwood, Michigan, that was cut by
two-thirds. It went from $111 million to $39 million. That has helped
our people to take care of jobs and try to ship their product overseas.
Unfortunately, that program has been cut.
So I think the administration just has it backwards. We have to do
something differently. It is not just the free trade agreements; it is
the tax incentives built into our Tax Code.
It is also what we call HELP. The State of Michigan has been
devastated, as we mentioned, about manufacturing, so we actually put
together a program called HELP, which we sent to the Secretary of
Commerce, Secretary Evans, and said, look at this proposal.
It is a lengthy proposal, but HELP really means, first, let us
address health care needs. Every American should have the right to have
health care. You take Ironwood Plastics, a small company up in my
district. They were going to expand their plant, but they found their
health care costs went up so much in the last 2 years, they cannot add
on their plant. In fact, for every product they produce, 42 cents of it
is just for fringe benefits; and they do not have lucrative fringe
benefits. Health care is probably 60 to 70 percent of that 42 cents on
every piece they make. It is just to pay for the health care in this
country. We have to get a handle on health care prescription drug
costs.
{time} 2145
That is the first part of ``H'' in HELP.
Unemployment compensation. Why is it that past years when we have had
these downturns in the economy, in my state of Michigan we are at 6.6
unemployment, some parts of my district fall over 12 percent
unemployment. Federal Government works the area with the States. The
States have a program. We do 26 weeks of unemployment, but we have
always extended it another 13 weeks. Unfortunately, we have not done
that.
While people are unemployed through no fault of their own, we should
be there to help them out to see them through those rough spots and
keep them working and keep their health care going.
Level playing field. The third letter in HELP. ``L'' for level
playing field. On these trade barriers, I am always amazed that we see
these trade agreements, take the CAFTA plan, which is the Central
America Free Trade Agreement, which will devastate the sugar industry
in my State of Michigan, which is a half billion dollar industry, if
Central America is allowed to bring their sugar into this country. They
all do now. But if one takes down all barriers and it can freely flow
into this country, it will wipe out the sugar beet industry in
Michigan.
The sad part about that is, while we immediately lower our barriers
in this country, it takes about 15 years for other countries to lower
their barriers. Plus they put up these artificial trade barriers
depending on the value of their currency, the environmental standards,
their employment standards of their workers. Why can't we have a level
playing field?
If it is truly going to be a global economy, and I was here back in
1993 through the NAFTA debates, which I did not support NAFTA because I
felt it would hurt this country overall. But
[[Page H1634]]
when you take a look at it, in NAFTA and all the rest of it, if we are
going to have a global economy, and that was the buzzword back in 1993,
some 11, 12 years ago, then should not we really have global standards
on workers' rights, on the environment, how we treat each other's
currency so you do not have these artificial trade barriers for our
products from the U.S. going to these other countries? So that is the
third letter in our help program.
Last but not least, P for pensions. In this country we are funding
pensions. Many people feel we are overfunding them. Some are
underfunded. But we have to look at pension reform. There has been a
bill that we tried to pass out of the House. It has been stuck in the
Senate. We can do some work here and make this pension system fair to
the workers, guarantee the benefit, but at the same time allow the
companies to use it for research and development. That would free up
some money so they can do their research, development, and investment
in their countries. It just makes sense.
Training. We have to invest in this country. So there are so many
needs, and one can just see what happens and in State after State,
whether it is Washington, Florida, or Michigan.
Just one more: Electrolux, which was really a sort of French company
that had been in Michigan for many, many years, besides making great
vacuum cleaners, they also did refrigeration. They just announced it is
closing its doors and going to Mexico also. It will cost Michigan 2,700
jobs.
We are losing about 2,000 jobs in Michigan just in the manufacturing
section. Our governor, who is very concerned about it, has put together
an aggressive manufacturing agenda to try to help companies. Our
governor even offered Electrolux a new $30 million building, $182
million in tax credit, including a Renaissance Zone that would allow
the company to operate virtually free of State and local taxes for up
to 20 years.
There was even changes from the United Auto Workers that they said,
look, we do not want to lose these jobs. It is good-paying jobs. We
will change our labor agreement. We will give about $31 million in
concessions. But still the company still saw it lucrative to go to
Mexico with the tax breaks they would get from the U.S. taxpayers and
the low-wage-paying jobs in Mexico.
Electrolux was a very profitable company. It pays $13 to $15 an hour
plus benefits, and that included health care to its employees. So why
are they moving? Because they can go down to Mexico and pay people
$1.57 an hour.
Like I said, Michigan has lost about 128,900 manufacturing jobs since
January of 2001. We have a total job loss in our State of 335,868 in
Michigan, despite offering almost $1 billion in tax incentives for
companies to stay.
So I am pleased to join with the gentleman from Washington (Mr.
Smith) tonight. I think my colleague said it best earlier when he said
it is not just trade agreements, there are tax issues, there are
employment issues, there are a number of issues we should tackle as a
Congress.
I will go back and just repeat that. The Job Protection Act of 2004,
H.R. 3827, a bipartisan bill. We have 182 Members who signed a
discharge petition. I wish the majority in this Congress would allow to
us bring that bill to the floor. If the majority party, the Republican
party, want to vote against it, that is certainly their right. But at
this critical time in our Nation's history, manufacturing jobs leaving,
why cannot we have a good debate on the issue?
Maybe this tax break is not quite right. I am not saying we have all
the answers, but let us at least get a debate going. Let us exchange
ideas. Because we have to look at trade agreements, Tax Code, and other
incentives we have out there that encourage people to leave offshore or
go offshore with their corporations.
So I stand with Senator Kerry and my colleagues tonight and we look
forward to a day when we invest in companies for keeping jobs here in
the United States and not shipping them overseas, providing health care
for all our workers so it is not such a burden on just strictly the
employer, and reexamine these trade laws and make sure we all play by
the same rules.
America can compete with anybody anywhere in this world. We are just
looking for a level, fair, playing surface on trade agreements.
I thank the gentleman from Washington (Mr. Smith) for once again
yielding. I thank him again for stepping forth and organizing this
special order tonight. It is always a pleasure to join with the
gentleman and look forward to working with him on this and other issues
in the future.
Mr. SMITH of Washington. Mr. Speaker, I want to thank the gentleman
from Michigan (Mr. Stupak) for his remarks, and I do agree, as I said,
that we need to be more aggressive about enforcing our trade
agreements.
I will point out I am actually fairly familiar with the CAFTA trade
agreement, and it does not have the affect on sugar you describe. It
raises the quotas for sugar from Central America by less than 5 percent
over what they currently are and it is, in fact, spread out over 15
years.
So if my colleague looks at the details of CAFTA, sugar, corn, a
variety of different issues, it is a pretty level playing field on both
of those. It does not dramatically increase the quotas on sugar coming
from Central America.
So I would urge my colleague to take a closer look at that and assure
your folks in the Michigan sugar beet industry that they are going to
be just fine with regard to that particular agreement.
Mr. STUPAK. Mr. Speaker, if the gentleman would yield on that one.
Our sugar producers and the Michigan Farm Bureau have come out against
it because we do not have that big of a sugar industry. It is only a
$500 million industry. But they feel with it coming in, and my
colleague is right, over 15 years, the barriers would fall down. That
would just about do the end of our sugar in Michigan.
Mr. SMITH of Washington. Mr. Speaker, that cannot possibly be true. I
would be happy to take a look at it, but it is not just over 15 years.
At the end of 15 years the quotas are still there. They are just
slightly larger than they are now. It does not even get rid of them.
So sugar was very important to me, and I was actually in
conversations with Ambassador Zellick and others while they were
negotiating that.
Mr. STUPAK. Mr. Speaker, I hope my colleague is right on that issue
because we are concerned about it in Michigan. We look forward to my
colleague's leadership on that issue to make sure we preserve our sugar
industry in Michigan.
Mr. SMITH of Washington. Mr. Speaker, absolutely. We have a sugar
industry throughout the U.S.
Mr. Speaker, I want to now yield to my colleague from my State, our
State, I should say, the gentleman from the great State of Washington
(Mr. Inslee) from the first district who is the cosponsor with me on
the TAA bill to expand trade adjustment assistance for service sector
employees and expand it in other areas as well.
Mr. INSLEE. Mr. Speaker, I thank my colleague for yielding.
I want to make a couple points before I address the specifics of this
trade adjustment which I really think is great, not a panacea but
certainly one of the things we need to do that address this problem.
But I want to make two points about why legislation like this is
necessary right now, and that is that two I think interesting facts
that demonstrate why Congress needs to act now and the administration
needs to follow us in doing so.
That is the unemployment, the job loss that we have suffered in the
last 3 years is actually understated. A lot of folks have heard now a
familiar number that we have lost about 2.2 million jobs in the last 3
years which is a greater job loss than any other time since Herbert
Hoover was President of the United States. But that number is really
kind of a fake number, and the reason is that it fails to take into
account the jobs that should have been created under any sort of normal
rate of economic growth. The truth is we have lost specifically about
2.2 million jobs, but if we had just grown jobs to keep pace with the
rate of population increase, we would have actually grown four and a
half million jobs if we had only kept pace with the population increase
in the United States in the last 3 years.
So it is not that we have lost 2.2 million jobs, sort of behind the
curve by
[[Page H1635]]
2.2 million Americans that are out of work. It is actually closer to 7
million. So the job deficit, along with the largest Federal deficit in
American history, we now have the largest job deficit in the last 50
years.
Mr. SMITH of Washington. Mr. Speaker, if the gentleman would yield,
because that is a point I found interesting. When the President has
proposed his tax cuts, for 3 years he has talked about the number of
jobs he is going to create. The figure that he used for the tax cut
that was passed was 1.2 million. He has fallen way short of at this
point, I think it is about 400,000. But in making that proposal it is
interesting that he assumes that, absent that tax cut, no jobs would be
created, which flies in the face of history. Obviously, some jobs were
going to be created.
As the gentleman points out, after we did this supply side tax cut
for people at the high end of the scale, we actually created less jobs
than economists tell us we would have created if we had done nothing.
So it is worse than just not doing what he said it was going to do. It
seems to be having a negative impact.
Mr. INSLEE. Mr. Speaker, that is another way of basically saying we
have had no meaningful job creation for the last 3 years. So we have a
$7 million job deficit and we basically had an experiment and that
experiment failed. The President basically said these very large tax
cuts for the wealthiest among us, those who are over $200,000 a year,
we are going to create millions of jobs. It failed even to keep pace
with just population growth.
There is four and a half million jobs missing that should have been
there just to keep pace with population growth, and then there are 2.2
million jobs lost on top of that. So we are in a deep, deep hole; and
whatever we are going to say, if we add one job now, we are still at
the bottom of the well. So maybe we are one inch off the bottom of a 7
million foot well, if you will. We have got a long ways to go.
Second point is the reason Congress needs to act now is that these
figures belie the severity in the length of this unemployment. Because
we have over 2 million people who are unemployed tonight who have been
unemployed for more than 6 months. That is the longest period and the
largest number of people who have been unemployed over 6 months for
over 50 years in America.
So not only are people not even counted in the unemployment insurance
statistics because they have given up looking for work, those who are
still on there we have the longest period of long-term unemployment in
the last 50 years.
So I just want to point out those two points that we need to take
into consideration whether we are going to act or not boldly and
aggressively. And we think we should.
So one of the ideas, and this is not the only idea that we need to
pursue, but we need to bring our trade adjustment assistance for
Members up to speed with what is going on in the U.S. economy. We, and
I am sure the gentleman has talked about this, have had a program to
help people who have lost jobs that are associated with the dynamics of
trade in manufacturing now for some period of time.
We have seen in Seattle a great success with that program. We have
seen hundreds of folks, if not thousands, in Boeing who several years
ago during the downturn availed themselves of the benefit of this
program to get retraining. I have talked to any number of those. It is
not 100 percent, but any number of these folks have been successful in
finding other careers with retraining.
But now we have this phenomenon in the service sector, computer
programming, accounting, in radiological services, in call centers. Now
the service sector employees are experiencing the dynamics of trade. We
simply have to bring this up to speed to this century's challenges that
exist.
Our bill will do that. It will simply say that people in the service
sector who lose jobs associated with the dynamics of trade are going to
have an assistance from Uncle Sam. It is a pretty simple commitment
that Uncle Sam ought to fulfill. We hope that the administration will
embrace this idea.
And I will share one piece of good news. I serve on the President's
Export Council, which is a group appointed essentially to advise the
executive branch on export policies and trade policies.
{time} 2200
It is a group of a lot of high-level executives of major corporations
at General Motors, Intel, Boeing, a couple of Members of Congress; and
last week, we met and this group sort of unanimously concluded that
this idea of the extension of trade adjustment authority to service
personnel should be pursued, and that will go to the President as a
formal recommendation of this group here in the near future.
So we are hopeful that the administration and our Republican
colleagues will join us in this very commonsense measure to help
Americans get back on their feet, and we do not want to hear that we
cannot do this for fiscal reasons, for two reasons; and there is a
fiscal impact for this obviously, and we should be totally responsible
in addressing that fiscal impact, but we believe that in the long term
this is fiscally responsible to do because these folks are going to get
back to work, they are going to get off the unemployment rolls, and
they are going to start creating wealth and profits and wages and taxes
themselves. This is a fiscally responsible thing to do, is we get
people back to work. Over the long term it does not create the deficit;
it helps to ameliorate it.
In addition, we think there are some future tax cuts for those
earning over $200,000, which on a scale is not as important as the fact
as getting these thousands of people who may have lost these jobs to
folks in other countries due to trade. They have a higher claim on
America's assistance right now, and they will be much more productive
for the U.S. economy as well, and so we think this is a fiscally
responsible approach; and we hope our Republican colleagues will join
us.
There is one other thing that this bill will do. You may have talked
about this already, but I want to allude to it. There are some
imperfections in the existing trade adjustment bill, one of which would
not kick in assistance for Americans except that they lost their job,
at least the presumption is a country that we already had free trade
agreement with. That is an artifact of history that we had to cure
because if you are out of work, frankly it does not make a difference
to your creditors whether you are out of work, losing a job to someone
Uncle Sam has a free trade agreement with or not. So we hope to fix
that in the long term.
The bottom line is, as the trade world has changed, as the economy
has changed, Congress needs to change our provision for Americans to
get retrained; and this is a fundamentally sound, fair, fiscal way to
do it, and we are hoping that ultimately this becomes a bipartisan
effort.
Unfortunately, we have not had our colleagues across the aisle coming
in droves to join this, and that frankly is disappointing because
anyone ought to understand when you are out of work and your job's been
shipped to another country, and your mortgage still needs paying and
your child's college education tuition still needs paying, it should
not be a Republican or Democrat position the fact that we ought to help
you get retrained, and we ought to recognize for those of us who
recognize the value of trade, and I count myself among those who come
from a very trade-dependent part of the world. The State of Washington
is one of the trade-dependent parts of the country. We recognize the
value of trade, selling Boeing planes to India, selling Microsoft
software to China. We understand the value of trade, but those who care
about trade have to recognize that there are dynamics of trade and
people are discomfited and there are job losses associated with trade,
and we need to create a lifetime learning situation where, as trade
creates dynamic changes in the job market, we need to guarantee
Americans the ability to get back on their feet and become retrained,
and that is one part of that support system that I hope that we will
pass.
Mr. SMITH of Washington. I thank the gentleman for his help on this
issue. You worked very closely on it, and I thank you for your
leadership
I want to close off the debate, and we do not have anymore speakers
for our hour, which is almost up, by emphasizing the point the
gentleman from
[[Page H1636]]
Washington (Mr. Inslee) made about the cost and some of the choices
involved. It is interesting, business leaders throughout this country
have come together and agreed with a lot of the items we have talked
about tonight, agreed with the importance of education, the importance
of job training, the importance of investment in research and
development, the importance of another item we have not talked about,
which is an investment in infrastructure, a building of roads and
improving our energy system so that we can have a sustainable strong
economy; and they know we need to do those things, and they
consistently advocate for them and I appreciate that support.
But it is also tied into the issue of how do we pay for these things,
and as the gentleman from Washington (Mr. Inslee) pointed out, the tax
cut choice. We have heard a lot already in this campaign about taxes
and tax cuts; and the general approach of the President and his party
is that, look, any tax cut there is has to be lower, anyone who is for
higher taxes is by definition not worth being elected, but we have to
take a step back and look at this in terms of choices, and take a look
at those issues that I just talked about, the business leaders and many
Republicans say they support, funding for education, funding for job
training, funding for infrastructure.
There is the little problem of paying for these things, and we have
to look at the choice that is being presented. The President wants to
make his tax cut permanent, all of his tax cut, including the portion
of that tax cut which is a pretty substantial portion of it that goes
to people making over $200,000 a year, also the portions of the tax cut
that go to people who are paid dividends; and, yes, I know average
Americans earn some dividends, too. If you look at the percentage of
where dividend income goes, it goes almost entirely, 75 to 80 to 90
percent, to people again making a great deal of money; and I understand
the philosophy behind that, give these people money, they will invest
and everything will be fine.
It has not quite worked over the course of the last 3 years at this
point, but more importantly it is a matter of choices. If the business
community, other folks out there, want us to make that investment in
education, job training and research and infrastructure, there has got
to be some money left somewhere to do that; and when we are sitting
here with an over-$400 billion deficit due this year to pile on top of
a $7 trillion debt, to say that we are going to make the tax cuts
permanent at the cost of somewhere around 2 to $3 trillion, over the
course of the 10-year period, and still make these investments in our
workers, an investment in our economy, it does not add up.
It is a matter of choices, what is the best investment of that money.
Is it really best to make sure that the top tax rate for people who
make, it is about $250,000 before you hit that top tax rate, goes down
from 39 to 35 percent? It goes down to 4, I guess, critical percentage
points. Or is it best to take some of that money to get us back towards
fiscal responsibility and to get us back towards making an investment
in our workers that they can fairly compete? Looked at in that context,
I think it is a pretty obvious choice; and I hope that we will make
those choices.
We absolutely need tax cuts. Senator Kerry supports a number of tax
cuts targeted to the middle class, the child tax credit, elimination of
the marriage tax penalty, a number of different issues; but,
absolutely, we have got to give those tax cuts to hardworking
Americans.
When you look at the total package of tax cuts, these are some
choices we can make to better invest in our workers and better invest
in our country. We hope that we can make those choices so that we can
deal with the challenges we face from outsourcing, from offshore, so
that American workers can have that level playing field, can have that
opportunity to grow our economy and to benefit from that growth.
I thank you very much for the time.
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