[Congressional Record Volume 150, Number 120 (Wednesday, September 29, 2004)]
[House]
[Pages H7838-H7844]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE NATIONAL ECONOMY

  The SPEAKER pro tempore (Mrs. Miller of Michigan). Under the 
Speaker's announced policy of January 7, 2003, the gentleman from 
California (Mr. Dreier) is recognized for 60 minutes.

[[Page H7839]]

  Mr. DREIER. Madam Speaker, as I look at the clock, I see it is 10 
o'clock. At this time tomorrow evening, we will be two-thirds of the 
way through the debate that is scheduled to take place between 
President Bush and Senator Kerry, and I know that the focus of that 
debate is going to be on foreign policy issues. And so I have chosen 
this evening to talk about economic issues because that obviously will 
be down the road, but I think that as we get ready for the debate on 
foreign policy and we spend a great deal of time talking about that, I 
think it is also important for us to talk about very important economic 
issues.
  Just a few weeks ago, Madam Speaker, most American kids headed back 
to school signaling what obviously was the end of summer. Kids had 3 
months away from the classroom which is usually enough time for them to 
forget most of what they learned the year before. September is the time 
when teachers across the country settle down to the task of reviewing 
what was forgotten and maybe even tackle some new material.
  Madam Speaker, I am standing here tonight because I believe that it 
is not just America's youth that spent the summer forgetting what they 
have already learned. Last spring I spent a lot of time standing here 
talking about our economy and debunking a number of the economic myths 
that were being propounded by so many, like the myth of the, quote-
unquote, jobless recovery that is a familiar term. We have heard it so 
often. We were dealing with a jobless recovery. The myth that we have 
an economy similar to that of the Great Depression. And, of course, the 
ever-popular myth that all we have created are hamburger-flipping jobs.
  Eventually we saw some sanity in the debate over the state of our 
economy. Overwhelmingly positive economic news managed to silence or at 
least quiet this economy's noisiest critics because we were getting 
very positive news. Strong growth, high consumer confidence, record 
homeownership, and robust job creation all made it quite clear that our 
21st century economy is strong and very vibrant. And the economic 
policies of this Congress and this administration have been a 
tremendous success. That was sort of the word that was finally getting 
through to the American people and to our colleagues on both sides of 
the aisle before the summer.
  Then a few misrepresented statistics this summer managed to convince 
a lot of pundits, talking heads and even some of my colleagues that our 
vibrant, dynamic economy was tanking. Once again they began to believe 
that no jobs were being created, or at least no good jobs were being 
created. Perhaps it is not just the youngsters that needed to go back 
to school. I would like to set the record straight on the true state of 
our economy and give this summer's data and figures a very much needed 
perspective.
  Gross domestic product is perhaps the broadest measure of the 
economy's health. The growth in GDP. In the second quarter of this 
year, Madam Speaker, gross domestic product growth grew at a 3.3 
percent annualized rate. This is a very healthy and solid pace. But 
initial GDP estimates were somewhat lower, first 3 percent, and they 
were later revised downward to 2.8 percent, just under that 3 percent 
growth. Even these numbers indicate a healthy rate of growth.
  But because they were lower than predicted by most economists, the 
growth rate was widely reported as an alarming sign that our economy 
was in trouble. I think perhaps the media missed the point. The fact 
that economists incorrectly forecasted second-quarter growth may be 
interesting, but the big news here is that the U.S. economy has had 11 
straight quarters of economic growth. Eleven straight quarters 
uninterrupted growth in this economy. Not only do we now know that it 
grew by 3.3 percent in the last quarter, but the first-quarter rate was 
revised upward from 3.9 percent to a 4.5 percent rate. This means that 
the average growth rate of our economy for the first half of 2004 was 
3.9 percent, very robust by any standard and higher than the average 
during the much-heralded Clinton era where we had strong economic 
growth. The rate then was 3.7 percent on average. Again the first 6 
months of this year saw a 3.9 percent GDP growth.
  Another supposed cause for concern are the latest consumer confidence 
numbers. After steadily rising month after month, consumer confidence 
decreased somewhat in recent months. There is no doubt that constant 
headlines reporting rising oil prices caused Americans to wonder what 
impact they would have on the economy resulting in a modest dip in 
consumer confidence. But despite this blip on the screen, consumer 
confidence remains at a nearly 2-year high. Let me say that again, 
Madam Speaker. Consumer confidence, even with that dip with the 
increase in oil prices, it is at a nearly 2-year high.
  Perhaps the more telling number, consumer spending, is also very 
healthy. Retail spending has grown 5 percent over the past year, a 
strong pace by historical standards. Excluding auto sales, retail sales 
have grown at a rate of 7 percent. Americans are clearly demonstrating 
their confidence in the strength of our economy. Madam Speaker, real 
earnings also continue to grow. Real average weekly earnings grew 
seven-tenths of 1 percent in the month of July, and they are up 1 
percent during the Bush administration.
  To give these numbers a little context, real average weekly earnings 
increased by just four-tenths of 1 percent during the first 4 years of 
the Clinton administration, less than half the growth that we are 
experiencing today. Real hourly compensation has grown four-tenths of 1 
percent in the first half of this year and is up 5.2 percent since 
President Bush has been in office.
  Again, in order to give some context, Madam Speaker, real hourly 
compensation fell four-tenths of 1 percent during the first 4 years of 
the Clinton administration. That is 5.2 percent growth that we have had 
during the Bush administration versus a four-tenths of 1 
percent reduction in real hourly compensation.

  Real disposable personal income is perhaps the best and broadest 
measure we have of an individual's wealth because it takes into account 
many forms of after-tax income. This measure also shows a steady, solid 
pace of growth. During the Bush administration, real per capita 
disposable income has increased by $1,521 versus the $1,332 increase of 
real per capita disposable income during the first 4 years of the 
Clinton administration. So we have actually seen a pretty dramatic 
increase in the 4 years of the Bush administration juxtaposed to the 4 
years of the Clinton administration.
  Again, the reason I make these comparisons is that we constantly hear 
about how we long for the days of the bold and strong and dynamic 
economic growth that we had during the Clinton administration; and, of 
course, we recall very well that Bill Clinton was running for 
reelection in 1996, running on that strong, bold and dynamic economy; 
and if you look at real per capita disposable income, it actually has 
increased more in the past 4 years of the Bush administration than it 
did during those first 4 years of the Clinton administration.
  Industrial production continues to climb. Manufacturing output is 
stronger than ever. Let me underscore that again, Madam Speaker, 
because we have over the last few months been continuing to hear these 
lines about how the manufacturing sector of our economy is in the 
Dumpster. Manufacturing output is stronger than it has ever been.
  Productivity. Remember how important productivity is. Constantly for 
decades we have really had a focus on productivity. Productivity is on 
a long, steady upward trend. Exports, one of the important things that 
this administration has focused on, prying open new markets for U.S. 
goods and services, exports are surging. Business investment is very 
healthy, growing nearly 9 percent in the last quarter, marking the 
fifth consecutive quarter of growth. This is particularly significant 
in light of the 2001 economic recession which was characterized by 
abysmally poor business investment.
  Madam Speaker, today's robust investment demonstrates the strength 
and competitiveness of U.S. companies as well as a healthy climate in 
which firms are willing to take risks. Madam Speaker, on all fronts, 
the U.S. economy is vital and strong. Despite some misrepresentation, 
the recent economic data demonstrate a healthy and growing economy.

[[Page H7840]]

  This is not just a temporary phenomenon. These positive indicators 
are part of a 2\1/2\-year trend of growth and a rising standard of 
living. Of course, we are not going to be satisfied until every single 
American who wants a job has a job, but as we hear these constant 
gloom-and-doom predictions and these outlines from so many of our 
colleagues that you would think that we were in a deep depression, the 
numbers as well as empirical evidence prove otherwise.
  Of course, as I say, in any discussion of the economy, the issue of 
job creation is obviously the highest priority. On this front as well, 
the outlook is very bright and continues to be bright. But once again, 
as I say, some misrepresented numbers are leading to more rhetoric of 
doom and gloom that have come from so many naysayers.
  In July, the new payroll jobs number, the payroll survey jobs number 
was 32,000. This was much lower than previous months' numbers and fell 
far short of expectations. Immediately when those numbers came out for 
the month of July of 32,000, we heard the naysayers, led by John Kerry. 
They could be heard lamenting the end of our recovery and the start of 
a downward trend. That is what we continued to hear at midsummer. The 
announcement of 144,000 new payroll jobs in August has quieted some of 
the gloom-and-doom rhetoric, but John Kerry & Company still claim that 
good new jobs are not being created.
  But in order to understand what the payroll numbers mean, the payroll 
survey, there are several key points that we need to keep in mind. The 
first is that in spite of the July number, the payroll survey does in 
fact show a very strong job growth. This is the payroll survey, and I 
am going to talk about the difference between the payroll and the 
household surveys in a moment; but the payroll survey itself has shown 
1.4 million new jobs created in this calendar year alone and almost 1.7 
million new jobs created since August of last year.
  The second point, Madam Speaker, to keep in mind is that the payroll 
survey is notoriously inadequate at accurately accounting for new job 
creation following an economic recession.

                              {time}  2215

  This survey showed a very weak job recovery following that recession 
in 1991. Quarter after quarter, the meager payroll survey numbers seem 
to suggest a jobless recovery. Sound familiar? Once more, complete data 
became available, and once we were able to look at more complete data, 
we realized that the job creation had, in fact, been very strong 
throughout 1992. The payroll numbers were revised upwards 
significantly. Most economists agree that this phenomenon is taking 
place again today and that the payroll numbers will once again be 
revised upward.
  But the third and more fundamental point about the payroll survey is 
that it does not measure the entire workforce. Again, the payroll 
survey numbers that we regularly have come out on a monthly basis do 
not reflect the entire workforce of this country. This survey only 
counts jobs in established firms. It does not count self-employed 
workers. It does not count small-business owners, independent 
contractors and consultants, LLC partners, and it does not count 
farmers. The payroll survey, the numbers that we regularly look at, do 
not take all of those into consideration. Those innovative job creators 
out there are not taken into the mix.
  Historically self-employed workers represented only a small slice of 
the entire labor force. That is one of the reasons people have relied 
on the payroll establishment survey as opposed to the household survey. 
But our economy is many years into a fundamental shift in the overall 
nature of job creation. Self-employment currently accounts for one-
third of all new job creation. Self-employment accounts for one-third 
of all new job creation, Madam Speaker. That means that that is not 
taken into consideration in the payroll survey. The Internet and modern 
technology, especially digital technologies, are making the American 
dream of owning one's own business a much more accessible reality. 
Small business startups are booming. LLC partnerships are exploding, 
doubling the total number in just 3 years in some States. And these 
small merchants, empowered by the Internet age, are able to compete in 
the global market right alongside the multinational counterparts. And 
yet their work is not taken into consideration when the payroll survey 
is done.
  Our 21st Century economy is giving a quickly growing number of 
Americans the flexibility to work independently and to be their own 
bosses. This is very good news for workers and, Madam Speaker, for 
families as well. But it means, as I say, that the payroll survey is 
increasingly inadequate for measuring this new dynamic 21st Century 
workforce because that innovation and creativity that is out there is 
not taken into the mix. It is not taken into the mix at all. 
Furthermore, the payroll survey numbers are highly susceptible to 
changing the rates in job turnover. When job turnover is high, a 
significant amount of double counting takes place as workers move from 
one employer to another during a short period of time. The result is an 
inflated payroll number during periods of high turnover. Subsequently, 
when turnover begins to ebb, the payroll number is artificially 
deflated.
  A number of economists have long been pointing out this volatility in 
the payroll survey. Tim Kane, who is a very bright economist whom I 
know at the Heritage Foundation, estimates that high turnover could 
inflate the payroll jobs survey number by over a million jobs. As a 
result, there is huge potential for overstating job losses during 
points in the business cycle when turnover drops. The Bureau of Labor 
Statistics recently published its first assessment of this problem. Its 
report did not estimate the full potential for inflating payroll job 
numbers during high-turnover periods. But the Bureau of Labor 
Statistics did find that this turnover effect has led to an undercount 
of at least a quarter of a million, 250,000 jobs, during the period 
between March of 2001 and June of 2004, a period of low turnover and 
economic recovery.
  Let me run through that problem again. High job turnover prior to the 
2001 recession inflated the payroll number in the preceding years. The 
result has been that, over the past 3 years, while turnover has been 
low, the payroll survey has shown an artificially low number by at 
least 250,000 jobs. Based on Mr. Kane's estimate of a potential 
overstatement of 1 million jobs, the current undercount could be even 
greater than that quarter of a million. It could certainly be smaller.
  Steven Braun at the Council of Economic Advisors estimates that the 
current undercount could be as low as 145,000. But the point is, there 
is simply no doubt that the payroll survey is vulnerable to distortion 
from the job-turnover effect.
  So we know that the payroll survey has its shortcomings. But we have 
several measures of our labor force that, taken together, help to paint 
what is clearly a more accurate picture of job creation in this 
economy. The Bureau of Labor Statistics' household survey that I have 
been mentioning, for example, counts employed workers by going directly 
to households, directly to the households and counting the number of 
employed persons. Rather than surveying established businesses, the 
household survey counts all types of workers. This method makes it 
possible to account for the self-employed workers who are missed by the 
payroll survey.
  As I have said, the self-employed historically accounted for a 
relatively small section of the workforce in years past. Because of 
this, the payroll and household surveys, while taking different 
approaches to assessing employment, came up at that time in the past 
with similar results. There were differences here and there, but the 
two surveys, because of the fact that self-employed made up such a 
small segment of the workforce in the past, the difference between the 
household and the payroll surveys, so-called establishment survey, 
trended together, and the differences were not that great, and they 
demonstrated a very similar sort of the same employment climate.
  In the last few years, however, as I have been saying, an 
unprecedented divergence has taken place between the establishment 
payroll survey and the household survey. Since March of 2001, the two 
surveys have shown an incredible discrepancy in job creation. The gap 
currently stands at nearly 3 million jobs. That is a 3 million job 
spread

[[Page H7841]]

in the disparity between the prediction of the establishment payroll 
survey, which simply takes into account those in companies that are 
actually employed, juxtaposed to looking at the household survey, which 
goes directly to the homes and asks if people are working there. And 
while the household survey measures 1.9 million new jobs created since 
2001, the payroll data suggests a net job loss of a million over that 
same period of time.
  This divergence shows no sign of correcting itself. In July, the 
household survey showed a net job creation of 629,000. Remember, as I 
said, the payroll survey, as I mentioned a few minutes ago, showed 
32,000 jobs created. So by the antiquated way of determining jobs in 
the pre-21st Century economy, what we had was 32,000 jobs created, and 
yet with the household survey, the month of July showed 629,000 jobs 
created. There are likely a number of reasons contributing to that 
major divergence. The turnover factor, as I was mentioning earlier, has 
obviously had a big impact. And as I discussed, the payroll survey 
tends to undercount jobs in periods of recovery as was the case in the 
months following that 1991 recession.

  But it is clear, Madam Speaker, that the fundamental changes in the 
nature of job creation that are taking place in our economy have led to 
a far greater slice of the labor force that is working independently. 
As this trend continues, the payroll survey will be increasingly 
incapable of accounting for all working Americans. I think it is 
already there myself if we look at the numbers. The household survey 
alone is not enough to see the complete picture, however. But if we 
look at all the numbers that are available to us, it is clear that the 
current household survey numbers are much more in line with other 
economic indicators than is that very antiquated payroll survey. 
Average weekly jobless claims have been dropping for 13 straight 
months. The unemployment rate has fallen to 5.4 percent, lower than the 
average for the past 3 decades. The ISM manufacturing employment index 
has shown gains for 15 straight months. The same index for 
nonmanufacturing employment has been showing gains for 11 straight 
months.
  All of these employment figures are pointing in one direction, and 
that one direction is up. And yet Democratic presidential nominee John 
Kerry tries to claim that the economic policies of the Bush 
administration and this Republican Congress have been an abysmal 
failure. He claims that no jobs are being created. We have heard that 
line over and over again: ``George Bush is the first President since 
Herbert Hoover to preside over a net job loss.'' And yet faced with the 
evidence that thousands upon thousands of jobs are being created, John 
Kerry says that they are only low-wage hamburger-flipping jobs that 
have been created.
  Yet we can see from the overwhelmingly positive economic data that 
this is clearly not the case. Even the payroll survey, Madam Speaker, 
has shown 13 consecutive months of job creation. And these gains have 
been across virtually every single industry in our Nation. Gains have 
been especially strong in high-wage, high-skill industries like 
business and professional services. There is simply no denying the fact 
that job creation in this economy is strong and sustained. But the 
negative rhetoric just keeps on coming, and with it comes several new 
economic proposals.
  John Kerry says he would repeal the very tax cuts that halted a 
recession, revived business investment, gave Americans bigger 
paychecks, and produced all of the strong economic indicators that I 
have just been discussing, including $56 billion in unanticipated 
revenue to our Federal Treasury that came in because of the economic 
growth that followed our tax cuts.
  In addition to raising taxes on individuals, the Senator from 
Massachusetts would increase the tax burden on U.S. companies, the job 
creators, who compete and invest in the worldwide market. He would also 
impose new labor regulations on these global leaders and create new 
restrictions.
  For example, John Kerry supports preventing globally engaged 
companies from competing for federal contracts. He is also a cosponsor 
of the so-called Jobs for Americans Act. Sounds great, but it would 
impose dramatic new restrictions and regulations on any company, large 
or small, that invests in growing overseas markets. John Kerry would 
also bring our trade liberalization agenda to a standstill. He has 
proposed reopening the trade agreements that have removed barriers to 
U.S. goods and services, and we are all very proud of this Congress 
having in the past year passed agreements with Morocco and Chile and 
Singapore and Australia, very important; yes, small economies but very 
important market-opening opportunities. So he has proposed reopening 
the trade agreements that have removed barriers to U.S. goods and 
services and created new opportunities for American workers and 
provided quality, affordable choices for the American consumer, which 
is something we so often forget in the trade debate. He says he would 
put a moratorium on all negotiations currently in progress. And he has 
called for reinstating the Super 301 process, which would violate our 
commitments to the World Trade Organization. Remember, the WTO, often 
maligned, is an entity which has as its goal eliminating tariff 
barriers, and it would also, by taking the action that John Kerry has 
proposed, open up an opportunity for retaliation by our trading 
partners in the world.
  In short, John Kerry's economic platform consists of claiming that 
our vibrant, growing economy is actually weak and then proposing to 
make innovators and job creators even less competitive than they are 
today.
  Madam Speaker, several months ago I stood in this well and discussed 
many of the proposals that John Kerry has made and pointed out that he 
has been advocating policies that countries like France and Germany 
have had in place for many years. For decades, Madam Speaker, the 
French and the Germans have saddled businesses with high taxes and 
heavy regulation all in the name of what? Protecting jobs. As I said a 
few months ago when I stood here, we do not have to wonder what the 
impact of the Kerry economic agenda would be. Why?

                              {time}  2230

  All we need to do is look at the economies of France and Germany and 
decide that that is what our economy would look like under the policy 
proposals that have been put forth by John Kerry.
  So let us look, Madam Speaker, at these numbers again. Since 1999, 
unemployment in France has been stuck right around 10 percent. At the 
end of 2002 it dipped as low as 9.1 percent, but it is now back up to 
9.5 percent. The French unemployment rate is nearly double the 5.4 
percent unemployment rate that we have here in the United States, and 
it continues to rise at a time when the overall unemployment rate for 
OECD countries is actually falling.
  Remember, this increase is being led by falling unemployment in the 
United States. For the overall number of OECD countries, our economy is 
providing leadership. Unfortunately, the French economy, setting the 
example for the policies that John Kerry has proposed, unfortunately is 
headed in the wrong direction.
  Economic growth, overall economic growth in France has also been very 
disappointing. Last year GDP growth grew at a very paltry 1.8 percent. 
Remember, we have talked about it in excess of 3 percent growth here. 
Estimates for 2004 are that economic growth in France will be at 1.7 
percent. Its finance ministry announced it is hopeful the economy could 
grow by as much as 2.5 percent next year. But even they admit that this 
relatively slow rate of growth will be difficult to achieve. Getting up 
to 2.5 percent will be tough for them.
  This stagnation is not a recent or temporary situation in France. 
Average annual growth in gross domestic product throughout all the 
1990s was less than 2 percent, Madam Speaker, just over half of the 
average growth of 3.4 percent that we have had here in the United 
States.
  Germany has faced similar dismal jobs and growth numbers. Since the 
late 1990s, unemployment in Germany has remained just above 8 percent, 
and has steadily climbed over the past year. In 2003 it inched up from 
9 percent to 9.2 percent; and unfortunately for the German people, it 
continues to climb.
  At the same time, German GDP growth has been a very meager 1.7 
percent for the last 2 years, and economic

[[Page H7842]]

forecasters have downgraded their predictions of growth for 2004 from 
1.8 to 1.6 percent.
  Just like their neighbor to the West, Germany has experienced 
economic stagnation for many, many years. Throughout all the 1990s, 
economic growth averaged just 1.5 percent, an abysmal one-third of the 
U.S. growth that we have seen.
  But perhaps the most telling numbers of all, Madam Speaker, are what 
I call the ``innovation indicators,'' the innovation indicators, in 
terms of new patents, research and development, and venture capital. 
The United States far outpaces France, Germany, and the entire European 
Union. As a result, we are the world's leading innovator, right here in 
the United States.
  Our level of innovation, which demonstrates the vitality and dynamism 
of an economy, together with factors like unemployment and growth in 
GDP, clearly show that our economy is creating far more and far better 
opportunities for workers.
  Madam Speaker, the competitive edge has led to a significant brain 
drain from Western Europe to the United States. Over 100,000 European 
researchers currently work in the U.S. A recent European Commission 
survey found that more than 70 percent of European recipients of U.S. 
doctorates in the last decade plan to stay and work in America. This 
has the commission fretting that by the end of the decade Europe will 
have 700,000 fewer scientists and engineers than will be necessary to 
compete in the global economy.
  This realization, along with years of flagging growth and rising 
unemployment, has served as a wake-up call to Europe that their 
economic policies have failed.
  In fact, the policies that John Kerry is advocating have performed so 
poorly in France, Germany, and throughout the euro-zone area that the 
Europeans are now proposing significant reforms. It is long overdue, 
but it is great to hear it. They are starting to move in precisely the 
opposite direction that John Kerry is proposing to see the U.S. move 
in. The European Union has realized it is time for them to go back to 
school and learn what it takes to make sure that economies thrive.
  The most sweeping changes are taking place within the European 
Commission, beginning with the appointment of Jose Manual Barroso of 
Portugal as the new president of the European Commission. France and 
Germany had supported the Belgium Prime Minister Guy Verhofstadt, who 
favors high taxes and heavy-handed government intervention. But EU 
member countries chose Portugal's Prime Minister, a staunch free market 
proponent with strong reform credentials.
  Mr. Barroso has signaled his continued commitment to the principles 
of economic liberty in virtually every major appointment he has made 
for his team of commissioners. The competition portfolio is one that 
France in particular was interested in nabbing. But the job did not go 
to a French favorite. Instead, it went to Neelie Kroes-Smit of the 
Netherlands, a member of the free-market Liberal Party in the 
Netherlands. As transport minister in the 1980s, she supervised the 
privatization of key naturalized industries, such as the postal system 
and the telephone monopoly.
  The trade post went to a Brit, Peter Mandelson, a close ally of Tony 
Blair and a strong proponent of aggressive trade liberalization. The 
internal market position went to Charlie McCreevy, that great supply-
sider who cut Ireland's taxes to the lowest in the European Union and 
helped Ireland enjoy 8 percent, 8 percent, GDP growth. Latvia's Ingrida 
Udre was given the taxation portfolio in a clear signal of his support 
for lower taxes.
  Madam Speaker, Latvia adopted a 25 percent flat tax 10 years ago, and 
has experienced growth rates averaging over 6 percent during the last 5 
years.
  Clearly, the European Union has witnessed the damaging effects of 
Franco-German policies of high taxes and high regulation which stifle 
innovation and entrepreneurship; and as a result of that, the new 
leadership is attempting to make a fundamental shift in the EU's 
economic and labor policies.

  While France and Germany still seem to be lagging behind in this 
enthusiasm for change, there are signs that even they realize that 
their policies are not working. The German Chancellor, Gerhard 
Schroeder, has been struggling to institute new labor reforms that 
would significantly reduce the burdens of employers, particularly small 
business owners, in an attempt to jump-start job creation.
  There have also been some surprising proposals in the area of tax 
cutting. Last month the influential advisory panel to Germany's Finance 
Ministry actually proposed a flat tax of 30 percent on both corporate 
and personal income. That is still a high rate by international 
comparisons. Russia's individual flat tax rate, for example, is 13 
percent. But it would be a significant reduction, not to mention 
dramatic simplification, of the very, very complex system that they 
have in Germany.
  German corporate profits are now taxed at 37 percent and individual 
rates as high as 45 percent. The tax burden is so formidable that a 
recent European Commission report estimates that the black market in 
Germany has grown to 6 percent of its GDP.
  While much of Western Europe still has a very long way to go to undo 
the decades of burdensome labor regulations and protective tax 
policies, the seeds of change, I am happy to say, are being sown. But 
it is simply mind-boggling that at precisely the same time that the 
European Union is getting the message and beginning to deal with the 
very detrimental effects that they have had of years of bad economic 
policies, John Kerry is proposing that we as Americans begin adopting 
those failed policies.
  He wants to saddle employers with new regulations. He wants to burden 
U.S. companies that are global leaders and innovators with higher 
taxes. He wants to disrupt trade agreements that have created new 
opportunities for American workers, business and consumers. He wants to 
fundamentally alter the U.S. business environment that has made us the 
global economic leader and a magnet for the world's best and brightest.
  It is hard to understand what John Kerry could possibly be thinking, 
but at least he provides the American people with a very clear, 
distinct choice. On the one hand you have a President who cuts taxes, 
boosting the after-tax dollars of all Americans and making U.S. 
companies more competitive; a President who aggressively seeks to 
alleviate the burdens of unnecessary regulations and frivolous lawsuits 
on employers and job creaters, particularly small business owners; a 
President who tears down trade barriers that hurt U.S. manufacturers, 
service providers, farmers, investors and consumers; a President who 
has helped to lead our economy into the 21st century economy so it will 
continue to be the global standard bearer.
  On the other hand you have a candidate who wants to stymie the 
freedom and flexibility that have allowed innovators to develop and 
harness new technologies; a candidate who wants to prevent our most 
competitive businesses from investing in the global market; a candidate 
who wants to burden employers and individuals with new taxes and new 
regulations; a candidate who looks at our dynamic, vibrant, growing, 
innovative economy and sees only an opportunity for more heavy-handed 
government intervention.
  Madam Speaker, it sounds like John Kerry could learn a few things 
from the very Europeans whom he proposes we emulate. Our economy is the 
global leader because the hard work and innovations of millions of 
Americans are not constrained by excessive government meddling. France 
and Germany are reluctantly learning this lesson.
  I hope very much, Madam Speaker, that as he continues his career in 
the United States Senate after this November, that John Kerry will 
learn those lessons as well.
  Madam Speaker, I am very happy to yield to my friend the gentleman 
from San Diego (Mr. Cunningham).


                  A Vision of Peace in the Middle East

  Mr. CUNNINGHAM. Madam Speaker, I thank the gentleman from California 
for yielding. I applied for a 1-hour Special Order, but under the rules 
you are only allowed 2 hours; and thanks to the goodness of my friend, 
the gentleman from California (Mr. Dreier), I am able to speak for a 
few minutes.
  Madam Speaker, my intent is to bring something different, something

[[Page H7843]]

refreshing to a Special Order. As I listened to my colleagues on the 
other side, you would think that the White House and Republicans are 
mean-spirited, evil, and do not really care about the American public. 
I think it would be refreshing to listen to a Special Order that 
actually projects a vision. I wish it was my vision, Madam Speaker, but 
there are many great men that have tried to work on this, and the good 
news is that it is achievable.
  Now, tonight I only have 20 minutes left to speak. On Monday night I 
will have a full hour and I will expand. But history has witnessed 
great men with a vision accomplishing some very difficult tasks, and 
that vision is a safe and secure Israel. That vision is a Palestine 
that lives in peace beside its neighbor, Israel. It is a vision that 
says that the Muslim world can be supportive of both Palestine and 
Israel. And to make this happen, I want to go through this vision.
  I am just a Member of Congress. I do not have the power to bring this 
to fruition. But I think it is possible, and I think if all of us pull 
together on both sides of this aisle, it could be something that will 
change this world for the better, for Republicans, for Democrats, and 
all Americans.
  Can you imagine a time of peace? I know in my life I thought there 
would never be peace in Ireland. I am of Irish descent. A Democrat went 
under the Clinton administration and I think worked wonders in that 
part of the world. He had a vision of bringing Ireland together in a 
time of peace. Are there differences today? Yes. But it is a lot better 
than it was.
  That is what I want to talk about, and this is why I think it is 
possible, is to talk over this 20 minutes and then the hour on Monday 
night.
  First, I want to tell why I think it is possible. This is coming from 
a pilot that flew in Vietnam and also flew in Israel in the 1970s. It 
comes from a Member of Congress that is a strong supporter of Israel, 
but yet sees the possibility of Palestine living side by side with 
Israel and peace in the Middle East.
  I recently visited Saudi Arabia for a week.

                              {time}  2245

  I went there with a constituent of mine who is an American citizen 
and has been for many years. He is an American citizen first, but he 
also wants that vibrant feeling that used to exist between the United 
States and Saudi Arabia to be rekindled. Madam Speaker, I think that 
vision is possible, so much so that I am willing to lay out political 
capital to invest in this Special Order.
  I would like to thank Minister Mohammed. He put together a difficult 
schedule in which I was able to speak to every minister in the council. 
I was able to talk to the Shura Council, which is like our Congress, to 
business leaders, to students, to families, to bankers. We even went to 
an orthopedic rehab center that is rivaled nowhere in the world that 
takes care of people with orthopedic problems.
  Saudi Arabia is a leader, Madam Speaker, in the Muslim community. 
What happens in Saudi Arabia directs the rest of the feelings in the 
Muslim community itself. Both Mecca and Medina are looked upon by 1.3 
billion Muslims many times a day and pray towards Saudi Arabia, Muslims 
that want peace, not their counterparts that are active terrorists and 
extremists.
  On 9/11, Saudi Arabia saw many of the Saudi Arabians involved in the 
9/11 attacks. They were shocked. And one of the reasons they were 
shocked is that it was purported that many of the people that were 
still walking around in Saudi Arabia had been linked to those aircraft 
crashing into our World Trade Centers, and they were not.
  So they acted in disbelief that a nation that had been an ally of the 
United States, yes, they had problems. They had problems then and they 
still have problems now. But the majority of Saudi Arabians have a very 
strong friendship and belief with the United States itself. They 
thought that this terrible event, when it was confirmed, the Saudi 
leadership at first was slow to react in some areas; but in other 
areas, they stepped forward.
  One example is they provided millions of barrels of oil right off the 
bat to stabilize the U.S. economy and to help us meet our needs to help 
New York, to help the rest of the community when jobs were being 
destroyed right and left. Madam Speaker, in many instances I will 
discuss tonight, Saudi Arabia has helped us over and over again.
  I want to talk about some of the things I think that hurt us, that 
can take away from this vision. I look at the students before 9/11 from 
Saudi Arabia. When I spoke to the cabinet in Saudi Arabia and I spoke 
to the Shura Council, 75 percent of both the cabinet and Shura Council 
graduated from U.S. universities. Saudi Arabians that came to this 
country made personal investments in this country; and to a person, not 
a single one that had graduated said that they want to separate the 
ties with the United States. Quite on the contrary. They love the 
United States; they want to see those relationships rekindled. But, 
yet, they are angry at some of the things the United States is doing 
towards Saudi Arabia and the rhetoric that comes out of much of our 
newspapers that hurts that relationship.
  If Osama bin Laden wanted to achieve a division with the United 
States and one of its best allies in the Middle East, it would try and 
drive a wedge between us. They feel that is exactly what Osama bin 
Laden did on 9/11 in using Saudis. He could have used anybody within 
the entire world.
  Let me tell my colleagues about some of these students. I spoke to 
cabinet members that had graduated and, as a matter of fact, Madam 
Speaker, the majority of those students obtained Ph.D.s. These are the 
people who are now leading the Saudi government, both in the Shura 
Council and within the cabinet itself. But those who had just visited 
in the United States to a person said, we do not need the United 
States. I am going to send my son and my daughter to Australia, to 
England, to Austria, to New Zealand, to English-speaking schools, 
because they did not make that personal friendship bond with the United 
States.
  My biggest concern, Madam Speaker, is the fact that if we lose that 
strong support for the United States, 30,000 students from Saudi Arabia 
prior to 9/11, do we know how many we have today in U.S. universities? 
Two thousand Saudi students. There is a fine line between issuing visas 
and national security. Colin Powell is working desperately to change 
that and weigh the differences between making sure that those visas are 
offered only to people that are safe; but on the other hand, we are 
denying access to our universities and our schools, which people within 
5 to 10 years, we are going to ask to support the United States, and 
that support is not going to be here. That is dangerous, Madam Speaker.
  I will give a couple of significant issues as examples. When I talked 
to one of the students, one of the students who had been attending a 
United States university for many years had gone back and forth, a 
strong supporter of the United States even though he was a Saudi. When 
he checked in through INS, the INS agent looked at his passport and saw 
that he was from Saudi Arabia. The INS agent said, smile for me like a 
terrorist. These are the affronts that every single day Muslims in this 
country face, and the ignorance of some people on how it affects 
people.
  I have a constituent that lives in San Diego. He has been an American 
citizen for many, many years. His brother is still in Saudi Arabia. His 
brother's son had been a student within the United States, again for 
many years. He stepped foot into the United States after traveling back 
and forth many times, was put into handcuffs, was shackled, his legs 
where he could just shuffle, and shipped back to Riyadh with no 
explanation. And guess what? When he got to Riyadh, our agency said, 
oh, it is a big mistake.
  Now, when this constituent of mine goes to Saudi Arabia and speaks 
about how strong the love is that the United States has for Saudi 
Arabia, can we imagine what his brother purports to him about his son 
being shipped back without any reason and then it is proven wrong? And 
did the United States even offer to ship this man back? No, that is not 
the case.
  When I talked to this young man, his name is Badar, and Badar was 
even allowed to go get a meal. He had handcuffs, his legs were in 
irons, he had a

[[Page H7844]]

tray, and as he is walking to the little cafeteria, he looks over and 
sees the very agents that had secured him, and he looks and says, can I 
pick you up anything while I am on my way? I am on my way to do that; 
can I help you get anything? This is the attitude of many of these 
young men and women who attend our universities, and it is a shame. 
They give us support, and the problem is that we may do away with that 
support in the future.
  Madam Speaker, I have heard over and over the media, and even some of 
our Members of Congress, purport that Saudi Arabia is evil. They have 
problems in Saudi Arabia. I sit on the Subcommittee on Defense of the 
Committee on Appropriations, and I also sit on the Permanent Select 
Committee on Intelligence. I will tell my colleagues directly, not 
rhetoric, not spin, but the Saudi Government is working with the United 
States intelligence service in which on Monday, I will purport and 
submit for the record reams and reams and pages of al Qaeda that they 
have captured, that they have killed of their own soldiers dying to 
help us and the rest of the world live in peace from these terrorists. 
Again, have they had problems in the past? Yes. Do they have problems 
now? Yes. But we need to help a nation that is trying to help us 
instead of bashing that nation. In trade, in oil, they have always been 
there.
  Now, in the 1970s, when we had our oil shortage, Saudi did not help 
us. But since that time, under the first George Bush, under President 
Clinton, and now under George W. Bush, while the world is providing us 
oil at $50 a barrel, Saudi Arabia is working to give it to us at $38 a 
barrel. In the 1970s, when some of us were old enough to remember the 
gas lines, it was $72 and $73 a barrel. Yet, Saudi is pushing their own 
wells to make sure that the United States is taken care of, not just 
for Republicans, but for Democrat administrations as well. Colin Powell 
is working desperately to resolve this as well.
  Let me get into one last issue before my time runs out. Some of my 
friends that I meet with regularly, and I meet with Jewish 
constituents, with Persian constituents, with Muslim and Arabic 
constituents, and they have told me, those who have served in Saudi 
Arabia, that the Saudi curriculum, education curriculum has not changed 
in 40 years. Eighty-five percent of that curriculum was okayed by U.S. 
standards. Fifteen percent was in a gray area. Five percent taught the 
Wahabiism, the antitolerance system. Well, guess what? Saudi not only 
supported the 85 percent that we support; they got rid of the 15 
percent that was in a gray area. The 5 percent that taught intolerance; 
they fired those individuals, over 3,000 teachers that were teaching 
intolerance were eliminated, fired. And they actually have schools that 
go to purport a new curriculum to help not only not teach intolerance, 
but to help the Saudi education system itself. Many Americans do not 
recognize that, that they are trying to work in that direction.
  So the students coming to the United States and establishing a bond, 
the curriculum that they have changed to make sure that it is a 
curriculum not of intolerance, but of tolerance for other nations and 
adhere to the United States standards. I think that is significant.
  Madam Speaker, I am not sure how much time I have left, but I think 
it is a good start to set forth on Monday, when we talk about the 
issues and how do we get from this vision of having Palestine and 
Israel secure, yet to have a strong Middle East with support for a 
peaceful system in the viable future.
  Madam Speaker, I will start by saying on Monday, I am going to talk 
about a controversial issue. The Crown Prince Abdullah purported U.N. 
resolutions and supported U.N. resolutions 338 and 442, and those 
resolutions were adopted by the United States. They were adopted by the 
U.N. and NATO and all of the Arab nations. And what that did is it 
established a Palestinian state, a Jewish state, and if anyone violated 
those resolutions, the Arab nations would come to the rescue of Israel 
and support it.
  Now, I ask my colleagues, Madam Speaker, can we in today's 
environment continue the Israeli-Palestinian issue as it exists today? 
Every day people are losing their lives. I strongly feel before we ever 
have peace in Iraq and in Afghanistan and Egypt and Syria and Lebanon 
and other areas that the resolution between the Israeli and the 
Palestinian people has got to be fixed, and that is no easy issue. They 
have been fighting for a long time.
  So on Monday I want to give my colleagues a vision, not my vision, 
but a vision that has already been adopted by the United Nations, by 
the United States, by all of the Arab world, and supported by Crown 
Prince Abdullah. That is the antithesis of the direction that I would 
like to go forward in on Monday and give examples of how Saudi Arabia 
has helped the United States and other nations in the war on terror and 
the directions that we can go to have peace in the Middle East.

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