[Congressional Record Volume 152, Number 76 (Wednesday, June 14, 2006)]
[House]
[Pages H3980-H3981]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            THE WAR IN IRAQ

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, I would like to include in the Record 
extraneous materials this evening, particularly an article from the 
Christian Science Monitor entitled ``Prices Rise, and Interest Rates 
Sure to Follow.''
  This evening we have heard from many of our colleagues about the 
ensuing debate tomorrow on a very weak resolution concerning the 
ongoing war in Iraq. Tonight I would like to direct my comments to the 
terrible taxes that this war places on the American people. And not 
just taxes in the conventional meaning of the word because, indeed, 
this war is causing us to borrow money, which we must pay back, and we 
are borrowing it back from foreign countries. This war is costing us 
more every day. Over $300 billion and rising. We have to pay those 
dollars back because we are borrowing them.
  This war is placing a terrible burden on this economy as we now see 
prices rise and interest rates ticking up, which I will talk about in 
just a second. And, of course, the greatest tax is on the loss of life 
and the injury to body and limb of those that we have asked to fight 
the battles of this Nation, as well as innocent civilians who are being 
killed and injured across Iraq and the region.
  This war in Iraq is also exacting a terrible tax on the people of the 
Middle East and adjoining regions because it is yielding more 
terrorism, not less. This war is yielding more repressive regimes in 
places like Pakistan; in places like Egypt; in the Palestinian 
Authority; indeed, adjoining nations like Lebanon. The tax on 
democratizing regimes is getting heavier and heavier every day. There 
is more instability in the region as we watch the demonstrations in the 
West Bank and in Gaza, as we see Hamas and Fatah locked in internal 
struggles. There is more instability, not more stability. And most 
crushing for our country globally is the United States is losing 
respect across the world. We have fewer friends and more enemies and 
those who doubt the United States across the globe.
  Here at home we see rising interest rates, and that is the article I 
will enter into the Record tonight. Higher prices for such things as 
airline tickets, housing, health care, and, of course, gasoline are now 
starting to eat into consumers' pocketbooks. Indeed, this war is a 
terrible tax on the American people, and they are feeling it in their 
pocketbooks.
  Wednesday, the Labor Department reported the May consumer price index 
rose .4 percent after a .6 percent rise in April. This is well above 
the comfort level of the Federal Reserve, the Nation's chief inflation 
fighter. The Fed is going to have to raise interest rates more out of a 
desire to keep the market from thinking the new sheriff in town at the 
Federal Reserve is not serious about fighting inflation. Prices are 
rising against a backdrop of weakening housing and other parts of the 
economy. This war in Iraq is a heavy tax.
  Economists are most concerned that rising prices seem to have moved 
beyond the energy sector and removing food and energy, typically the 
most volatile prices from the inflation rate, indicates core prices 
rose in May .3 percent; and over the past 3 months, the core rate of 
inflation is up to an annual rate of 3.8 percent, the fastest pace in 
more than a decade. We are seeing a near-term acceleration in the core 
rate. An increase of half a percentage point at the next Fed meeting is 
a strong possibility before the Fed decides to back away.
  So we look at what this war is yielding on many levels. More 
terrorism, not less terrorism. Is it yielding more democratic regimes 
throughout the Middle East? No. The oil regimes continue to be as 
repressive as they ever were. There is not a single democratic nation 
anywhere in the region, and there will not be one for a long time to 
come. The United States ought to decouple itself from the repressive 
oil regimes it continues to support and become energy independent here 
at home.
  Is there a solution to the Palestinian-Israeli standoff? Are there 
ongoing negotiations? No. There is just shooting across borders. There 
are more demonstrations in the street. There is no back channel that is 
being actively promulgated by this administration to get the warring 
parties to sit down and finally reach a peace process following on the 
agreement that was attempted to be negotiated during the Clinton years.
  Have we seen freedom on the rise? No. We see repression on the rise, 
as

[[Page H3981]]

beheadings and the election of people who are absolutely opposed to the 
United States without any sense of growing freedom.
  There was a gentleman down here on the floor earlier who said that 
they do want our freedom here in the United States, that is why they 
hate us so much. Actually, a number of those revolutionaries want 
freedom from what they see us representing in that region, and that is 
support of dictatorships, support of oil regimes, and we are yielding 
the counterreaction to many years of supporting brutal dictatorships in 
that part of the world.

          [From the Christian Science Monitor, June 15, 2006]

             Prices Rise, and Interest Rates Sure to Follow

                            (By Ron Scherer)

       It could be a summer of rising interest rates.
       That's the sobering prospect for the U.S. economy following 
     news that the inflation rate is running at a quickening pace. 
     Higher prices for such things as airline tickets, housing, 
     healthcare--and of course, gasoline--are now starting to eat 
     into consumer pocketbooks.
       Wednesday, the Labor Department reported the May Consumer 
     Price Index (CPI) rose 0.4 percent, after a 0.6 percent rise 
     in April. This is well above the comfort level of the Federal 
     Reserve, the nation's chief inflation-fighter.
       The latest numbers just about guarantee the Fed will hike 
     interest rates at the end of the month. Its new chairman, Ben 
     Bernanke, an avowed inflation-fighter, may follow that with 
     yet another increase in August.
       The inflation pop, however, comes at a time when the 
     economy may be starting to cool. This could keep the Fed from 
     hitting the brakes too hard.
       ``The Fed is going to have to raise rates more out of a 
     desire to keep the market from thinking the new sheriff in 
     town is not serious about fighting inflation,'' says Anthony 
     Chan, chief economist at JP Morgan Private Client Services in 
     Columbus, Ohio. ``Prices are rising against a backdrop of 
     weakening housing and other parts of the economy.''
       Economists are most concerned that rising prices seem to 
     have moved beyond the energy sector. Removing food and 
     energy--typically the most volatile prices--from the 
     inflation rate indicates that ``core'' prices in May rose 0.3 
     percent. Over the past three months, the core rate of 
     inflation is up to an annual rate of 3.8 percent, the fastest 
     pace in more than a decade.
       ``We're seeing a near-term acceleration in the core rate,'' 
     says Gregory Miller, chief economist at Suntrust Banks in 
     Atlanta. ``An increase of half a percentage point at the next 
     Fed meeting is a strong possibility before the Fed decides to 
     back away.''
       However, Mr. Chan reports that such a large rate hike is 
     not likely. In the past, Mr. Bernanke has said previously, 
     the Fed has tended to ``overshoot'' by raising rates too high 
     or dropping them too low. The central bank would then have to 
     change directions, confusing the markets.
       ``I don't think Bernanke is going to put in a strong case 
     for a half a percentage point increase,'' Chan says. Though 
     the inflation rate is accelerating, the economy has 
     changed considerably since the last major period of 
     inflation in the 1970s, Chan says. Back then, whenever the 
     consumer price index rose, wages automatically ticked up 
     via ``cost of living adjustments.'' Most of those 
     arrangements are now gone, he says, particularly at 
     manufacturing facilities, like General Motors Corp., where 
     total remuneration is being cut, not raised. ``A slowing 
     economy will eventually lead to diminished pricing 
     pressures,'' Chan says.
       Until that happens, consumers are starting to feel the 
     effects of rising prices on their pocketbooks. For example, 
     airfares rose 2.6 percent in May, according to the CPI 
     report. Brian Hoyt, a spokesman for Orbitz.com, says airline 
     ticket prices this summer are up 10 percent over last year's.
       Amy Kelley of Calverton, N.Y., can attest to this. She's 
     been searching for less expensive tickets for a vacation to 
     Seattle. ``I can't find the bargains I used to,'' she says.
       While the higher airline prices are related to the rising 
     cost of jet fuel, the CPI also points to rising medical 
     expenses, which were up 0.3 percent in May. In Philadelphia, 
     Warren West, president of Greentree Brokerage Services, says 
     the cost of providing medical benefits to his employees rose 
     16 percent this year. ``There is no way to pass this on to 
     the end user. We don't have that kind of pricing power,'' he 
     says.
       In fact, inflation in services is a growing issue, says 
     economist Robert Brusca of Fact and Opinion Economics in New 
     York. ``The last two months there has been service-sector 
     wage pressure,'' Mr. Brusca says, pointing out that two-
     thirds of the jobs in the economy are service-related. 
     ``Inflation pressure on goods is not that bad, but in 
     services they seem to be building.''
       Part of the reason for the service-sector price increases 
     is supply and demand, says Sandy Horwitz, an accountant in 
     Coral Gables, Fla. His firm, Goldstein Schechter Price Lucas 
     Horwitz & Co., has raised its billing rates 5 to 7 percent 
     this year, he estimates. ``There is a shortage of accountants 
     and pretty strong demand out there, so we need to meet 
     people's salary requirements,'' he says.
       Miami lawyer Matthew Krieger says demand for his legal 
     specialty, immigration law, is so strong he has been able to 
     increase his billing rates from 10 to 20 percent this year. 
     ``There is a shortage of good attorneys in our area,'' he 
     says. ``It's a very complex area of the law.''
       In terms of prices, ``rents'' is one of the fastest 
     ascending groups. The government calculates rents by 
     determining what individuals would pay for housing if they 
     were renting to themselves. Last month, rents rose 0.6 
     percent, the fastest pace in years. Since housing represents 
     25 percent of the CPI, it is a significant contributor to the 
     overall inflation jump.
       In Miami, landlord David Lombardy says tenants are not 
     seeing rents climb--up about 30 percent in the past year, he 
     estimates. A one-bedroom apartment at the Mirador on South 
     Beach is now renting for $1,400 a month, up from $1,000 a 
     month last year, he says.
       Still, Mr. Lombardy expects rents to drop eventually due to 
     the rising number of luxury condominiums coming on the 
     market. ``All those people who bought on speculation will try 
     to flip them, and when they can't do that they will try to 
     rent them. So this will bring rents down in 12 to 18 
     months,'' he says.

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