[Congressional Record Volume 153, Number 37 (Monday, March 5, 2007)]
[House]
[Pages H2156-H2163]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      SOLUTIONS TO TRADE PROBLEMS

  The SPEAKER pro tempore (Mr. Arcuri). Under the Speaker's announced 
policy of January 18, 2007, the gentleman from Iowa (Mr. King) is 
recognized for 60 minutes.
  Mr. KING of Iowa. Mr. Speaker, I have had the privilege to be seated 
here in this Chamber and listen to the presentation over the last 
probably hour and a half or so. It is quite interesting as I listened 
to the presentation made by my colleagues on the other side of the 
aisle and the concern about the imbalance in trade, which I am 
concerned about, and the argument that we need not necessarily free 
trade, but fair trade.
  As I carefully listened to the 60-minute presentation, I hear some 
things that are wrong, and I agree with some of them, as a matter of 
fact, most of them, but I heard no suggestions on how we are going to 
fix this, except ask the administration to do it better and get it 
right.
  I think it is important for us, Mr. Speaker, if we are going to 
identify these issues that we are going to call problems that we should 
also step forward and have the will and the foresight to present some 
solutions.
  So in the time I have had here to listen now, I will just present 
some solutions that I would have liked to have heard from my colleagues 
on the other side of the aisle, because I think we ought to be here to 
fix the problems we have.
  First, I don't have quite the same number of trade deficit that the 
gentlelady from Ohio presented in the poster here just a little bit 
ago. I recall that 2 years ago, actually now 3 years ago, our trade 
deficit was a minus $617.7 billion. Last year it was a minus $725 
billion. Her number was slightly higher than that. We should by now 
have the records for the 2006 trade deficit. I have not had access to 
that number, and I note the gentlelady from Ohio didn't present a 
number for the 2006 trade deficit, but it had been increasing about 20 
percent a year for several years.
  I heard no evidence that convinces me that NAFTA is the only reason. 
In fact, I will submit that there are a number of other reasons that we 
have a trade deficit. I would challenge my colleagues, join with me in 
some of these solutions that I will present here.
  But before I do so, I am just going to go back and review some of the 
remarks that were made and then respond to them with solutions rather 
than lamentations, Mr. Speaker.
  The gentleman from Wisconsin called for fair trade. He showed a 
poster that has a minus $233 billion trade deficit with China. I don't 
dispute that number. I expect that is as very close, if not as 
accurate, a number as there is out there. But that is a portion of and 
not even a majority of our trade deficit that we have from a global 
imbalance.
  Then the gentleman from Illinois made the statement ``We need fair 
trade.'' Fair trade in fact was called for by I believe every one of 
the speakers, and at least no one disagreed with that.
  Well, Mr. Speaker, I refuse to allow my staff to use the word 
``fair.'' In fact, I refused to let my children use the word ``fair'' 
as they were growing up, because I know something that most Americans 
know, and that is anyone who has raised two or more children knows 
there is no such thing as fair.

[[Page H2157]]

  If you are going to use ``fair'' and be able to define the word 
``fair,'' you have to be talking about a county fair or a State fair or 
some other type of gathering where people display their wares, because 
the term ``fair'' is not definable; it isn't universally understood. So 
one person's idea of fair is another person's idea of a injustice, and 
it will be ever thus.
  We can talk about justice and equity, and we can talk about using the 
equal enforcement of trade agreements and laws, and I think we should 
do that; but to even try to define what we would like to do with a term 
like ``fair,'' we have chosen the vaguest term that there is in the 
dictionary and the one that submits itself to anyone's redefinition of 
it.
  Also the statement was made that we have no options, we have to vote 
these fast track trade agreements up or down. That is not true. Yes, 
they come to the floor as unamendable, but a couple of years ago, maybe 
3 years ago, I amended two unamendable trade agreement, and I did so in 
committee.

                              {time}  2145

  These were trade agreements that had to do with Singapore and Chile. 
Ambassador Zoellick had negotiated immigration agreements into those 
trade agreements. And so with the wisdom and tenaciousness of the 
chairman of the Judiciary Committee, the gentleman from Wisconsin (Mr. 
Sensenbrenner), we brought those trade agreements before the Judiciary 
Committee, and although they were unamendable trade agreements, up-or-
down, to be voted on, we had a mock markup in committee. And in that 
mock markup, I was successful in getting two mock amendments put on the 
mock bill. And when we finished with our analysis of the trade 
agreements that had been negotiated by the U.S. Trade Representative 
and had perfected the trade agreements in the process of going through 
the mock markup, the U.S. Trade Representative then, even though it was 
supposedly impossible to go back and reopen those negotiations, 
reopened those negotiations and adapted those two amendments into the 
trade agreement, and we struck out the immigration language out of the 
trade agreement. It had no business. It had no place there, and that is 
one way you can effect a change if you disagree with the trade 
agreements.
  But it sounds to me like the people that are speaking here are 
against all trade agreements no matter what they might be. They will 
always be able to oppose any agreement no matter how it is defined 
because they will always reserve the right to redefine their own term 
called fair. It will be, it isn't fair. We can't do it because it is 
not fair. Well, you have to be more specific than that.
  As I listened to my colleague from Iowa talk about the Maytag issue 
at Newton, and that has left a big hole in the central part of Iowa, 
and I look back on the 34\1/2\ years of my marriage, and there has 
never been anything but a Maytag washer and dryer in my home washing 
clothes for our family. That is deep in our heritage, and we are loyal 
to the brand.
  But part of the equation also was that, when it came time to resolve 
the labor disagreements and to settle the salary and benefit and 
pension plans, the burden of that was just too high to be able to hold 
the jobs in Iowa. It is too bad, but those were some of the 
circumstances that no one over here uttered, when you get collective 
bargaining and it drives the package up so high; when you overplay your 
hand, you lose the company. You don't have the option to back down, and 
the union doesn't come forward and say, I will be happy to take a $2 or 
$5 pay cut, or maybe we will negotiate the health care plan or do a 
package that has to do with our contribution versus our benefits, 
defined contributions versus defined benefits plan, that stuff is hard 
to get when you have a lucrative labor agreement, collectively 
bargained agreement, those types of agreements could not be resolved 
favorably to Maytag. That is one of the reasons why we no longer have 
Maytag centered up in Newton, Iowa. I think we need to talk about that.
  Yes, these jobs are going overseas. But, also, Maytag made an 
investment overseas to go over there and make washing machines to sell 
to the Chinese. They invested initially $70 million in that plant. And, 
finally, after some years of trying, they couldn't make it work and 
pulled out of that investment.
  There are many, many different components to these transactions. It 
isn't just simply American corporations, that they are simply greedy 
capitalists and that they quickly move our industries overseas. They 
are reluctant to go. But we set up the burden of taxation and 
regulation. And then you have the compensation packages of the 
collective bargaining agreements; and that being the environment here 
in the United States, having then to compete against the cheaper labor 
overseas. All of those things work against us, not just the 
corporations deciding to make a decision that is simply based on greed. 
That is not so, Mr. Speaker.
  Also, the argument, the gentlelady from Iowa said our trade deficits 
soar, we need a new trade model. I heard no proposal of what that new 
trade model is. It is criticism, but it is not a solution. We need to 
provide solutions.
  The other gentlewoman from Iowa talked about Hershey is moving out 
and going to Mexico. I am saddened to see that go. But some of my 
colleagues who have been here a number of years have had an opportunity 
to put a fix in place so we could sustain, could have sustained some of 
these businesses that we are losing, and we could still sustain many of 
these businesses today if we could get to work and roll up our sleeves 
and do the right thing for real tax reform.
  That would be to simply bring forward H.R. 25, the FAIR Tax. And that 
eliminates the IRS and the Income Tax Code, so it eliminates personal 
and corporate income tax. It eliminates the tax on your interest 
income, your dividend income and your capital gains. And it eliminates 
the AMT. It takes the tax off your savings and investment, and your 
pension and Social Security. It does all of those things.
  One of the things I would think my colleagues would want to do if 
they are concerned about the trade deficit, I would think that they 
would want to border adjust the taxes so we weren't operating here in 
the United States at a disadvantage, having to put taxes on the cost of 
our goods and be competing against imported goods from overseas that do 
not have that tax component in there. That is part of what they are 
talking about, is unfair trade, subsidized goods was the term used by 
the gentleman from Pennsylvania, the onslaught of foreign subsidized 
goods.
  Well, they may be subsidized goods, and I am sure there is a 
definition that can be applied to that, but we do the opposite. We put 
the tax burden on everything that we manufacture in this country, on 
materials and labor, and it has to be built in and embedded in the cost 
of the things that we sell, because corporations, companies that are in 
business to sell a good or a service or any combination of the two, do 
not pay income tax. They can't pay income tax. They collect it from 
people. The end user, the last stop on the retail chain, are the ones 
that pay the taxes, but it is collected through the companies that sell 
the goods and the services, and then they transfer it to the IRS in the 
form of corporate income tax, business income tax and sometimes the 
personal income tax of the executives and the shareholders as well.
  Corporations and businesses don't pay taxes; they collect it from 
real people. The consumer is the last stop on the retail dollar. Once 
we can get our minds around that absolute truth, then we can begin to 
talk about how we can work together to border adjust our taxes and 
become a more competitive Nation again.
  The studies that we have had done indicate that the components boil 
down to this: On average, 22 percent of a product that is on the shelf 
for sale here in the United States, 22 percent is the embedded cost of 
the tax structure that the company that is producing that product has 
to build into the price. So that says, if you are selling a widget and 
that widget is a dollar, 78 cents is the cost of the widget and 22 
cents is the cost of the tax.
  If you put that on some more expensive items, go from the $1 widget 
to the $30,000 vehicle, and we have millions of dollars worth of 
vehicles coming into the United States every year. Some of our trade 
deficit, I can tell you, would be $800 million worth of Mazdas that

[[Page H2158]]

come over from Japan every year, made in Japan, put on ships, brought 
here, off-loaded into the United States and marketed on our dealers' 
lots, $800 million. As that price goes up, and that is a couple-of-
year-old number, we could be into a billion dollars, and that would be 
one-700th of our entire trade deficit because we are buying Mazdas but 
we are not exporting Chevys or Fords back to Japan. If we sent a 
billion dollars worth of Chevys or Fords to Japan instead of them 
sending a billion dollars of Mazdas to us, then we pick up a two-for, 
and we reduce that trade deficit by $2 billion, not $1 billion.
  But if you put a Chevy and a Mazda on a dealer's lot and each has a 
sticker price of $30,000 and they are comparable vehicles, comparable 
quality and accessories that are built into that price so the 
competition will establish that price and they are selling against each 
other at $30,000; if we pass H.R. 25, the FAIR Tax and we cease taxing 
all productivity in America and we put the tax on sales instead of 
income, a national sales tax, that $30,000 Chevy, the price of it goes 
down.
  If you take the tax component out, you take 22 percent out of that 
$30,000 Chevy, and it takes us into that area of $23,400. The Mazda 
stays at $30,000.
  When we put our tax back in, we have to build it back in, the sales 
tax on the price, now the Mazda goes up by 23 percent, and it ends up 
as a $39,000 Mazda. That is the amount you would write the check for to 
drive it off the lot. But you would write the check for the Chevy or 
the Ford at $30,400. That is an $8,600 marketing advantage that we 
would gain simply by getting rid of the IRS and the Income Tax Code and 
put our tax back on sales and allowing these companies and competition 
to drive the embedded tax component out of everything that we are 
producing here in America.
  That gives us a 28 percent marketing advantage here in the United 
States. So when foreign companies are competing against American 
manufacturers, they would have to look at that huge 28 percent 
advantage that we would have. I can tell you, there would be a lot more 
products produced in the United States.
  I will take you back to the $800 million worth of Mazdas coming over 
from Japan by ship every year. Those cars are made in Japan. A lot of 
the components are put together in Japan, and wherever you make 
something, that is where the labor and jobs are. When we are purchasing 
from a foreign country, we are transporting and exporting our job 
market there.
  Now, that is true for everything that we are purchasing that is a 
good from a foreign country. Those jobs, whenever we send money 
overseas and purchase a good from a foreign country, we are also 
transferring jobs there.
  We pass the FAIR Tax, those jobs come back home, many of them, and we 
hold most jobs here. We end up with a 28 percent marketing advantage, 
and it does a number of other things. That is, it doubles our economy 
in 10 to 15 years. It fixes our balance of trade, that minus-$725 
billion, probably a larger number now, because we can compete not only 
here better, and we will be pulling jobs back here and creating more 
jobs here in the United States, but also our export markets. Many times 
the export markets turn on a 1 or 2 percent margin.
  We pick up instantaneously a 28 percent advantage from where we are 
right now if we can take the tax component out of the products that we 
are selling. So we do a number of good things. We hold our 
manufacturing base here. We hold our jobs here, especially our blue 
collar jobs, the jobs like Hershey and Maytag, that are leaving 
America. These are manufacturing jobs after manufacturing jobs. Those 
kinds of jobs stay here. We create more jobs here. These are American-
made products, and the dollars will stay here. As those dollars stay 
here, they turn over seven times in a community, as the economists tell 
us they do. They create more and more and more jobs. Pretty soon we 
would have that trade deficit gone. We would end up with a trade 
surplus. We would end up with a healthy, robust industrial base in 
America and a strong economy that would be doubled in 10-15 years.
  If we do that, the rest of the world would have to stand up and take 
notice. We are already the most dynamic economy the world has ever 
seen. But we have a problem, a series of them. But, Mr. Speaker, the 
problem I am speaking of is the problem of going back and indexing 
Alexander Tyler's statement, that when a democracy realizes it can vote 
itself benefits from the public treasury, on that day the democracy 
ceases to exist.
  We are at least 44 percent of Americans not paying income tax. If we 
go to a national sales tax, a FAIR Tax, that does a number of things, 
but it untaxes the poor, and I will get to that in a moment. But it 
also makes taxpayers out of every consumer in America. And we are all 
consumers.
  Each time we step up, and I think of little Johnny stepping up to the 
counter, and he is going to buy his baseball cards, and he is going to 
put a couple of dimes up there for Uncle Sam. Those children from 
little on up will understand that the Federal Government is expensive, 
and they will know that they are funding the Federal Government, and 
they will be buying into the Federal Government. And they will also be 
advocating for let me have a few less services and let me keep a few 
more of my dimes. That penetrates into young people.
  I remember a story told by a candidate for Congress in last summer's 
primary election. He had a little son; I believe his name was Michael. 
Little Michael had saved up his money. Little Michael, he picked up his 
box of Skittles, and he had counted out 89 cents for the box of 
Skittles.

                              {time}  2200

  So he put his money up on the counter with the box of Skittles, 
carefully counted out 89 cents, and the lady at the check-out register 
rang it up and said that will be 96 cents. He did not have anymore 
money. He got that look on his face of what am I going to do; they are 
89 cents; I have 89 cents. The lady said, well, with the tax. Little 
Michael turned to his dad and said, Dad, I have to pay tax on Skittles? 
Yes, that is what you have to do if we eliminate the IRS and the 
Federal income tax code. You could be a consumer who chooses when to 
pay your taxes, and like little Michael, pay taxes on Skittles at age 
seven or eight or less, and realize how expensive the Federal 
Government actually is.
  That changes the psyche of an entire culture. People that are always 
looking to the Federal Government for a solution begin to realize they 
are funding the Federal Government and they are part of the solution. 
They are bought into this.
  Going for a national sales tax, a consumption tax, a fair tax, Mr. 
Speaker, does everything good that everyone else's tax policy does and 
more besides, and that is not just my words. Those are also the words 
of one famed chairman who has been the lead guru on economics here in 
America for a lot of years.
  It fixes everything that you can fix with a tax policy. It fixes 
everybody, all the pieces that come along here, puts them all together 
and does more besides. It border adjust taxes and it provides incentive 
for savings and investment. It doubles our economy in 10 to 15 years. 
It repairs our balance of trade and puts it on a surplus of balance of 
trade, and this growing economy then, on top of that, Mr. Speaker, it 
solves our deficit, our deficit in our revenue that we have here, our 
deficit spending because, when the economy doubles, we are going to 
have a lot more dollars that come flowing in here.
  We replace the payroll tax, the Social Security, the Medicare and the 
Medicaid, with a consumption tax portion. I advocate for a 23 percent 
embedded tax that is made of these components. I said I would get back 
to this.
  Three percent of that 23 percent provides a rebate into everybody's 
household to untax everyone in America up to the poverty level. So let 
us say the poverty level is $20,000 for a family of four, and I think 
the number is actually $18,500 for a family of four. They would pay 
about $458 in a month in taxes if they were going to consume to the 
level of their income. So this 3 percent goes into a fund, and 
immediately at the beginning of every month, it would do an automatic 
transfer into each household as registered by the Health and Human 
Services for the level of sales tax that that family would pay just up 
to the poverty level. So anybody that is living at the poverty level or 
below pays no tax, pays no national sales tax, but those that start

[[Page H2159]]

spending above that, above that $18,500, they start then paying the 
sales tax on that until you get to someone like I presume Bill Gates 
would be a rather robust consumer, I do not know that, but if I were 
he, I would be a robust consumer. People of that kind of income will be 
the ones who will pay the highest percentage of tax off their income. 
This is progressive, but also, it untaxes the poor. The first 3 percent 
collected is the portion that goes in to untax everyone up to the 
poverty level, and then those of us who spend more than the poverty 
level will pay our fair share of taxes going on up. That is 3 percent.
  Eight percent goes to replace the payroll tax, Social Security, 
Medicare and Medicaid, so that we no longer have to have that most 
regressive kind of a tax. That is a very regressive tax on especially 
the lower income people. There is no exemption for you if you are only 
making $10,000 a year. You are going to take the .0765 percent times 
two, and that is 15.3 percent, multiply that by your $10,000, and you 
are going to give up $1,530 to the payroll tax even if you only make 
$10,000 a year.
  So you can see, Mr. Speaker, that is a 15 percent tax on some of the 
poorest people in America. We eliminate that tax and put it back on 
consumption. And by the way, when people max out on Social Security, 
the most wealthy people are paying at a lower rate on the payroll tax 
than the poor are among us. So payroll tax is a very regressive tax. We 
replace it with 8 percent. We untax everyone up to the poverty level 
with 3 percent, that is 11, and then to replace the income tax itself 
and be revenue neutral that takes a 12 percent embedded tax. That is 
how we get to 23.
  This plan works. Every time I turn this rubrics cube around and look 
at it another way, it looks better and better and better, but my 
colleagues over here are content to stand here night after night, give 
us a list of lamentations on what is wrong with the President, the 
administration, the previous majority, the decisions that have been 
made here in this Congress over the last 15 years on trade. They argue 
that free trade is fine as long as it is fair trade, but I did not hear 
anyone advocate for any trade agreement that they ever agreed with. So 
that makes us trade isolationists unless they can come forward with 
some real changes.
  Well, I will submit that I can support trade agreements. I can 
support them, Mr. Speaker, if we can have smart trade, but also, we 
need to have a more competitive environment for America's producers. 
That means pass the fair tax.
  Also, a couple of years ago, I was sitting over in China. As I 
watched the negotiations go on and engaged in them, I saw the eyes of 
the negotiators on the other side of the Pacific Ocean, and I watched 
their smiles and I watched their heads nod. We were talking to them 
about the billions of dollars of intellectual property that is pirated 
by the Chinese, and it is essentially a national standard. At least 
there is so much of it that goes on, there is not a punishment going on 
for it, this standard of stepping in and stealing our intellectual 
property as quick as it comes on the market.
  We might have a Hollywood movie that comes out and before the 
premier, the DVD has been pirated by the Chinese and it is on the 
streets in its black market version, undercutting the intellectual 
property and the creativity of Hollywood. Those things happen.
  The copyrights and also the patents and the trademarks, those 3 
pieces of intellectual property are consistently and persistently and 
strategically pirated by the Chinese. The Russians, too, only the 
Russians just are not as good as it yet, and they are getting better.
  As I listened to those negotiations and as we put pressure on them 
over there to bring criminal charges against those who are stealing 
U.S. intellectual property rights and selling Rolex watches, fake Rolex 
watches would be another example that brings to that mind's eye, Mr. 
Speaker. As we put pressure on them to bring criminal charges and civil 
charges, they said to us, well, we are fining people for stealing U.S. 
intellectual property and we are moving forward more aggressively to 
enforce. So I asked them for a report on those fines, and they gave me 
150 pages. It was all in Chinese, Mr. Speaker, so I did not really have 
the ability to determine that except that, by their witness and their 
verbal presentation to me, they had levied some fines for X number of 
yuan, Chinese dollars, but we also know that a government-owned 
company, that if it is owned by the government and if the government 
fines that company, it is like me deciding I am going to fine myself 
and I will take a couple of dollars out of this pocket and put it over 
here in this pocket. Makes no difference to a Communist State and 
State-owned businesses if the State fines the company. The State is the 
company, and so those statements did not move me very much, Mr. 
Speaker.
  Then I asked about criminal charges, and they said, yes, we have 
brought some criminal charges and we are getting more rugged with our 
enforcement. So I asked the point blank question: Who have you locked 
up in jail? Who is in jail today because you are stealing our 
intellectual property? And of course, the answer was, Mr. Speaker, 
well, we have not locked anybody up just yet, but we are moving forward 
to enforce.
  Well, I came to the conclusion that the Chinese saw it as a price of 
doing business. The cost of doing business was to smile and nod and 
speak nice and make nice to Americans that are over there that want to 
alleviate the burden of the pirating of the U.S. intellectual property 
rights and that they will continue smiling and nodding and hosting 
Americans as long as we are willing to come over there to complain, but 
nothing is going to happen. Nothing is ever going to happen unless we 
bring some leverage against them.
  So I will submit a second solution for the folks over here and ask 
them: Do you care to weigh in on this? I would be happy to yield to 
you, and I hope you come to the floor at a later time, too, or we can 
get together and you can sign on to some of this legislation that 
actually provides solutions to the problems that you so articulately 
laid out here tonight.
  But one of these solutions is this. Direct the U.S. Trade 
Representative to conduct a study to determine and evaluate the loss to 
American intellectual property rights holders to the Chinese for the 
pirating of those intellectual property rights. Once that amount is 
quantified, and Mr. Speaker, I can tell you it is in the billions, then 
direct the U.S. Trade Representative to levy a duty on all goods that 
come from China in an amount equivalent to be able to recover the 
complete loss that American property rights holders have sustained 
because of the piracy of their property rights and to distribute those 
proceeds back into the hands of the people that hold the copyrights, 
the trademarks and the other intellectual property rights.
  That is another concrete solution that I would lay out here for the 
folks that come to the floor and talk about what is wrong but do not 
provide a solution and do not provide a way to fix things and turn them 
around and make them right, Mr. Speaker.
  I did not necessarily come here tonight, though, to talk about the 
shortfalls of the presentation that was made by my colleagues on the 
other side of the aisle. I came here tonight, Mr. Speaker, to talk 
about a great big issue that we have to face in this country.
  As I stand here, this being the week beginning the 5th of March, it 
has been my understanding for some two to three weeks that the senator 
from Massachusetts, Senator Kennedy, was preparing to introduce a, I 
will put it in quotes, a ``comprehensive'' immigration bill sometime 
the week of the 5th of March. I am hopeful that that does not happen, 
at least coming out of him, the subcommittee chairman of the 
Immigration Subcommittee of the Judiciary on the Senate side.
  We saw what they did last year over in the Senate and actually 
passed, and it was an abysmal piece of policy, Mr. Speaker. Now they 
are winding up to try it again, same person or persons, same face, same 
philosophy. That same philosophy is amnesty first, enforcement maybe 
never.
  I remember Senator Kennedy standing out here on the Mall just on the 
West side of our West portico when we had demonstrators by the tens and 
perhaps hundreds of thousands last spring. He said to them, and these 
demonstrators, many were not lawfully present in the United States, one 
can presume I

[[Page H2160]]

think accurately, and he said to them, some say report to be deported; 
I say to you, report to become an American citizen.
  That was the clarion call of the left wing liberals and the voice of 
Senator Kennedy calling for people, come to America, come here 
illegally and when you are here, we are going to pave the way for a 
path to citizenship for you and hand over to you all the benefits of 
American citizenship.
  Well, I say to Senator Kennedy, if your mantra is amnesty, those of 
you who stand on amnesty, you deserve to be branded with the scarlet 
letter A for amnesty and treated as such because amnesty undermines the 
rule of law in this country.
  These are some pillars of America that are essential for us in order 
to be able to sustain ourselves and sustain ourselves into the future. 
In order to identify those pillars of American civilization, we need to 
look back and identify what has been some of the roots of American 
exceptionalism. Why are we an exceptional Nation with such a dynamic 
economy? Why have we been so robust as a people?
  There are a number of reasons, but one I would point out is that 
because we have brought in immigrants from all over the globe, because 
it was difficult to get here, because many of them had to sell 
themselves for seven years to pay off their passage to the United 
States, to work off the cost of that ride aboard ship across from 
Western Europe, for example, the people that had that sense of a dream, 
the sense of wanting to come here to realize their American dream, to 
raise their families here, they also had that sense of 
adventuresomeness.
  Within all of that, the dream, the industriousness, the creativity, 
the sense of adventure, that desire to join with us in our manifest 
destiny as we settled a continent in lightening speed, all of that was 
the vitality that came in with our immigration. We were able to skim 
the cream off of the crop in Nation after Nation after Nation. Donor 
Nations gave up a measure of their most vital population because they 
came here so they could spread their wings and they could excel.

                              {time}  2215

  That is one of the pillars of American exceptionalism. Without 
belaboring that point very much any more, another pillar of American 
exceptionalism has been the foundation of our Constitution, which is 
drafted based upon the principles that you will find in the 
Declaration. And in the Constitution are our basic rights, freedom of 
speech, press, religion, assembly, and the second amendment rights, the 
right to keep and bear arms, and what used to be in our fifth 
amendment, the right to property, which says, ``nor shall private 
property be taken for public use without just compensation.''
  But now after the Keloe decision, it says, ``nor shall private 
property be taken without just compensation,'' the for public use words 
have been eliminated from the fifth amendment by the Supreme Court in 
the Keloe decision.
  But up until that time, the sanctity of property rights rode right 
along with the sanctity of our first amendment rights, and we have done 
a good job of defending our second amendment rights. Throughout this is 
the vitality of America, because we have individual rights that are 
guaranteed, and they are passed down from God to each one of us. Then 
the individuals, we the people, then hand that responsibility over to 
our elected representatives to represent us in places like this House 
of Representatives.
  But we have guaranteed rights, and those guaranteed rights and the 
rights of due process and to be protected from discrimination in a 
court of law have given us a sense of justice and a sense of the rule 
of law that gives every American, every American citizen and those who 
aspire to be American citizens, solid ground on which to stand, 
confidence that it is predictable into their future so that they can 
invest capital, borrow money against their property, be able to pay off 
the mortgage, be able to reach for the stars and dream, create and 
become an entrepreneur, be one of those people that really makes a big 
difference and realize their fortune and their dreams. These are some 
of the foundations of American exceptionalism, but the rule of law is a 
foundation for it.
  If we grant amnesty to people who broke the law to come here, then we 
have undermined the rule of law. If we undermine the rule of law, we 
don't have the culture for a strong America any longer. We have lost a 
pillar for what makes us great.
  So to reward law breakers does exactly that. As I listen to people 
that come in and testify in the immigration subcommittee meeting, I 
will often hear people; there will be those that come in and say, well, 
I was a beneficiary of the amnesty in 1986. I came in illegally when 
Ronald Reagan signed the amnesty bill; there was supposed to be some 
say as low as 300,000 that would get amnesty. I recall about 1 million, 
but we know that went over 3 million who received amnesty because the 
fraud was so rampant.
  The document forgers kicked into high gear. For everyone that got a 
designed amnesty in a legal fashion, there were others who by hook and 
crook got their amnesty. But all of them are for amnesty today if they 
happen to be alive and still in this country, and so are their families 
and their friends for amnesty. They say, well, it is not a hard thing 
to figure out. It was good for my dad or my mother or my brother or my 
uncle. Look, they are here in America, and they are doing well.
  Why shouldn't we give amnesty to other people, because it has been 
good to us. Now that is a very simple equation and not a very rational 
thought process but, for every one we grant amnesty to, there will be 
several who will say, I think that is a good idea because my friend or 
my relation thought amnesty was a good idea.
  If this becomes amnesty for 12 million or 15 million or for 20 
million or more, and they bring in their extended families at the tune 
of maybe as many as 273 for every anchor baby that comes into the 
United States, we won't just have 12 or 15 or 20 or more million who 
have no respect and, in fact, contempt for the rule of law; we will 
have 100 or more million that will have contempt for the rule of law.
  That then would utterly destroy the rule of law in America. We would 
go back to a third world kind of country where the rule of law doesn't 
work down south in places like Mexico, Honduras, El Salvador, Colombia. 
It is the rule of who has the power and who has the guns.
  I see that my friend and colleague from Texas, the wonderful doctor, 
whom I seek his counsel quite often, especially on these technical 
issues, has arrived on the floor. I would be happy to yield as much 
time as the doctor from Texas (Mr. Burgess), would consume.
  Mr. BURGESS. I would thank the gentleman for yielding. Certainly, I 
was sitting in my office and watching you, watching your discussion 
with the American people tonight. I am always so grateful that you take 
the amount of time that you do to come to the floor and explain things 
to people in simple commonsense language that the average person can 
understand. I heard your discussion, of course, on fundamental tax 
reform. As you know, I am committed also to fundamental tax reform.
  I knew that you wouldn't want your good friend Steve Forbes to think 
that you had forgotten all of the good things he had told us in a 
meeting about his flat tax. So I just wanted to remind the Members of 
Congress that in addition to H.R. 25, which deals with a consumption 
tax, there is also another approach to fundamental tax reform, which is 
H.R. 1040, what a clever number and scheme that is, which is the 
resurrection, if you will, of the flat tax that was previously espoused 
and popularized by former majority leader Dick Armey, and, of course, 
the subject of the ever popular book by Steve Forbes, the ``Flat Tax 
Revolution.''
  I am not sure how many weeks it has been on the bestseller list, but 
it certainly should have stayed on there for weeks at a time.
  This really meets the criteria, meets the test that was set forth by 
the President at the start of his second term for a simple, fair, pro-
growth tax. The flat tax almost immediately eliminates the marriage 
penalty. It repeals the death tax. It abolishes the alternative minimum 
tax. If there was ever a time to consider the abolishment of the 
alternative minimum tax, it is today with more and more middle class

[[Page H2161]]

people being pulled into that type of unfair taxation. It eliminates 
multiple taxation of investment income, and it allows for immediate 
expensing of business equipment.
  This bill, H.R. 1040, which is a voluntary election for a flat tax, 
it is not a requirement. If someone has constructed their time and 
their talents and their financial portfolio towards compliance with the 
IRS code, God bless them, my hat is off to them. But if they would 
rather take a more fundamentally sane approach to their family's 
finances, to their business's finances, and wish to elect a flat tax 
system, this should be available to them.
  My concern is that we don't trust the American people enough, that if 
we gave them the opportunity to coexist with the IRS code as it exists 
today, it is completely unintelligible and not understandable by anyone 
with any level of education, or we gave them the opportunity to elect 
into a simple flat tax that they would choose to do so.
  In fact, the gentleman from Iowa is quite aware that, since November, 
the elections in November, we have heard a lot of discussion from the 
other side of the aisle about the so-called tax gap, the tax gap being 
that $350 billion which is assessed by the IRS but never collected.
  Well, what are the reasons it is not collected? To be sure, there is 
some fundamental dishonesty that exists in some people. But some people 
just look at the IRS code and say it is too complicated, I am going to 
ignore it and hope it goes away, I am not going to deal with this, and 
they are caught, and they are punished.
  It is a shame that has to happen. If they were allowed the option of 
having a simple pro-growth system, such as the fair tax, such as the 
flat tax, I think the American people would be all the richer for it.
  I just want to point out one passage in Mr. Forbes's book, which does 
not deal so much with the bill that I introduced, and I know it is 
going to surprise the gentleman from Iowa to hear that, but in 1989, a 
Senator requested a revenue forecast from Congress's Joint Committee on 
Taxation, on a hypothetical tax increase, raising the top rate to 100 
percent. There is a flat tax, 100 percent on incomes over $200,000. The 
Joint Committee on Taxation responded by forecasting increased revenues 
of $204 billion in 1990, $299 billion in 1993. Incredibly, the Joint 
Committee on Taxation failed to recognize or at least assume that 
people would continue to work and work hard even if every penny of 
their income was taken away in income taxes.

  I suggest that that indicates a departure and a divorce from reality 
that the Joint Committee on Taxation has, and it is for that reason 
that it is incumbent upon us to introduce measures that are, again, 
commonsense, straightforward measures that the American people can 
understand and get behind.
  I notice that the speaker from Iowa had gone on from talking about 
taxation to talking about issues dealing with immigration. I will just 
say that we have had a lot of discussion in this Congress since 
Congress convened in January about the 9/11 recommendations or the 
recommendations of the 9/11 Commission from a couple of years ago.
  To me, the two most important recommendations of the 9/11 Commission 
that have yet to be enacted, one was quite simply to build stable 
democracies in Middle East. I think we are doing that. We receive a lot 
of criticism for doing that, but that is one of the fundamental steps 
we must take in order to achieve stability worldwide and ultimately 
gain control in the global war on terror.
  But the other concept, and it is so simple that it astounds me that 
it hasn't been taken up yet, and that is simply to secure the border. 
Both north and south, our American borders are not secure. They need to 
be secure; we deserve secure borders. The American people deserve 
secure borders after the ravages of 9/11, and I think that was a 
sensible recommendation the 9/11 Commission has made. I frankly do not 
understand why the House leadership has not taken that up with the 
seriousness it deserves.
  With that, I want to thank the gentleman from Iowa and the Speaker 
for his indulgence.
  Mr. KING of Iowa. In reclaiming my time, I thank the tenacious Texan 
for coming to the floor. He knows how much I revere Steve Forbes and 
Steve Forbes' financial acumen, as well as Alan Greenspan's. Perhaps on 
this subject matter it is one versus the other.
  I also notice the gentleman from Texas, however compelling the 
argument, didn't present a list of things that his tax policy does 
better than the tax policy I advocate. But I think we both recognize 
that either is far better than what we are dealing with today.
  There is nothing coming out of the other side of the aisle, 
particularly from the Chairman of the Ways and Means Committee, Mr. 
Rangel, except, well, we are going to figure out some ways to raise 
some of these existing taxes and maintain the convolutions that are 
within them. That is what we have to look forward to.
  The stock market last week had its worst single week in 4 years. I 
don't think its coincidental that the tax increases that this have come 
out of this Congress, the Pelosi Congress, and the noises coming out of 
the Ways and Means Committee, particularly the Chair, have added 
instability to our New York stock exchange and all of our financial 
markets. Once the inertia of this continues, we might find ourselves in 
a significantly poorer situation and not very far from now.
  I, also, on the immigration issue, there were some statistics that I 
had made a promise that I would unfold here and send this message out, 
and that is that we are faced with a tremendous amount of loss here in 
America in the lives of Americans because we are not enforcing at our 
border.
  As the gentleman from Texas said, we need to first stop the bleeding 
at the border and get that under control. We need to push all traffic, 
both, all products, all contraband, all human traffic, through the 
ports of entry. We need to beef up our ports of entry.
  You know, as I was sitting in an immigration hearing a couple or 3 
years ago, I began to listen to the testimony about how many people 
died in the Arizona desert in a year.
  It is a significant number then; it was about 250. Now, I think it is 
400. That is sad, and it is tragic, but I, again, wonder, the 11,000 a 
night that sneak into the United States across our southern border, I 
sat down there by the fence in the dark and had the infiltration going 
around on either side of me, and that 11,000 a night is calculated by 
this Border Patrol agent who testified they stop between a fourth and a 
third.
  And they stop 1,188,000 last year. If you do the math on that, that 
shows about 4 million a year get into the United States, and out of 
that 4 million, that works out to be about 11,000 a night.
  I would expect there is someone around here that knows the size of 
Santa Ana's Army when he came across the river. But me being a Yankee, 
I have to guess at it. I think it was about 6,000 strong. It was then 
that when they attacked the Alamo at San Antonio. But if it was 6,000 
strong or less than that when they attacked the Alamo, I would just 
suggest that twice the size of Santa Ana's army comes across the border 
every single night.
  They may not be in uniforms, and they may not be marching in orderly 
ranks, and they may not be all of them armed, but they are carrying 
with them $65 billion worth of illegal drugs coming into the United 
States, $65 billion.

                              {time}  2230

  And we are spending $8 billion a year on our southern border. And out 
of that $8 billion, that is $4 million a mile, and we are getting some 
kind of efficiency rating of our dollars of maybe 25 percent of 
enforcement, and often I hear a 10 percent number from the Border 
Patrol people that are down there.
  So what is the price to America? $65 billion worth of illegal drugs 
that comes out of the pockets of Americans. And the price in lives? The 
question that I ask and commissioned the GAO study for was, How many 
Americans die at the hands of those who do get across the border? And 
that number came out, not quite apples to apples and I had to do a 
calculation or two off of other government studies to match up with the 
GAO study from April of 2005, and it works out to be this: of the 
inmates in our Federal and State penitentiaries, 28 percent are 
criminal

[[Page H2162]]

aliens. And I am going to presume that if we had enforced our laws, 
none of them would have been in the United States.
  So if you take 28 percent and you calculate that across the murders 
that we have in America, and that is about 16,000, a little over that, 
you will end up with a number 28 percent of that is 4,518 murder 
victims in the United States at the hands of those who are criminal 
aliens in the United States. You add to that the victims of negligent 
homicide, most of them drunk driving victims, and that is going to run 
28 percent of those, that comes out to 4,746, Mr. Speaker. So you add 
those two together, that is 9,264 lives in America die violently every 
year at the hands of criminal aliens, presumably who would not be in 
the United States had we aggressively enforced our laws.
  That is a shocking and astonishing number. It is three times the 
amount of victims that we had on September 11, and that is an annual 
number every single year.
  Now, what does it cost us in dollars? Incarceration costs alone of 
the 267,000 illegal aliens that we have locked up in our prisons that 
we can count, and many of them we don't know, but we know we can count 
267,000 and they will cost us in incarceration costs $6.7 billion just 
to lock them up.
  So we are spending $8 billion on the border on our Border Patrol for 
maybe 25 percent efficiency; we are spending $6.7 billion to lock up 
the criminal aliens and hold them in our prisons. And then, on top of 
that, the cost to murder victims, and that number has been calculated 
by government numbers at $3.9 million per murder victim. That comes out 
to be $17.05 billion in the cost of murder victims in dollars. And 
those victims of negligent homicide, I have measured that a little bit 
smaller at two-thirds of that overall cost of the murder victim because 
the investigations don't go so far. That comes to $11.37 billion.
  So I add these numbers up: Incarceration costs, $6.7 billion; the 
value of lost productivity in lives of murder victims, $17.05 billion; 
the value in lost productivity in lives at negligent homicide victims, 
$11.37 billion. It comes up to $35.12 billion out-of-pocket costs out 
of the United States just for those who were killed and to lock up 
those who kill. That does not include rape victims, assault victims, 
grand larceny and theft victims. That list goes on and on and on.
  Sex victims is another one. We have identified about 240,000 sex 
criminals who are criminal aliens. And of those, they have at least 
four identifiable victims. So you do the math on that. It is just a few 
short of 1 million victims of sex crimes, and many of those are sex 
crimes where there is a murder involved as well.
  The price to this society is unbelievable. It has only begun to be 
quantified. But to put it in a context, it works like this: $65 billion 
worth of illegal drugs is costing our economy $35 billion-plus a year, 
just the victims of murder, negligent homicide, and to lock up those 
who do the same, $35 billion.
  The value of the entire oil industry of Mexico is $28 billion. We pay 
more for murder victims and negligent homicide victims here in the 
United States and plus locking them up than all of the oil revenue of a 
pretty good oil-producing country the size of Mexico.
  And then, additionally, another $8 billion a year just to guard our 
southern border. And on top of that, there will be a report coming out 
very soon, if it is not out already, that shows that remittances is a 
term they use. This is a transfer of wages from mostly immigrants here 
in the United States, some illegal, some legal, out of the United 
States. That number has been going up incrementally year by year, and 
last year it was $45 billion a year that was transferred out of the 
United States in remittances, or usually wire transfers, back to home 
countries.
  This report that is due to come out if it is not out now will show 
$60 billion transferred in the last year, $30 billion of it going to 
Mexico, $30 billion of it going to other places in the western 
hemisphere, but usually the lion's share of that goes into Central 
America and the Caribbean.
  So when you look at the dollars transferred out of our society, $60 
billion being sent out by labor, $65 billion paying for illegal drugs, 
$35 billion to pay for the cost of violent death, and $8 billion to 
guard the border, you can see, I think, Mr. Speaker, how massive this 
burden is here for the taxpayers and the victims of crime here in the 
United States.
  And one thing that I have always wondered about crime victims is that 
if society really paid that whole cost, if we had to write the check 
for the $35 billion or so that it costs for victims, the violent death 
in America at the hands of criminal aliens, if we had to write the 
check for that, the taxpayers would be outraged if it were a line item 
on an appropriations bill here in the United States Congress.
  But, instead, it isn't quite like that. There are costs picked up by 
the taxpayers, investigations, prosecutions, incarcerations. We pick 
those up. But the real costs comes out of the lives of the people who 
are their victims in great huge whopping chunks of their lives, their 
future, for their families, their productivity, and leaves a hole that 
can never be healed again.
  That is the burden that is all of this, and the injustice of it comes 
from the psychology that the State is the one that is wronged and the 
crime victim is made whole when the State believes that they are whole. 
And the crime victim in this country by our process is seldom made 
whole, and as a matter of fact, maybe is never made whole.
  So we have a big problem here in America. But sometimes there are 
faces that need to be identified, too, Mr. Speaker, and so I have 
gathered up some of the faces of these perpetrators. When I stand here 
and say 9,264 violent deaths in America, that is kind of faceless. I 
would point out, too, though, that maybe people were skeptical of my 
numbers. Maybe they think that those numbers are too high. I would ask, 
what are your numbers? Produce those.
  But here is another way of looking at it. Violent death in America is 
4.28 out of every 100,000 people. Violent death in Mexico is 13.2 out 
of every 100,000. That is a good, solid three times the violent death 
rate in Mexico as it is the United States.
  Now, Mexico happens to be one of the more peaceful countries south of 
us. If you go to Honduras, their violent death rate is nine times that 
of the United States. And I don't know what El Salvador's is, they 
don't publish that. But when you get to Colombia, their violent death 
rate is 15.4 times the violent death rate of the United States. And, on 
top of that, the people that are coming in from those countries are 
young men. Young men will commit more than twice as many violent crimes 
as any other demographic group, in fact, significantly more than that.

  And they are coming from countries that are more violent, and they 
are bringing drugs from those countries to the tune of $65 billion. So 
there is crime and violence associated with the drugs; there is crime 
and violence associated with young men. There are young men coming from 
countries that are far more violent than in the United States. And when 
you sit down and do the math and calculate out, if you were going to 
predict the crime results here in America, you would find, Mr. Speaker, 
that the 28 percent that are incarcerated in our prisons today that are 
criminal aliens probably don't represent the overall crime impact on 
the United States society.
  But to personalize this a little bit, I have brought a few of the 
faces of these evil perpetrators down here to the floor. This, being 
one of the more evil. This is the face of Santos Cabrera Borjas. He is 
a 22-year-old, was a 22-year-old illegal alien from Honduras, that 
country that has got nine times the violent death rate of the United 
States. They can live with a lot higher level of violence.
  Here is the kind of violence you get with one of these people. On 
June 4, 2006, Borjas murdered an innocent 9-year-old boy named Jordin 
Paudler of Georgia by hacking him to death with a hatchet. Borjas was 
in a car that was driving through the neighborhood, it had a wobbly 
wheel, and this young 9-year-old boy Jordin Paudler called out to the 
car and said, You have got a bad wheel on your car, being helpful, like 
young boys will do, like a lot of good Americans are. And Santos 
Cabrera Borjas got out of the car and attacked this young 9-year-old 
boy with a hatchet and twice split his forehead with a hatchet and left 
it in, as I understand it, all because he tried to help.

[[Page H2163]]

  This is an example, and I will bring many of these examples to the 
floor as time unfolds, Mr. Speaker, and this is one of the faces of 
evil. There are many, many faces of evil. We have a big debate in front 
of us. I thank you.

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