[Congressional Record Volume 160, Number 141 (Tuesday, November 18, 2014)]
[House]
[Pages H8067-H8070]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
A ROADMAP FOR PROSPERITY
The SPEAKER pro tempore (Mr. LaMalfa). Under the Speaker's announced
policy of January 3, 2013, the Chair recognizes the gentleman from
South Carolina (Mr. Rice) for 30 minutes.
Mr. RICE of South Carolina. Mr. Speaker, I am here to talk about a
roadmap for prosperity of this country.
I think the elections last week, in large part, didn't deal as much
with Republicans and Democrats as it dealt with a frustration over the
lagging lack of prosperity this country has experienced for the last 7
years. I think that there are ways to solve that, that are complicated,
but there is a pathway that we can pursue that involves a lot of common
sense.
If you will look at these charts that I have here, Mr. Speaker, what
I have here with this blue line that goes up until 2007 and trends down
thereafter is median household income. You can see, Mr. Speaker, it
drops from a peak of $56,000 annually in 2007 down to just over $51,000
today, a drop of over 10 percent for the median American family.
Mr. Speaker, at the same time, this red line represents the cost that
these families incur. The red line actually is food cost. You can see
that they have risen from an inflation-adjusted basis of 190 to 240,
almost 20 percent, Mr. Speaker. At the same time their incomes have
declined over 10 percent, their costs for food have gone up over 20
percent.
Then the bottom graph here represents their cost for fuel and
utilities, and you can see here that they have risen almost 20 percent
as well.
My belief, Mr. Speaker, is that the cause of the decline in the
income, as well as the cause of the rise in the cost in fuels and food,
is largely from policies that come out of Washington. These are not
things that are beyond repair. These are things that we can fix, so
what we have to do is lay out a roadmap, a plan, to restore the
prosperity that we have enjoyed for over 200 years.
Mr. Speaker, before I forget, I want to credit my good friend,
Professor Michael Porter from Harvard, with a lot of these slides that
I am using because I am stealing a lot of those from him, but this
chart here, Mr. Speaker, is a breakdown of jobs in the American
economy.
The red at the bottom is jobs that we have to compete with, with the
rest of the world, manufacturing jobs, for example, that can be done
anywhere in the world. The top part is jobs that serve local markets,
things like health care that have to be delivered here, things like
services, like, for example, real estate or tourism services, things
that have to be delivered here.
This chart begins at 1998, but you can actually go back even further,
and what you would see is in the area of service jobs, things that have
to be handled locally, the number of jobs has risen. It certainly
dipped around 2007, but it is coming back up.
But in the areas of what we call tradeable jobs, jobs that can be
done anywhere in the world, the number of Americans working in those
jobs has declined in this chart over the last 16 years, but you could
go back even further, a very disturbing trend.
Now, why is that occurring? Why is it that tradeable jobs have left
our shores and continue to leave our shores? Mr. Speaker, why is it
that we continue to read in the newspapers every month about another
American iconic company like Pfizer or like Burger King moving their
headquarters out of our country?
{time} 1845
Well, there are a number of reasons for that, and the most obvious
reason is because we have the highest corporate tax rate in the world.
If they want to be an American company, they have to pay extra for
that.
This chart at the top represents the corporate tax rates of the OECD
countries, and you can see the red line at the end represents America.
The average rate is 25\1/2\ percent, and we are at 39 percent.
[[Page H8068]]
When the President says things, Mr. Speaker, like, ``Our American
companies should be willing to pay the highest tax rate in the world to
be patriotic,'' he is missing some real important points.
One is that any company, American or otherwise, doing business in
America will pay American tax rates on the profits they earn in our
country, but these iconic American companies that are leaving our
shores have to compete worldwide, and competition is tooth and nail,
and only the strongest competitor will survive.
Mr. Speaker, if you have an iconic American company that has to pay
taxes at 39 percent here in this country competing on the same product
line with a company that has to pay 15 percent in Ireland or in Canada,
in the end, which company will survive? You see, Mr. Speaker, it is not
about patriotism. That is nonsense. It is about survival.
Mr. Speaker, how do we end this cycle? How do we convince our iconic
American companies, our large employers, to stay in this country and to
convince those that have left our country to come back?
Before I came here, I had one other elected office. I was a tax
attorney and a CPA for 25 years, and I helped companies structure their
business in the smartest way for taxes, for regulatory purposes, and to
make a profit.
Once I retired from that, I ran for one other office, and that was as
the chairman of Horry County Council in Horry County, South Carolina,
where Myrtle Beach is.
Horry County had a problem because most all of its job creation was
in the tourism industry, and the tourism industry is great, but it
produces an inordinate amount of seasonal jobs and jobs with relatively
low pay. They needed to diversify their industry, and many other
counties in the State were doing a better job of it.
Once I became chairman of the county council, I started to look at
why that was and what we needed to do, and it was obvious that we had
many, many assets. The problem was we weren't even in the game. We
weren't even trying to compete.
Once we laid out a roadmap to enter the competition to attract
industry and jobs, it didn't take very long. Companies responded
quickly. Thousands of jobs had been created. All we had to do was enter
the competition.
Counties across this country compete with other counties for jobs.
States across this country compete with other States for jobs, States
like Texas, which has done a fantastic job. South Carolina has done a
fantastic job of creating a favorable business tax environment,
favorable regulatory environment, and has done tort reform, and lo and
behold, companies come.
Company after company after company leave States like California or
Washington State and come to States like Texas or South Carolina, and
you can see the result in South Carolina with BMW, Amazon, Boeing,
Michelin, Continental, and on and on and on. All they had to do was
decide to compete, and industry responded.
You see, before I became chairman of the county council in Horry
County, the attitude there was that we were the leader in tourism, and
they are great at tourism. We are big, and we have a lot of advantages,
and we really don't need to compete for business. But guess what, it
wasn't working.
Once we changed our attitude, people responded quickly, and I believe
the attitude here in Washington is the same. Look, we are big. We don't
have the biggest economy in the world anymore. China overtook us. We
have one of the biggest economies in the world. We have great capital
markets. We have great consumer markets.
We don't have to try to compete. Business is going to come anyway.
But guess what, just like in Horry County, it is not working in the
country either, and if we simply decide to compete for industry, with
all of the advantages that we have, I believe no one can stop us.
My friend Michael Porter is, as I said, an economics professor at
Harvard Business School. He has been there for decades. He has written
multiple books on competitive theory. He has come here to Congress with
me, and we scheduled seminars with Congressmen from both sides of the
aisle to talk about what this country needs to do to be competitive. We
have been in front of over 100 Congressmen, and this is the roadmap
that he lays out. I am not going to claim authorship. This is the
roadmap that he lays out.
His book is, ``On Competition,'' by Michael Porter. It is one of
many. Michael Porter sits on the board of public companies. He
represents countries around the world. He has written this roadmap for
the United States. If we will adopt the attitude that we are going to
be competitive in the world, we can expect to see American companies
coming back, more foreign investment in the United States, and millions
and millions of American jobs created and our economy lifted from its
meager growth to above trend and restore our American prosperity.
Mr. Speaker, let's look at these things one by one. One of them is
lowering the corporate tax rate, and as I pointed out earlier, this one
is common sense. We have the highest corporate tax rate in the world.
Does that mean that we have to collect less revenue? No.
Our corporate Tax Code is incredibly complex. It is filled with
deductions and credits, many of which make sense but others that don't.
It needs to be cleaned up. Dave Camp and the House Ways and Means
Committee put out a proposal to do it last year.
I agree with, by far, the bulk of it. The House needs to take it up--
or something like it--and we need to get it over to the Senate, and we
need to get corporate tax reform. The President agrees we need
corporate tax reform, but the President thinks we need to raise
revenue.
The goal here, Mr. Speaker, is not to increase taxes. The goal here
is to make our country more competitive. Why? Because then we will have
more business and we will have more jobs and we will raise revenue that
way, rather than by raising taxes. If we boost our economy, the revenue
will come.
The second item on this menu, Mr. Speaker, is taxing overseas profits
earned by American companies only where they are earned. We are the
only remaining OECD country with a global tax system. Everywhere else,
they pay taxes where they earned the money, and they can bring the
money home without paying taxes.
But here in America, our multinational companies--companies like GE,
GM, and every alphabet soup company that you can name--if they earn
profits overseas and they pay taxes at the lower rate over there, they
know if they ever bring that money back to the United States, they have
to pay it at 39 percent.
So what do they do? They park that money overseas. It is only common
sense. They are competing tooth and nail worldwide. To make any other
choice puts them at a huge disadvantage.
So let's say we have an American company that has a billion dollars
in profits in India and they need to build a factory and are looking
for where to build that billion dollar factory. Do you think they are
going to bring that money back and pay 40 percent taxes in the United
States to build that factory? No.
What they are going to do is build that factory in India and employ a
thousand people there instead of employing a thousand Americans, so we
need to change our global tax system.
We need to ease the immigration of highly-skilled immigrants. Mr.
Speaker, I am for comprehensive immigration reform, but I am not for
the kind of immigration reform the President is talking about.
Mr. Speaker, we have the most liberal legal immigration system in the
world. We allow 1.2 million legal immigrants every year. The problem
with our system is that most every OECD country that has looked at this
has decided they are going to use immigration as a mechanism to be more
competitive. Other countries are already working on this.
So what they do is they say, ``Okay. You can immigrate into our
country if you have a skill that we need. They allow people with high
skill sets and high education to come to the front of the line to
immigrate.''
Our immigration system is exactly the reverse. It is completely
counterintuitive. Sixty-five percent of the immigration that we allow
is not based on skill set but based on family relationship.
[[Page H8069]]
Only 12 percent of our immigration is based on skill set, and what is
the result? The result of that, as I have read, is that as many as 42
percent of the new applications for Medicaid come from immigrants. At a
disproportionately large amount, legal immigrants rely on our social
safety net, and that makes us less rather than more competitive.
We need comprehensive immigration reform, but what that means to me
is that we need to base our immigration largely on skill set. I am not
saying eliminate immigration based on family relationship, but I am
saying make that a much smaller piece of the pie.
Another problem with our immigration system is with our student visa
program. We have the best universities in the world. People come from
all over. In fact, I think I read yesterday that there were a record
number of foreign students in American universities.
So the problem is when they get their degree and after their student
visa expires, under our immigration system, we require that they go
back to their home country. We prevent them from staying here.
They have to go back to their home country for a period of years
before they can even apply to come back to the United States. We have
given them the best education in the world, and we force them out of
this country.
So what does that mean, practically? Let's say we have a gentleman
from China who gets an engineering degree from MIT and has the best
idea in the world to manufacture whatever it might be, but he can't
stay here and do that. He can't even apply.
He has to go back home and do his initial public offering and build
his plant there and employ thousands of people there, rather than using
the education that our American universities gave him to create
thousands of jobs here in this country.
There are so many things about our immigration system and there are
so many things about so many areas of Federal law that are clearly
counterintuitive. They are exactly the opposite of what they need to be
to make this country competitive.
Next, we have addressing distortions and abuses in our trading
system. I am not going to spend a whole lot of time on this, but let me
just say that, at one time, we were so advanced, we were so
competitive, we were so much far ahead of the rest of the world, that
we could adopt trading plans that weren't necessarily to our benefit.
We can't afford to do that anymore. We need to have free trade. We
need to have fair trade.
{time} 1900
Improving American logistics, communications and energy
infrastructure. Everybody knows we need infrastructure to be
competitive. We do so many things to hold ourselves up: roads, bridges,
pipelines, and everything else. Federal regulation drags out projects
for not just years--decades--and drives up cost.
When the Port of Miami has been working on trying to get their
environmental permit to deepen their port to 50 feet for post-Panamax
ships for over a decade; when the Port of Charleston, in my home State
of South Carolina, has been under study for 4 years to determine
whether they can go from 46 feet to 52 feet so that they can take these
post-Panama Canal ships, and they are hoping that they get that port
deepened by the year 2020, in the end everybody knows that port is
going to get done. In the end, there will be little or no environmental
damage, and what there is will be mitigated, but it is going to take a
decade of wrangling to get to where we can deepen our port.
Let me tell you how important that is. Right now, I think one in five
families' incomes in South Carolina are related to the use of that
port. Companies in South Carolina, shipping or importing or exporting,
it takes $3,000 to ship a container from the Port of Charleston to
Shanghai on ships as they exist today. When the Panama Canal opens and
the new ships come through, that will drop the cost of transportation
by 20 to 30 percent. So instead of it costing $3,000 to ship a
container from Charleston to Shanghai, it will cost $2,200.
If an importer or exporter in South Carolina or in the Southeast
doesn't have access to one of those ports, they start out $800 per
container behind the rest of the world. So there are only two of those
ports that can take these ships right now on the east coast: Norfolk
and Baltimore. If a manufacturer or an importer or an exporter is
looking to where they are going to locate their business, do you think
they are going to locate in a place that they are going to start out
$800 per container behind the rest of the world?
And it is going to take us till 2020 to get approvals to get this
port deepened?
So many of these environmental rules are just mechanisms to delay
progress. In the end, we know this port is going to get done. Let's get
busy and dig this port, and then we can talk about what we need to do
to mitigate. But why are we going to hold it up for a decade and put my
home State and this country at another competitive disadvantage?
We need to work on infrastructure. We need to find a way to get the
highway trust fund funded. We need to eliminate a lot of the
uncertainty. So many of these problems that are listed here, because
they haven't been solved, they create so much uncertainty in the
economy. It makes it very difficult for businesses to invest.
The Federal Government is an incredibly complex organization, yet it
hasn't had a budget in 5 years until last year--not even a budget, not
even for a year. Any complex organization, to make rational decisions,
has to have long-term planning, and we can't even do a budget for a
year.
We continually kick the can down the road, things likes the highway
trust fund, things like the SGR, the doc fix. The Federal Government
has got to resolve these things, remove these uncertainties so that
people know how to plan and invest.
I skipped over one here: responsible development of our oil and gas
reserves. The administration has thrown up every roadblock that you
could throw up to development of our reserves. We have had the largest
oil and gas boom in history in the last 6 years.
Eight years ago, when President Bush was in, they were talking about
something called peak oil theory, where they said we had already
discovered all of the recoverable oil and it was going to get lower and
lower, and it was going to be harder and harder to recover and that we
were at our finite limits.
That shows you how wrong science can be, because in the last 5 years
we have had the largest oil boom in history right here in the United
States. Yet, at the same time, the day that President Obama was sworn
in, gas was $1.80 a gallon. Google it. It went up as high as $3.75 a
gallon just a few months ago, and it has been gradually backing down
because, despite all of the roadblocks and all of the burdens that we
have placed on developing this oil, private industry is figuring out
how to get it done. We won't let them build pipelines, so they put it
on rail. We try to regulate them out of the rail business, and they
figure out a way around that.
The administration is using executive orders to broaden the clean air
rules and the Clean Water Act to do everything they can to prevent the
development of these oil and gas reserves, and the result of that is
that the price of fuel is artificially high because they want us off of
these fossil fuels and they want us on alternative energy.
You know what? So do I. But I want it when the technology can deliver
it at a competitive price. I don't want to artificially inflate the
cost of fossil fuels simply to force us on to alternative energy,
because, you see, cheap, reliable energy is another factor that makes
us competitive.
How does it make us competitive? Well, number one, it lowers the cost
of a company doing business in the United States if they have cheap,
reliable energy. That is obvious.
But another problem is we do have the largest consumer market in the
world. Two-thirds of our economy is based on consumer spending. And
when you have declining income, what does that do to consumer spending?
Obviously, it goes down. When you have increasing expenses for fuel and
home utilities, with the war on coal, that affects the cost of food, so
all these things rise. That takes money out of the consumers' pockets
when they already have declining income.
What do you think that does to our economy? What do you think that
does to our competitiveness?
[[Page H8070]]
So we need low-cost energy because, A, it makes it cheaper for
companies to do business here and will bring jobs here, but it also
puts more money in consumers' pockets.
When the President was first elected, he said we need a stimulus
program, and he put in something called a payroll tax holiday that gave
everybody, the average working man, $90 a month more in his pocket. But
at the same time, with his policies for energy, with the war on coal
taking our coal plants offline, that increases the cost to the average
consumer by about $40 per household a month.
If putting $90 a month in his pocket is stimulus, what does taking
$40 a month out of his pocket do? That is ``de-stimulus.''
Then when his policies forced up the price of gasoline from a $1.80 a
gallon--it was $3.80 a gallon; now it is $2.80 or $3--every dollar a
gallon costs the average consumer another $90 a month. Now the payroll
tax holiday is gone. Instead of putting $90 a month in the consumers'
pocket to stimulate the economy, we are taking $200 a month out of
their pocket. What does that do to the economy?
This one is a no-brainer. We need to do everything we can to
responsibly develop our fuel reserves; and we need low-cost, reliable
energy in this country to, A, encourage companies to come here for the
low energy cost and, B, to put more money in consumers' pockets to
stimulate our economy.
The last thing on this list is create a sustainable Federal budget,
including entitlement reform. I will run through this, but I am about
out of time.
Entitlements are on a collision course with bankruptcy. Nobody who
understands it will argue that point. These things have got to be done.
They create so much uncertainty. They create instability in our
economy, and they are nothing but future taxes.
The House Budget Committee, of which I am a member, has put out a
budget that would balance in 10 years. For the last 2 years in a row
that I have been in the Congress, and I believe 2 years before that,
they have not even been taken up by the Senate. We need to put our
budget on a path to balancing. The nonpartisan Congressional Budget
Office agrees and says that where we are is unsustainable.
Mr. Speaker, thank you for your patience with me. Thank you for
allowing me to lay out my road map. I hope that the Republicans and the
Democrats and everybody will consider this as a pathway to a prosperous
future.
Mr. Speaker, I yield back the balance of my time.
____________________