[Congressional Record (Bound Edition), Volume 145 (1999), Part 2]
[House]
[Pages 1538-1543]
[From the U.S. Government Publishing Office, www.gpo.gov]




              CONGRESS RELINQUISHING THE POWER TO WAGE WAR

  The SPEAKER pro tempore (Mrs. Biggert). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Texas (Mr. Paul) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. PAUL. Madam Speaker, I have great concern for the future of the 
American Republic. Many Americans argue that we are now enjoying the 
best of times. Others concern themselves with problems less visible but 
smouldering beneath the surface. Those who are content point out that 
the economy is booming, we are not at war, crime rates are down, and 
the majority of Americans feel safe and secure in their homes and 
community. Others point out that economic booms, when brought about 
artificially with credit creation, are destined to end with a bang. The 
absence of overt war does not negate the fact that tens of thousands of 
American troops are scattered around the world in the middle of ancient 
fights not likely to be settled by our meddling and may escalate at any 
time.
  Madam Speaker, the relinquishing of the power to wage war by Congress 
to the President, although ignored or endorsed by many, raises serious 
questions regarding the status of our Republic, and although many 
Americans are content with their routine activities, much evidence 
demonstrating that our personal privacy is routinely being threatened. 
Crime still remains a concern for many with questions raised as to 
whether or not violent crimes are accurately reported, and ironically 
there are many Americans who now

[[Page 1539]]

fear that dreaded Federal bureaucrat and possible illegal seizure of 
their property by the government more than they do the thugs in the 
street. I remain concerned about the economy, our militarism and 
internationalism, and the systemic invasion of our privacy in every 
aspect of our lives by nameless bureaucrats. I am convinced that if 
these problems are not dealt with. The republic for for which we have 
all sworn an oath to protect will not survive.
  Madam Speaker, all Members should be concerned about the war powers 
now illegitimately assumed by the President, the financial bubble that 
will play havoc with the standard of living of most Americans when it 
bursts and the systemic undermining of our privacy even in this age of 
relative contentment.
  The Founders of this great Nation abhorred tyranny and loved liberty. 
The power of the king to wage war, tax and abuse the personal rights of 
the American colonists drove them to rebel, win a revolution and codify 
their convictions in a new Constitution. It was serious business, and 
every issue was thoroughly debated and explained most prominently in 
the Federalist Papers. Debate about trade among the States and with 
other countries, sound money and the constraints on presidential power 
occupied a major portion of their time.
  Initially the Articles of Confederation spoke clearly of just who 
would be responsible for waging war. It gave the constitutional 
Congress, quote, sole and exclusive right and power of determining on 
peace and war. In the debate at the Constitutional Convention it was 
clear that this position was maintained as the power of the British 
king was not to be, quote, a proper guide in defining executive war 
powers, close quote, for the newly formed republic. The result was a 
Constitution that gave Congress the power to declare war, issue letters 
of mark and reprisal, call up the militia, raise and train an Army and 
Navy and regulate foreign commerce, a tool often used in international 
conflict. The President was also required to share power with the 
Senate in ratifying treaties and appointing ambassadors.
  Let there be no doubt. The President, according to the Constitution, 
has no power to wage war. However it has been recognized throughout our 
history that certain circumstances might require the President to act 
in self-defense if Congress is not readily available to act if the 
United States is attacked.
  Recent flagrant abuse of the power to wage war by modern-day 
Presidents, including the most recent episodes in Iraq, Afghanistan and 
Sudan, should prompt this Congress to revisit this entire issue of war 
powers. Certain abuses of power are obviously more injurious than 
others. The use of the FBI and the IRS to illegally monitor and 
intimidate citizens is a power that should be easy to condemn, and yet 
it continues to thrive. The illegal and immoral power to create money 
out of thin air for the purpose of financing a welfare-warfare state 
serving certain financial interests while causing the harmful business 
cycle is a process that most in Washington do not understand nor care 
about. These are ominous powers of great magnitude that were never 
meant to be permitted under the Constitution.
  But as bad as these abuses are, the power of a single person, the 
President, to wage war is the most egregious of all presidential 
powers, and Congress deserves the blame for allowing such power to 
gravitate into the hands of the President. The fact that nary a 
complaint was made in Congress for the recent aggressive military 
behavior of our President in Iraq for reasons that had nothing to do 
with national security should not be ignored. Instead, Congress 
unwisely and quickly rubber stamped this military operation. We should 
analyze this closely and decide whether or not we in the Congress 
should promote a war powers policy that conforms to the Constitution or 
continue to allow our Presidents ever greater leverage to wage war any 
time, any place and for any reason.
  This policy of allowing our Presidents unlimited authority to wage 
war has been in place since the end of World War II, although abuse to 
a lesser degree has occurred since the beginning of the 20th century. 
Specifically, since joining the United Nations congressional authority 
to determine when and if our troops will fight abroad has been 
seriously undermined. From Truman's sending of troops to Korea to 
Bush's Persian Gulf War, we have seen big wars fought, tens of 
thousands killed, hundreds of thousands wounded and hundreds of 
billions of dollars wasted. U.S. security, never at risk, has been 
needlessly jeopardized by the so-called peacekeeping missions and 
police exercises while constitutional law has been seriously and 
dangerously undermined.
  Madam Speaker, something must be done. The cost of this policy has 
been great in terms of life and dollars and our constitutional system 
of law. Nearly 100,000 deaths occurred in the Vietnam and Korean wars, 
and if we continue to allow our Presidents to casually pursue war for 
the flimsiest of reasons, we may well be looking at another major 
conflict somewhere in the world in which we have no business or need to 
be involved.
  The correction of this problem requires a concerted effort on the 
part of Congress to reclaim and reassert its responsibility under the 
Constitution with respect to war powers, and efforts were made to do 
exactly that after Vietnam in 1973 and more recently in 1995. Neither 
efforts were successful, and ironically the President emerged with more 
power, with each effort being undermined by supporters in the Congress 
of presidential authoritarianism and internationalism. Few objected to 
the Truman-ordered U.N. police actions in Korea in the 1950s, but they 
should have. This illegal and major war encouraged all subsequent 
Presidents to assume greater authority to wage war than was ever 
intended by the Constitution or assumed by all the Presidents prior to 
World War II. It is precisely because of the way we have entered in 
each military action since the 1940s without declaring war that their 
purposes have been vague and victory elusive, yet pain, suffering and 
long term negative consequences have resulted. The road on which this 
country embarked 50 years ago has led to the sacrifice of a lot of 
congressional prerogatives and citizen control over the excessive power 
that have fallen into the hands of Presidents quite willing to abuse 
this authority. No one person, if our society is to remain free, should 
be allowed to provoke war with aggressive military acts. Congress and 
the people are obligated to rein in this flagrant abuse of presidential 
power.
  Not only did we suffer greatly from the unwise and illegal Korean and 
Vietnam wars, Congress has allowed a continuous abuse of military power 
by our Presidents in an ever increasing frequency. We have seen troops 
needlessly die in Lebanon, Grenada, invaded for questionable reasons, 
Libya bombed with innocent civilians killed, persistent naval 
operations in the Persian Gulf, Panama invaded, Iraq bombed on numerous 
occasions, Somalia invaded, a secret and illegal war fought in 
Nicaragua, Haiti occupied, and troops stationed in Bosnia and now 
possibly soon in Kosovo.

                              {time}  1800

  Even the Congressional permission to pursue the Persian Gulf War was 
an afterthought, since President Bush emphatically stated that it was 
unnecessary, as he received his authority from the United Nations.
  Without an actual declaration of war and support from the American 
people, victory is unachievable. This has been the case with the 
ongoing war against Iraq. Without a legitimate concern for our national 
security, the willingness to declare war and achieve victory is 
difficult. The war effort becomes narrowly political, serving special 
interests, and not fought for the defense of the United States against 
a serious military threat. If we can win a Cold War against the 
Soviets, we hardly need a hot war with a third world nation, unable to 
defend itself, Iraq.
  Great concern in the 1960s over the excessive presidential war powers 
was

[[Page 1540]]

expressed by the American people, and, thus, the interests of the U.S. 
Congress after Vietnam in the early 1970's. The War Powers Resolution 
of 1973 resulted, but due to shrewd manipulation and political 
chicanery, the effort resulted in giving the President more authority, 
allowing him to wage war for 60 to 90 days without Congressional 
approval.
  Prior to the Korean War, when the Constitution and historic precedent 
had been followed, the President could not and for the most part did 
not engage in any military effort not directly defensive in nature 
without explicit Congressional approval.
  The result of the passage of the War Powers Resolution was exactly 
opposite to its authors' intentions. More power is granted to the 
president to send troops hither and yon, with the various Presidents 
sometimes reporting to the Congress and sometimes not. But Congress has 
unwisely and rarely objected, and has not in recent years demanded its 
proper role in decisions of war, nor hesitated to continue the funding 
that the various presidents have demanded.
  Approval of presidential-directed aggression, disguised as ``support 
for the troops,'' comes routinely, and if any member does not 
obediently endorse every action a President might take, for whatever 
reason, it is implied the member lacks patriotism and wisdom. It is 
amazing how we have drifted from the responsibility of the Founders, 
imagine, the Congress and the people would jealously protect.
  It is too often and foolishly argued that we must permit great 
flexibility for the President to retaliate when American troops are in 
danger. But this is only after the President has invaded and placed our 
troops in harm's way.
  By what stretch of the imagination can one say that these military 
actions can be considered defensive in nature? The best way we can 
promote support for our troops is employ them in a manner that is the 
least provocative. They must be given a mission confined to defending 
the United States, not policing the world or taking orders from the 
United Nations or serving the special commercial interests of U.S. 
corporations around the world.
  The 1995 effort to repeal the War Powers Resolution failed because it 
was not a clean repeal, but one still requiring consultation and 
reporting to the Congress. This led to enough confusion to prevent its 
passage.
  What is needed is a return to the Constitution as a strict guide as 
to who has the authority to exert the war powers and, as has been 
scrupulously followed in the 19th century by essentially all political 
parties and presidents.
  The effort to curtail presidential powers while requiring 
consultation and reporting to the Congress implies that that is all 
that is needed to avoid the strict rules laid out by the Constitution.
  It was admitted in the House debate by the House leadership that the 
repeal actually gave the President more power to use troops overseas 
and therefore urged passage of the measure. This accurate assessment 
prompted antiwar pro-peace Republicans and Democrats to narrowly reject 
the proposal.
  The message here is that clarification of the War Powers Resolution 
and a return to constitutional law are the only way presidential 
authority to wage war can be curtailed. If our presidents do not act 
accordingly, Congress must quickly and forcefully meet its 
responsibility by denying funds for foreign intervention and aggression 
initiated by the President.
  The basic problem here is that there are still too many Members of 
Congress who endorse a presidency armed with the authority of a tyrant 
to wage war. But if this assumption of power by the President with 
Congress' approval is not reversed, the republic cannot be maintained.
  Putting the power in the hands of a single person, the president, to 
wage war, is dangerous and costly, and it destroys the notion that the 
people through their Congressional representatives decide when military 
action should start and when war should take place.
  The sacrifice of this constitutional principle, guarded diligently 
for 175 years and now severely eroded in the past 50, must be restored 
if we hope to protect our liberties and avoid yet another unnecessary 
and, heaven-forbid, major world conflict, and merely changing the law 
will not be enough to guarantee that future presidents will not violate 
their trust.
  A moral commitment to the principle of limited presidential war 
powers in the spirit of the republic is required. Even with the 
clearest constitutional restriction on the President to wage undeclared 
wars, buffered by precise legislation, if the sentiment of the 
Congress, the courts and the people or the President is to ignore these 
restraints, they will.
  The best of all situations is when the spirit of the republic is one 
and the same, as the law itself, and honorable men are in positions of 
responsibility to carry out the law. Even though we cannot guarantee 
the future Congress' or our president's moral commitment to the 
principles of liberty by changing the law, we still must make every 
effort possible to make the law and the Constitution as morally sound 
as possible.
  Our responsibility here in the Congress is to protect liberty and do 
our best to ensure peace and trade with all who do not aggress against 
us. But peace is more easily achieved when we reject the notion that 
some Americans must subsidize foreign nations for a benefit that is 
intended to flow back to a select few Americans. Maintaining an empire 
or striving for a world government while allowing excessive war powers 
to accrue to an imperial president will surely lead to needless 
military conflicts, loss of life and liberty, and a complete 
undermining of our constitutional republic.
  On another issue, privacy, privacy is the essence of liberty. Without 
it, individual rights cannot exist. Privacy and property are 
interlocked and if both are protected, little would need to be said 
about other civil liberties. If one's home, church or business is one's 
castle, and the privacy of one's person, papers and effects are rigidly 
protected, all rights desired in a free society will be guaranteed. 
Diligently protecting the right to privacy and property guarantees 
religious, journalistic and political experience, as well as a free 
market economy and sound money. Once a careless attitude emerges with 
respect to privacy, all other rights are jeopardized.
  Today we find a systematic and pervasive attack on the privacy of all 
American citizens, which undermines the principle of private property 
ownership. Understanding why the attack on privacy is rapidly expanding 
and recognizing a need to reverse this trend is necessary if our 
republic is to survive.
  Lack of respect for the privacy and property of the American 
colonists by the British throne was a powerful motivation for the 
American revolution and resulted in the strongly worded and crystal 
clear Fourth Amendment.
  Emphatically, searches and seizures are prohibited except when 
warrants are issued upon probable cause supported by oath or 
affirmation, with details listed given as to place, person and things 
to be seized.
  This is a far cry from the routine seizure by the Federal Government 
and forfeiture of property which occurs today. Our papers are no longer 
considered personal and their confidentiality has been eliminated. 
Private property is searched by Federal agents without announcement, 
and huge fines are levied when Federal regulations appear to have been 
violated, and proof of innocence is demanded if one chooses to fight 
the abuse in court and avoid the heavy fines.
  Eighty thousand armed Federal bureaucrats and law enforcement 
officers now patrol our land and business establishments. Suspicious 
religious groups are monitored and sometimes destroyed without due 
process of law, with little or no evidence of wrongdoing. Local and 
state jurisdiction is rarely recognized once the feds move in.
  Today, it is routine for government to illegally seize property, 
requiring the victims to prove their innocence in

[[Page 1541]]

order to retrieve their property, and many times this fails due to the 
expense and legal roadblocks placed in the victim's way.
  Although the voters in the 1990's have cried out for a change in 
direction and demanded a smaller, less intrusive government, the attack 
on privacy by the Congress, the administration and the courts has, 
nevertheless, accelerated. Plans have now been laid or implemented for 
a national I.D. card, a national medical data bank, a data bank on 
individual MDs, deadbeat dads, intrusive programs monitoring our every 
financial transaction, while the Social Security number has been 
established as the universal identifier.
  The Social Security number is now commonly used for just about 
everything, getting a birth certificate, buying a car, seeing an MD, 
getting a job, opening up a bank account, getting a driver's license, 
making many routine purchases, and, of course, a death certificate. 
Cradle-to-the-grave government surveillance is here and daily getting 
more pervasive.
  The attack on privacy is not a coincidence or an event that arises 
for no explainable reason. It results from a philosophy that justifies 
it and requires it. A government not dedicated to preserving liberty 
must by its very nature allow this precious right to erode.
  A political system designed as ours was to protect life and liberty 
and property would vigorously protect all citizens' rights to privacy, 
and this cannot occur unless the property and the fruits of one's 
labor, of every citizen, is protected from confiscation by thugs in the 
street as well as in our legislative bodies.
  The promoters of government instruction into our privacy 
characteristically use worn out cliches to defend what they do. The 
most common argument is that if you have nothing to hide, why worry 
about it?
  This is ludicrous. We have nothing to hide in our homes or our 
bedrooms, but that is no reason why big brother should be permitted to 
monitor us with a surveillance camera.
  The same can be argued about our churches, our businesses or any 
peaceful action we may pursue. Our personal activities are no one 
else's business. We may have nothing to hide, but, if we are not 
careful, we have plenty to lose, our right to be left alone.
  Others argue that to operate government programs efficiently and 
without fraud, close monitoring is best achieved with an universal 
identifier, the Social Security number.
  Efficiency and protection from fraud may well be enhanced with the 
use of a universal identifier, but this contradicts the whole notion of 
the proper role for government in a free society.
  Most of the Federal programs are unconstitutional to begin with, so 
eliminating waste and fraud and promoting efficiency for a program that 
requires a violation of someone else's rights should not be a high 
priority of the Congress. But the temptation is too great, even for 
those who question the wisdom of the government programs, and 
compromise of the Fourth Amendment becomes acceptable.
  I have never heard of a proposal to promote the national I.D. card or 
anything short of this for any reasons other than a good purpose. 
Essentially all those who vote to allow the continual erosion of our 
privacy and other constitutional rights never do it because they 
consciously support a tyrannical government; it is always done with 
good intentions.
  Believe me, most of the evil done by elected congresses and 
parliaments throughout all of history has been justified by good 
intentions. But that does not change anything. It just makes it harder 
to stop.
  Therefore, we cannot ignore the motivations behind those who promote 
the welfare state. Bad ideas, if implemented, whether promoted by men 
of bad intentions or good, will result in bad results.
  Well-intentioned people, men of goodwill, should, however, respond to 
a persuasive argument. Ignorance is the enemy of sound policy, every 
bit as much as political corruption.
  Various management problems in support for welfarism motivates those 
who argue for only a little sacrifice of freedom to achieve a greater 
good for society. Each effort to undermine our privacy is easily 
justified.
  The national I.D. card is needed, it is said, to detect illegal 
aliens, yet all Americans will need it to open up a bank account, get a 
job, fly on an airplane, see a doctor, go to school or drive a car.

                              {time}  1815

  Financial privacy must be sacrificed, it is argued, in order to catch 
money launderers, drug dealers, mobsters and tax cheats. Privacy for 
privacy's sake, unfortunately for many, is a nonissue.
  The recent know-your-customer plan was designed by Richard Small, 
Assistant Director of the Division of Banking Supervision Regulation at 
the Federal Reserve. He is not happy with all of the complaints that he 
has received regarding this proposal. His program will require that 
every bank keep a detailed profile on every customer, as to how much is 
deposited, where it comes from, and when and how the money is spent. If 
there is any deviation from the profile on record, the bank is required 
to report this to a half dozen government agencies, which will require 
the customer to do a lot of explaining. This program will catch few 
drug dealers, but will surely infringe on the liberty of every law-
abiding citizen.
  After thousands of complaints were registered at the Federal Reserve 
and the other agencies, Richard Small was quoted as saying that in 
essence, the complaints were coming from these strange people who are 
overly concerned about the Constitution and privacy. Legal 
justification for the program, Small explained, comes from a court case 
that states that our personal papers, when in the hands of a third 
party like a bank, do not qualify for protection under the Fourth 
Amendment.
  He is accurate in quoting the court case, but that does not make it 
right. Courts do not have the authority to repeal a fundamental right 
as important as that guaranteed by the Fourth Amendment. Under this 
reasoning, when applied to our medical records, all confidentiality 
between the doctor and the patient is destroyed.
  For this reason, the proposal for a national medical data bank to 
assure us there will be no waste or fraud, that doctors are practicing 
good medicine, that the exchange of medical records between the HMOs 
will be facilitated and statistical research is made easier, should be 
strenuously opposed. The more the government is involved in medicine or 
anything, the greater the odds that personal privacy will be abused.
  The IRS and the DEA, with powers illegally given them by the Congress 
and the courts, have prompted a flood of seizures and forfeitures in 
the last several decades without due process and frequently without 
search warrants or probable cause. Victims then are required to prove 
themselves innocent to recover the goods seized.
  This flagrant and systematic abuse of privacy may well turn out to be 
a blessing in disguise. Like the public schools, it may provide the 
incentive for Americans finally to do something about the system.
  The disaster state of the public school system has prompted millions 
of parents to provide private or home schooling for their children. The 
worse the government schools get, the more the people resort to a 
private option, even without tax relief from the politicians. This is 
only possible as long as some remnant of our freedom remains, and these 
options are permitted. We cannot become complacent.
  Hopefully, a similar reaction will occur in the area of privacy, but 
overcoming the intrusiveness of government into our privacy in nearly 
every aspect of our lives will be difficult. Home schooling is a 
relatively simple solution compared to avoiding the roving and snooping 
high of big brother. Solving the privacy problem requires an awakening 
by the American people with a strong message being sent to the U.S. 
Congress that we have had enough.
  Eventually, stopping this systematic intrusion into our privacy will 
require challenging the entire welfare state.

[[Page 1542]]

Socialism and welfarism self-destruct after a prolonged period of time 
due to their natural inefficiencies and national bankruptcy. As the 
system ages, more and more efforts are made to delay its demise by 
borrowing, inflating and coercion. The degree of violation of our 
privacy is a measurement of the coercion thought necessary by the 
proponents of authoritarianism to continue the process.
  The privacy issue invites a serious discussion between those who 
seriously believe welfare redistribution helps the poor and does not 
violate anyone's rights, and others who promote policies that undermine 
privacy in an effort to reduce fraud and waste to make the programs 
work efficiently, even if they disagree with the programs themselves. 
This opportunity will actually increase as it becomes more evident that 
our country is poorer than most believe and sustaining the welfare 
state at current levels will prove impossible. An ever-increasing 
invasion of our privacy will force everyone eventually to reconsider 
the efficiency of the welfare state, if the welfare of the people is 
getting worse and their privacy invaded.
  Our job is to make a principled, moral, constitutional and practical 
case for respecting everyone's privacy, even if it is suspected some 
private activities, barring violence, do not conform to our own private 
moral standards. We could go a long way to guaranteeing privacy for all 
Americans if we, as Members of Congress, would take our oath of office 
more seriously and do exactly what the Constitution says.


                          The Financial Bubble

  On a third item, the financial bubble, a huge financial bubble 
engulfs the world financial markets. This bubble has been developing 
for a long time but has gotten much larger the last couple of years. 
Understanding this issue is critical to the economic security of all 
Americans that we all strive to protect.
  Credit expansion is the root cause of all financial bubbles. Fiat 
monetary systems inevitably cause unsustainable economic expansion that 
results in a recession and/or depression. A correction always results, 
with the degree and duration being determined by government fiscal 
policy and central bank monetary policy. If wages and prices are not 
allowed to adjust and the correction is thwarted by invigorated 
monetary expansion, new and sustained economic growth will be delayed 
or prevented. Financial dislocation caused by central banks in the 
various countries will differ from one to another due to political 
perceptions, military considerations, and reserve currency status.
  The U.S.'s ability to inflate has been dramatically enhanced by other 
countries' willingness to absorb our inflated currency, our dollar 
being the reserve currency of the world. Foreign central banks now hold 
in reserve over $600 billion, an amount significantly greater than that 
even held by our own Federal Reserve System. Our economic and military 
power gives us additional license to inflate our currency, thus 
delaying the inevitable correction inherent in a paper money system. 
But this only allows for a larger bubble to develop, further 
jeopardizing our future economy.
  Because of the significance of the dollar to the world economy, our 
inflation and the dollar-generated bubble is much more dangerous than 
single currency inflation such as Mexico, Brazil, South Korea, Japan 
and others. The significance of these inflations, however, cannot be 
dismissed.
  The Federal Reserve Board Chairman Alan Greenspan, when the Dow was 
at approximately 6,500, cautioned the Nation about irrational 
exuberance and for a day or two the markets were subdued. But while 
openly worrying about an unsustained stock market boom, he nevertheless 
accelerated the very credit expansion that threatened the market and 
created the irrational exuberance.
  From December 1996, at the time that Greenspan made this statement, 
to December 1998, the money supply soared. Over $1 trillion of new 
money, as measured by M-3, was created by the Federal Reserve. MZM, 
another monetary measurement, is currently expanding at a rate greater 
than 20 percent. This generous dose of credit has sparked even more 
irrational exuberance, which has taken the Dow to over 9,000 for a 30 
percent increase in just two years.
  When the foreign registered corporation long term capital management 
was threatened in 1998, that is, the market demanding a logical 
correction to its own exuberance with its massive $1 trillion 
speculative investment in the derivatives market, Greenspan and company 
quickly came to its rescue with an even greater acceleration of credit 
expansion.
  The pain of market discipline is never acceptable when compared to 
the pleasure of postponing hard decisions and enjoying for a while 
longer the short-term benefits gained by keeping the financial bubble 
inflated. But the day is fast approaching when the markets and Congress 
will have to deal with the attack on the dollar, once it is realized 
that exporting our inflation is not without limits.
  A hint of what can happen when the world gets tired of holding too 
many of our dollars was experienced in the dollar crisis of 1979 and 
1980, and we saw at that time interest rates over 21 percent. There is 
abundant evidence around warning us of the impending danger. According 
to Federal Reserve statistics, household debt reached 81 percent of 
personal income in the second quarter of 1998. For 20 years prior to 
1985, household debt averaged around 50 percent of personal income. 
Between 1985 and 1998, due to generous Federal Reserve credit, 
competent American consumers increased this to 81 percent and now it is 
even higher. At the same time, our savings rate has dropped to zero 
percent.
  The conviction that stock prices will continue to provide extra cash 
and confidence in the economy has fueled wild consumer spending and 
personal debt expansion. The home refinance index between 1997 and 1999 
increased 700 percent. Secondary mortgages are now offered up to 120 
percent of a home's equity, with many of these funds finding their way 
into the stock market. Generous credit and quasi-government agencies 
make these mortgage markets robust, but a correction will come when it 
is realized that the builders and the lenders have gotten ahead of 
themselves.
  The willingness of foreign entities to take and hold our dollars has 
generated a huge current account deficit for the United States. It is 
expected a $200 billion annual deficit that we are running now will 
accelerate to over $300 billion in 1999, unless the financial bubble 
bursts.
  This trend has made us the greatest international debtor in the 
world, with a negative net international asset position of more than 
$1.7 trillion. A significantly weakened dollar will play havoc when 
this bill comes due and foreign debt holders demand payment.
  Contributing to the bubble and the dollar strength has been the fact 
that even though the dollar has problems, other currencies are even 
weaker and thus make the dollar look strong in comparison. Budgetary 
figures are frequently stated in a falsely optimistic manner. In 1969 
when there was a surplus of approximately $3 billion, the national debt 
went down approximately the same amount. In 1998, however, with a so-
called surplus of $70 billion, the national debt went up $113 billion, 
and instead of the surpluses which are not really surpluses running 
forever, the deficits will rise with a weaker economy and current 
congressional plans to increase welfare and warfare spending.
  Government propaganda promotes the false notion that inflation is no 
longer a problem. Nothing could be further from the truth. The 
dangerous financial bubble, a result of the Federal Reserve's 
deliberate policy of inflation and the Fed's argument that there is no 
inflation according to government-concocted CPI figures, is made to 
justify a continuous policy of monetary inflation because they are 
terrified of the consequence of deflation. The Federal Reserve may 
sincerely believe maintaining the status quo, preventing price 
inflation and delaying deflation is possible, but it really is not.

[[Page 1543]]

  The most astute money manager cannot balance inflation against 
deflation as long as there is continued credit expansion. The system 
inevitably collapses, as it finally did in Japan in the 1990s. Even the 
lack of the CPI inflation as reported by the Federal Reserve is 
suspect.
  A CPI of all consumer items measured by the private source shows 
approximately a 400 percent increase in prices since 1970. Most 
Americans realize their dollars are buying less each year and no chance 
exists for the purchasing power of the dollar to go up. Just because 
prices of TVs and computers may go down, the cost of medicine, food, 
stocks and entertainment, and of course, government, certainly can rise 
rapidly.
  One characteristic of an economy that suffers from a constantly 
debased currency is sluggish or diminished growth in real income. In 
spite of our so-called great economic recovery, two-thirds of U.S. 
workers for the past 25 years have had stagnant or falling wages. The 
demands for poverty relief from government agencies continue to 
increase. Last year alone, 678,000 jobs were lost due to downsizing. 
The new service sector jobs found by many of those laid off are rarely 
as good paying.
  In the last 1\1/2\ years, various countries have been hit hard with 
deflationary pressures. In spite of the IMF-led bailouts of nearly $200 
billion, the danger of a worldwide depression remains. Many countries, 
even with the extra dollars sent to them courtesy of the American 
taxpayer, suffer devaluation and significant price inflation in their 
home currency.

                              {time}  1830

  But this, although helpful to banks lending overseas, has clearly 
failed, has cost a lot of money, and prevents the true market 
correction of liquidation of debt that must eventually come. The longer 
the delay and the more dollars used, the greater the threat to the 
dollar in the future.
  There is good reason why we in the Congress should be concerned. A 
dollar crisis is an economic crisis that will threaten the standard of 
living of many Americans. Economic crises frequently lead to political 
crises, as is occurring in Indonesia.
  Congress is responsible for the value of the dollar. Yet, as we have 
done too often in other areas, we have passed this responsibility on to 
someone else; in this case, to the Federal Reserve.
  The Constitution is clear that the Congress has responsibility for 
guaranteeing the value of the currency, and no authority has ever been 
given to create a central bank. Creating money out of thin air is 
counterfeiting, even when done by a bank that the Congress tolerates.
  It is easy to see why Congress, with its own insatiable desire to 
spend money and perpetuate a welfare and military state, cooperates 
with such a system. A national debt of $5.6 trillion could not have 
developed without a willing Federal Reserve to monetize this debt and 
provide for artificially low interest rates. But when the dollar crisis 
hits and it is clearly evident that the short-term benefits were not 
worth it, we will be forced to consider monetary reform.
  Reconsidering the directives given us in the Constitution with regard 
to money would go a long way towards developing a sound monetary system 
that best protects our economy and guides us away from casually going 
to war. Monetary reform is something that we ought to be thinking about 
now.
  Mr. Speaker, let me summarize. We in the Congress, along with the 
President, will soon have to make a decision that will determine 
whether or not the American republic survives. Allowing our presidents 
to wage war without the consent of Congress, ignoring the obvious 
significance of fiat money to a healthy economy, and perpetuating 
pervasive government intrusion into the privacy of all Americans will 
surely end the American experiment with maximum liberty for all unless 
we reverse this trend.
  Too often the American people have chosen security over liberty. 
Allowing the President a little authority to deal with world problems 
under a U.N. banner has been easier than reversing the trend of the 
past 50 years. Accepting the financial bubble when on the short run, it 
helps everyone's portfolio, helps to finance government spending, is 
easy, even if it only delays the day of reckoning when the bills come 
due, as they already have in so many other countries in the world.
  Giving up a little privacy seems a small price to pay for the many 
who receive the generous benefits of big government, but when the 
prosperity comes to an end and the right to privacy has been 
squandered, it will be most difficult to restore the principles of a 
free society.
  Materialistic concerns and complacency toward the principles of 
liberty will undo much of what has been built in America over the past 
200 years, unless there is a renewed belief that our God-given rights 
to life and liberty are worth working for. False economic security is 
no substitute for productive effort in a free society, where the 
citizens are self-reliant, generous, and nonviolent. Insisting on a 
limited government designed to protect life and property, as is found 
in a republic, must be our legislative goal.

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