[Congressional Record (Bound Edition), Volume 149 (2003), Part 2]
[Senate]
[Pages 2092-2098]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE DEFICIT

  Mr. HOLLINGS. Mr. President, last evening, the distinguished 
President said we were not going to pass on our problems to the next 
generation. There has to be a time of sobriety. We have to get off of 
this deficit binge and get to reality. The best way I know to really 
bring it to the attention of my colleagues is to go right back to 
President Bush coming into office. Everyone agrees and says, oh, the 
Clinton era started the recession, and so it did. But in February of 
2001, right after the President had taken office, at the end of that 
month he acted like instead of a recession it was an economic boom. He 
talked of $5.6 trillion in surplus, and he outlined a budget of some 
$2.6 trillion for Social Security. He was going to protect Social 
Security. He had another $2 trillion for tax cuts, domestic and defense 
spending, and in the year before last, he went on to say we should 
prepare for the unexpected. His budget set aside $1 trillion over 10 
years for additional needs. That is one trillion additional reasons 
everyone can feel comfortable supporting the budget.
  I ask unanimous consent that a pertinent portion of the President's 
address be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       My budget has funded a responsible increase in our ongoing 
     operations. It has funded our nation's important priorities. 
     It has protected Social Security and Medicare. And our 
     surpluses are big enough that there is still money left over.
       Many of you have talked about the need to pay down our 
     national debt. I listened, and I agree. (Applause.) We owe it 
     to our children and grandchildren to act now, and I hope you 
     will join me to pay down $2 trillion in debt during the next 
     10 years. (Applause.) At the end of those 10 years, we will 
     have paid down all the debt that is available to retire. 
     (Applause.) That is more debt, repaid more quickly than has 
     ever been repaid by any nation at any time in history. 
     (Applause.)
       We should also prepare for the unexpected, for the 
     uncertainties of the future. We should approach our Nation's 
     budget as any prudent family would, with a contingency fund 
     for emergencies or additional spending needs. For example, 
     after a strategic review, we may need to increase defense 
     spending. We may need to increase spending for our farmers or 
     additional money to reform Medicare. And so, my budget sets 
     aside almost a trillion dollars over 10 years for additional 
     needs. That is one trillion reasons you can feel comfortable 
     supporting this budget. (Applause.)

  Mr. HOLLINGS. On September 6, 2001--I will never forget it--Mitch 
Daniels, the director of the Office of Management and Budget, said we 
were going to have a surplus at that time because we had passed the tax 
cut and we had actually passed the stimulus.
  This is the Senator who forced the vote to have the stimulus in March 
of that year, because we were thinking of a $100 billion stimulus, 1 
percent of the GDP. What happened instead? They cut it back. They did 
not give it to the wage earners, to the payroll taxpayers,

[[Page 2093]]

but they gave it to all the rich and they cut it back some 40-some-
billion dollars and it did not work. It was passed in June, along with 
the tax cut.
  By September 6, just before September 11, Mitch Daniels came in and 
he projected at that particular time a surplus of $158 billion. Three 
weeks later we ended up with a deficit of $143 billion, a swing of some 
$300 billion.
  They go into the litany now of the recession, which they never wanted 
to recognize except in debate, and corruption and, of course, the war. 
They never want to pay for the war. The President says when we have 
war, we are going to run deficits.
  Getting right to the point, I asked the Congressional Budget Office 
to estimate the cost of September 11th at that particular fiscal year 
2001 and they said $34 billion, not the $300 billion swing from a $158 
billion surplus to a $143 billion deficit.
  The President had set up his contingency of $1 trillion and talked 
about his tax cuts in the same breath. So we had voodoo II. I will 
never forget under President Reagan, Vice President Bush, the 
President's father, had called that voodoo.
  I went to a budget meeting last evening with the new Budget 
Committee, and I heard our distinguished chairman, the Senator from 
Oklahoma, mention growth, growth. So they got into the buzz word 
``growth.'' Let me say what it grows. It grows deficits. It grows debt. 
In 200 years of history, the cost of all the wars from the Revolution 
right on up to World War I, World War II, Korea, and Vietnam, we never 
reached a trillion dollar debt. With only the cost of the gulf war, 
with the Saudis paying for most of it, we hardly paid the cost of the 
war. Yet with this growth that we are going to hear about, we are 
talking about $6.3 trillion in deficits. We grew into horrendous debt 
and horrendous interest costs as a result of voodoo, and now we have 
voodoo II.
  Mr. President, I ask unanimous consent to have this chart printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                          TAXES TO PAY FOR WAR
------------------------------------------------------------------------
                                      Individual           Corporate
               War                     increases           increases
------------------------------------------------------------------------
Civil War.......................  0-10%.............  Dividends.
World War I.....................  13-77%............  1-12%.
World War II....................  79-94%............  20-40%.
Korean War......................  82-91%............  38-52%.
Vietnam.........................  70-77%............  48-52.5%.
Afghan, Iraq and Terrorism Wars.  Tax cut...........  Tax cut.
------------------------------------------------------------------------

  Mr. HOLLINGS. Early last year, the President said the deficit was 
going to be small and short-lived. Those were his exact words. I ask 
unanimous consent to have those remarks printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Once we have funded our national security and our homeland 
     security, the final great priority of my budget is economic 
     security for the American people. (Applause.) To achieve 
     these great national objectives--to win the war, protect the 
     homeland, and revitalize our economy--our budget will run a 
     deficit that will be small and short-term, so long as 
     Congress restrains spending and acts in a fiscally 
     responsible manner. (Applause.) We have clear priorities and 
     we must act at home with the same purpose and resolve we have 
     shown overseas: We'll prevail in the war, and we will defeat 
     this recession. (Applause.)
       Americans who have lost their jobs need our help and I 
     support extending unemployment benefits and direct assistance 
     for health care coverage. (Applause.) Yet, American workers 
     want more than unemployment checks--they want a steady 
     paycheck. (Applause.) When America works, America prospers, 
     so my economic security plan can be summed up in one work: 
     jobs. (Applause.)

  Mr. HOLLINGS. We have been going up, up and away. These are small and 
short-lived. They can understand the chart better upside down, but here 
is the actual fact. I ask unanimous consent that a copy of this 
particular chart be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                               HOLLINGS' BUDGET REALITIES
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Annual
                                                            U.S. Budget   Borrowed trust      Unified     Actual deficit                   increases in
                     Pres. and year                        (outlays) (in       funds       deficit with    without trust   National debt   spending for
                                                             billions)      (billions)      trust funds      funds (in      (billions)       interest
                                                                                           (in billions)     billions)                      (billions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Truman:
    1947................................................            34.5            -9.9             4.0           +13.9           257.1  ..............
    1948................................................            29.8             6.7            11.8            +5.1           252.0  ..............
    1949................................................            38.8             1.2             0.6            -0.6           252.6  ..............
    1950................................................            42.6             1.2            -3.1            -4.3           256.9  ..............
    1951................................................            45.5             4.5             6.1            +1.6           255.3  ..............
    1952................................................            67.7             2.3            -1.5            -3.8           259.1  ..............
Eisenhower:
    1953................................................            76.1             0.4            -6.5            -6.9           266.0  ..............
    1954................................................            70.9             3.6            -1.2            -4.8           270.8  ..............
    1955................................................            68.4             0.6            -3.0            -3.6           274.4  ..............
    1956................................................            70.6             2.2             3.9            +1.7           272.7  ..............
    1957................................................            76.6             3.0             3.4            +0.4           272.3  ..............
    1958................................................            82.4             4.6            -2.8            -7.4           279.7  ..............
    1959................................................            92.1            -5.0           -12.8            -7.8           287.5  ..............
    1960................................................            92.2             3.3             0.3            -3.0           290.5  ..............
Kennedy:
    1961................................................            97.7            -1.2            -3.3            -2.1           292.6  ..............
    1962................................................           106.8             3.2            -7.1           -10.3           302.9             9.1
Johnson:
    1963................................................           111.3             2.6            -4.8            -7.4           310.3             9.9
    1964................................................           118.5            -0.1            -5.9            -5.8           316.1            10.7
    1965................................................           118.2             4.8            -1.4            -6.2           322.3            11.3
    1966................................................           134.5             2.5            -3.7            -6.2           328.5            12.0
    1967................................................           157.5             3.3            -8.6           -11.9           340.4            13.4
    1968................................................           178.1             3.1           -25.2           -28.3           368.7            14.6
Nixon:
    1969................................................           183.6             0.3             3.2            +2.9           365.8            16.6
    1970................................................           195.6            12.3            -2.8           -15.1           380.9            19.3
    1971................................................           210.2             4.3           -23.0           -27.3           408.2            21.0
    1972................................................           230.7             4.3           -23.4           -27.7           435.9            21.8
    1973................................................           245.7            15.5           -14.9           -30.4           466.3            24.2
    1974................................................           269.4            11.5            -6.1           -17.6           483.9            29.3
Ford:
    1975................................................           332.3             4.8           -53.2           -58.0           541.9            32.7
    1976................................................           371.8            13.4           -73.7           -87.1           629.0            37.1
Carter:
    1977................................................           409.2            23.7           -53.7           -77.4           706.4            41.9
    1978................................................           458.7            11.0           -59.2           -70.2           776.6            48.7
    1979................................................           504.0            12.2           -40.7           -52.9           829.5            59.9
    1980................................................           590.9             5.8           -73.8           -79.6           909.1            74.8
Reagan:
    1981................................................           678.2             6.7           -79.0           -85.7           994.8            95.5
    1982................................................           745.8            14.5          -128.0          -142.5         1,137.3           117.2
    1983................................................           808.4            26.6          -207.8          -234.4         1,371.7           128.7
    1984................................................           851.9             7.6          -185.4          -193.0         1,564.7           153.9
    1985................................................           946.4            40.5          -212.3          -252.8         1,817.5           178.9
    1986................................................           990.5            81.9          -221.2          -303.1         2,120.6           190.3
    1987................................................         1,004.1            75.7          -149.8          -225.5         2,346.1           195.3

[[Page 2094]]

 
    1988................................................         1,064.5           100.0          -155.2          -255.2         2,601.3           214.1
Bush:
    1989................................................         1,143.7           114.2          -152.5          -266.7         2,868.3           240.9
    1990................................................         1,253.2           117.4          -221.2          -338.6         3,206.6           264.7
    1991................................................         1,324.4           122.5          -269.4          -391.9         3,598.5           285.5
    1992................................................         1,381.7           113.2          -290.4          -403.6         4,002.1           292.3
Clinton:
    1993................................................         1,409.5            94.2          -255.1          -349.3         4,351.4           292.5
    1994................................................         1,461.9            89.0          -203.3          -292.3         4,643.7           296.3
    1995................................................         1,515.8           113.3          -164.0          -277.3         4,921.0           332.4
    1996................................................         1,560.6           153.4          -107.5          -260.9         5,181.9           344.0
    1997................................................         1,601.3           165.8           -22.0          -187.8         5,369.7           355.8
    1998................................................         1,652.6           178.2            69.2          -109.0         5,478.7           363.8
    1999................................................         1,703.0           251.8           124.4          -127.4         5,606.1           353.5
    2000................................................         1,789.0           258.9           236.2           -22.7         5,628.8           362.0
Bush:
    2001................................................         1,863.9           270.5           127.1          -143.4         5,772.2           359.5
    2002................................................         2,011.8           270.1          -158.5          -428.6         6,200.8           332.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Historical Tables, Budget of the US Government FY 1998; Beginning in 1962, CBO's The Budget and Economic Outlook: Fiscal Years 2003-2012, January
  23, 2002.

  Mr. HOLLINGS. Mr. President, we have run down all of these so-called 
deficits and interest costs from President Truman on through President 
Bush. You can find that the deficits now of Presidents Truman, 
Eisenhower, Kennedy, Johnson, Nixon, Ford, for 6 presidents and 
almost--in almost 30 years, the cost of World War II, the cost of 
Korea, and the cost of Vietnam, cumulative, add them all up, those 
deficits are $358 billion. Guess what we added up--we ended up with 
this past September? The end of the fiscal year, September 30, little 
less than 4 months ago, we ended up with a deficit of $426 billion. 
They had estimated at that particular time it was going to be $173 
billion. That was a swing of some $283 billion.
  So when they say they are not going to pass on the costs, and let's 
not get bogged down in all of these figures around here, we are telling 
the American GI we are going to war and we hope you do not get killed. 
But if you are lucky enough not to get killed, come on home because we 
are going to give you the bill for the war. Have my colleagues ever 
heard of such a thing?
  I want to remind everybody of last year, we tried our best to be 
fiscally responsible, and I commend our leader for withholding the 
budget. They said we could not pass one. Why didn't we pass one? 
Because we passed out the budget resolution, but if we had called up 
that budget, they would have put on tax cuts. The distinguished Chair 
knows it because he was a member of the Budget Committee over on the 
House side--we would have put on reconciliation and they, with the 
majority vote, could have passed those tax cuts. That is what we were 
holding up for. We did not want tax cuts on last year and that is why 
we held up the budget. Listen to what the former Director of the 
budget, Mr. David Stockman, said when he saw the disaster, the so-
called growth, how are we going to grow out of it; all you do is just 
cut all your revenues.
  Call up one of the Governors now with deficits--and they are trying 
to make it up--and say: Cut the taxes. They would be run out of the 
State capital. I cannot understand it. I cannot run at home unless I 
promise to pay the bill; I cannot run for the Senate unless I promise 
not to pay the bill. It is the darndest nonsense I have ever engaged 
in. We were trying to cancel the tax cuts. But what did David Stockman 
say about the Reagan tax cuts?
  On page 342 in ``The Triumph of Politics'':

       The President had no choice but to repeal or substantially 
     dilute the tax cut. That would have gone far toward restoring 
     the stability of the strongest capitalist economy in the 
     world. Ronald Reagan chose to be not a leader but a 
     politician. His obstinacy was destined to keep America's 
     economy hostage to the errors of his advisers for a long, 
     long time.

  Voodoo 1, long, long time. We had to get President Clinton in to 
raise taxes, get the best 8 years of an economy, and now we are going 
to have not only Voodoo 2 in 2001, but now for 2003 we are going to 
pass, for next year, another tax cut. It is a foregone conclusion, now 
that the Republicans have a majority of the Senate as well as a 
majority of the House.
  I commend everyone to read ``The Triumph of Politics'' and see what 
the Director of the Budget thought about that particular tax cut.
  I ask unanimous consent to have printed in the Record the article in 
this morning's Washington Post: 2004 Budget Likely to Show Record 
Deficits; OMB Chief Projects Annual Shortfalls of More Than $300 
Billion for 2003-2004.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               2004 Budget Likely To Show Record Deficits


  OMB Chief Projects Annual Shortfalls of More Than $300 Billion for 
                               2003, 2004

                  (By Jonathan Weisman and Mike Allen)

       The White House is likely to project record budget deficits 
     next week when President Bush releases a 2004 budget that 
     will include large tax cuts as well as big boosts in spending 
     on homeland defense, Medicare and the military.
       In a series of telephone interviews yesterday, White House 
     Office of Management and Budget Director Mitchell E. Daniels, 
     Jr. said the deficits for 2003 and 2004 would approach 3 
     percent of the economy, or more than $300 billion a year. 
     That would surpass the 1992 record deficit of $290 billion, 
     even before the cost of a possible war with Iraq is factored 
     in. It would also be nearly triple the $109 billion deficit 
     for 2003 that was forecast by the White House six months ago.
       ``We're about to disappear into the deepest of red ink,'' 
     said Sen. John D. Rockefeller IV (D-W.VA.).
       Still, expressed as a percentage of the gross domestic 
     product, Daniels said, a $300 billion deficit is manageable 
     and could be reversed easily if Congress and the president 
     make it a priority. ``If what the nation should care about 
     most is getting back to balance, it's no great trick to do 
     it,'' Daniels said. ``We can do it in a year or two. All we'd 
     have to do is limit spending growth to inflation and 
     undertake no new initiatives.''
       That contention was echoed by Treasury secretary nominee 
     John W. Snow at his confirmation hearing yesterday, when he 
     said: ``There is some level of deficits that is troublesome, 
     that begins to tilt the financial markets. We're not there 
     yet. We're a long way from there.''
       Nevertheless, the numbers appeared to put to rest any 
     prospect of a return to surpluses this decade. Two years ago, 
     the White House and the Congressional Budget Office forecast 
     a surplus of $5.6 trillion this decade. In July, the OMB 
     projected a deficit of $109 billion in 2003, declining to $48 
     billion in 2004 before surpluses return. Now, Daniels said he 
     expects the 2004 deficit to be close to his 2003 estimate.
       Daniels said the White House will no longer issue 10-year 
     budget projections. ``Those numbers would be, in my view, 
     worse than a wasted effort,'' he said.
       The CBO in August projected deficits of $145 billion in 
     2003 and $111 billion in 2004. The CBO will update those 
     projections today with a relatively optimistic 2003 deficit 
     of between $165 billion and $175 billion, according to Senate 
     Republican aides. The CBO will likely project a 2004 deficit 
     of about $130 billion.
       But unlike the White House projections, those figures do 
     not include a new round of tax cuts or the increases in 
     spending for defense, homeland security and Medicare that 
     Bush will be seeking in his new budget.

[[Page 2095]]

       Daniels said the 2004 budget would propose more than $40 
     billion more for homeland security, between a 7 percent and 8 
     percent increase over last year. Military spending would jump 
     between 4 percent and 5 percent under the plan. Spending on 
     the rest of the government would rise between 3 percent and 4 
     percent, Daniels said.
       A senior administration official said Bush will also seek 
     about $400 billion over 10 years to overhaul Medicare and add 
     a prescription drug benefit for some seniors.

  (Mrs. Dole assumed the Chair.)
  Mr. HOLLINGS. What we are headed for is deficits of $500 billion--if 
you have got just $426 billion and you are already $167 billion. Let me 
include the debt to the penny. I want everyone to understand. Do not 
give me all of this off budget, on budget, unified budget. Just find 
out how much you spend and how much you pay, and we can find out the 
shortfall or the deficit.
  We are already in a shortfall this year, a little less than 4 months, 
the public debt to the penny as of the 27th, the most recent. I looked 
for one this morning, $167 billion. I ask unanimous consent to have 
this printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                          THE DEBT TO THE PENNY
------------------------------------------------------------------------
                                                          Amount
------------------------------------------------------------------------
Current: 1/27/2003.............................    $6,395,237,394,489.82
Current Month:
  1-24-2003....................................     6,392,119,196,353.47
  1-23-2003....................................     6,389,561,622,961.91
  1-22-2003....................................     6,389,894,461,722.18
  1-21-2003....................................     6,387,841,175,651.97
  1-17-2003....................................     6,388,587,973,011.41
  1-16-2003....................................     6,384,824,540,523.90
  1-15-2003....................................     6,386,957,326,682.31
  1-14-2003....................................     6,383,462,572,294.58
  1-13-2003....................................     6,380,582,269,971.85
  1-10-2003....................................     6,382,620,048,983.48
  1-9-2003.....................................     6,381,926,712,367.35
  1-8-2003.....................................     6,383,281,068,493.19
  1-7-2003.....................................     6,387,381,983,103.35
  1-6-2003.....................................     6,383,514,236,076.15
  1-3-2003.....................................     6,382,650,489,675.40
  1-2-2003.....................................     6,389,356,141,156.55
Prior Months:
  12-31-2002...................................     6,405,707,456,847.53
  11-29-2002...................................     6,343,460,146,781.79
  10-31-2002...................................     6,282,527,974,378.50
Prior Fiscal Years:
  9-30-2002....................................     6,228,235,965,597.16
  9-28-2001....................................     5,807,463,412,200.06
  9-29-2000....................................     5,674,178,209,886.86
  9-30-1999....................................     5,656,270,901,615.43
  9-30-1998....................................     5,526,193,008,897.62
  9-30-1997....................................     5,413,146,011,397.34
  9-30-1996....................................     5,224,810,939,135.73
  9-29-1995....................................     4,973,982,900,709.39
  9-30-1994....................................     4,692,749,910,013.32
  9-30-1993....................................     4,411,488,883,139.38
  9-30-1992....................................     4,064,620,655,521.66
  9-30-1991....................................     3,665,303,351,697.03
  9-28-1990....................................     3,233,313,451,777.25
  9-29-1989....................................     2,857,430,960,187.32
  9-30-1988....................................     2,602,337,712,041.16
  9-30-1987....................................     2,350,276,890,953.00
------------------------------------------------------------------------
Source: Bureau of the Public Debt.

  Mr. HOLLINGS. There you are. We are in a heck of a fix and somewhat 
similar, if you please, to the situation we had with President Clinton.
  I will never forget because I was active member and a former chairman 
of the Budget Committee. We had a $403.6 billion deficit in 1992. That 
is the big reason our distinguished President lost reelection and lost 
to that little Governor down there in Arkansas. The President was 
running $403.6 billion deficits. And they said: Yes, you did 
wonderfully well in the gulf war. But heavens above, you have to get 
someone to get ahold of it.
  We brought the Governor up who balanced budgets. And what did the 
Governor do? Right after his nomination, in Little Rock, he invited a 
group of the best financial minds down to Little Rock, sat them all 
down, including Alan Greenspan, the head of the Federal Reserve, and 
said: I have won now, but what is for the good of the country, what are 
we going to do?
  Greenspan told him: Mr. President, you not only are going to have to 
cut spending, you are going to have to increase taxes.
  President Clinton went around the room and asked: Do you all agree 
with that, we have to increase taxes? They said, to a man: That is what 
we need to do. We need to cut down these deficits, cut down this debt, 
and keep up the long-term interest rates because we are not investing 
in the stock market with these horrendous interest costs, almost $1 
billion a day--and it is still almost $1 billion a day.
  The first thing the Government does at 8 o'clock in the morning is go 
down to the bank and borrow $1 billion and add it to the debt--every 
Saturday morning, every Sunday morning, and every Christmas morning. We 
have got the debt going up, up, and away. But the President says: Don't 
worry about debt. It is a time of war.
  I cannot agree with him on that. What happens, in time of war, is we 
believe in sacrifice, not just for those who are facing battle. I went 
back to the Civil War. I remember they chastised my friend Senator 
Lott, and they all hail the party of Lincoln. I have heard that now, 
that chat on the weekend shows--the party of Lincoln. Where is Abraham 
when we need him now? President Lincoln taxed dividends to pay for the 
war. Go back and look at the record. He taxed dividends.
  President Bush, instead of inviting Alan Greenspan, invited Charles 
Schwab. He said: Eliminate the tax on dividends. And we call it a 
stimulus. Come on, who is kidding whom around here? When are we going 
to sober up and understand the American people? If you are in the war, 
we want to sacrifice and we want to at least pay for the war.
  In World War I, we went up to 77 percent of personal income tax for 
the highest tax bracket; World War II, up to 94 percent; the Korean 
war, 91 percent; Vietnam, 77 percent. We are at 38.6 percent right now.
  Instead, in the Afghan, Iraq, and terrorism wars we say: Let's cut 
taxes. We are not going to pay for it.
  When we are running a $6.3 trillion debt and, according to the 
morning paper--you can interpret what Mitch Daniels says--we will be 
running a $500 billion deficit this year, who wants to bet? Tell them 
Hollings is here. September 30 will come around, and we will add it up, 
and I will bet your boots if we get all these things for homeland 
security, for AIDS, for health care, prescription drugs, and everything 
else of that kind, and put in this tax cut, we will have a $500 billion 
deficit. And they say: Don't worry about it.
  Worse, they try to sell the dividend tax cut. It is wrong. You tax 
the income of the corporation, and you tax the individual when he gets 
his dividends.
  I remember my distinguished friend from Texas, Phil Gramm. He stood 
over there when we were increasing taxes under President Clinton in 
1993 and could not get a single Republican vote. And Senator Gramm 
looked at me and said: You are increasing taxes on Social Security; 
they will be hunting you Democrats down like dogs in the street.
  You ought to look at the record. Now we pay taxes in order to get the 
Social Security trust fund, and then when I receive the Social Security 
benefit, I pay taxes--double tax on Social Security. Nobody mentions 
the Social Security tax. They all mention dividends and all the other 
things for the rich. And they are trying to say the economy is 
recovering when the economy is declining. You can't go along with this 
kind of tax cut here. We tried our best to stop it, and we will do our 
best here when we show that you have taxed like this before.
  I have introduced a value-added tax of 1 percent. I would like to 
have 2 percent, but I didn't want to argue about the amount. I want to 
start a value-added tax to pay for the war. It takes the IRS one year 
to really administer and set it into collection. During that year's 
time, it could have no effect whatsoever on the economy. They say by 
the next year we will have recovered. That is what they are telling us. 
So they can't give me that argument that the value added tax will 
weaken economy this year if it is passed.
  But I have a 1-percent VAT for the payment for the war--not for 
increased spending, not for tax cuts or anything else, but a tax to pay 
for the war.
  They say their economic initiative is going to be stimulative. Let me 
get right to the point. You are not going to stimulate anything with 
the Democratic or the Republican initiative. President Bush wants a 
$674 billion tax cut, plus the interest costs of $300 billion, plus 
extending and making permanent the tax cut they passed in 2001. All of 
this adds up to $4 trillion. I am looking at it the way my market 
friends look at it. They say: Heavens above, this fellow is going to 
take $5 trillion out of the economy in the next several years; I am not 
going to invest. And we are going to war, and we are not paying for the 
war. We are looking at $500 billion deficits, or more.

[[Page 2096]]

  I don't know any better way to stultify this economy and make sure it 
doesn't recover. I never heard of such things. This is the worst I have 
ever seen.
  Why do I say it is not going to be a stimulus? If you just run $426 
billion, that is $35 billion a month. That is the deficit for just last 
year. And then October, November, December, January--you are already up 
to $167 billion in deficits. That is $40 billion a month. We are 
spending $40 billion a month, and the President's stimulus plan of $110 
billion is, let's say, $10 billion a month. The Democrats', Senator 
Daschle's stimulus plan, is $143 billion, or $12 billion a month. I 
don't think $10 billion or $12 billion a month more is going to 
stimulate this economy. You know that, and I know that. But it is 
buying the vote and making the mistakes--the Democrats are--even 
calling either one a stimulus.
  There is not going to be any stimulus. It is just throwing away 
fiscal responsibility, running up the debt, and running up the interest 
costs. I have many quotes right here with respect to where we are as a 
result of it.
  Let me show just exactly where we are now. For a stimulus, we are 
going to have one, whether we like it or not. If you listen to the 
President and you listen to us Democrats, we will agree with him on 
homeland security, we will agree with him on defense, we will agree 
with him on health care. It is just a matter of whatever it is. If you 
pay for defense, $20 billion; if you pay for health care, another $40 
billion; if you pay for the first responders, if you pay for port 
security, if you pay for rail security, if you pay for homeland 
security, you add another $20 billion or $30 billion. If we pay the 
States money--and we should--that is another $20 billion or $30 
billion.
  That is another $120 or $130 billion stimulus we are going to be 
putting into the pipeline. We are going to be putting that out this 
year as a stimulus without a tax cut. With the Democrats or the 
Republicans, we are still going to be paying out $40 billion or $50 
billion a month that we cannot account for--we cannot pay for.
  That is stimulus enough. That would send a message, we are not going 
to run $500 billion deficits, because for that amount we could pay for 
the blooming homeland security and the war and prescription drugs and 
AIDS in Africa and all of those things we heard about last night. Fine 
business. Let's go to it. But let's not fool the American people and 
say this is going to stimulate or kick-start things. Everybody has the 
buzz words that pollsters and consultants give them: Kick-start, and 
growth, and stimulate. They just throw out the words, and we have 
thrown the economy into a decline.
  Let me show just how bad off we are. It came to my attention that the 
Maastricht Treaty says: In order to be a member of the European Union, 
the budget deficits have to be held to 3 percent of the GDP, and the 
gross federal debt to GDP ratio has to be held to 60 percent, in order 
to assure avoidance of excessive borrowing of members. That is exactly 
the point. They can see what fiscal responsibility is. They are not 
going to invest.
  You have that fellow who runs around saying deficits don't matter 
because the Europeans will come over here and supplant the market and 
they will buy. No, no, they are not going to buy. When the Europeans 
see this, that you have 3 percent of the GDP and you have to reduce the 
gross federal debt to the GDP ratio to 60 percent--we have computed it 
here. Turn to page 17. We can't put the entire record in here. This is 
the Budget and Economic Outlook for Fiscal Year 2004 to 2013, just 
issued this morning by the Congressional Budget Office. You will find 
on page 17 that the debt, the gross Federal debt, is $6,620 trillion 
for 2003. And the gross domestic product is $10,756 trillion. So the 
debt as a percent of the GDP is 61.5 percent, and that exceeds the 60 
percent requirement.
  We can't even join. These smart rascals around here are criticizing 
the Europeans. We can't even get into the European Union, fiscally, as 
this article says.
  I ask unanimous consent to have this article printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                        TABLE 1-4.--CBO'S PROJECTIONS OF FEDERAL DEBT UNDER ITS ADJUSTED BASELINE
                                                                [In billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Actual
                                    2002      2003      2004      2005      2006      2007      2008      2009      2010      2011      2012      2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
Debt held by the public at the       3,320     3,540     3,766     3,927     4,013     4,045     4,034     3,983     3,894     3,766     3,501     3,062
 beginning of the year..........
                                 =======================================================================================================================
Changes to debt held by the
 public:
    Surplus (-) or deficit......       158       199       145        73        16       -26       -65      -103      -140      -277      -451      -508
    Other means of financing....        63        27        16        13        16        15        14        14        13        12        12        11
                                 -----------------------------------------------------------------------------------------------------------------------
      Total.....................       220       226       161        86        32       -11       -51       -90      -127      -265      -440      -497
                                 =======================================================================================================================
Debt held by the public at the       3,540     3,766     3,927     4,013     4,045     4,034     3,983     3,894     3,766     3,501     3,062     2,565
 end of the year................
                                 =======================================================================================================================
Debt held by government
 accounts:
    Social Security.............     1,329     1,489     1,664     1,858     2,070     2,302     2,552     2,820     3,106     3,409     3,727     4,057
    Other government accounts\1\     1,329     1,364     1,447     1,546     1,660     1,780     1,907     2,038     2,174     2,315     2,463     2,615
                                 -----------------------------------------------------------------------------------------------------------------------
      Total.....................     2,658     2,854     3,112     3,404     3,730     4,082     4,459     4,858     5,280     5,724     6,190     6,671
                                 =======================================================================================================================
Gross federal debt..............     6,198     6,620     7,039     7,417     7,776     8,116     8,442     8,752     9,046     9,225     9,251     9,236
Debt subject to limit\2\........     6,161     6,598     7,017     7,395     7,753     8,094     8,419     8,729     9,023     9,201     9,227     9,212
Memorandum: Debt held by the          34.3      35.0      34.7      33.6      32.2      30.4      28.5      26.5      24.3      21.5      18.0      14.4
 public at the end of the year
 as a percentage of GDP.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Mainly the Civil Service Retirement, Military Retirement, Medicare, Unemployment Insurance, and Airport and Airway Trust Funds.
\2\Differs from gross federal debt primarily because it excludes most debt issued by agencies other than the Treasury. The current debt limit is $6,400
  billion.
Note.--These projections incorporate the assumption that discretionary budget authority totals $751 billion for 2003 and grows with inflation
  thereafter.
 
Source: Congressional Budget Office.


  Mr. HOLLINGS. We would be subject to a $20 billion to $50 billion 
fine right quickly.
  We need to rebuild the economy. They will invest. We will get jobs.
  I ask unanimous consent to have printed in the Record an article in 
this week's Business Week, on page 50.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                   [From Business Week, Feb. 3, 2003]

                        The New Global Job Shift

       (By Pete Engardio, Aaron Bernstein, and Manjeet Kripalani)

       The sense of resignation inside Bank of America (BAC) is 
     clear from the e-mail dispatch. ``The handwriting is on the 
     wall,'' writes a veteran information-technology specialist 
     who says he has been warned not to talk to the press. Three 
     years ago, the Charlotte (N.C.)-based bank needed IT talent 
     so badly it had to outbid rivals. But last fall, his entire 
     15-engineer team was told their jobs ``wouldn't last through 
     September.'' In the past year, BofA has slashed 3,700 of its 
     25,000 tech and back-office jobs. An additional 1,000 will go 
     by March.
       Corporate downsizings, of course, are part of the ebb and 
     flow of business. These layoffs, though, aren't just 
     happening because demand has dried up. Ex-BofA managers and 
     contractors say one-third of those jobs are headed to India, 
     where work that costs $100 an hour in the U.S. gets done for 
     $20. Many former BofA workers are returning to college to 
     learn new software skills. Some are getting real estate 
     licenses. BofA acknowledges it will outsource up to 1,100 
     jobs to Indian

[[Page 2097]]

     companies this year, but it insists not all India-bound jobs 
     are leading to layoffs.
       Cut to India. In dazzling new technology parks rising on 
     the dusty outskirts of the major cities, no one's talking 
     about job losses. Inside Infosys Technologies Ltd.'s (INFY) 
     impeccably landscaped 22-hectare campus in Bangalore, 250 
     engineers develop IT applications for BofA. Elsewhere, 
     Infosys staffers process home loans for Greenpoint Mortgage 
     of Novato, Calif. Near Bangalore's airport, at the offices of 
     Wipro Ltd. (WIT), five radiologists interpret 30 CT scans a 
     day for Massachusetts General Hospital. Not far away, 26-
     year-old engineer Dharin Shah talks excitedly about his 
     $10,000-a-year job designing third-generation mobile-phone 
     chips, as sun pours through a skylight at the Texas 
     Instrument Inc., (TXN) research center. Five years ago, an 
     engineer like Shah would have made a beeline for Silicon 
     Valley. Now, he says, ``the sky is the limit here.''
       About 1,600 km north, on an old flour mill site outside New 
     Delhi, all four floors of Wipro Spectramind Ltd.'s sandstone-
     and-glass building are buzzing at midnight with 2,500 young 
     college-educated men and women. They are processing claims 
     for a major U.S. insurance company and providing help-desk 
     support for a big U.S. Internet service provider--all at a 
     cost up to 60 percent lower than in the U.S. Seven Wipro 
     Spectramind staff with PhDs in molecular biology sift through 
     scientific research for Western pharmaceutical companies. 
     Behind glass-framed doors, Wipro voice coaches drill staff on 
     how to speak American English. U.S. customers like a familiar 
     accent on the other end of the line.
       Cut again to Manila, Shanghai, Budapest, or San Jose, Costa 
     Rica. These cities--and dozens more across the developing 
     world--have become the new back offices for Corporate 
     America, Japan Inc., and Europe GmbH. Never heard of Balazs 
     Zimay? He's a Budapest architect--and just might help design 
     your future dream house. The name SGV & Co., probably means 
     nothing to you. But this Manila firm's accountants may crunch 
     the numbers the next time Ernst & Young International audits 
     your company. Even Bulgaria, Romania, and South Africa, which 
     have a lot of educated people but remain economic backwaters, 
     are tapping the global market for services.
       It's globalization's next wave--and one of the biggest 
     trends reshaping the global economy. The first wave started 
     two decades ago with the exodus of jobs making shoes, cheap 
     electronics, and toys to developing countries. After that, 
     simple service work, like processing credit-card receipts, 
     and mind-numbing digital toil, like writing software code, 
     began fleeing high-cost countries.
       Now, all kinds of knowledge work can be done almost 
     anywhere. ``You will see an explosion of work going 
     overseas,'' says Forrester Research Inc., analyst John C. 
     McCarthy. He goes so far as to predict at least 3.3 million 
     white-collars jobs and $136 billion in wages will shift from 
     the U.S. to low-cost countries by 2015. Europe is joining the 
     trend, too. British banks like HSBC Securities Inc. (HBC) 
     have huge back offices in China and India; French companies 
     are using call centers in Mauritius; and German 
     multinationals from Siemens (SI) to roller-bearings maker 
     INA-Schaeffler are hiring in Russia, the Baltics, and Eastern 
     Europe.
       The driving forces are digitization, the internet, and 
     high-sped data networks that girdle the globe. These days, 
     tasks such as drawing up detailed architectural blueprints, 
     slicing and dicing a company's financial disclosures, or 
     designing a revolutionary microprocessor can easily be 
     performed overseas. That's why Intel Inc. (INTC) and Texas 
     Instruments Inc. are furiously hiring Indian and Chinese 
     engineers, many with graduate degrees, to design chip 
     circuits. Dutch consumer-electronics giant Philips (PHG) has 
     shifted research and development on most televisions, cell 
     phones, and audio products to Shanghai. In a recent 
     PowerPoint presentation, Microsoft Corp. (MSFT) Senior vice-
     President Brian Valentine--the No. 2 exec in the company's 
     Windows unit--urged managers to ``pick something to move 
     offshore today.'' In India, said the briefing, you can get 
     ``quality work at 50% to 60% of the cost. That's two heads 
     for the price of one.''
       Even Wall Street jobs paying $80,000 and up are getting 
     easier to transfer. Brokerages like Lehman Brothers Inc. 
     (LEH) and Bear, Sterns & Co. (BSC), for example, are starting 
     to sue Indian financial analysis for number-crunching work. 
     ``A basic business tenet is that things go to the areas where 
     there is the best cost of production,'' says Ann Livermore, 
     head of services at Hewlett-Packard Co. (HPQ), which has 
     3,300 software engineers in India. ``Now you're going to see 
     the same trends in services that happened in manufacturing.
       The rise of globally integrated knowledge economy is a 
     blessing for developing nations. What is means for the U.S. 
     skilled labor force is less clear. At the least, many whit-
     collar workers may be headed for a tough readjustment. The 
     unprecedented hiring binge in Asia, Eastern Europe, and Latin 
     America comes at a time when companies from Wall Street to 
     Silicon Valley are downsizing at home. In Silicon Valley, 
     employment in the IT sector is down by 30% since early 2001, 
     according to the nonprofit group Joint Venture Silicon 
     Valley.
       Should the West panic? It's too early to tell. Obviously, 
     the bursting of the tech bubble and Wall Street's woes are 
     chiefly behind the layoffs. Also, any impact of offshore 
     hiring is hard to measure, since so far a tiny portion of 
     U.S. white-collar work has jumped overseas. For security and 
     practical reasons, corporations are likely to keep crucial 
     R&D and the bulk of back-office operations close to home. 
     Many jobs can't go anywhere because they require fact-to-face 
     contact with customers. Americans will continue to deliver 
     medical care, negotiate deals, audit local companies, and 
     wage legal battles. Talented, innovative people will adjust 
     as they always have.
       Indeed, a case can be made that the U.S. will see a net 
     gain from this shift--as with previous globalization waves. 
     In the 1990s, Corporate America had to import hundreds of 
     thousands of immigrants to ease engineering shortages. Now, 
     by sending routine service and engineering tasks to nations 
     with a surplus of educated workers, the U.S. labor force and 
     capital can be redeployed to higher-value industries and 
     cutting-edge R&D. ``Silicon Valley doesn't need to have all 
     the tech development in the world,'' says Doug Henton, 
     president of Collaborative Economics in Mountview, Calif. 
     ``We need very good-paying jobs. Any R&D that is routine can 
     probably go.'' Silicon Valley types already talk about the 
     next wave of U.S. innovation coming from the fusion of 
     software, nanotech, and life sciences.
       Globalization should also keep services prices in check, 
     just as it did with clothes, appliances, and home tools when 
     manufacturing went offshore. Companies will be able to keep 
     shaving overhead costs and improving efficiency. ``Our 
     comparative advantage may shift to other fields,'' says City 
     University of New York economist Robert E. Lipsey, a trade 
     specialist. ``And if productivity is high, then the U.S. will 
     maintain a high standard of living.'' By spurring economic 
     development in nations such as India, meanwhile, U.S. 
     companies will have bigger foreign markets for their goods 
     and services.
       For companies adept at managing a global workforce, the 
     benefits can be huge. Sure, entrusting administration and R&D 
     to far-flung foreigners sounds risky. but Corporate America 
     already has become comfortable hiring outside companies to 
     handle everything from product design and tech support to 
     employee benefits. Letting such work cross national 
     boundaries isn't a radical leap. Now, American Express (AXP), 
     Dell Computer (DELL), Eastman Kodak (EK), and other companies 
     can offer round-the-clock customer care while keeping costs 
     in check. What's more, immigrant Asian engineers in the U.S. 
     labs of TI, IBM (IBM), and Intel for decades have played a 
     big, hidden role in American tech breakthroughs. The 
     difference now is that Indian and Chinese engineers are 
     managing R&D teams in their home countries, General Electric 
     Co. (GE), for example, employs some 6,000 scientists and 
     engineers in 10 foreign countries. GE Medical Services 
     integrates magnet, flat-panel, and diagnostic imaging 
     technologies from labs in China, Israel, Hungary, France, and 
     India in everything from its new X-ray devices to $1 million 
     CT scanners. ``The real advantage is that we can tap the 
     world's best talent,'' says GE medical Global Supply Chain 
     Vice-President Dee Miller.
       That's the good side of the coming realignment. There are 
     hazards as well. During previous go-global drives, many 
     companies ended up repatriating manufacturing and design work 
     because they felt they were losing control of core businesses 
     or found them too hard to coordinate. In a recent Gartner 
     Inc. survey of 900 big U.S. companies that outsource IT work 
     offshore, a majority complained of difficulty communicating 
     and meeting deadlines. As a result, predicts Gartner Inc. 
     Research Director Frances Karamouzis, many newcomers will 
     stumble in the first few years as they begin using offshore 
     service workers.
       A thornier question: What happens if all those displaced 
     white-collar workers can't find greener pastures? Sure, tech 
     specialists, payroll administrators, and Wall Street analysts 
     will land new jobs. But will they be able to make the same 
     money as before? It's possible that lower salaries for 
     skilled work will outweight the gains in corporate 
     efficiency. ``If foreign countries specialize in high-skilled 
     areas where we have an advantage, we could be worse off,'' 
     says Harvard University economist Robert Z. Lawrence, a 
     prominent free-trade advocate. ``I still have faith that 
     globalization will make us better off, but it's no more than 
     faith.''
       If the worries prove valid, that could reshape the 
     globalization debate. Until now, the adverse impact of free 
     trade has been confined largely to blue-collar workers. But 
     if more politically powerful middle-class Americans take a 
     hit as white-collar jobs move offshore, opposition to free 
     trade could broaden.
       When it comes to developing nations, however, it's hard to 
     see a downside. Especially for those countries loaded with 
     college grads who speak Western languages, outsourced white-
     collar work will likely contribute to economic development 
     even more than new factories making sneakers or mobile 
     phones.

[[Page 2098]]

     By 2008 in India, IT work and other service exports will 
     generate $57 billion in revenues, employ 4 million people, 
     and account for 7 percent of gross domestic product, predicts 
     a joint study by McKinsey & Co. and Nasscom, an Indian 
     software association.
       What makes this trend so viable is the explosion of college 
     graduates in low-wage nations. In the Philippines, a country 
     of 75 million that churns out 380,000 college grads each 
     year, there's an oversupply of accountants trained in U.S. 
     accounting standards. India already has a staggering 520,000 
     IT engineers, with starting salaries of around $5,000. U.S. 
     schools produce only 35,000 mechanical engineers a year; 
     China graduates twice as many. ``There is a tremendous pool 
     of well-trained people in China,'' says Johan A. van 
     Splunter, Philips' Asia chief executive.
       William H. Gates III, for one, is dipping into that pool. 
     Although Microsoft started later than many rivals, it is 
     moving quickly to catch up. In November, Chairman Gates 
     announced his company will invest $400 million in India over 
     the next three years. That's on top of the $750 million it's 
     spending over three years on R&D and outsourcing in China. At 
     the company's Beijing research lab, one-third of the 180 
     programmers have PhDs from U.S. universities. The group 
     helped develop the ``digital ink'' that makes handwriting 
     show up on Microsoft's new tablet PCs and submitted four 
     scientific papers on computer graphics at last year's 
     prestigious Siggraph conference in San Antonio. Hyderabad, 
     India, meanwhile, is key to Microsoft's push into business 
     software.
       This is no sweatshop work. Just two years out of college, 
     Gaurav Daga, 22, is India project manager for software that 
     lets programs running on Unix-based computers interact 
     smoothly with Windows applications. Daga's $11,000 salary is 
     a princely sum in a nation with a per capita annual income of 
     $500, where a two-bedroom flat goes for $125 a month. 
     Microsoft is adding 10 Indians a month to its 150-engineer 
     center and indirectly employs hundreds more at IT 
     contractors. ``It's definitely a cultural change to use 
     foreign workers,'' says Sivaramakichenane Somasegar, 
     Microsoft's vice-president for Windows engineering. ``But if 
     I can save a dollar, hallelujah.''
       Corporations are letting foreign operations handle internal 
     finances as well. Procter & Gamble Co.'s (PG) 650 Manila 
     employees, most of whom have business and finance degrees, 
     help prepare P&G's tax returns around the world. ``All the 
     processing can be done here, with just final submission done 
     to local tax authorities'' in the U.S. and other countries, 
     says Arun Khanna, P&G's Manila-based Asia accounting 
     director.
       Virtually every sector of the financial industry is 
     undergoing a similar revolution. Processing insurance claims, 
     selling stocks, and analyzing companies can all be done in 
     Asia for one-third to half of the cost in the U.S. or Europe. 
     Wall Street investment banks and brokerages, under mounting 
     pressure to offer independent research to investors, are 
     buying equity analysis, industry reports, and summaries of 
     financial disclosures from outfits such as Smart Analyst Inc. 
     and OfficeTiger that employ financial analysts in India. By 
     mining databases over the Web, offshore staff can scrutinize 
     an individual's credit history, access corporate public 
     financial disclosures, and troll oceans of economic 
     statistics. ``Everybody these days is drawing on the same 
     electronic reservoir of data,'' says Ravi Aron, who teaches 
     management at the Wharton School at the University of 
     Pennsylvania.
       Architectural work is going global, too. Fluor Corp. (FLR) 
     of Aliso Viejo, Calif., employs 1,200 engineers and draftsmen 
     in the Philippines, Poland, and India to turn layouts of 
     giant industrial facilities into detailed specs and 
     blueprints. For a multibillion-dollar petrochemical plant 
     Fluor is designing in Saudi Arabia, a job requiring 50,000 
     separate construction plans, 200 young Filipino engineers 
     earning less than $3,000 a year collaborate in real time with 
     elite U.S. and British engineers making up to $90,000 via Web 
     portals. The principal Filipino engineer on plumbing design, 
     35-year-old Art Aycardo, pulls down $1,100 a month--enough to 
     buy a Mitsubishi Lancer, send his three children to private 
     school, and take his wife on a recent U.S. trip. Fluor CEO 
     Alan Boeckmann makes no apologies. At a recent meeting in 
     Houston, employees asked point-blank why he is sending high-
     paying jobs to Manila. His response: The Manila operation 
     knocks up to 15 percent off Fluor's project prices. ``We have 
     developed this into a core competitive advantage,'' Boeckmann 
     says.
       It's not just a game for big players: San Francisco 
     architect David N. Marlatt farms our work on Southern 
     California homes selling for $300,000 to $1 million. He fires 
     off two-dimensional layouts to architect Zimay's PC in 
     Budapest. Two days later, Marlatt gets back blueprints and 3-
     D computer models that he delivers to the contractor. Zimay 
     charges $18 an hour, vs. the up to $65 Marlatt would pay in 
     America. ``In the U.S., it is hard to find people to do this 
     modeling,'' Zimay says. ``But in Hungary, there are too many 
     architects.''
       So far, white-collar globalization probably hasn't made a 
     measurable dent in U.S. salaries. Still, it would be a 
     mistake to dismiss the trend. Consider America's 10 million-
     strong IT workforce. In 2000, senior software engineers were 
     offered up to $130,000 a year, says Matt Milano, New York 
     sales manager for placement firm Atlantic Partners. The same 
     job now pays up to $100,000. Entry-level computer help-desk 
     staffers would fetch about $55,000 then. Now they get as 
     little as $35,000. ``Several times a day, clients tell me 
     they are sending this work off shore,'' says Milano. 
     Companies that used to pay such IT service providers as IBM, 
     Accenture (ACN), and Electronic Data Service (EDS) $200 a 
     hour now pay as little as $70, says Vinnie Mirchandani, CEO 
     of IT outsourcing consultant Jetstream Group. One reason, 
     besides the tech crash itself, is that Indian providers like 
     Wipro, Inforsys, and Tata charge as little as $20. That's why 
     Accenture and EDS, which had few staff in India three years 
     ago, will have a few thousand each by next year.
       Outsourcing experts say the big job migration has just 
     begun. ``This trend is just starting to crystallize now 
     because every chief information officer's top agenda item is 
     to cut budget,'' says Gartners Karamouzis. Globalization 
     trailblazers, such as GE, AmEx, and Citibank (C), has spent a 
     decade going through the learning curve and now are ramping 
     up fast. More cautious companies--insurers, utilities, and 
     the like--are entering the fray. Karamouzis expects 40 
     percent of America's top 1,000 companies will at least have 
     no overseas pilot project under way within two years. The 
     really big offshore push won't be until 2010 or so, she 
     predicts, when global white-collar sourcing practices are 
     standardized.
       If big layoffs result at home, corporations and Washington 
     may have to brace for a backlash. Already, New Jersey 
     legislators are pushing a bill that would block the state 
     from outsourcing public jobs overseas. At Boeing Co. (BA), an 
     anxious union is trying to ward off more job shifts to the 
     aircraft maker's new 350-person R&D center in Moscow (page 
     42).
       The truth is, the rise of the global knowledge industry is 
     so recent that most economists haven't begun to fathom the 
     implications. For developing nations, the big beneficiaries 
     will be those offering the speediest and cheapest telecom 
     links, investor-friendly policies, and ample college grads. 
     In the West, it's far less clear who will be the big winners 
     and losers. But we'll soon find out.

  Mr. HOLLINGS. ``Is your job next?'' I have been at this 36 going on 
37 years now. We said we were going to create so many jobs when we had 
NAFTA. We have lost exactly 57,100 jobs in textiles alone in the State 
of South Carolina since NAFTA--57,100.
  We have lost 2 million jobs since President Bush took office. He 
said: My economic plan last year is encapsulated in one word--jobs. So 
he got fast track. Everybody, as this article shows, headed to China. 
Not just the smokestack jobs, but the service jobs. Not just the 
service jobs, but the high-tech jobs.
  What we need to do, like President Nixon, is take those States where 
we have a deficit in the balance of trade and put in a 10-percent 
import surcharge. I was here when we did it. We went around with 
Senator Mansfield to explain it to all the heads of state--nine 
countries in Europe--that is what we ought to do: We ought to hold up 
on this Eximbank financing the building of your plants. Because if you 
did get the economy going, it is not going in America, instead it is 
creating jobs in downtown Shanghai.
  Right to the point, we ought to enforce 301. We ought to do away with 
that Bermuda thing. I am talking fast because my time has reached the 
endpoint here. But right to the point here, we have to start rebuilding 
a competitive trade policy, on the one hand, and get ahold of ourselves 
like the Governors and the mayors, and start paying the bill and cut 
out this nonsense about tax cuts stimulating.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Smith). Without objection, it is so 
ordered.

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