[Congressional Record (Bound Edition), Volume 149 (2003), Part 5]
[House]
[Pages 6691-6696]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1900
                  FINDING SOLUTIONS FOR REDUCING DEBT

  The SPEAKER pro tempore (Mr. Bonner). Under the Speaker's announced 
policy of January 7, 2003, the gentleman from Michigan (Mr. Smith) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SMITH of Michigan. Mr. Speaker, tonight I would like to follow up 
the previous Special Order by starting out with some comments on the 
budget, on spending, on the tremendous deficit that we are leaving to 
our kids. Then also, I want to, on this eve of the war, finish up with 
some concerns that I have with such countries as France and Germany and 
Russia, I think putting our kids at a little greater risk. But first 
let me react to some of the comments that we have been listening to, 
that we need to increase spending on some of these important items.
  Let me start with the tax cut. When the gentleman from Maryland (Mr. 
Bartlett) and I first came to this Congress in 1993, one of the first 
events was a Democratically controlled House and Senate; and with a new 
Democrat President, we increased taxes more than taxes have ever been 
increased in the history of this country. The tax cuts that are being 
suggested now do not commence to negate that huge tax increase that we 
had in 1993. But let me talk about trying to attract more voters by 
suggesting that Congress should spend more money.
  For a moment, look at what has happened over the last 10 years of 
spending history. This is how much we have been increasing spending. As 
my colleagues can see, fairly level, and it started to go up more and 
more in 1995, 1996, and 1997, and started taking off in 1998. 
Discretionary spending of the United States has increased an average of 
6.3 percent each year since 1996 and 7.7 percent each year since budget 
balance was reached in 1998, showing a tremendous increase in the 
growth of government. And one can just project, if we continue to spend 
two and three and sometimes four times the rate of inflation, then 
government takes over; and instead of empowering people in the United 
States, instead of empowering businesses to encourage them to expand 
and develop and offer better and more jobs, government has been at the 
feeding trough to use more of those dollars by increasing taxes across 
the country.
  How do we deal with a situation where we have made our taxes so 
progressive that the lower-paying 50 percent of income tax payers in 
this country only pay 1 percent of the total income tax revenues. So we 
can see, it is easy to suggest that any tax cut is a tax cut for the 
rich, since the upper 50 percent pay 99 percent. In fact, the upper 10 
percent pay almost 84 percent of the total income taxes. So we have put 
more and more taxes on higher incomes to discourage that kind of 
effort, and we have put more and more taxes on business. Really, 
business taxes are a tax that that business, in order to survive, has 
got to pass on to consumers in the fashion of increased prices for 
their particular product. So the increased price we pay for any product 
we buy, part of that is really a hidden tax, because you pay it to 
business to pay their tax, and they have to charge a price that is 
going to allow them to survive.
  Mr. Speaker, the gentleman from Maryland (Mr. Bartlett) and I have 
been trying to convince Congress on both sides ever since we have been 
here of the unfairness of the increased spending that has resulted in 
increased borrowing that is going to end up leaving our kids a 
mortgage. I am a farmer. The gentleman from Maryland (Mr. Bartlett) is 
a farmer, plus a scientist; and in the farming community, you try to 
pay off some of that mortgage so that your kids will have a better 
chance. Well, right now, we are sort of pretending that our problems 
today are so great that somehow it justifies going into the huge debt 
that we are going to leave our kids and our grandkids.
  Mr. Speaker, I yield to the gentleman from Maryland (Mr. Bartlett).
  Mr. BARTLETT of Maryland. Mr. Speaker, for the next few moments I 
would like to continue to direct attention to the spending curve that 
the gentleman from Michigan (Mr. Smith) was just talking about. If we 
look at that curve, we will see that it goes up ever and ever steeper. 
Now, the gentleman from Michigan (Mr. Smith) talked about a pretty 
steady 7.5 percent increase.
  Now, one would think with a steady increase that we ought to have a 
curve that is going up at the same rate, but it does not do that. This 
is a phenomenon called the ``exponential curve.'' Every time we have an 
interest rate like this or a growth rate like that, the curve will go 
up ever steeper and steeper. Now, it is obvious when we look at that 
curve, it cannot continue because pretty soon it will go right through 
the ceiling. So it is obvious that sooner or later, and I hope sooner 
for the sake of our children and our grandchildren, that we have to 
bring our spending into line so that this curve does not continue to 
keep going up and up and up and soak up more and more of our gross 
domestic product.
  Now, I would like to for a few moments turn our attention to another 
curve, another set of curves, and these curves are just some detail-
building on

[[Page 6692]]

the curve that the gentleman showed us. What we have here are three 
curves. One of them is the gross Federal debt. Now, that is the total 
amount of money which the Federal Government owes, and we will note a 
line here in the middle, and that is where we are now. We will notice 
that that goes through this debt line at about $6.4 trillion. That is 
the amount of money we owe.
  Now, as a matter of fact, we owe more than that now, but that is the 
amount of money that we owed on the 20th of last month. This debt keeps 
growing and growing; and right now the Treasury Department is having to 
move monies around so that they can pay their obligations, because we 
have already exceeded our debt limit ceiling. So we need to pass a 
budget resolution soon, because buried in that is a mechanism which 
will automatically increase the debt limit ceiling to whatever monies 
the budget would have us spend for the next year.
  We will notice that all of the expenditures beyond our current date 
are extrapolations. They are just guesses of what we are going to be 
spending in the future. But everything to the left of that are the 
monies that we have spent, and so those are real numbers.
  Now, this gross Federal debt, which more often is referred to as the 
national debt, that debt is made up of two subparts. One of those is 
called the debt held by the public, and that is sometimes referred to 
simply as the public debt or sometimes it is the Wall Street debt. Now, 
that is the debt that the Federal Government owes because it has bought 
securities and bonds; and because it has sold these securities and 
bonds and so forth, it has gotten money from those. But that is not the 
only debt that we owe, because we owe another debt which we see started 
out fairly low and has now been increasing more and more; and this 
also, as we see, is an exponential kind of a curve, and we will 
understand why in a moment. This is a debt held by government accounts, 
it says here. A simpler way to understand that debt is that that is the 
trust fund surplus debt. That is the debt we owe to trust funds which 
have accumulated surpluses.
  Now, how do we have trust funds that are accumulating surpluses? That 
is because we are taking monies from the paychecks of people and 
putting it in trust for them, presumably putting it in trust for them, 
so that the money will be there later on when they need it and they are 
retired, like Social Security, like Medicare, like civil service 
retirement, like railroad retirement. There are about 50-some of these 
trust funds, and this year we will have about $191 billion surpluses in 
these trust funds.
  Now, more than three-fourths of all of that surplus is in the Social 
Security trust fund, and it is good there is such a big surplus there, 
because during the retirement of the baby boomers, we are going to run 
enormous deficits in Social Security if we do not do something to fix 
that problem. But that is a discussion for another evening.
  Mr. SMITH of Michigan. Mr. Speaker, on the definition of surplus, we 
say the trust funds have surplus; but actually, what they have is IOUs, 
so when programs like Medicare become insolvent or have less money 
coming in than enough to pay promised benefits in 2012, or when the 
money coming in from Social Security taxes is less than what is 
adequate to pay promised benefits for Social Security in 2017, all we 
have when we go to that box is a bunch of IOUs.
  So what is government going to do to pay back those IOUs? They are 
going to increase taxes again, or they are going to cut benefits, or 
they are going to probably, most likely, increase borrowing again. So 
they go again and bid up the available money and borrow that money to 
pay back to make sure we pay Social Security benefits. But even then, 
by the mid-2030s, the trust funds are going to be gone and the 
insolvency of many of these programs is going to be devastating in 
terms of the burden that it puts on our kids.
  Mr. BARTLETT of Maryland. Mr. Speaker, that is exactly right. And 
that is why these are shown as debt. Because although there are 
surpluses in the trust funds, as the gentleman from Michigan (Mr. 
Smith) points out, there are no monies in the trust funds. Because we 
have a computer in Washington which, when we take some money from your 
paycheck, presumably put in trust for you, it only momentarily goes in 
trust for you, and then we almost immediately take that money out; and 
in its place we put a nonnegotiable bond in there. It is a 
nonnegotiable security; that is, we cannot negotiate it. It is only a 
security that can be redeemed by the Federal Government. When the time 
comes to redeem that, as the gentleman from Michigan points out, our 
children are then going to have to either increase taxes to get the 
money or borrow the money and pass that debt on to their children. I 
hope they do not do that, because I am ashamed that we are passing this 
debt on to our children.
  As we can see, in a few years, in a few years, the debt owed to these 
trust funds is going to exceed the debt that we owe to what we 
generally call the Wall Street debt or the public debt.
  Now, for about 4 or 5 years, Washington is telling us that we had 
surpluses and we were balancing the budget. But I want my colleagues to 
take a look at this gross Federal debt, or the national debt, and 
notice there never was a moment in time when that debt went down. It 
kind of flattened out here, we notice; and now it has really picked up 
the last couple of years. But there never was a time when it went down.
  Now, the budget that was balanced is what Washington calls the 
``unified budget.'' That is all the money that comes into Washington 
and all of the money that Washington checks out. But about 10 percent 
of the money that comes into Washington is money that they have taken 
from our citizens, presumably to put in trust for our citizens, but 
instead of putting it in trust for our citizens, we print IOUs and put 
that in what should be the trust fund, and then we spend that money. So 
that now it accumulates a debt here.
  Now, for every dollar that we took out of the trust fund debt to pay 
down the public debt, and that is when they say we had a surplus and 
the debt was going down, that debt did go down. We can see it here.
  Mr. SMITH of Michigan. But maybe an analogy, sort of like using one 
credit card to pay off another credit card. So we borrow money from the 
trust funds to pay down the public debt, and then a lot of politicians 
in Washington brag that we are paying down the public debt of the 
United States, and with muscle-flexing and suggesting that we are going 
to put the Social Security money in a lockbox, and that lockbox was 
again nothing but IOUs where the government took the money and used it 
for a couple of years to pay down the debt or the Wall Street debt or 
the debt held by the public. That kind of hoodwinking I think has 
brought about a lot of suspicion of the American people with their 
Congress and with the White House and with Washington.
  Again, if we look at the tremendous growth, how fast we have 
increased spending of the Federal Government, if we simply went back to 
where we were 7 years ago, we would have a huge surplus on both the 
Social Security as well as the extra money coming in from taxes.
  So it is a situation I think where we have to ask ourselves the 
question, Do we want to reduce the debt that we are leaving to our 
kids? Do we want to do that by increasing taxes? And that is what the 
Democrat substitute proposal for the budget does; they increase taxes.

                              {time}  1915

  They say, we will go along with the tax breaks for the lower-income; 
which, as I mentioned before, does not represent very much of the tax 
revenue coming into the government. But they say, we are not going to 
go along with the legislation that we passed 2 years ago that gives tax 
breaks across the board. In effect, it encourages savings, encourages 
investment, encourages businesses to expand.
  So we have to end up making that decision: Are we going to borrow 
money to pay our way, or are we going to increase taxes to pay our way? 
I suggest

[[Page 6693]]

that there are a lot of expenditures of government, and, in fact, this 
budget, the budget that the Committee on the Budget turned out, says, 
let us look for waste and fraud and abuse, and figure that we are going 
to put the responsibility on the different departments of government to 
seek out that waste and fraud and abuse.
  Already we have identified more than enough to accommodate that 1 
percent; to say, look, across the board we are at least going to have a 
1 percent reduction in this time of war, so we can adequately make sure 
that we can adequately fund the military budget, the homeland defense 
budget. Those have been increased at the President's request, 
suggestion, in both of those areas. Where we have cut back is in other 
areas.
  If we are in a time of war, is it not reasonable to start 
prioritizing our spending, especially since that kind of traditional 
increased spending as if there is no problem, do more for this group, 
more for that group, do more for the old, do more for the young, have 
midnight basketball games so kids do not get in trouble, that is the 
kind of spending rampage that we have been on.
  What I am suggesting and what the gentleman from Maryland is 
suggesting is that that kind of spending that ends up having a deficit, 
let me define my definition for deficit, deficit is the annual 
overspending. Debt is when you take that annual overspending and add it 
up to the debt that we have for our kids and our grandkids.
  Mr. Speaker, I yield to the gentleman from Maryland (Mr. Bartlett).
  Mr. BARTLETT of Maryland. The gentleman mentioned lockboxes, Mr. 
Speaker. It might be wise to spend a few moments talking about 
lockboxes. We have not heard lockboxes mentioned in the last several 
months. That is because we now have no surpluses.
  In terms of the national debt, we never had any surpluses. We had 
surpluses in terms of the unified budget; but when the unified budget 
was balanced, the national debt was still going up almost $200 billion 
a year. That is because it was about $200 billion a year of trust fund 
monies that we were taking and spending.
  What were the lockboxes? They were talked about a whole lot and were 
very popular. What were they, and what did they do?
  The first lockbox was the Social Security lockbox. What that 
legislation said was that if there is a surplus in Social Security, and 
of course there is a surplus, and will be for 10 or 12 years in Social 
Security, if there is a surplus in Social Security, we cannot use that 
for ordinary spending; we have to use it to pay down the debt. The only 
debt we could pay down with that is this public debt, so what they did 
was to take the monies out of the trust fund and to pay down the public 
debt, but for every $1 of public debt they paid down, they incurred 
another $1 of trust fund debt. Notice what is happening to these 
curves. As this one went down, that is the public debt we are paying 
down, the trust fund debt went up, so the net effect on the debt was 
zero.
  There was another smaller trust fund that was included in the 
lockbox, and that is the Medicare Trust Fund. We did the same thing 
with that. But there were 40 or 50 other trust funds that we did not 
have a lockbox for. They did not amount to a whole lot, but we happily 
took them and spent them. When we did that, of course, even though we 
were advertising a balanced budget on the unified budget, the total 
debt that we owed, the national debt, here called the gross Federal 
debt, kept going up and up. Obviously, we should not continue to do 
this forever.
  By the way, the gentleman from Michigan (Mr. Smith) mentioned 
spending. The question is always asked, if we spend more money for this 
group or more money on that program, will it help more people? Of 
course, the answer is always, yes. If we spend more money, it will help 
more people. But I would submit, Mr. Speaker, that that is the wrong 
question. The question that needs to be asked is, will spending more 
money on that program help more people than if we left that money in 
the private sector?
  Money left in the private sector also helps people because it creates 
capital for creating new businesses and new jobs. In those, government 
revenues will grow. The question we really need to be asking, whenever 
there is a suggestion that we increase a current program, is will 
increasing that program do people more good than saving that money and 
leaving it in the private sector, where it will create jobs for people 
who will then have an increased standard of living and who will pay 
more income tax, and Federal revenues will go up, and our economy will 
grow?
  But we never in this Chamber ask the right question. The question we 
always ask is, will more money help more people? Of course it will.
  Mr. SMITH of Michigan. Mr. Speaker, when we say leave it in the 
private sector, we say leave it in the pockets of the individuals that 
earned it. Do not have the kind of taxes on businesses that put our 
businesses at a competitive disadvantage to businesses that they are 
competing with in other countries.
  That is what we do. Right now we are charging our businesses about 18 
percent more tax than the businesses in the other G-7 countries, in the 
other industrialized countries. So when we talk about this, the tax 
changes that the President is suggesting that are incorporated in this 
budget, what can we do to strengthen the economy? What can we do to 
encourage our businesses to invest and expand and have more and better 
jobs in this country?
  The other tax cuts, some of the other tax cuts, potential tax cuts, 
maybe should not be considered now; but let us at least look at the 
kind of tax incentives that can encourage savings and investment and 
business expansion.
  Mr. BARTLETT of Maryland. The gentleman mentioned business taxes, and 
the fact that businesses really pass that tax on. I would just like to 
concentrate on that for a moment.
  In a very real sense, we cannot tax a business, because that simply 
becomes part of the cost of doing business. If the business is going to 
remain in business, if that company is going to remain in business, 
they have to pass that tax on or they cannot remain in business.
  I would like to make the argument, which I think is pretty hard to 
refute, that business taxes are probably the most regressive tax we 
have. I know my liberal friends are very fond of business tax, and they 
would like to increase it. I am not sure they have thought through what 
happens when we increase business taxes.
  Whenever we tax a business, it has to add the cost of that to their 
goods and services. Now, there is no deduction for that and no 
exemption from it. So the poorest of the poor, when they go to buy the 
services or the products of a business, have to pay more for that 
service or product because we tax the business.
  There is another way in which business taxes are very regressive and 
hurt people, particularly poor people. Another thing that happens when 
we tax a business is that we have increased their cost of doing 
business; so now that makes them less competitive with firms in other 
countries, and they may, in fact, not be able to continue doing 
business here, and those jobs may end up somewhere else in the world, 
more and more frequently on the Pacific Rim.
  There are some companies today, I say to the gentleman from Maryland 
(Mr. Smith), that are doing something that we call inversions. A 
company, when they look at the regulations that govern them here, when 
they look at the taxes here, they say, we just cannot stay in business 
in this climate, so what we are going to do is move our headquarters 
overseas to some island offshore or something like that. We are going 
to continue our major operations here, but for tax and regulatory 
purposes, we are going to move our headquarters overseas somewhere.
  The question we are asking ourselves is, how can we punish those 
people? I think that is exactly the wrong question. The question we 
ought to be asking is, why are they leaving this country? What is there 
about our regulatory climate, what is there about our

[[Page 6694]]

tax structure that is forcing these businesses out of this country? 
What do we need to do so that we not only keep these businesses in this 
country, but we attract other businesses to this country?
  Do Members not think that that is the question we really ought to be 
asking here?
  Mr. SMITH of Michigan. Mr. Speaker, a survey was done of the 
businesses that inverted or moved to another country to pay their lower 
tax rate, but kept their jobs and their operations in this country.
  A survey was taken, and for over half of those companies it was a 
question of going out of business or reducing their expenses and taxes, 
one of the expenses, reducing that expense by roughly 17 percent that 
we overcharge compared to other countries, by moving their business 
overseas.
  So absolutely, rather than the suggestion in the Democratic budget 
that says let us punish those businesses that move their headquarters 
and their taxing location outside of this country by saying that they 
cannot move or else they lose a lot of the benefits, and we are not 
going to buy from them for military use, and we are going to punish 
them anyway in some form of additional taxes to discourage their moving 
out of this country, absolutely, I say to the gentleman from Maryland, 
the right decision is that we cannot put our businesses at a 
competitive disadvantage because of our gluttony to somehow raise more 
money through what I call a hidden tax, a very regressive tax like the 
gentleman suggests; because it says that the lower-income person that 
has to buy these goods has to pay a tax on this, they have to pay the 
extra price on the goods to accommodate the high taxes that we have 
imposed on business.
  It is not so, what is the good word, identifiable because it is not 
so obvious that people are paying another tax to government when they 
buy this product. It is sort of a hidden tax that has been politically 
an advantage, some people felt; but in the long run it discourages 
business expansion, and it discourages the kind of economy and the kind 
of strongest economy in the world that we have developed in our first 
226 years.
  So absolutely, it is the wrong way to go. What we should be doing is 
making our taxes competitive with the taxes in other States, and part 
of the way to do that is to hold the line on spending.
  When the complaint is of cutting spending by 1 percent, the previous 
special order suggested that Republicans are suggesting a 1 percent 
cut, no cut. What it is is a slowdown in the increase in spending. 
Where I come from down on the farm, a cut is when there is less money 
spent one year than the previous year.
  Mr. BARTLETT of Maryland. Mr. Speaker, I say to the gentleman from 
Maryland (Mr. Smith), there is a good analogy of this that helps us 
understand what these Washington cuts are that are really not cuts. We 
have big cuts, and we are spending more money next year than we did 
last year in spite of a cut.
  It is like our son comes to us, and we are giving him a $5 allowance, 
and he comes and says, I would like a $10 allowance. But we say, gee, 
$10 is a little much. Suppose we give you a $7 allowance? So now the 
son goes and tells his friend, I just had my allowance cut by $3. 
Obviously the allowance went from $5 up to $7, it went up $2; but 
relative to his anticipation, his hope that it might be $10, he now has 
a cut.
  Most of Washington's cuts are those kinds of cuts. They are simply a 
cut in the increase in the rate of spending, increased rate of 
spending; they are not a cut, or are almost never. Just look at these 
curves. Almost never do we spend less money this year than we spent 
last year. So be careful that people define very carefully what they 
mean by a cut in Washington, because most of the time it is, in fact, 
not a cut; it is simply not as big a rate of increase as they would 
like to have seen.
  All of the cuts we hear my friends on the other side of the aisle 
talking about in our budget are that kind of cut. As far as I know, 
essentially nothing is being cut in the budget. We hope to cut the rate 
of increase of some of these programs, but as far as I know, 
essentially nothing is being cut.
  Mr. SMITH of Michigan. Mr. Speaker, let us discuss just a little what 
the imposition that this increased debt that we are leaving our future 
generations has on the potential of those generations to have a strong 
economy or strong incomes that they are going to be able to keep and 
raise their families with.
  Right now, servicing the debt, and $6.4 trillion is our current debt, 
servicing that debt costs approximately $300 billion a year; but 
interest rates are at record lows right now. So with interest rates, 
with the government able to borrow some of their money for about 2.7 
percent, what if that interest rate goes up? What about when we have 
economic recovery and there is a greater demand for money?
  That interest rate, the interest rate in the early 1980s, was as high 
as 17 percent; so what if that $300 billion a year paying interest were 
to quadruple because of higher interest rates in the future? It would 
devastate those people that are trying to service that huge debt in the 
next generation, or years from now.

                              {time}  1930

  Mr. SMITH of Michigan. Also, sometime, someplace, somehow future 
Congresses are going to start thinking that we have to operate more 
like a family, more like a business, that someplace down the roads we 
have to start paying this debt down. Nobody is talking about paying the 
debt down. All they are talking about is, well, maybe the debt right 
now is manageable and let us put the war on terrorism or whatever 
happens in Iraq aside for a moment because we are funding that. And I 
think it is reasonable to borrow more money to fund that effort to make 
sure our military are well equipped to the best possible degree because 
we certainly are going to support them. And I think everybody is going 
to do that. But for the other spending, let us not do business as 
usual. Let us start looking at the budget. Let us start prioritizing. 
Let us start slowing down the growth of a lot of government and let us 
start paying attention to a lot of fraud and abuse.
  In fact, just in Medicare alone, GAO estimates that in 1 year there 
is probably fraud that amounts to between $17 and $19 billion. And when 
you are spending somebody else's money, it is easy to waste some of 
that money. So there needs to be the kind of pressure that this body 
can put on the different bureaucracies to make them look very carefully 
at how they are spending that money and reduce some of that wasteful 
spending.
  Mr. BARTLETT of Maryland. Mr. Speaker, the gentleman talked about 
hidden taxes. I would like to talk about the biggest hidden tax of all 
that most Americans are completely oblivious to.
  Now, if this year is like last year, May 10 will be a very special 
day because that will be Tax Freedom Day. That will be the day that you 
have finished working so that you can pay all of our Federal, State and 
local taxes. Now that is quite some weeks for now so you are still 
working to pay Federal, State and local taxes and will until May 10 of 
this year, if this year is like last year.
  But on May 11 you are not going to be able to work for your family to 
buy that car or pay something on that tuition bill or to make a 
mortgage payments on your home. Because for the next 7 weeks, right at 
7 weeks, until July 6 every American is going to have to work to pay 
the cruelest tax of all. It is a hidden tax which is a very regressive 
tax, and by the way it is a favorite tax of my liberal friends. But it 
is the most regressive tax we have because the poorest of the poor have 
to pay that tax. They get no exemption from the tax. They can get no 
deductions from it. And what is this tax, this big hidden tax that 
consumes 7 weeks of the working time of every American? It is unfunded 
Federal mandates.
  Now, that is a mouthful, but let us point out what that is. It is a 
law which we passed in this Congress and, boy, are we fond of doing 
this, a law which we pass in this Congress which causes a State 
government or a county government or a city government or a

[[Page 6695]]

business or your family to spend money that we do not provide. In other 
words, it is a mandate; but we do not provide any money for the mandate 
so it is an unfunded Federal mandate. And that consumes the working 
time of every American for just about 7 weeks out of the year. So you 
spend about 52 percent of your time working to support government.
  If you are in the average community, go out on the street and walk 
around and look at every fourth person you meet. They work for 
government at some level.
  Now, I would submit that the average American thinks that is just too 
much government. And if we could resurrect our Founding Fathers and 
have them see where we are, they would be appalled at what we have done 
to the dream that they had for this country, where they envisioned a 
very limited Federal Government, where essentially all of the rights 
and all of the responsibilities stayed with the citizens in the private 
sector. We have come an awful long way from that dream, have we not?
  Mr. SMITH of Michigan. Mr. Speaker, let me give you an example of a 
young married couple that have two kids in my congressional district in 
Michigan. And they were working. They had one job. The husband decided 
to provide more money for the family. He would go and take at least a 
half shift for a second job. And so he was upset when he learned that 
not only does he have to pay more taxes, but under our Tax Code, he was 
shoved for that additional earning into a higher tax bracket. So we 
said, look, if you are going to go out and get a second job and earn 
more money, not only do you have to pay the taxes, the increased taxes 
because of increased earnings, but we are going to tax you more because 
you went out and worked harder to do that second job to have more 
income.
  So we have a Tax Code that in many ways discourages what made this 
country great. And, of course, our Founding Fathers, I agree with the 
gentleman, would be very upset because we have a Constitution and a 
Bill of Rights that in effect says that those people that use that 
learning, that try, that work hard, that save and invest end up better 
off than those that do not.
  And what we have been slipping into for the last 30 years is a more 
socialistic system where we say if you go out and work harder and save 
and invest and try and earn more money, we are going to really hit you 
with high taxes because after all, we need to give, we need to give 
some of this money to people that need it more, that maybe are unlucky, 
that maybe did not save and invest. But our system has worked very well 
not because we are stronger or smarter. It is because we have had the 
incentive that those that really make the effort and try and invest and 
save and learn and use that education end off better than those that do 
not.
  And so to change that around and say, look, if you are going to be 
successful, we are going to punish you more, is not what is going to 
keep us the strongest economy in the world.
  Mr. BARTLETT of Maryland. Mr. Speaker, I would like to come back for 
a moment to look a little bit more at these trust fund surpluses and 
the debt that we owe to this trust fund which is big and going to get 
bigger and bigger. One observation is that our law requires that we 
accumulate this. I say that because the only thing we can do with these 
surpluses by law is to invest them in nonnegotiable U.S. securities.
  I cannot imagine money laying around Washington that we do not spend. 
And so if it is invested in nonnegotiable U.S. securities, we are going 
to spend it.
  Now, the fact that we took monies from these trust funds and paid 
down for a little while some of the publicly held debt, that did a very 
nice thing for us today. What it did was to reduce our demand for money 
in the marketplace, and that competition dropped interest rates 
probably by about 2 percent. So the home you are buying costs you less 
per month. The car you are buying costs you less per month. The tuition 
payments you are making for the debt for your children or your debt if 
you went to school and you are now paying it off that cost you have is 
less.
  But the flip side of that is that what we are accumulating here is 
the largest intergenerational debt transfer in the history of the 
world. And although we are living better today because we are taking 
these trust fund surpluses and spending them and, therefore, we are not 
borrowing as much in the marketplace, our kids and our grandkids are 
really going to have to pay for this. Because when it comes their time 
to run this government, we cannot run it on current revenues. So what 
we are doing is borrowing from their generation. When it comes their 
time to run the government, not only are they going to have to run the 
government on current revenues, but they are going to have to pay back 
all of the money that we borrowed from their generation.
  Now, when I first ran for Congress 11 years ago, I promised I was 
going to conduct myself so that my kids and my grandkids would not come 
and spit on my grave because of what I had done to their country. I say 
to the gentleman, I am trying to do that; but I am not getting as much 
help here as I hoped I would get when I came here 11 years ago.
  Mr. SMITH of Michigan. Because, Mr. Speaker, it is tempting for 
politicians to come up with more programs, to have more pork barrel 
projects because the news media puts them on the front page, the 
television covers them cutting the ribbon for the new jogging trail. So 
what has happened is you increase the probability that you are going to 
get reelected if you come up with new programs to help someone with 
their problems. And once you start spending, if you spend that money 
for a certain project or a certain arena for a couple of years, it 
almost becomes an entitlement because they develop the interest and 
they hire a lobbyist that starts saying, boy, we are really going to 
scold you if you decide not to continue our funding.
  Mr. Speaker, I would like to thank the gentleman from Maryland (Mr. 
Bartlett) for joining me tonight in this Special Order. And I would 
like to begin with some of my particular concerns on the war on Iraq 
and, of course, the 48 hours are up now; and that means in the next 
several days I presume there is going to be a more military aggressive 
insistence that Saddam Hussein gives up those weapons of mass 
destruction.
  Let me start out by saying that Bonnie, my wife, and I will be 
remembering our troops every night in our prayers and I hope, Mr. 
Speaker, that everybody in America does the same. These are the best 
soldiers in the world. They are courageous defenders of our freedom and 
worthy representatives of the United States of America. I think it has 
been regrettable that some countries that have traditionally been U.S. 
allies have not been able to join our coalition to rid Saddam Hussein 
of devastating weapons.
  I am told that I cannot swear on the floor of the House, but I am as 
mad as Hades about France's actions. France, which the U.S. liberated 
in World War II, has gone as far as to use its veto to block any U.N. 
approval of any resolution to support the coalition that would have 
insisted on the disarmament of Iraq. I think this is unfortunate 
because they have resulted in putting our young men and women soldiers 
at risk. We should not be under any illusion that France is acting on 
its, at least in part, narrow self-interest. The French want a 
prominent role on the world stage, and they seem to delight in cutting 
down the United States. But even more importantly, they want to defend 
some of their profitable extensive contracts and trade relationships 
that they have bargained with Saddam Hussein and Iraq.
  Let me list a few of those interests. According to the CIA World Fact 
Book, France produces over 22.5 percent of Iraq's imports. In 2001 
France became Iraq's largest European trading partner. Roughly 60 
French companies do an estimated $1.5 billion in trade with Baghdad 
annually under the U.N. Oil for Food Program. France's largest oil 
company, Total Fina Elf, has negotiated a deal to develop one of the 
world's major oil fields, the Majnoon field, in western Iraq. The 
Majnoon

[[Page 6696]]

field purportedly contains up to 30 billion barrels of oil.
  Total Fina Elf also negotiated a deal for future oil explorations in 
Iraq's Nahr Umar field. Both the Majnoon and Nahr Umar fields are 
estimated to contain as much as 25 percent of Iraq's oil reserves. 
France's Alcatel Company, a major telecom firm, is negotiating a $76 
million contract to rehabilitate Iraq's telephone system.
  From 1981 to the year 2001, according to the Stockholm International 
Peace Research Institute, France was responsible for over 13 percent of 
Iraq's arms imports. Selling military equipment and arms to Iraq. And 
this is not a new position for France. It has consistently blocked 
attempts to bring Iraq into account since the Gulf War in 1991.

                              {time}  1945

  In 1995, when there was an effort in the U.N. Security Council 
finding Saddam in material breach, France opposed it. In 1996, when 
there was an effort to pass a resolution condemning Saddam Hussein for 
his slaughter of the Kurds, France opposed it. In 1997, when there was 
an effort to block travel by Saddam's intelligence and military 
officials, France opposed it. In 1998, France announced that Iraq was 
free of all weapons of mass destruction, something that nobody believed 
and France does not believe today. In 1999, of course, they opposed the 
creation of UNMOVIC, the existing inspection regime that they now want 
to say is where we should go and just let them keep going and keep 
looking. Of course last month, they vowed to veto any resolution 
authorizing force to disarm Iraq of weapons of mass destruction.
  Let me say again. France's opposition to the U.N. resolution sought 
by the President and Prime Minister Tony Blair appears to have been 
based somewhat on business considerations. Saddam Hussein, no matter 
what he has done to his own people, no matter what threat he poses to 
his neighbors or the world, has been someone France has been able to do 
business with, and France has certainly not been the only country. But 
one of our dignitaries suggested that France has sort of acted over the 
last dozen of so years like the legal counsel for Saddam Hussein. So I 
am concerned about their motivation.
  Here again, there are other countries. We can see that both Germany 
and Russia have extensive dealings with Iraq that call their motives 
into question, as far as I am concerned. In Germany's case, direct 
trade between Germany and Iraq amounts to about $350 million every 
year, and another $1 billion is reportedly sold through third parties.
  It has recently been reported that Saddam Hussein has ordered Iraqi 
domestic businesses to show preference to German companies as a reward 
for Germany's firm positive stand in rejecting the launching of a 
military attack against Iraq. It was also reported that over 101 German 
companies were present at the Baghdad annual exposition. During the 
35th annual Baghdad International Fair just 4 months ago, a German 
company signed a contract for $80 million for 5,000 cars and spare 
parts. In 2002, DaimlerChrysler was awarded over $13 million in 
contracts for German trucks and also spare parts.
  German officials are investigating a German corporation accused of 
illegally channeling weapons to Iraq via Jordan. The equipment in 
question is used for boring the barrels of large cannons and is 
allegedly intended for Saddam Hussein's Al Fao supercannon project.
  Russia, too, has extensive dealings with Iraq that it wants to 
protect. For example, according to the CIA World Factbook, Russia 
controls roughly 5.8 percent of Iraq's annual imports. Under the U.N. 
oil for food program, Russia's total trade with Iraq was somewhere 
between $530 million and $1 billion for the 6 months ending in December 
2001. According to the Russian Ambassador to Iraq, Vladimir Titorenko, 
new contracts worth another $200 million under the U.N. oil for food 
program are to be signed over in the next 3 months. Soviet-era debt, 
someplace between $7- and $9-billion was generated by arms sales to 
Iraq during the 1980 to 1988 Iran-Iraq war. Our soldiers will have to 
face many of these weapons on the battlefield in the coming days.
  Russia's LUKoil negotiated a $4 billion, 23-year contract in 1997 to 
rehabilitate the 15-billion-barrel West Qurna field in southern Iraq. 
Work on the oilfield was expected to commence upon cancellation of U.N. 
sanctions on Iraq. The deal is currently on hold, obviously.
  In October of 2001, Salvneft, a Russian-Belarus company, negotiated a 
$52 million service contract to drill at the Tuba field in southern 
Iraq. In April of 2001, a Russian company received a service contract 
to drill in the Saddam, Kirkuk, and Bai Hassan fields to rehabilitate 
the fields and reduce water incursion.
  A future $40 billion Iraqi-Russian economic agreement, reportedly 
signed in 2002, would allow for extensive oil exploration opportunities 
throughout western Iraq. The proposal calls for 67 new projects over a 
10-year time frame to explore and further develop fields in southern 
Iraq and the Western Desert, including the Suba, Luhais and the West 
Qurna and Rumaila projects. Additional projects added to the deal 
include second phase construction of a pipeline running from southern 
to northern Iraq, and extensive drilling and gas projects. Work on 
these projects would commence on cancellation of sanctions.
  One Russian company over the past few years has signed contracts 
worth $18 million to repair gas stations in Iraq. The former Soviet 
Union was the premier supplier of Iraqi arms. From 1981 to 2001, Russia 
supplied Iraq with 50 percent of its arms.
  It is important, Mr. Speaker, for us to understand who our friends 
are in the world and how they make their decisions. The negotiations 
over this U.N. resolution has been, I think, a certain lesson on this 
topic. It is one that will not easily or not quickly, I hope, be 
forgotten. The challenges ahead of us are great, but make no mistake. 
If Saddam Hussein were to succeed in developing, in keeping these 
weapons of mass destruction, the chemical weapons, the biologic 
catastrophes that could come from the biological weapons and certainly 
his efforts over the years to try to develop atomic weapons, if that 
were to be let go undone, it would be tremendously difficult to deal 
with the other problems that the free world is facing in Iran, in North 
Korea, let alone the rogue nations with tyrants as dictators that might 
decide, well, Iraq got away with it and they were able to do great 
bargaining for themselves. If we develop these weapons, then we are 
going to be in better shape to threaten, coerce, blackmail, if you 
will, for better deals for our country.
  The challenge ahead is great. The technology and the ability of many 
of these countries to develop these kind of devastating weapons is now 
available, almost on the Internet. So I think today it is so important 
that we strongly support our military troops, that we thank the 30 to 
50 countries that have decided, according to Secretary Powell, to 
support us in this effort. Maybe this is the beginning, but the United 
States has taken on this responsibility. In past actions through World 
War I, World War II, all of our wars, the Korean War, even Vietnam, 
they were all for good humanitarian reasons, to make sure that freedom 
and justice and the rights of people were helped throughout the world. 
That is part of what we are going to be going after in the next few 
days, to try to make sure that not only these weapons in Iraq are 
disassembled and destroyed, but that we keep other countries from 
making the same effort and having the same threat on our liberty and 
freedom.

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