[Congressional Record (Bound Edition), Volume 150 (2004), Part 6]
[House]
[Pages 7055-7061]
[From the U.S. Government Publishing Office, www.gpo.gov]




             TAX FREEDOM DAY MOVING UP BECAUSE OF TAX CUTS

  The SPEAKER pro tempore (Mr. Burns). Under the Speaker's announced 
policy of January 7, 2003, the gentleman from New Mexico (Mr. Pearce) 
is recognized for 60 minutes as the designee of the majority leader.
  Mr. PEARCE. Mr. Speaker, as most of the Members did, I just concluded 
about 16 days in my home district. We had visits about Medicare for the 
first week and about the economy and the job growth for the second, 
first of all, addressing concerns and answering questions.
  Mr. Speaker, I will tell you that as I talked to my constituents 
about the prescription drug Medicare bill, there was a deep 
understanding that we have done significant work here, first of all, in 
creating the benefit for our seniors that is desperately needed, but, 
secondly, causing deep reforms in the Medicare program which should 
begin to increase the financial stability of that program.
  Mr. Speaker, while we were home, there was a dramatic event. During 
my entire life, I have seen Tax Freedom Day, that day which every 
American works up until that time to provide their entire income for 
the Federal Government. That Tax Freedom Day has been as far out as the 
middle of May, tending toward the first of June.

[[Page 7056]]

  Mr. Speaker, this year, because of the tax cuts created during the 
last 3 years, Tax Freedom Day came on April 11. That means every 
American worked their entire workweek for the Federal Government up to 
April 11, but those days from April 11 on to December 31, they are 
working to use the money for their families, for the education of their 
families, for just the rent, paying for their house, owning a car, or 
those things that the American dream really entails.

                              {time}  2130

  Mr. Speaker, it is extremely important that we are beginning to cause 
Tax Freedom Day to move back toward January 1, rather than further out 
toward December 31. We should work less for the government and more for 
our families.
  I will tell my colleagues, Mr. Speaker, that without doubt the family 
is the key building block of society. Strong families create strong 
individuals. And strong individuals create strong countries. That is 
exactly the paradigm that we should be following and have followed in 
this country throughout our history.
  And as we tax less and put more into the pockets of hard-working 
Americans, I will tell my colleagues, Mr. Speaker, that the strength of 
the family increases, thereby increasing the strength of our country.
  Mr. Speaker, one of the questions that comes up, and it is a fair 
question, why are we in the economic straits that we are in? What 
things have contributed to the financial situation that this country 
faces?
  Mr. Speaker, the first event which really shocked our economy, and 
there have been three deep events that shocked our economy, and it is 
instructive that we would remember all three of those, but the first of 
them was the collapse of the dot-com economy.
  Most Americans will remember in the late 1990s that the dot-com 
industry had really sprung up from very little to something 
significant, companies that really did not have product. They were not 
even selling anything. They had no cash flow, no revenues. Those stocks 
were escalating from no value to $200 and $300 value.
  Just the capital gains tax off of those sales of stocks began to 
thrust our growth curves upward. It was primarily due to those capital 
gains taxes, Mr. Speaker, that we were seeing what economists and what 
politicians felt like were surplus as far as the eye could see. We 
remember those days at the end of the Clinton administration where 
there were the surpluses as far as the eye could see, but they were 
based on stock values that really had no foundation under them. It was 
an explosion in value that was driven by emotion, but not fact.
  Now, that collapse in the dot-com industry came, as well it should 
have. Stocks absolutely at some point have to have something to back 
them up. That collapse came, brought us back down actually to the same 
level of economy we had been sustaining, about a 3.5 percent of growth. 
It was the incline up, then it bubbled back over. And after the 
collapse we had about a 3.5 percent rate of growth.
  That shock into our economy was significant, though, shocking us into 
a mild recession, one that we should have come out from fairly soon. 
But just as we were coming up out of that recession, 9/11 came without 
warning. Now, that was a significant shock on the economy, Mr. Speaker. 
That shock, by the estimates of some, cost $2 trillion and over 2,000 
lives. $2 trillion needs to be put into the perspective that our total 
economy is in the $11 trillion range, so approximately 20 percent of 
our economic size was taken out of the economy in one day.
  When people are concerned about the cost of the war on terror, and it 
is extremely high, no doubt about it, if we assume that we are up to 
around $200 billion at this point, Mr. Speaker, it still is only about 
one-tenth of what that one day cost on 9/11 was.
  That shocked our economy on the heels of the dot-com collapse into a 
deeper recession and continuing difficulties. But until 9/11, several 
things had happened. In those eras and those times of surpluses as far 
as the eye could see, both the Federal Government and the State 
governments began to reorient their spending, beginning to pay for 
programs that had long been underfunded.
  It is a complaint of our friends across the aisle, and that is fine 
that they would complain about it, that spending increased tremendously 
under President Bush. But I will tell you that some of the areas that 
the spending increased in are the very ones they are criticizing as 
underfunding.
  It is really difficult for me to understand when education spending 
was at $27 billion from the Federal programs and has increased under 
President Bush to over $66 billion, approaching $70 billion, that we 
are described as underfunding education. But if one listens to the 
rhetoric very carefully, Mr. Speaker, it is underfunding the authorized 
amount. They do not want to say they are cutting funding, although they 
occasionally slip over the line and say that, because the truth is we 
have more than doubled funding for education from Federal sources under 
President Bush.
  And keep in mind it might have been at a better time. It might have 
been that we might have understood that those surpluses did not exist 
as far as the eye could see. But I am not sure anyone on either side 
understood the reality of what was going on. And it is very easy to 
understand after the fact.
  A second area that often we hear our friends on the other side of the 
aisle discussing is the underfunding of the IDEA, the Individuals With 
Disabilities Education Act. Now, it is curious that we hear those 
descriptions of underfunding in that program, when the truth is that at 
the inception of IDEA the funding was about $1 billion and for almost 
30 years stayed very constant, much of that time under Democrat 
control.
  The funding stayed constant at about $1 billion. And finally under 
President Clinton, it eased up to almost $2 billion. Now, today you 
will hear all-out assaults that the President is desperately 
underfunding IDEA. One would think maybe he had cut it back to $1 
billion. But if we actually look at it, the facts would show that the 
funding is actually at $11 billion, almost five times the dramatic 
increase that came under President Clinton.
  Now, one has to begin to ask at some point, are we interested in 
communicating the situation that the country faces or are we simply 
throwing out facts?
  I would say that this President made commitments to fund serious 
programs, including education, that at the point right now are causing 
us to stress as far as our deficits are concerned. So we saw that the 
Federal Government began to escalate its spending at a time when both 
parties felt like the surpluses were there as far as the eye could see. 
It is a fact also that almost every State did the same thing. The 
economists there were viewing the results the same as the Federal 
economists.
  Just my State and, I think, one other actually preserved budget 
surpluses through that time because even in the surplus era as of the 
late 1990s, the Republican Governor of New Mexico said we are going to 
hold spending very, very tight. And to his credit he did that. Thus, 
when the dot-com collapse came, when the later 9/11 attack came, 
shocking our economy into recession and driving down revenues, New 
Mexico and one other State maintained a surplus, and we saw many of the 
States begin to have tremendous economic difficulties.
  Now, was it their fault that they are in economic difficulties? I do 
not know. We could place blame. But I think the greater understanding 
is to know why.
  So, again, we experienced increased spending because the perception 
was that we had surpluses, but we also had two deep shocks into the 
economy at the very time we were experiencing those surpluses, causing 
us to go into an economic tail spin.
  The third shock, the third of three deep shocks came just as we were 
about to come out from underneath the effects of 9/11, Mr. Speaker. 
That is when Global Crossing, WorldCom, Enron, and several other 
companies had to reveal that they were actually cooking the books, that 
they were misleading their investors, that they were

[[Page 7057]]

doing things with accounting procedures that they declared correct, 
that they declared legal, but which, in fact, may have been legal but 
certainly were not right. And they did not lead to right conclusions by 
investors.
  At that point of deception, many, many investors began to pull their 
money out of the stock market and put it into savings accounts and 
banks. That began to remove needed capital from our companies where 
economic expansion was no longer available.
  So three deep shocks into the economy: the dot-com collapse of the 
late 1990-2000 time period; 9/11/2001, a second deep shock; the third 
deep shock was the corporate scandals led by Global Crossing, Enron, 
and WorldCom. All those three things combined to give us a significant 
change in our economic climate.
  Now, at that point in our economic climate, when we had increased 
spending believing that surpluses were there as far as the eye could 
see, we had increased spending and suddenly three shocks into the 
economy caused the revenues to drop. Now we are faced with some 
management questions.
  It is easy at this point, Mr. Speaker, to sit and say what should be 
and should not be. But I will tell my colleagues when we get to that 
discussion there really are only three solutions that I see: one is to 
cut spending, the second is to increase taxes, and the third is to grow 
the economy. If we grow the economic size, and it is about $11 trillion 
now, if we grow the economic size from about $11 trillion or 13 or $14 
trillion, it is easy for anyone to understand that at the same rates of 
taxes that we are going to have more revenues.
  So we can, again, to solve the problem of deficits from both internal 
and external causes, caused by increased spending and recession that 
has been thrown into us from three violent shocks to the economy, given 
those situations, again, the three solutions are to increase taxes to 
bring in more revenue, to cut spending, or to grow the size of the 
economy. It is really simple. There are not many other choices than 
that.
  Now, the problem is if you begin to increase taxes at a time of 
economic stress, you come into an economic principle and economic 
reality that when government spending begins to increase to a certain 
percent of the economy, and generally the range is in the 20 to 24 
percent range, Mr. Speaker, at that point you begin to take so much of 
the investment capital out of the economy that recovery is simply not 
available.
  The Germans find themselves in that situation right now. When I came 
back from Iraq, we stopped in Stuttgart and met with several key 
business leaders at a dinner at night. Around the table uniformly, and 
the head of DaimlerChrysler is at that location, it was in that meeting 
they said please get your economy going because if your economy is 
going, if the United States economy is going, maybe it will raise the 
level of the entire economic output in the entire world because we are 
one-third of the world's economy. And if we can get our economy going 
in the U.S., just maybe they can get their economy going in Germany.
  Now, the difficulty they face in Germany is about 44 percent of their 
current gross domestic product is government spending. They cannot get 
out of a recession. They cannot create jobs. They cannot do it because 
they refuse to cut spending, and they refuse to cut taxes. Taxes would 
begin to lower that amount of government spending down as a percentage. 
But keep in mind they are desperately high at 44 percent.
  We were approaching the 24 percent level, which really does begin to 
dampen down an economy and put the economic brakes on. So we had some 
choices to make in this Congress and the preceding Congress of just how 
to handle this. How do you go about creating economic growth? How could 
you create economic growth when you have had three deep shocks that 
have taken tremendous assets, both physical assets and the lives of our 
countrymen?
  My colleagues recall after 9/11 people just began to stay home. They 
did not consume, and they did not spend. It was a sadness, there was a 
deep sorrow in our Nation that really affected us economically as well 
as spiritually and emotionally.
  So, Mr. Speaker, we have those situations that existed in our 
economy. I will tell my colleagues that the Democrat Governor of New 
Mexico said it best last year. He said that my party should get over 
the fact that tax cuts create jobs.
  That is what we wanted to do in this body. Keep in mind we have three 
choices: we can cut spending, we can increase taxes, or we can grow the 
size of the economy so that our tax rates bring more revenues.
  We elected, Mr. Speaker, in this House, and I am proud to have been a 
part of that vote, to begin to try to grow the economy. And we did that 
by decreasing the amount of government spending, that is, by increasing 
the take-home pay of our people in our economy. We began to give tax 
cuts.
  Now, those tax cuts began to show immediate promise. The biggest tax 
cut took place last year. We had estimates in the House, estimates that 
said we hoped we would get 3.5 percent rate of growth from the tax cuts 
that we gave. But we would have been satisfied for any rate of growth. 
We were stunned, Mr. Speaker, when we saw the economic growth in the 
third quarter of last year jump to 8.2 percent. No one had even 
anticipated that level of growth in our economy. In the fourth quarter 
it settled down to a more stable sustainable 4 percent and continues in 
that 4 to 5 percent range today with Alan Greenspan saying that the 
economic indicators are good. Independent watchdog groups have looked 
at our economy and said it looks positive for the next 2 years.

                              {time}  2145

  One of the problems, though, in the recovery was that jobs had not 
been created. I heard a lot of my colleagues on both sides of the House 
express concerns, and I understood the concerns, but, Mr. Speaker, as a 
business owner, I also understood the other side because as a business 
owner, the last thing I wanted to do is hire permanent employees. If I 
am in a period of growth, then, first of all, I want to work overtime 
because I do not want to hire employees and then have to lay them off 
if we are just in a little bubble upward.
  So the first thing we will do to see if we are going to get through 
this pick-up in activity is we begin to work overtime just an hour here 
or an hour there. The next thing we begin to do, Mr. Speaker, is work 
weekends. When those two things do not combine to fill the needs for 
employees, Mr. Speaker, at that point we would always bring in 
temporary employees, and I say ``we'' because my wife and I were co-
owners in the company. She managed one piece, I managed the other 
piece, and we have always made our decisions together. But always on 
hiring we wanted to do the same thing, so we would progress through 
this sequence over time, working Saturdays and Sundays, temporaries, 
and then we would hire part-timers. Usually we would go to retirees who 
did not need full-time jobs, but always would like to have 3 or 4 hours 
a week or 3 or 4 hours a day.
  So we would do these four steps before we hired full-time employees. 
And so, Mr. Speaker, it was not so concerning to me at that point that 
we had not seen the job figure growth after two successive quarters of 
significant growth in our economy. As we went into the early months of 
this year, again the job growth had been small, at about 300,000 for 
about a 2- to 3-month period, but in March alone, Mr. Speaker, we had 
stunning news that this economy that had shown all the signs of 
economic recovery in fact produced 308,000 new jobs in 1 month. That 
308,000 new jobs, Mr. Speaker, combined to make almost a million since 
August of last year.
  At this point, Mr. Speaker, we feel the signs of recovery. We are 
beginning to show those signs of job growth which is beginning to show 
growth signs, and we are beginning to hear it frequently on the floor 
of the House from our friends. I would expect to see the 300,000 jobs 
in 1 month. They will begin to rejoice with us because no one

[[Page 7058]]

would like to see a Nation in suffering. We would like to see a Nation 
that has found the key to recovery, and these keys are not so simple as 
going out and causing recovery and passing a law. We have to rekindle 
the confidence of the consumer. We have to rekindle the confidence of 
the investor, the confidence in companies that were shaken by corporate 
wrongdoing, the confidence of purchasers that were shaken by the tragic 
events of 9/11. So this restarting of the economy should be a rejoicing 
for each one of us, and I hope that it is that, because, in my view, 
the last thing we want to do is begin to change courses.
  I, along with my friends on the other side of the aisle, am very 
concerned about the deficit, but also I know that we have done some 
very expensive things last year that could not be put off. The Medicare 
prescription drug bill was an expensive bill that 78 percent of 
Americans said needed to occur because people were choosing between 
food and medicine. Yet it was very expensive. We must have the will to 
pay for it, and we must have the economic discipline to pay for it.
  The war on terror is extremely expensive and is taking much, much out 
of our economy, and that needed to be done, and the President is 
pursuing that with bold determination to win that war on terror and 
preserve the liberty that is the world's, because terror and liberty 
cannot live in the world together. 9/11 changed forever the way we look 
at this world.
  Mr. Speaker, another important expenditure that we have undertaken 
that have helped create the deficits, and even though we do not like 
them, we begin to understand that we are having to do things that could 
not be put off, homeland security could not be put off. We must begin 
to seal our borders so that the American people would feel safe. We 
must begin to do those things which will keep terror outside our 
borders. So we fight the war on terror to kill and disable terrorists 
in their own areas, but we begin to build our own borders that would 
protect the lives of our children and give them access to the hope and 
opportunity that peaceful neighborhoods give to each one of us and that 
we have raised our families with.
  These are the things that we have been spending money on in the last 
year and 2 years that are going to fund a deficit. And do we like the 
deficit? No, we do not. But we must be patient. This year the 
discussion is should we allow the tax cuts to expire because they are 
temporary, and they expire towards the end of this year. So the 
discussion is, and we should be on the floor of this House having that 
discussion, and we have will it, should we allow the tax cuts to 
expire?
  I will tell you that once we have charted a course, the worst single 
thing is to begin to withdraw and to find another course. In history we 
can determine that several courses usually will solve a problem, but we 
have elected to a course here; we have chosen the course of trying to 
grow the economy. We have given the tax cuts that have stimulated the 
growth and jobs, and the last thing we need to do is to retreat out and 
not pursue that one single objective of growing the economy, 
reestablishing our economic stability, creating jobs so that every 
American in this country is able to find a career that they look for, 
is able to have employment security with the outcome of raising and 
maintaining good families.
  So, Mr. Speaker, we will continue this discussion this year. I myself 
believe that we must stay with the tax cuts that we have put into 
place; that to do otherwise would again begin to thrust up the percent 
of government spending as a percent of our gross domestic product and 
run the risk of pouring water on the flames, the low flames of our 
economic recovery.
  Mr. Speaker, I am joined in the House tonight by my colleague from 
Colorado (Mr. Beauprez). We came in as freshmen. He, like I, has been a 
businessman. He, like I, has made a payroll; and like I, he married 
above his head, and his wife now runs their business, as mine does. So 
I, Mr. Speaker, would yield to the gentleman from Colorado to discuss 
this economic recovery from his eye, and is from the eyes of a man with 
a dairy background and with a banking background. I yield to the 
gentleman from Colorado.
  Mr. BEAUPREZ. Mr. Speaker, I thank the gentleman, and I especially 
thank him for acknowledging the quality of our wives. We are blessed 
indeed, are we not? And I thank the gentleman for bringing this Special 
Order to the floor tonight.
  It strikes me that there are a lot of people out there that are 
trying to convince people that maybe conditions are different than they 
really exist. Mr. Speaker, the gentleman from New Mexico (Mr. Pearce) 
just acknowledged that I have been a businessman before myself. I have 
met payroll. I have created jobs. Most recently I was CEO and president 
and chairman of a bank. I am kind of prone to analyzing things and 
getting a basis of comparison, the ``compare to test'' I call it. 
Compared to what?
  Folks are talking about how bad things are. Well, I have done a 
little reading. I think my colleagues in this Chamber, all of us, do 
quite a lot of reading, and I have found a few things that I think are 
fairly interesting. Specifically, there has been a lot of talk lately 
about how great everybody else is, and especially our friends over in 
Europe, how good they are doing. Well, I was in Europe. In fact, I was 
in France last May, not quite a year ago, representing this great body 
as a representative of the United States Congress at a conference on 
terrorism and the growth of anti-Semitism in Europe. And I witnessed 
for myself how ``good'' they are doing. They were not doing all that 
great, as a matter of fact, Mr. Speaker.
  In fact, according to an article in the National Review just this 
very month, our economy has grown about one-third faster than Europe's 
or Japan's, Mr. Speaker, even though, of course, as my colleague from 
New Mexico just cited, it was us that experienced the ravages of 9/11, 
an event, Mr. Speaker, that I submit to you, I submit to this body, 
would have crippled, perhaps destroyed, the economies and the 
governments of nearly every other nation on this Earth. But yet we are 
growing faster.
  Now, some of us, myself included, are certainly old enough to 
remember an index that was created some time ago called the misery 
index. It was not created by me. It was not created by you, Mr. 
Speaker. I think we remember where it came from. It was invented by our 
friends in the other party in an attempt to bludgeon a former 
President, Gerald Ford, for the condition of the economy.
  Let us go back and look. Let us use that as a comparison. When Gerald 
Ford was running for reelection in 1976, this misery index, which was a 
simple combination of the inflation rate and the unemployment rate, add 
the two together as an indicator of the pulse, if you will, of the 
economy. Well, that misery index in 1976 when President Ford ran for 
reelection and was unsuccessful was 11 percent. In 1980, that misery 
index rose to 17 percent under then President Carter, and the country 
decided to make a change. When President Clinton ran for his reelection 
in 1996, which our colleagues on the other side continually cite as the 
best of times, the misery index, again, inflation plus unemployment, 
stood at 8 percent. Now, Mr. Speaker, that same index today stands at 
7.8 percent, the lowest, obviously, of that entire period. And yet our 
colleagues on the other side of the aisle night after night, day after 
day are trying to convince the American people that they administration 
under this party's leadership is experiencing ``the worst economic 
performance since Herbert Hoover.''
  Mr. Speaker, I cannot find evidence to support that claim. And just 
because you say it is so does not make it so. The facts do not bear it 
out.
  A few other facts, Mr. Speaker, if I might. Again, I will remind you, 
Mr. Speaker, I have created jobs. I have met payroll, and I am proud of 
that. So I am concerned like many about those seeking employment in 
this country but not able to find it. We are addressing that situation. 
Jobs are coming back. We all know that they are the lagging indicator. 
That does not make

[[Page 7059]]

us feel any better, but it is one of those economic realities.
  Now, if we go back to 1979, 1980, that recession, unemployment hit 
7.9 percent. The mini-recession in 1982, it peaked at 10.8 percent. 
Then in 1990, one I remember very well, it hit 7.8 percent before 
beginning to fall.
  Now, all of this seems to me, Mr. Speaker, to pale by comparison to 
the 6.3 percent that we hit even following 9/11, even with the effects 
of a recession and then the tremendous impact of a 9/11. Why? Because 
with this President's leadership, the 107th Congress enacted tax cuts 
in 2001, and we have followed now with tax cuts again in 2003.
  Now, to reference again what is going on in the European Continent, 
which many seem to want to cite as some sort of utopia, some sort of 
model, well, over in Europe right now the European Union is averaging 
unemployment of about 8 percent, Mr. Speaker, about 8 percent.

                              {time}  2200

  We are at 5.7 today and falling, and we are the ones, again, who 
experienced the ravages of 9/11. If we were doing as well, and I use 
that in quotes, as our friends in the European continent, we would have 
3 million more jobless Americans, Mr. Speaker. That is my comparison. 
That is one of my comparisons.
  Additionally, let us look at just some statistics. We are under 
assault nightly for the terrible, again, I use that in quotes, tax cuts 
that we imposed last year and the conditions that it has created, and 
there is at least one person running around this country campaigning to 
be our next President to change the course, that wants to rescind those 
tax cuts. Well, let us make a little comparison.
  Beginning in May of 2003, which is shortly before this body approved 
those tax cuts and before the President even had the pleasure of 
signing those tax cuts, until February of this year, to give a baseline 
of when we got current numbers, the Dow has increased almost 20 
percent, the NASDAQ almost 30 percent. Not everybody has stocks, but it 
is a pretty good bellwether of what is going on economically in this 
country and where we are headed, the faith and confidence in the 
market; and I know full well and I would guess my colleagues, too, Mr. 
Speaker, have had any number of constituents come up to them and talk 
about that 401(k) that is now a 1(k). Remember that joke, Mr. Speaker?
  Well, the markets have come back, and that is real value in the 
pockets and the wallets and in the bank for the people all over the 
country that have got an IRA, 401(k), any kind of pension plan, a 
little investment in a mutual fund.
  It is estimated that some 3 trillion, with a T, Mr. Speaker, $3 
trillion have returned to the market, returned to people's net asset 
value. That is a good thing. Real gross domestic product, same period 
of time, just inside of 9 months, increased 6.1 percent. Productivity, 
6.4 percent while we are increasing job growth, albeit a little bit 
slow, but increasing job growth, adding employment figures, 
productivity up 6.4 percent, just inside of 9 months.
  Housing starts, strongest in 20 years, Mr. Speaker, increase of 9 
percent just inside that 9-month period of time, all while unemployment 
on a percentage basis fell 8.2 percent. Mortgage rates lowest in 20 
years, prime interest rates lowest in 45 years, and inflation the 
lowest in 4 decades.
  Mr. Speaker, the numbers do not bear out their claim that this is the 
worst economic performance since Herbert Hoover. We should be 
celebrating, Mr. Speaker, not only the actions of this body, the other 
body in Congress and the White House, but especially celebrating the 
will, the fortitude, the entrepreneurship of the American worker and 
the American businessman. That is who we ought to be celebrating. They 
are doing the heavy lifting, and they are performing. The system is 
working. It is not time, Mr. Speaker, to change course nor captains of 
the ship.
  It has been cited that manufacturing has taken a tough hit. Indeed 
they have, indeed they have; and no one, no one should know better what 
the true nature of the reason for the difficulties, the struggles that 
manufacturing has gone through, nobody should know better than 
manufacturing.
  I happened to come across a little communication from the National 
Association of Manufacturers, an organization that represents, Mr. 
Speaker, manufacturers all over this land, largest organization of its 
kind, so far as I know. I would assume that they are a legitimate 
mouthpiece for their members.
  I do not like to read at this hour or during these Special Orders 
very often, but I do not want to misstate anything either, Mr. Speaker. 
So I am just going to quote what the National Association of 
Manufacturers tells us.
  Let us look at the real sources of manufacturing job loss. While many 
were lost to productivity gains in technology, there were many other 
major factors as well, such as 900,000 jobs lost when U.S. exports 
tanked owing to the overvalued dollar and slow growth abroad. That is 
the problem in other countries. Their economies were in the tank, the 
value of our dollar went up, 900,000 jobs because of foreign problems.
  75,000 jobs lost in the chemical sector alone, due largely to 
skyrocketing natural gas prices. Mr. Speaker, maybe we can talk about 
that at another point in time, too.
  60,000 jobs lost due to asbestos litigation that drove companies 
right into bankruptcy. We have a solution to that. We have a solution 
that will save companies, save jobs. Members on the other side of the 
aisle say no, no, no, let us give it to the trial lawyers and bankrupt 
companies. I do not know how you can have it both ways, Mr. Speaker, 
create jobs and put companies out of business at the same time and 
thousands more jobs lost because of the high cost of doing business in 
America.
  Here is what they say: nonproduction costs, nonproduction costs such 
as taxes, excessive legal and regulatory burdens, and the rising cost 
of natural gas and health care add 22 percent to the cost of making a 
product in America relative to our major trading partners. Mr. Speaker, 
I am not making that up. This is from the National Association of 
Manufacturers. That is why we struggle in this country to be 
competitive in a global market, even a domestic market, because taxes, 
excessive legal and regulatory burdens, and the rising costs of energy 
and health care are stifling American business, thus, American workers.
  Mr. Speaker, this is a critical subject. I thank the gentleman for 
bringing it to the attention of this body and I see he has something on 
his mind that he would like to say. I thank him for the time.
  Mr. PEARCE. Mr. Speaker, I thank the gentleman from Colorado (Mr. 
Beauprez) for his thoughts on this subject and for the calm approach 
that he has to dissecting a very difficult problem.
  Always when you face difficulties it is easy to discuss the 
difficulties, but understanding those elements that must be changed in 
the very measured way that they must be changed is the difficult part 
of this business.
  He began to discuss why would American jobs be leaving our country. I 
think that he is on a very, very timely subject in discussing the cost 
of frivolous lawsuits, lawsuits that would drive companies out of this 
country.
  About a year ago, Mr. Speaker, right at this time of year, I went to 
Ground Zero in New York. We went across the street to American Express; 
and the head of American Express told us, as congressional leaders, 
that if you do not reform lawsuit litigation problems in this Nation 
that you will not have a major company left in America in 20 years. I 
see those pressures that litigation costs us.
  Currently, the cost of lawsuits on the U.S. is equivalent to a 5 
percent tax on wages. Litigation cost $233 billion in 2002. This is 
$807 per U.S. citizen. Increased litigation costs have burdened 
American families and businesses with higher insurance premiums and 
contributed to higher medical costs and, in some places, removing 
medical care completely as doctors go into retirement or refuse to 
practice under the conditions that face them.

[[Page 7060]]

  Individuals suffered directly by having less disposable income than 
they would otherwise have due to increased prices for products but also 
higher insurance premiums. Individuals suffered directly when 
businesses raised their prices on goods and services to pay for the 
litigation costs.
  The U.S. Chamber of Commerce 2 years ago was advertising in my 
district that the cost for every consumer who bought a new car for the 
litigation costs throughout the production of that car was over $500 
per vehicle that every single American consumer paid.
  Individual wages bear the brunt in the form of lower wages in jobs 
and fewer jobs when we are exposed to continued litigation, and that is 
not litigation to respond to problems. These are frivolous lawsuits 
that come up simply because the legal community feels like they can get 
redress outside the courts, that they can get settlements outside the 
court without jury trial.
  Frivolous lawsuits discourage businesses and individuals from taking 
risk, which means that fewer new products are brought to production and 
new technologies are either delayed or foregone completely. 
Consequently, good, high-paying jobs are not created because of the 
fear of lawsuits. Companies are left going bankrupt instead of being 
able to pay the high cost of litigation.
  Currently, this House has passed four kinds of tort reform, four 
kinds of litigation reform that currently have stalled out in this 
city, unable to move further because of the influence of the personal 
injury lawyers in this community. Out of this House, Mr. Speaker, we 
have passed class action tort reform, asbestos tort reform, medical 
liability reform and then also, just recently, that cheeseburger bill 
because the personal injury lawyers are trying to tap into the pockets 
of every single restaurant owner in America saying they are the cause 
that people are sick or overweight.
  Mr. Speaker, just the asbestos litigation reform is needed to begin 
to deal with the tremendous numbers of cases that face us. An estimated 
300,000 claims are pending, 730,000 individuals have already brought 
claims and 60 to 100,000 new claims are filed every year.
  Asbestos victims face uncertainty, delay, and risk in the current 
tort system. Today, a person's compensation is more likely to be 
determined by where and when the claim is filed and who is the lawyer 
or judge rather than by the severity of his illness. Many victims even 
die before receiving anything.
  To name a few examples, after having his claim consolidated with 
1,000 other plaintiffs in a Louisiana trial, a former Avondale shipyard 
employee died of mesothelioma before his trial even began. An Ohio 
welder died during trial. A flooring contractor died during his trial 
in California. While some courts prioritize cases where plaintiffs 
suffer from mesothelioma, other times plaintiffs can die before or 
during the trial. Exponential growth in claims involving plaintiffs who 
are not sick is clogging the system. Those people who are simply making 
claims with no physical symptoms are clogging the system so that those 
who are legitimately sick are unable to move forward with their claims. 
Mr. Speaker, this is an economic distress to companies that maybe never 
even manufactured asbestos. It is an affront to our entire system.
  In 2001, an asbestos verdict awarded six unimpaired Mississippi 
plaintiffs $25 million each. None of the plaintiffs claimed prior 
medical expenses or absences from work due to any related illness; but 
they were awarded a combined total of $150 million, Mr. Speaker, and 
they had never claimed any absences from work due to related illnesses. 
These unimpaired awards have bankrupted 67 companies and wrung $54 
billion from companies. Some experts estimate that under the current 
broken system the past and future trials of asbestos liability will 
ultimately reach as much as $200 billion or more.
  Mr. Speaker, to put these numbers in perspective, the savings and 
loan sector crisis in the 1980s and 1990s cost approximately $153 
billion. The collapse of Enron and WorldCom resulted in losses of as 
much as $42 billion in gross domestic product and as much as $50 
billion in insurance industry losses and as much as $50 billion in 
insurance losses stemming from the September 11 terrorist attacks.

                              {time}  2215

  Most unfortunately, the asbestos litigation system imposes billions 
of dollars of costs, while claimants receive very little of what is 
paid. Transaction costs have accounted for well over half of the 
spending. Plaintiff attorney fees alone can be 40 percent of any 
settlement, with expenses often reducing the settlement to less than 50 
percent.
  It is not just the American companies that are left with the cost, it 
is the American worker. Companies bankrupted by these 75 percent of 
unwarranted asbestos claims have slashed 60,000 jobs and failed to 
create 423,000 new jobs. Each displaced worker has lost up to $50,000 
in wages and an average of 25 percent of the value of their 401(k) 
accounts. Even the AFL-CIO testified before the Senate Judiciary 
Committee, noting that the uncertainty for workers and their families 
is growing as they lose health insurance and see their companies file 
for bankruptcy protection.
  So while our friends on the other side of the aisle continue to talk 
about the jobs that move overseas and the failure of this economy to 
create jobs, they are overlooking one of the most important cures, Mr. 
Speaker, that can be found to be effective: that of litigation reform.
  Mr. Speaker, I see that the gentleman from Colorado has additional 
comments, and I yield back to him.
  Mr. BEAUPREZ. Mr. Speaker, I thank the gentleman, and I thank him for 
his timely comments as well.
  We talk about large numbers in this body. We are dealing with a $2.4 
trillion budget this year. And running the United States of America's 
business is certainly an expensive business. But while I was home over 
the last couple of weeks, I talked to a whole lot of constituents. I 
know the gentleman has a great deal of familiarity with the energy 
business, and, not surprisingly, energy came up over and over again.
  I think in the context that we have been discussing these last about 
45 minutes now of embedded costs, costs that stifle competitiveness, 
job creation, economic growth, and all the things we are all talking 
about, now we have this rapidly escalating cost of energy.
  A friend of mine, a young mother, she has three children. I think the 
oldest is about eight. So this mother of these three little children, 
she is absolutely beside herself. She does not work outside the home. 
She is home doing what moms ought to do, taking care of her three 
little kids and doing a good job of it. Her husband works and is 
bringing home a decent income, but one can imagine that things are 
pretty tight around her house.
  She is now faced with rapidly escalating costs of gasoline and in 
their utility bill at home. So I went looking for numbers. She pulled 
up to the pump just behind me and she said, oops. Regular unleaded that 
day was about $1.85, and the next two grades were over $2. I think it 
was $2.05 and $2.13, if I remember correctly. The AAA estimates that in 
the average two-car household, they use about 1,200 gallons of gasoline 
a year. I know the gentleman is from New Mexico. I am from Colorado. 
Out our way we drive even more miles, I think, than the average, so 
that 1,200 gallons is probably a conservative number for the average 
household.
  Now, imagine just a 50-cent-per-gallon increase. And we have had all 
of that. Maybe it is closer to 60 or 70 cents now in just recent 
months. But at 50 cents, 1,200 gallons a year, that is obviously a 
$600-a-year additional burden on that family. That $600 has to come 
from somewhere, so I asked her, where does it come from, Teresa? Teresa 
says, I just have to do without something. We do not take the kids to 
the zoo, or we do not take the kids to McDonald's for a Happy Meal. We 
are starting to make those tough choices.
  We have to stop and ask ourselves, I think, what are we doing to 
American people? In addition to that extra $50 a month to pay her fuel 
bill, Teresa tells me that her energy prices, the utility

[[Page 7061]]

bill at home, has gone up about $30 a month, too. Now, sooner or later 
it gets to be real money.
  That evening I spoke to a group of realtors. They have been enjoying 
pretty good times, because, thankfully, interest rates have been very 
low, and, to a very real degree, the housing market has kind of kept us 
going as we get jobs coming back on the market. But they are concerned, 
and they are concerned for exactly this reason: I asked them, I said, 
how many of your clients have wanted to put a contract on a house, and 
they pushed the numbers, and, having been a banker before, I understand 
how this works, and they find out they just barely or maybe not quite 
qualify for that new home they would like to buy? It is often $50 or 
$100 a month one way or the other. When energy costs alone go up that 
much, you just have a whole pile more folks who cannot afford going 
that next step up the ladder. That does not make sense.
  We have passed an energy bill out of this body three times since 
2001. It is time that the entire Congress, with the cooperation of the 
other body, do what America desperately needs and pass an energy bill, 
send it down Pennsylvania Avenue and let the President sign it.
  There is no silver bullet solution. But as the gentleman knows, we 
need to address some common-sense regulation relief, common-sense 
permitting, and create some jobs at home. And that is the other thing 
that is so maddening, as we talk day after day after day, and we hear 
rhetoric in the media and from candidates running for all kinds of 
offices about jobs. Pass an energy bill.
  The Department of Commerce estimates that for every $1 billion we 
send offshore, those foreign sources which we are now two-thirds 
dependent on for our total energy supply, for every $1 billion we send 
them, we are sending them 12,389 jobs. With what we are sending in 
total today, the billions and billions, that is 1.7 million American 
jobs that are somewhere else on this planet, and in the meantime we are 
paying more. Less jobs; more for our energy.
  Mr. Speaker, you do not have to be the proverbial rocket scientist to 
figure out that that will not work forever and ever and ever. So 
rhetoric is not going to get it done. Sooner or later we have to have 
some decent policy. The American people are feeling the pinch right 
now, and they need to hear the truth.
  My colleague talked about litigation reform. We talked about how we 
have to have some regulation relief in this country. We talked about 
the effects of the tax cuts. We need a good energy policy to go with 
it.
  Mr. Speaker, I see the gentleman has that look in his eye that says 
he has something to close with, so I yield back to him and thank him 
for his kindness this evening in letting me participate.
  Mr. PEARCE. Mr. Speaker, I thank the gentleman from Colorado (Mr. 
Beauprez), and he is exactly right. We have passed the energy bill out 
of this Congress, and it is stalled out, unable to move further. The 
estimates are that energy bill would create 800,000 jobs nationwide.
  Now, the most important thing it would do is begin to limit our 
dependence on foreign oil. And when people ask, what is suddenly 
causing the price of oil to escalate, it is very simple. The OPEC 
countries decided they are going to try to squeeze off the supply, 
understanding our demand is fairly constant. If they squeeze off the 
world supply of oil, the price goes up.
  Now, those are independent countries. They operate on their own. Our 
President is asking them, it is an arbitrary decision on their part, if 
they will not consider going ahead and increasing the supply where the 
price will moderate. But the fact remains that we do get about 60 
percent of our energy from overseas, and there are people in this 
country, the extremists, who would say we should not produce any energy 
in this country. They would like to move all drilling to other 
countries. They do not want to drill offshore, they do not want us to 
drill in the Rocky Mountains, they do not want those jobs in America, 
and they do not want an America independent of foreign energy 
production.
  Mr. Speaker, this economy that America has is built on one thing and 
one thing only: It is built on affordable energy. And right now the 
price of natural gas in this country is between $5 and $6, last year 
spiking up to $10. In Russia and in Africa right now the price is 
between 50 cents and 70 cents. We cannot sustain our economy at the 
levels it is and the levels that it has traditionally been, paying five 
times for our energy.
  There are those extremists who say that we cannot and should not 
drill in areas that have been drilled before on our public lands. Mr. 
Speaker, we are going to decide in this country if we want a vibrant 
economy or if we are going to send all those jobs overseas, because 
that is what will happen. Infrastructure will eventually relocate to 
the area where energy costs are one-tenth of what they are today. In 
the meantime, we are going to be faced with paying more at the pump 
because we have internal policies which refuse to allow drilling to 
occur in places in this country where there are known and proven 
reserves.
  Mr. Speaker, I would also make comment that it is time that we have 
these discussions. I think that in this Nation we can reach the balance 
between preserving the environment and providing affordable energy, and 
it is time that we begin to look at those policies which will allow us 
to do that. We cannot continue shipping jobs overseas because of the 
cost of litigation, because of the cost of energy, because of our 
unwillingness to deal with the regulatory climate that simply frightens 
people out of investing in new jobs in this country.
  Mr. Speaker, we ourselves, as Americans, are going to determine at 
what level our economy operates, and it is each one of those small 
increments that will determine exactly what we do.
  In concluding the discussion tonight, Mr. Speaker, and I thank the 
gentleman from Colorado for participating with me, I would remind the 
House that our economy has been suffering from three deep shocks. It is 
suffering from the deep shock of the dot-com collapse, of the 9/11 
strike, and finally the corporate scandals, which are now being tried 
in our courts.
  Mr. Speaker, the Republicans and the President have charted bold 
initiatives that are pulling us out of the economic recessions that 
began in the late 1990s and early 2000. Those recoveries must be 
sustained. That tremendous job growth in March is an indicator of what 
lies ahead, 308,000 new jobs in 1 month.
  Mr. Speaker, we have 138 million jobs in this Nation, but every 
single person who needs a job and a career should be able to find it. 
And with the policies that this administration and this Congress have 
passed, we are on the road to recovery and providing careers for every 
person that looks for them.

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