[Congressional Record (Bound Edition), Volume 151 (2005), Part 18]
[House]
[Pages 24043-24050]
[From the U.S. Government Publishing Office, www.gpo.gov]




              THE POOR, THE MIDDLE CLASS, AND THE WEALTHY

  The SPEAKER pro tempore (Miss McMorris). Under the Speaker's 
announced policy of January 4, 2005, the gentleman from Vermont (Mr. 
Sanders) is recognized for 60 minutes.
  Mr. SANDERS. Madam Speaker, let me begin by suggesting that as the 
only Independent in the House of Representatives, my view of things is 
a little bit different than my Republican friend; in fact, some of my 
Democrat colleagues.
  When I look out in America today, what I see that is important are 
not just statistics, but what is going on in the real lives of real 
people, of what is going on in the middle class in America, the vast 
majority of our people, what is going on in our communities. And in a 
broad sense, when I look at America today, I see an economic reality 
which includes the shrinking of the middle class, the reality that 
ordinary people in my State of Vermont and all over this country are 
working longer hours for lower wages. I look out at a time when in 
family after family it is absolutely necessary for two breadwinners to 
be working in order to pay the bills and often at the end of the week 
have less disposable income than a one-income family had 30 years ago.
  So I look out and I see that despite a huge increase in worker 
productivity, a huge explosion in technology, which makes us a much 
more productive society, that at the end of the day, despite all of 
that, the middle class is shrinking.
  And when I look out in my State and I look throughout this country, I 
see another phenomenon, and that is that poverty is increasing; that in 
the last 5 years alone, since George W. Bush has been President, over 5 
million more Americans have entered the ranks of the poor. And when I 
look at what is happening in America today with the middle class 
shrinking, with poverty increasing, I see another reality, a reality, 
in fact, that is not talked about terribly much on the floor of this 
House or, in fact, in the corporate-owned media, and that is that the 
wealthiest people in America today have never had it so good. Poverty 
increasing, the middle class shrinking, and people on the top doing 
phenomenally well.

                              {time}  1915

  That is the economic reality of America today.
  Madam Speaker, since President Bush took office, the average annual 
household family income has declined by $2,500, approximately 4.8 
percent. Furthermore, earnings also declined last year. This decrease 
in earnings was the largest 1-year decline in 14 years for men, but 
women also saw a decline in income. So what we are seeing in America, 
despite all of the rhetoric, all of the statistics being thrown around, 
is that people are not keeping up with inflation.
  Madam Speaker, a recent income analysis by the IRS showed that in 
2003, the last year that they studied, only those Americans in the top 
1 percent saw an increase in their income above inflation; and 
amazingly enough, it was not just the top 1 percent that did well. It 
was the top one-tenth of 1 percent that really made the increased 
income. Meanwhile, while the top 1 percent in 2003 was the only group 
to earn more money above inflation, 99 percent of the American people 
were unable to earn enough income to keep up with inflation. In fact, 
the IRS data shows us that the wealthiest one-tenth of 1 percent earned 
more income than the bottom one-third of American taxpayers.
  So what we are seeing in our country today is a decline of the middle 
class, an increase in poverty, and a growing gap between the rich and 
the poor. In fact, with the exception of Russia and Mexico, the United 
States today has the greatest gap between the rich and the poor of any 
major country on Earth, and that gap today is substantially wider than 
it was at any time since the 1920s in this country.
  When we talk about the growing gap between the rich and the poor, 
when we talk about increase in wealth among the very wealthiest people 
in our country, it is rather incredible to understand that the richest 
400 Americans, the wealthiest 400 Americans, are now worth $1.1 
trillion. Madam Speaker, that incredible amount of money among 400 
families equals the annual

[[Page 24044]]

income of over 45 percent of the entire world's population, or 2.5 
billion people. On the one hand, 400 families have more wealth than is 
the income of 2.5 billion people in this world.
  In 2004, when we talk about the growing gap between the rich and the 
poor, what we see is that in 2004 the President of the United States 
said, yes, we have a serious problem here. What is the answer?
  Well, the answer is that in 2004, American families making more than 
$1 million a year received tax cuts averaging $123,000 a year. So we 
have a situation where the gap between the rich and the poor is growing 
wider, where the wealth of the upper-income people, the wealthiest 
people in this country, is getting bigger; and this White House and 
Republican leadership responds by giving those particular people huge 
tax breaks.
  Madam Speaker, when we talk about what is going on in America, it is 
important to recognize that in 1980, the average pay of the CEOs of the 
largest corporations in America was 41 times larger than that of what 
blue collar workers then earned. By 2004, the average pay of those CEOs 
increased to 431 times larger. So in 2004 we have a situation where the 
CEOs of the largest corporations in America are now earning over 400 
times what blue collar workers in this country are earning.
  Is that what America is supposed to be about? Are we supposed to be a 
country in which the wealthiest 1 percent own more wealth than the 
bottom 90 percent, where the richest 13,000 families earn more income 
than the bottom 20 million families, where the people on top are able 
to use their wealth to make enormous political contributions that shape 
policy that benefits them, that the wealthiest people are able to own 
the media which describes reality for ordinary people in a way that 
benefits them? Is that what America is supposed to be about? I think 
not.
  Madam Speaker, I am delighted that I have been joined by a very good 
friend of mine, in my view one of the outstanding Members of the United 
States Congress, a leader, fighting for the middle class, fighting for 
our environment, the gentleman from Oregon (Mr. DeFazio).
  Mr. DeFAZIO. Madam Speaker, I thank the gentleman for yielding and 
appreciate being here tonight to talk about this important topic.
  It was interesting, I watched a little bit of the hour before with 
the gentleman from Texas and others, and they were prattling on about 
the reckless spending of the Democrats. What they forget is that the 
last time the budget was balanced, there was a Democrat sitting in the 
White House. The last time we began to tax the rich fairly, to bring 
about a balanced budget, there was a Democrat in the White House and 
the Democrats controlled Congress. Yet they talk about the reckless 
spending of the Democrats.
  The debt when George Bush took office was about $18,000 per American, 
the tiniest baby, oldest senior citizen, $5.6 trillion. In 5 short 
years, he has run the debt up to over $8 trillion, almost $27,000 per 
person on the President's watch. Yet they prattled on about the 
Democrats' reckless spending.
  But what they are really trying to cover up here is their favoritism 
for a very small percentage of society, and the gentleman from Vermont 
was just talking about it. This is IRS data. Under the Bush 
administration, the IRS being steadily politicized by this President, 
still, the data shows that one-tenth of 1 percent of the people in this 
country, those who earn over $1.3 million a year, got an average income 
increase last year of $130,000, a dream to most of my constituents, to 
earn $130,000, principally due to tax cuts.
  Here is what we are doing: collecting from working people, only 
people who earn salaries and wages who earn less than $94,000 a year 
paying Social Security taxes. They are paying on every dollar they 
earn, up to $94,000. Social Security will have a $180 billion surplus 
this year. The Republicans and the Republican President are borrowing 
every penny of that $180 billion surplus that is supposed to go to fund 
future retirement benefits for those Americans. They are borrowing it 
and they are spending it and they are replacing it with IOUs.
  In part, and this is the ironic thing, in part, as the gentleman 
knows, that is going to finance tax cuts for the wealthiest among us, 
people who do not pay Social Security taxes, or pay at a tiny fraction 
of the rate. A person who earns, let us say $940,000 a year, their 
Social Security tax rate is one-tenth of that of someone who earns 
$30,000 a year. And many of them, since this administration values 
wealth over work, many people do not pay any Social Security tax, 
because they just live off their investments. Yet this administration 
says they need relief from taxes.
  When they talk about the working people, they are not talking about 
giving tax relief to working families or help to working families. They 
today, and for the last week, have been talking about cutting student 
loans by $15 billion, cutting Medicare for senior citizens, Medicaid 
for senior citizens and the poorest of Americans, cutting food 
security, cutting foster care from the Federal Government, cutting all 
those programs under the guise of new-found fiscal responsibility on 
the part of the Congress, which is spending us into bankruptcy. And 
what are they going to do with it? They are going to finance more tax 
cuts for the wealthy, because they think what America needs is more 
trickle-down economics: give the money to the wealthiest among us and 
they will spend it in ways that will put other Americans to work.
  Well, what if they spend it overseas? What if they invest it 
overseas, as more and more companies flee overseas? That does not put 
any Americans to work. The guy who runs Delphi auto parts has an answer 
for that. People are just going to have to take a little pay cut. He 
says Americans who work in these industries who are earning now good 
family wages should work for $10 an hour. I do not know what Mr. CEO of 
Delphi earnings; I bet it is a little more. The average CEO earns in 
the first 12 hours of the year what working people under their tutelage 
and in their industries earn in 365 days of hard labor.
  But this administration values wealth over work, trickle-down 
economics over investments in our future, in education, in our kids, in 
health care and infrastructure above all. They are hollowing out 
America, and we should get to trade policy a little later to talk about 
that, they are hollowing out America, looting the Treasury, and they 
are getting ready to hand our kids and our grandkids the bill, a bill 
that they will have to pay on $10 an hour in wages. Now, this is not 
all going to hold together.
  Mr. SANDERS. Madam Speaker, I thank my friend for his comments. My 
friend mentioned the Delphi Corporation, which is in Michigan, I 
believe. I want to say a word about that. It is not in my district. Why 
is it important, what is happening there?
  In general, and we will get to the whole trade issue, the whole 
globali-
zation that has been pushed on this country by corporate America in 
order to make the wealthiest people and the large corporations richer 
while working people see a decline in their standard of living, we will 
get to that in a moment. But what this attack on the workers, unionized 
workers, UAW workers at the Delphi Corporation is about is something of 
huge national significance.
  As the middle class declines, it is absolutely not uncommon, from 
Maine to California, that workers see some decline in their wages; 
workers are forced to pay more for their health care; workers are 
losing some or all of their pensions. That is going on all over this 
country as we move in a race to the bottom.
  But what this Delphi Corporation business is about is something more. 
That is not a slow decline in our standard of living; that is a 
precipitous collapse in the standard of living of working people. What 
I fear very much is that what happened at Delphi, that particular 
concept can spread all over this country.
  What happened at Delphi, which recently filed for bankruptcy, is that 
the

[[Page 24045]]

workers there had solid, middle-class incomes. They were doing well. 
They could send their kids to college; they had decent homes. They were 
making $25 or $30 an hour, solid, middle-class income.
  The company files for bankruptcy, and what the CEO there says is you 
are not going to make $25 an hour anymore; you are going to make $10. 
You are going to go from the middle class to poverty, like that.
  Then a fellow named Jerry Jasinowski, who is the president of the 
Manufacturing Institute at the National Association of Manufacturers, 
which, by the way, has been one of the leading forces in this country 
in pushing unfettered free trade and unfettered globalization on 
America, they push it on America, and then in responding to the attack 
on the workers at Delphi, this is what he says:
  ``From airline pilots to auto assembly workers, employees need to 
help reduce their costs. We can't afford to live with the very generous 
benefits we provided 10-15 years ago.''
  What he is saying in English is, if you are a working person, what is 
happening to the Delphi employees could happen to you, should happen to 
you. The rich get richer.
  Last year the CEOs of major corporations earned a 54 percent increase 
in their compensation. The gap between the rich and the poor is growing 
wider, and what these people at the National Association of 
Manufacturers say is, hey, working people all over this country, 
tighten your belt.

                              {time}  1930

  We are taking it away from you. You thought you were in the middle 
class. You thought you could provide an education to your kids, have 
decent health care, have some security. Forget it. We are in a race to 
the bottom, and there are workers in China who are making 30 cents an 
hour. How dare you think you could earn $50,000 or $60,000 a year? Not 
anymore.
  I yield to the gentleman from Oregon.
  Mr. DeFAZIO. Madam Speaker, the gentleman raises an excellent point. 
The other technique that Delphi and other major corporations are 
employing is they are also sticking it to the U.S. taxpayer, because 
Delphi also is going to walk away from its pension obligations.
  Now, we have a pension insurance fund backed by the Federal 
Government called the PBGC. Under George Bush's watch, it has gone from 
having an $8 billion surplus to an estimated $200 billion deficit in 5 
short years of George Bush's watch. That is the future obligations of 
pension plans they have assumed. United Airlines pension plan and now 
Delphi is going to try to dump theirs on them, and other airlines.
  So these major U.S. corporations declare bankruptcy and dump the 
pension plans on the taxpayers. Workers see a major reduction in 
pension, because they will not give you your promised pension; 
depending upon your age and what you were promised, you might get 30, 
40 percent of what your pension was going to be. Ultimately the 
taxpayers are going to pick up the bill for this little maneuver as 
they take this company through.
  Now, there are no future claims. This company goes through 
bankruptcy, reemerges and is sold for a huge profit, but the Federal 
taxpayers have no recourse. They cannot reclaim any of that money.
  I asked a fellow from the PBGC about this, about the airlines. I 
said, so, you have taken an equity position in United Airlines as part 
of this deal of assuming their pensions. Could you not have a claim 
against future profitability of the airline or against future stock 
value to make the taxpayers and the PBGC whole? And he got really 
puzzled for a moment and he looked and said, well, I guess we could do 
that. Never thought of doing that.
  So this has become the new technique: dump the obligations, dump the 
health care plans, dump the pension plans, the health care plans of 
people who either fall into the cracks; or, if they are old enough, 
they can get into Medicare, which this administration is also driving 
toward bankruptcy. And I do not know if we will have a chance to get to 
that tonight, but that is another topic of extraordinary concern. And 
then they become, you know, recovery champions when they turn Delphi 
around and when the company becomes worth a whole heck of a lot more 
money, and some turnover specialists capitalize it to come out of 
bankruptcy and make a fortune on the company. That is the way it works 
now. That is not a long-term, sustainable plan for this country.
  I think now, if we could, we might move a little bit into trade now. 
Tax policies are a huge portion of this. We already talked about that 
to some extent. The other thing that is driving down wages and benefits 
and the working standards, the living standards in this country, is 
trade. As the gentleman said, it is a race to the bottom. We are saying 
to the American workers, well, you have to live at the standard of a 
Chinese worker.
  Well, I do not think that that is going to work real well in the 
system. I mean, we are a consumer-based society. Housing is pretty 
expensive, cars, fuel, all of these sorts of things. How are you going 
to live on 3 bucks an hour or a buck an hour, raise a family, have a 
home, have a place to live and do those sorts of things? It will not 
work. This model will not work.
  But we are also losing our entire manufacturing base. The first 
automobiles manufactured in China are going to be reimported next 
January. So goodbye, auto industry, it is gone. And they were pretty 
honest about that. There was actually an article, 1 day before we voted 
on special trade status for China, on the front page of the Wall Street 
Journal which said, this is the end of the manufacturing in America. It 
is all going to China. And Boeing, of course, wants to go, too. Then we 
will not make anything anymore. We will try and borrow money to buy 
things we used to make, but at some point they will probably stop 
lending us the money, or they will start demanding something in return 
that we are not going to want to pay.
  Mr. SANDERS. If I might, let me just pick up on that point, because 
you are absolutely right. Let us be clear about what has happened here 
in the last 20 years.
  Corporate America woke up one day and they said, hmm, why do we have 
to pay American workers American wages, provide health insurance, 
negotiate on occasion with unions, obey environmental laws, pay taxes 
in the United States of America? Why do we have to do that when you 
have billions of people in China, desperately poor people in Latin 
America, in other countries, who will work for us for almost nothing? 
Now, just because we, who are the heads of major corporations that grew 
grapes here in the United States because of American workers, who 
became profitable giants because of American consumers, well, we do not 
have to respect that. We do not owe any allegiance, in fact, to the 
United States of America. In fact, they say, we are not American 
corporations. Oh, yes, we are American corporations when we come to 
D.C. in order to get billions of dollars in corporate welfare from the 
American taxpayers. Oh, yes, we speak English well, and we are American 
corporations on those days. But on every other day, if we can throw 
American workers out on the street, move to China, hire desperate 
people there at 30 cents an hour, who go to jail if they try to form an 
independent union, who are breathing air that is highly polluted 
because the environmental standards are virtually nonexistent, we are 
international corporations. We are off and running.
  And that was clearly what they had in mind at the very beginning of 
this whole debate on free trade, and that is, in fact, what they have 
done, and that is, in fact, what they are doing.
  From their perspective, what globalization is about is telling an 
American worker, hey, shape up, fellow, because there are people over 
there who can work for 10 percent of what you are working for. And if 
you are not prepared to take cutbacks in health care, cutbacks in 
wages, give up your pension, we are picking up, we are

[[Page 24046]]

going to China, and guess what? Because of permanent normal trade 
relations, which Congress passed, my goodness, they could bring those 
products back into this country without any tariff whatsoever. We do 
not need you anymore. So industry after industry, whether it is steel, 
whether it is furniture, whether it is textiles, whether it is 
footwear.
  In fact, one of the interesting things, Christmas is coming soon, and 
during Christmastime people do an enormous amount of shopping, and they 
go to the stores and they look and they try to find products made in 
the United States of America, and they look and they look and they 
look. And as Mr. DeFazio mentioned, it is harder and harder to find 
products manufactured in America, because our corporations have 
essentially taken our manufacturing base and sent it to China.
  As Mr. DeFazio indicated, this is really bad not just for the 
standard of living for American workers, it is very dangerous for the 
future of our country in a dozen different respects. How do you defend 
yourself as a nation in terms of national defense if you are not making 
products in this country anymore to be used by the military? How are 
you a great country when you are no longer producing real products, but 
are now engaged only in service industry-type work?
  I yield to the gentleman.
  Mr. DeFAZIO. Madam Speaker, I guess this is a little bit of a 
digression, but it is a case in point. I mean, there is this whole 
bizarre concept of free trade based on an economist who has been dead 
over 200 years that only the United States Government, under the 
tutelage of these multinational corporations is following, much to our 
detriment.
  Our trade deficit this year is headed towards $700 billion. That 
means we are borrowing almost $2 billion a day from overseas, 40 
percent of that from the Chinese, to buy things made in China and other 
countries that used to be made here. That is not a sustainable model. 
That ultimately undermines our standard of living. We are piling up 
huge overseas debts.
  But even worse than that, and that is just all under these bizarre 
theories of free trade, the race to the bottom and all things are a 
result from that; we are not even really practicing what President 
Clinton and President Bush are so fond of calling rules-based trade. We 
are going to have rules. Well, there are rules. The rules say that the 
Chinese cannot pirate things. Guess what? The Chinese pirate millions 
of dollars a year worth of U.S. dollars.
  The gentleman mentioned furniture. I have a little furniture 
manufacturer, a high-end furniture manufacturer, in my district. He 
called me up and said, I have a little trade problem. I thought, that 
is a little weird, but okay, and I went to visit. Well, it turns out 
the Chinese delegation came over to look at his plant, they liked his 
stuff, they offered him more money than he could ever imagine he would 
ever have to buy his company. The only condition was he had to unbolt 
all the machines and all the production lines, send 3 managers to China 
for 6 months, and then they would send him a 20 percent cut for the 
future. Of course, he would not have workers or a company anymore. He 
agonized, and he said no.
  Well, the Chinese said, okay, fine. They went to Seattle and, from a 
furniture store there, bought a copy of everything he made, and the 
next year a Chinese Communist Government-subsidized company produced a 
clone of everything this company in Oregon makes and were selling it 
for 40 percent less at the furniture show. That has also happened to a 
high-tech company in my district.
  My staff was in an extraordinary phone call with the Bush 
administration, the Commerce Department, saying, will you not help 
these companies fight the piracy? And they said, no, we will not do 
that. We are not interested. These are the people who cloak themselves 
with small business, except if the Chinese want to steal the small 
businesses, that is okay with us. We are not going to do anything about 
it, because it might upset some of the big deals going on between GM to 
move all of their manufacturing to China, or Boeing to move all of 
their manufacturing to China, or IBM; you know, the big companies. So 
small business gets written off.
  So not only are we losing the big manufacturing firms; our small 
firms, our innovators, are being pirated by the Chinese. The 
administration will do nothing about it. We are borrowing almost $2 
billion a day. This is a crazy thing we are doing to the future of our 
Nation, and they want to tell us how great it is.
  Remember, it was the President's own economic advisor who, in the 
President's economic report a year ago January, said that outsourcing, 
that is, exporting U.S. jobs overseas like Delphi or GM or others, is 
yet just the latest and greatest new manifestation of the advantages of 
free trade.
  Mr. SANDERS. I believe, roughly speaking, although I do not have the 
exact words in front of me, but what he said is something like, if a 
product can be made less expensively abroad than in the United States, 
it makes sense to do that. So essentially what he is telling us, and 
this is the President of the United States' economic adviser, what he 
is saying to every corporation in America is, hey, dummy, they pay 50 
cents an hour there, $15 an hour here, where are you going to go? Go. 
So what you have is the Bush administration essentially telling 
corporate America that they should throw American workers out on the 
street and move abroad.
  I remember a couple of years ago, one of the largest corporations in 
America is, of course, General Electric. The fellow who is head of that 
corporation is a guy named Jeff Immelt. Mr. Immelt spoke to some GE 
investors and he said, and I roughly quote here, not the exact quote, 
he said, when I look at the future of General Electric, I see China, 
China, China, China, and China. Why not? Why would you want to pay an 
American worker a decent wage? Why would you want to reinvest in Oregon 
or in the State of Vermont when you can hire people abroad for 50 cents 
an hour or $1 an hour, and they go to jail if they stand up for their 
political rights? It sounds like a great place to do business to me.
  Mr. DeFAZIO. Remember how they have sold this, how they sold CAFTA, 
NAFTA? It was, we are opening up markets for U.S. workers and U.S. 
products. We want to put Americans to work. We want to create wealth in 
this country. NAFTA, Bill Clinton said, was going to bring 400,000 jobs 
to America. He was off by a few. It actually exported 1.2 million jobs 
from America to Mexico, so he was off by a little bit there.
  Bill Clinton talked about how all the Mexicans were going to buy our 
goods. The total buying power of Mexico is less than the purchasing 
power of the people of New Jersey. If they spent every peso they earned 
on U.S. goods, which, of course, they have to eat and provide housing, 
they could not do that. The same thing with CAFTA and the same thing 
with China. These workers who work in the plants that are producing 
these products, they cannot afford to buy them.
  Mr. SANDERS. Let me interrupt my friend and tell you, I do not know 
if you have been to Mexico to view this.
  Mr. DeFAZIO. Yes, Machiadora.
  Mr. SANDERS. I have been on several occasions to Machiadora, and what 
a sad sight it is. When you go there you see these modern factories, 
and then a mile away from these modern factories, not only by American 
interests, but European interests, Japanese interests, a mile away from 
those modern factories you see people literally living in cardboard 
shacks because their income is so low, their wages are so low that they 
cannot afford decent housing, even by Mexican standards, being 
exploited terribly.
  But that is what we are seeing, a huge shift in manufacturing from 
the United States to China and to Mexico. And do you want to hear one 
of the ironies is that many of these corporations who have gone to 
Mexico are now leaving Mexico in order to go to China, because they do 
not want to pay Mexican workers $1 an hour. Go to China. You can pay 
people there 50 cents an hour.

[[Page 24047]]

  It is a very serious problem currently existing in Mexico, and it is 
part of that whole race to the bottom.

                              {time}  1945

  American workers, that is where our competition is. That is what this 
President, this Congress has said. Your competition are desperate 
people earning pennies an hour and if you don't lower your standard of 
living, they are going there.
  Is that a sensible policy for the middle class of this country? 
Obviously it is not. Nobody here is not concerned about the poor people 
in the world. We want to see those people being able to feed their 
kids, have decent jobs, have health care, have education. But you don't 
have to destroy the middle class of this country in order to improve 
the standard of living of poor people around the world. We can do both. 
We can raise the standard of living of American workers and improve the 
lives of poor people around the world rather than engage in this race 
to the bottom.
  I would like to mention to my friend, we can stay on the trade issue, 
but I know he has been very involved and we have worked together on 
this issue of the greed and the rip-offs being perpetrated literally 
today by ExxonMobil and the other large oil companies. I think just 
today, if my memory is correct, ExxonMobil announced that in the last 
quarter, the last 3 months, they earned $10 billion in profits which as 
I understand it is more than any corporation in the history of the 
United States of America; $10 billion. They are not the only large oil 
company to be earning record-breaking profits. In my State of Vermont, 
which obviously gets very cold in the wintertime, we are seeing a lot 
of senior citizens, lower income people, middle-income people, who are 
going to be having a very, very difficult time heating their homes this 
winter because the price of home heating oil is soaring. What I see in 
my State, a very rural State, where it is not uncommon for workers to 
travel 100 miles to and from their jobs, paying now $2.60, $2.70 for a 
gallon of gas, that is what I see. Meanwhile, ExxonMobil has just 
earned more profits than any other corporation in the history of the 
United States and every other major oil company is also earning record-
breaking profits.
  I wonder why the President of the United States has not said to the 
CEOs of the major oil companies: Come on into my office. Let's go into 
the Oval Office and let's talk about how you're going to lower gas 
prices, lower home heating oil prices so the American people don't have 
to take their paychecks or their limited incomes and give it to the 
large corporations.
  I know my friend has done a lot of work on this issue.
  Mr. DeFAZIO. I have got to correct the gentleman. He exaggerated. 
Their profit was only $9.8 billion for the quarter because they had 
some markdowns. That is the largest corporate quarterly profit in the 
history of the world, not just the United States of America. Some would 
say, well, you know, it has to do with supply and demand and all that. 
The biggest increase in profits for ExxonMobil, whose profits are up 75 
percent on the quarter, BP's profits up 34 percent on the quarter. I 
think their stockholders should be talking to them. How come they only 
went up 34 percent on the quarter? ConocoPhillips 89 percent on the 
quarter--that CEO is going to be getting a nice little bonus--is in 
their refining areas.
  The Republican chairman, from Texas, stood up on the floor of the 
House and said, ``We have closed 300 refineries in America in the last 
10 years.'' If he is talking about ``we,'' that is, if he identifies 
himself as an oil company executive, that is true. If he is talking 
about the government of the United States of America, the laws of the 
United States of America, environmental laws, tax laws, other things, 
no. The 300 refineries that were closed were closed because of hundreds 
of oil company acquisitions and mergers and a deliberate policy.
  There has been uncovered a memo from Conoco to other major oil 
companies back in the mid nineties that said: We have a great idea. 
We're all only getting 27, 22 cents a gallon on refining. If we close 
down a bunch of refineries, we can drive up those margins. They have 
succeeded beyond their wildest dreams. Oregonians were paying three 
bucks a gallon on Labor Day weekend. We are not in the east coast 
supply train so it is a little hard to say it had something to do with 
Katrina. But we were paying three bucks, $3.05 a gallon for regular, I 
remember paying. That was because the refiners cut went from 22.7 cents 
a gallon to $1.11 a gallon, a 500 percent increase in profits for the 
refiners. In fact, there is a new company, a new kid on the block, the 
largest refiner in America now called Valero whose CEO when George Bush 
offered to let him build new refineries on closed military bases with 
no environmental restrictions, he basically said, why would I want to 
do that? It's working just great the way it is. They are making 
unbelievable profits price gouging. It is exactly the same thing that 
Enron did in California. Enron in California got ahold of a bunch of 
generating plants and then they would shut them down and they would 
say, oh my god, we've got to charge you 10 times as much for your 
electricity today because there's a shortage. They are doing the same 
thing with refineries. They shut them down and they say, Oh, there's a 
refinery shortage. Americans are just going to have to pay more. Those 
darn environmentalists. None of them were closed because of 
environmental reasons, and they haven't applied to build any new ones.
  Yesterday the Republican leaders of Congress held a press conference, 
which was kind of pathetic, where they said, Pretty please. We don't 
care about your really high profits, but we've heard there might be 
some gouging going on and you better stop that. And pretty please use 
some of your profits to build refineries.
  No. It doesn't fit their business model. They are making money hand 
over fist. Their production end where they pump the stuff out of the 
ground, their profits are only up a measly 50 percent. On the 
distribution end they are only up 5 percent. The retailers are up 2 
percent. The Republicans the week before last did adopt some price 
gouging legislation. Who did they target? The refiners, whose profits 
are up 500 percent? No. The companies who are pulling it out of the 
ground, whose profits are up 50 percent? No. Even the distributors who 
are up 5 percent, not a big deal? No, they targeted the retailers whose 
profits are up 2 percent because it's those mom-and-pops who are 
responsible for those high prices, let me tell you. But the friends of 
small business target the retailers and let the price gougers, the 
refiners, off the hook. Then they say, oh, we need to open up more 
land, we have to do this, we have to do that. No. Plain and simple this 
business model is immensely profitable in the industry and until we go 
after them has no incentive to change that business model.
  The gentleman is right. The target is now fixed on your people. They 
have turned it from price gouging my people on gasoline to price 
gouging your people on home heating oil. But next spring they will turn 
their sights back to gasoline. They cannot extort as high, economists 
call it rent or price for their excess products in gasoline in the 
wintertime because people don't drive as much. In the summer they can 
do that.
  Mr. SANDERS. Just so that everyone remembers, one of the points that 
the President made during his campaign, he comes from an oil 
background. The Vice President comes from an oil background. They know 
about these things. So for all folks in America who are paying 
outrageously high prices for gas at the pump, outrageously high prices 
for home heating oil, well, we have a President and a Vice President 
who are very chummy with the oil industry which maybe helps explain why 
the oil industry is enjoying the highest profits they have ever seen 
while people all over this country are absolutely getting ripped off. 
While we talk about oil, I want to divert just a little bit and go back 
to the trade issue because I know you and I have worked on this one 
together as well. I always find it so amusing for folks who say, We're 
great free traders. We believe that competition is where it is.

[[Page 24048]]

  As everybody in Congress and everybody in America knows, there is an 
organization called OPEC, Organization of Petroleum Exporting 
Countries. OPEC's very reason for existence, the reason they came 
together, was to be a cartel which could limit production and raise 
profits. That is what they are. They acknowledge it. This is a self-
acknowledged cartel. So I find it just so curious that for an 
administration, for leaders here in Congress who tell us how much they 
believe in competition and the free market, I find it quite amazing 
that I have not heard one word from the White House about the need to 
take action at the World Trade Organization to break up OPEC so that we 
can see honest competition from different countries and companies in 
terms of the oil they are producing.
  Have you heard the President, the great exponent of free enterprise 
and competition, raise that issue?
  Mr. DeFAZIO. To be totally fair, the last administration was pathetic 
on this issue, too. I first uncovered this issue during the Clinton 
administration. I thought they would be happy to hear it. They could 
help American consumers. They were big rules-based trade guys. They 
said, no, no, they didn't believe it. I had further legal analysis done 
and the legal analysis said, Yes, you can clearly file a claim. They 
are clearly violating the rules of OPEC. You can't constrain supply of 
a commodity in international trade if you are in the World Trade 
Organization to drive up the price, only for conservation purposes. 
They certainly can't make that case.
  But the Clinton administration would not do it. I have heard, well, 
maybe the Bush people, he understands oil, the Vice President 
understands oil, they will get tough and take on OPEC. They are tough 
guys. And so I contacted them. I have gotten a form response from the 
Trade Representative and the Commerce Department. I have introduced 
legislation here in the House which the Republican leaders refuse to 
schedule which would mandate the President file a complaint against 
OPEC.
  Free trade, you have got to realize, only works one way. It only 
works to stick it to American workers. It doesn't work for American 
consumers. They are not going to use free trade rules to go after OPEC. 
They are not going to use free trade rules to go after the company in 
China that cloned my furniture company. They are make a little feint at 
it. They are saying, Oh, we're going to go to the WTO and ask them to 
look at whether the Chinese are pirating things. All they have to do is 
pick up the Trade Representative's report or Pat Choate's book and they 
can read page after page after page of documentation of the Chinese 
stealing American products and goods and jobs. But they have only filed 
one complaint. This administration, 5 years in office, has filed one 
trade complaint against China, to be totally fair, on behalf of a 
pharmaceutical company. That is the only one they have filed. The 
thousands of small businesses and big businesses are being ripped off, 
OPEC who is ripping off everybody and driving businesses out of the 
United States of America, they won't take them on, but they did file a 
complaint on behalf of the pharmaceutical industry in China.
  Mr. SANDERS. The reason for all of that is obviously very clear. 
Virtually every piece of legislation that comes to this floor of the 
House is frankly bought and paid for. Why would you stand up to our 
China policy, which has now a $160 billion trade deficit, the loss of 
millions of jobs, the lowering of wages throughout this country, why 
would you stand up and try to fight that when you have corporate 
America investing tens of billions in China, donating huge amounts of 
money to the President and other political people, why would you stand 
up for American workers in the middle class when you could defend China 
and the large corporations that go to China?
  When we speak about our trade policy, I don't want anybody to think 
that we are just talking about blue collar jobs. One of the major 
economic crises facing our country today is not just the loss of 
manufacturing jobs in the auto industry, the steel industry, textiles, 
furniture, et cetera, et cetera. That is hugely important. But what is 
happening now, in addition to the loss of manufacturing jobs, we are 
beginning to see the hemorrhaging of white collar information 
technology jobs. For many years, the rhetoric here in Washington was, 
well, don't worry too much if you're going to lose the blue collar jobs 
in your community because that's kind of old-fashioned economics. We're 
not into that anymore. The real trick is to make sure your kids get a 
college education and they can go out and get white collar, computer, 
information technology jobs, make 50, 60, $70,000 a year, good, clean, 
solid income. That's the future of America.
  But what is happening there? What is happening now is corporations 
are beginning to understand the same thing. Information technology 
companies are understanding what manufacturing companies are 
understanding. And, that is, why do you want to hire American workers 
at 40 or $50,000 a year when there are people in India, China, Russia 
and elsewhere who can do information technology jobs very, very well 
for 10 percent of the wages paid in the United States? So what you are 
beginning to see now is a hemorrhaging of white collar information 
technology jobs which are impacting people who have college degrees, 
people who have graduate degrees. We are seeing this taking place at an 
increasing level. The answer is if we lose blue collar jobs that paid 
middle-class wages, if we lose white collar jobs that paid middle-class 
wages, what is left?

                              {time}  2000

  Well, I guess it is Wal-Mart time. We have a situation now, in a 
company like Wal-Mart, which is far and away the largest employer in 
America today, a company which pays low wages, minimal benefits, 
virtually no pension plan, that is the future of America, lose good-
paying blue-collar jobs, lose good-paying white-collar jobs and move 
towards the Wal-Mart-type job in which our standard of living becomes 
less and less.
  Mr. DeFAZIO. Just to make a link there, remember, during the 
discussions here on this floor, and during the formulation of the China 
trade policy here, there were the special Wal-Mart provisions that were 
added to that legislation, China being the largest producer of products 
for Wal-Mart. Wal-Mart has been driving manufacturers out of America.
  There was a fan company driven out of Ohio. Finally, they did not 
want to go. They wanted to keep making them here, but Wal-Mart said we 
can get them cheaper. You make them cheaper. The guy said, I can't make 
them any cheaper. This is really efficient. We are making great 
products here in the United States of America. I am paying these people 
a decent wage. They said, no, we know you can do it better. No more 
contract unless you go cheaper. We know where you can go, China.
  They are doing that to business after business after business, 
driving them out of America, driving them to China. Yes, you can say 
short run, that is good. The products are cheaper. Well, the profit 
margins are a lot cheaper. The products are maybe a little cheaper, but 
people do not have jobs any more. People are buying things on credit.
  Not only are we borrowing $675 billion this year, projected, to buy 
products made overseas, Americans are borrowing money to buy the 
products that we borrowed money to import from overseas that we used to 
make here, because they have lost their jobs, and they are living off 
the equity in their homes or other things. We have record levels of 
debt in this country. So there are a host of cascading problems that 
are falling out of this unsustainable rush toward the bottom.
  Mr. SANDERS. My friend mentioned the argument in favor of the 
permanent normal trade relations agreement was this. China is a huge 
country, with enormous numbers of consumers. Think about the potential 
market that we are going to have by selling product to China, all the 
jobs that we are going to be creating. That was the argument.
  Well, it turns out I was in China a couple of years ago. We actually 
met

[[Page 24049]]

with, I believe the gentleman was the head of Wal-Mart China. We went 
to Wal-Marts, and we talked to a number of their executives including, 
I think, the head of Wal-Mart China. Somebody asked a question of them. 
They said, will you please tell us, we are in your store here, it is a 
huge store, and in many respects it looks like an American Wal-Mart 
store.
  Somebody asked them, tell me, I am looking around, and I see all of 
these American products from soaps to basketballs to whatever it is. 
What percentage of the products here in Wal-Mart China are made in the 
United States of America and brought to China?
  The guy was a little bit sheepish. He really did not want to hear 
that question. He said 1 percent. Now obviously why would anybody, any 
large corporation, make a product in the United States and send it to 
China when you can produce it in China with wages substantially less 
than they are here.
  Mr. DeFAZIO. Let me tell you, I had a container board company in my 
district, major corporation. They closed it down. They had one candid 
executive who told the truth. He said, why would anybody make container 
board in the United States of America any more? The container board is 
made to package products. The products are all made in China. The 
container board industry is moving to China so they can make the 
container board in China for the products made in China to ship back to 
the United States of America, even basic industries like that.
  I mean, it is extraordinary the breadth and the depth of the 
undermining that is going on here. When you ask them what is your long-
term vision, Alan Greenspan, the chief economist hack of the country, 
likes to say, oh, this shows how much people have faith in us. They 
will lend us all this money. But then when you say is it sustainable to 
borrow $600 or $700 billion a year forever.
  Well, no, no, no. This is a temporary situation that will be 
corrected. How is it going to be corrected? If the dollar went to 
Arrupe, how would it be corrected? It is not going to be corrected 
through the typical currencies. We are buying everything overseas. The 
Chinese have basically pegged their currency to ours. No matter how 
much the dollar goes down the products cost the same. Oil costs more 
because we are paying for it, and they are raising the price.
  The old models of trade do not work any more. But this 
administration, because it is working well for a very few, for the 
corporate CEOs and for a few investors, are perpetuating the model to 
the point where they push America over the final edge. You talked about 
the CEO of General Electric. The former CEO of Boeing gave a speech 
where he said he could not wait until Boeing was not referred to as an 
American company anymore.
  Think about it. If our Republican colleagues do not care about the 
middle class and small business, which they pretty clearly do not by 
perpetuating these policies, they at least ought to care about their 
number one thing they are supposedly tough on, national security. So, 
in 30 years, when we are in confrontation with China, we have no 
manufacturing base at all left in this country, we do not make 
airplanes any more. Like the year before, we predicted we would get 
into a potential conflict with China, say, over Taiwan. We will call 
them up and ask them to sell us weapons so we can defend ourselves 
against them.
  How is this going to work? They won't need weapons. They have so many 
of our assets in their bank as of now. When George Bush took the 
presidency they had $60 billion in U.S. assets. As of the end of last 
year they had $242 billion of Treasury bonds. They are headed from 
being number 2 toward being number 1. They will eclipse Japan in a few 
years as the largest holder of our debt.
  All they have to do is threaten to dump our debt on the market and 
crash the dollar, and they can control the United States of America.
  They are putting us so much at jeopardy. If they do not care so much 
about the middle class, if they do not care about small business, they 
have to care about the national security implications of this, and the 
economic security implications of this. But they do not seem to. A few 
people are doing really well, and they consider themselves sort of 
stateless people, like the guy who owns a cruise line, who gave up his 
U.S. citizenship, lives in the U.S. but he took Bahamian citizenship so 
he would not have to pay taxes any more. He just lives here and all his 
customers are here. I mean, that is great. What a great model for the 
American people.
  Mr. SANDERS. I think we are running out of time. Maybe we can just 
kind of wrap this up by saying this. This is a great, great country, 
and the concern that many of us have is that despite people working 
harder and harder, despite new technology being there that makes us 
more productive, for some of the reasons that we have discussed 
tonight, and many of the others that we have not discussed, what we are 
seeing in America is that the middle class is becoming poorer. Millions 
of American families today desperately want to be able to send their 
kids to college so that their kids will have a better income and 
standard of living than they do. They cannot afford to do that. What we 
are seeing is families being stressed out, because both husbands and 
wives are working incredible hours in my State in Vermont. It is not 
uncommon for people to be working two or three jobs trying to cobble 
together an income.
  We did not touch on health care, and the disintegration of our health 
care system, 46 million Americans without any health insurance 
whatsoever, tens of millions more who are underinsured, people who are 
dying because they cannot accord to go to a doctor, and their illnesses 
become so severe that they are incurable by the time they walk into the 
doctor's office.
  We did not touch on the greed of the pharmaceutical industry, which 
makes huge contributions to the political profession, mostly to the 
Republicans, and the result being that we end up paying by far the 
highest prices in the world for prescription drugs; and the passage of 
a Medicare prescription drug bill, which does not allow Medicare and 43 
million recipients to negotiate with the drug company, so drug prices 
will go up and up.
  The bottom line here is, in my view, that unless ordinary Americans, 
middle-class, working people, begin to stand up and fight back to 
reclaim this country from a handful of wealthy and powerful interests, 
who are using their power to make themselves wealthier at the expense 
of almost everybody else, unless we turn that around, the future of 
this country is not great for our kids and our grandchildren, 
everything being equal. Our kids will have a lower standard of living 
than we will.
  I would like to let my friend from Oregon conclude.
  Mr. DeFAZIO. The new CEO of Delphi said that very plainly. He said 10 
bucks an hour. That is the future for manufacturing workers in America. 
As you mentioned, it will not be very long until they try to put the 
same squeeze on knowledge-based workers. They have done it to other 
skilled workers.
  Just yesterday Northwest Airlines announced, or was it Continental, 
whichever one of those is currently in bankruptcy, they are both in 
bankruptcy. Anyway, one of those two airlines announced that they were 
going to outsource their flight attendant jobs because they can get 
cheaper jobs overseas. They want to do the same thing with pilots.
  We are outsourcing the maintenance of our airplanes. More than half 
the heavy maintenance on our airplanes is now done overseas with very 
little supervision from the FAA. We are losing those jobs, too, because 
they can get a mechanic for $2 an hour in El Salvador, where they would 
have to pay a skilled mechanic in the United States of America maybe 
$25, $30 an hour. They do not want to pay those wages. The race to the 
bottom is going to end very, very poorly for most Americans. We have 
got to stop it.
  Mr. SANDERS. We have got to stop it.
  Mr. DeFAZIO. We have got to stop the trade policies, tax policies, 
the fiscal bankruptcy policies that we are doing. I don't mean by the 
bankruptcy

[[Page 24050]]

bill, that was bad enough, written by the credit card companies, but 
the bankrupting, the looting of America that is going on with this 
administration.
  It is just laughable when the Republicans parade down here and talk 
about the spending of the Democrats when they control everything and 
they have increased the debt by 62 percent in 5 years. How do you blame 
the Democrats for that when they are in charge of every branch of 
government?
  Mr. SANDERS. The House and the Senate and the White House. They have 
it all.
  Let me just conclude by thanking my friend from Oregon for being with 
me today.

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