[Congressional Record (Bound Edition), Volume 151 (2005), Part 20]
[House]
[Pages 27584-27590]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE ECONOMY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 2005, the gentleman from Texas (Mr. Conaway) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. CONAWAY. Mr. Speaker, it is great to be here tonight to host this 
hour, and I am looking forward to having a colloquy with some of my 
friends from our party to discuss the economy, which I think in this 
era of where we are right now does not get bragged on enough; and so we 
are going to spend the next hour bragging on the economy.
  Before I do that, though, I would like to talk a little bit about 
what my friends on the other side have been talking about.
  When I was campaigning for this first time, the Chair and I are in 
our first term in this House, I talked about trying to make some 
friends on the other side of the aisle, trying to build a group of 
folks we could deal with across the aisle in a bipartisan manner. I 
committed to myself to try to avoid inflammatory rhetoric, overreaching

[[Page 27585]]

hyperbole, all the kinds of things that sometimes get us and our 
colleagues in a lot of trouble when we come to these microphones and 
speak.
  Having listened for the last few minutes to the folks on the other 
side, I would like to, with as much respect as I can, challenge some of 
the things that we have heard here tonight.
  I am a CPA. I spent 30-plus years in business helping write financial 
statements and do tax returns and all the kinds of things that a CPA 
does. With respect to financial statements, it was always the goal of 
the financial statement to fairly present the financial results of a 
particular enterprise, whether it is a small business or a large 
business. The goal was the same, get all the information out, allow the 
investor, the banker and the owner to make fair and well-informed 
decisions.
  One of the things we do here each night is to try to do that same 
thing. We try to get information out to each other, to the American 
people, so that they can make good decisions; and then, hopefully, we 
can make good decisions as well.
  Sometimes it is not what is said that is as important as what is left 
unsaid, and I would like to point out a few things tonight that were 
left unsaid while my colleagues talked about the debt of the Nation and 
how we got in this particular position.
  One of the things that you heard over and over is that we are 
experiencing the largest deficits ever, and that is an accurate 
statement. But it also ought to be put in context with a couple of 
other ``largest ever,'' and that is, that we are now in the largest 
economy, the largest U.S. economy, ever. The American economy, U.S. 
economy, has never been bigger than it is today. That is not an excuse 
for the deficit, but it helps to put it into context.
  We also have more people working in America today than ever. More 
people employed, more people self-employed, more people at jobs every 
single day to try to feed their families, provide for themselves, and 
make their communities a better place to live. That is a point that 
ought to be said in the same sentence or same several sentences when we 
talk about the deficit.
  We have got more people owning homes today than have ever owned homes 
in America, and that is a major statement because with respect to 
probably on an absolute basis from the family standpoint, homeownership 
is the single largest asset, single largest borrowing that most all 
families will ever do. There is obviously some exceptions to that; but 
by and large, most folks will see their biggest debt is their home and 
biggest asset will be the equity in that home. Overall, good news with 
which to examine the deficits.
  Now, coming at my role here in Congress with a background in finance, 
background in accounting, you go at budgets or correcting budget 
deficits, there is really only two things to do. You either raise 
revenues or you cut expenses, and what got left unsaid tonight over and 
over and over as my colleagues on the other side talked about the 
spending that the Republicans have championed over the last 5 years in 
our attempt to try to reduce that was where would the Democrats not 
spend money.
  We heard a lot of things about what they did not like about the $50 
billion that we passed a couple of weeks ago in rates of reduction in 
the growth of spending in mandatory programs, mandatory programs being 
two-thirds out of our annual budget. They did not like any of those. 
They would argue that every single one of those cuts was into programs 
that were totally efficient and totally without an opportunity to 
reduce spending in those areas, and they were not really cuts as I have 
mentioned. They were simply reductions in the rate of growth.
  What got left unsaid was where would the Democrats, our Blue Dog 
colleagues, actually cut, which program. Let us be precise. It is real 
easy for my colleagues and me to stand up here and say we are against 
excess spending, we are against the runaway spending, we are against 
all those kinds of things. But talk is cheap in west Texas, where the 
Chair and I hang out. Where are the specific programs that they think 
are subject to being cut? We did not hear any of that.
  Maybe over the next several weeks, as they said, they are going to 
come down here again next Tuesday night and talk about what their plans 
are, and maybe then they will lay out for us are they going to cut 
defense. I do not think so. Are they going to cut homeland security? We 
did not hear that tonight. In fact, what we did hear is that they are 
going to increase spending in those areas. Are they going to cut 
mandatory spending? It did not sound like it. It sounded like they 
would prefer to increase spending in all of these areas.
  That leaves the nondefense, nonhomeland security discretionary 
budget, which is about $400 billion, a lot of money; but if we have got 
a $300 billion deficit and we only have $400 billion that they would be 
willing to kind of work on in terms of providing us with spending cut 
direction, that runs everything else by the way. So I do not 
realistically think you can cut out of the $400 billion that is in 
discretionary spending that you can cut enough to eliminate $300 
billion in deficits.
  The other side of the equation, though, is revenue. What I did hear 
tonight is that my colleagues are in favor of tax increases, period. 
Someone once said that trying to work your way out of a deficit with 
tax increases is like standing in a bucket and trying to lift yourself 
up with the handles. Those do not work.
  What we have seen over the last 3 years, 4 years now, the new tax 
rates, the new tax code that we have in place for America, a tax code 
and a tax scheme that is pro-growth, pro-job creation, is a recovery 
from a pretty tough time. Let me just go quickly through a couple of 
numbers that will help you set in context, and then I would like to 
allow a couple of my colleagues time to visit with us about that.
  In 1999, the Federal Government's total tax receipts, and this was in 
the years of surpluses as they have mentioned, was $1.827 trillion; and 
then in 2000, it was just a little over $2 trillion in tax receipts. 
Then we had a couple of things happen that seem to get lost often when 
we are in these Chambers and we are talking about projections that were 
done back in 1999 and 2000, about the ongoing surpluses as far as you 
could see into the future.
  We had a little thing called September 11, 9/11, horrible attack on 
this country that had a devastating impact on our economy. We also had 
the bust of the dot-com era, the stock market bust. We had corporate 
accounting frauds with which I am very familiar. A lot of things went 
bad. We were already, unbeknownst to most, already in a recession and 
heading into recession.
  In 2001, it went down to $1.99 trillion. In 2002, it went down to 
$1.853 trillion. In 2003, it went down to $1.782 trillion. That is when 
the 2001 tax cuts and the 2003 tax cuts began to take effect and tax 
revenue recovered the next year to $1.88 trillion. In 2004, the year we 
just finished, it was $2.153 trillion.
  That is the way we should raise taxes, is to grow this economy and to 
have more people working than have ever worked before. All of those 
good things increase receipts for the Federal Government, and that is 
the way you do it.

                              {time}  2145

  You do not do it by raising rates and taking more money away from 
people that have earned it.
  I noticed tonight they mentioned tax increases on earned income. Tax 
increases on money that people have earned. I spent a long time trying 
to earn money, and I know how hard it is to come by. I spent a long 
time trying to advise clients what to do with their money and how to 
comply with the Tax Code, and I understand how difficult that is when 
those tax laws go up.
  So we have got some things left unsaid from our folks on the other 
side, and perhaps next week they will come back with a specific plan 
and specific programs that they would propose that we reduce spending 
in, and then I suspect that will get the attention of an awful lot of 
folks on our side of the aisle and we can then go about trying to craft 
some sort of a bipartisan bill that we can work with.

[[Page 27586]]

  Because I hang out with some folks that would really like to reduce 
the Federal Government's spending. I think we should be about doing 
that, and I think if the other side comes to us next week with some 
specific program cuts they would champion, maybe we can do that.
  I want to ask my colleague, the gentleman from Georgia (Mr. Price), 
also a freshman with me tonight, and he has agreed to come and speak 
with us on the economy and share his thoughts with us, so I yield to 
the gentleman from Georgia.
  Mr. PRICE of Georgia. Mr. Speaker, I thank Congressman Conaway for 
organizing this hour and giving us an opportunity to present what we 
will call ``correct the record.'' How does that sound? I served, as you 
know and others, four terms in the State Senate in Georgia, and in 
three of those terms I was in the minority. At that time, we used to 
kind of call the majority party on the carpet and we would make certain 
that people knew exactly what they were doing. We got to where we were 
giving away what we were calling a stuck pig award. And we called it a 
stuck pig award because when you put the truth out on the table, some 
folks sometimes squeal.
  That is kind of what I heard tonight from the Blue Dogs. They were 
very eloquent in their presentation, but what I heard was squealing. 
That is what I heard. I heard squealing.
  They talked about the Deficit Reduction Act and why they thought it 
was done and why they felt it was to cover tax cuts. And we are going 
to talk about that a little tonight, and I appreciate the gentleman's 
bringing that up and putting that on the table. But I think it is 
important for people to appreciate and understand that across the 
Nation the reason that we took that step 2 weeks ago with the Deficit 
Reduction Act was not to cover for tax cuts, which, as I said, we will 
mention and talk about very specifically, because we are very proud of 
the tax decrease package we have that we will be putting on the table, 
but the reason we did the Deficit Reduction Act was to decrease the 
size of government. It was to cut waste and fraud and abuse and it was 
to fulfill the promise that we make, and I know some folks on the other 
side of the aisle make to their constituents, and that is that it is a 
principled position of decreasing the size of government, making the 
government smaller and spending less money.
  That is why we passed that bill. That is why we put it on the table. 
We would love to have had some support from the other side of the aisle 
from some folks who say so often that they do believe that the 
government spends too much. We gave them a chance to put that vote up, 
and you heard them tonight themselves say, and they said so proudly, 
listen to this, not one Democrat voted for that. Well, now, that is 
real leadership. You put a spending cut, a savings bill on the table 
and not a single Democrat supports it.
  Now, Congressman Conaway mentioned the increased tax revenue, and I 
think it is important to say that when you decrease taxes, what 
happens. What happens when you decrease taxes? The other side would 
have you believe that revenue plummets, that revenue to the Federal 
Government plummets. Well, if you look at the facts, the facts are that 
when you decrease taxes, what happens is that you increase revenue, as 
the gentleman said.
  This chart is from the CBO and it shows clearly, as my colleague 
mentioned, in 2003, tax revenue to the Federal Government, $1.78 
trillion. That is when the most recent tax decreases, tax cuts, took 
effect at that point. In 2004, $1.88 trillion. In 2005, $2.14 trillion.
  Mr. CONAWAY. If the gentleman will yield for one second, let us 
correct our language. Because what we are talking about voting on this 
week are extensions of the current Tax Code. These are not tax cuts. 
They are only cuts when the Federal Government has got some claim to 
this money.
  So what we are talking about doing on Thursday or Friday of this week 
is to extend the current pro-growth, pro-job creation tax scheme we 
have in place. So let us not talk about it in terms of cuts in the 
future, let us make sure my colleague and I use the right phrases.
  Mr. PRICE of Georgia. I appreciate that so much, because that is 
exactly right. Anybody that is opposed to extending these tax decreases 
is in favor of, in fact, a tax increase.
  And what could we expect from continuing the tax decrease? Well, I 
would expect, just as I know my colleague would, that the revenues to 
the Federal Government will increase, more than enough, I am certain, 
to continue the appropriate programs that we should at the Federal 
level, and, in fact, what we ought to be able to anticipate is the 
opportunity to further continue those tax decreases.
  Now, I have some other examples of what happens when you decrease 
taxes that I would like to share with my colleagues. Remember, 2003 is 
when the tax decrease went into effect, and this chart here shows the 
amount of growth by each quarter, the amount of growth by each quarter 
before the tax cuts took effect and after tax cuts took effect.
  What you will see very clearly, this is as vivid as it gets, before 
the tax cuts took effect, you had kind of variable growth. We had the 
difficulty, as the gentleman mentioned, of the challenge of 9/11, the 
extreme hardship that we faced at that point and the difficulty of 
recovering from that. The tax cuts were put in place and they took 
effect at the beginning of 2003, and since then, since then we have had 
10 straight quarters of plus 3 percent or more growth in GDP. In fact, 
every one of those quarters is greater than every one of the quarters 
before when the tax cuts were not in place.
  That is the kind of remarkable growth that occurs when you put more 
money in people's pockets. It increases the amount of economic activity 
throughout our country.
  This is the remarkable chart that demonstrates again what happens 
with tax cuts, with tax decreases. This chart demonstrates the change 
in employment. These are the jobs across our Nation. Again, this line 
in the middle is when the tax cuts took effect. Before that you see 
from January 2001 through the beginning quarter of 2003, before the tax 
relief occurred, you see decreased job growth.
  Again, 9/11 took an incredible toll, but decreased job growth. What 
happens when the tax cuts takes effect? You have increased job growth, 
with 4.4 million jobs created since the tax cuts took effect. Every 
single quarter you have job growth. Sometimes less, oftentimes a lot 
more. This past month, we had 215,000 new jobs created across our 
Nation.
  So what happens when you cut taxes? You increase revenue to the 
government, you increase the economic productivity and growth in this 
Nation, and you increase jobs. That is what happens when you cut taxes.
  Would my colleague agree with that?
  Mr. CONAWAY. I agree with that completely, and the evidence is in the 
statistics that we have and that the gentleman is presenting tonight 
and that my other colleague from Texas will, I suspect, share with us 
as well.
  Mr. PRICE of Georgia. Let me just share a few more charts with my 
colleagues, because I think these charts just speak loudly. They say a 
picture is worth a thousand words, and these charts can say it so much 
better than I can.
  This shows again the jobs as it relates to the unemployment rate 
since the tax cuts took effect. So again, we have jobs that we see in 
this line down below here, the green line as it heads up; unemployment 
rate in the red line, and time across the bottom. So the tax cuts take 
effect right here. Job growth is relatively low. Continued upward 
increase in the amount of jobs. And in terms of the rate of 
unemployment, topped off in early 2003, and since then, has been 
steadily declining.
  In fact, we are now at an unemployment rate in this Nation of 5 
percent, which many economists will tell you is full employment; that 
people are changing jobs or moving or from between one position or 
another, that 5 percent unemployment is virtually full employment.
  The unemployment rate right now is less than, less than the average 
unemployment rate for the 1970s, for the

[[Page 27587]]

1980s, and everybody remembers the boom time in the 1990s, for the 
entire decade of the 1990s. Less than the average rate right now for 
those decades. So I think that demonstrates clearly exactly what 
happens when you decrease taxes.
  And the wonder and the beauty of our economy is that it responds so 
consistently and so clearly and really so quickly.
  Let me share one more chart, because I think that oftentimes, we have 
the other side talking about the spiraling deficit and how the tax 
decreases add to that deficit. Well, in fact, what has happened over 
the past number of months and years is that the deficit in fact has 
decreased. With a decrease in taxes, the deficit has decreased. And 
over the past 18 months, what we have seen is a 30 percent decrease in 
the deficit. In fact, this year, a $138 billion decrease in the 
deficit.
  So I want to thank my colleague once again for providing this time, 
but I think it is important that the American people appreciate that 
the responsibility that we believe we have in Congress is to make 
certain that individuals have more money in their pocket, are able to 
determine greater their destiny, to decrease the size of government, 
and that all of those things play into increasing the ability of the 
market to increase jobs and increase the productivity of our private 
sector and economic development.
  Mr. CONAWAY. Mr. Speaker, I want to thank my colleague from Georgia 
for coming out tonight and sharing these facts with us. I want to quote 
my good colleague from Texas, everybody is entitled to their own 
opinion, but none of us are entitled to our own set of facts. And the 
more we speak to the facts and the less we talk about the make-believe, 
I think the better off we all are.
  This is clear and convincing evidence that the tax system, while 
flawed in many ways, is working, and that to tinker with that at this 
point in time is muddle-headed and hopefully something we will keep 
from happening. So I want to thank my colleague for coming out and 
joining us.
  And I now want to recognize my good friend and colleague from Texas, 
Congressman Hensarling, who has been at this for four or five times as 
long as I have been, and who is a constant champion of reining in 
Federal spending.
  We sometimes equate Federal spending with the Federal Government's 
growth, and I think that is an accurate portrayal, and Congressman 
Hensar-
ling is a leader among many of us here on the Republican side, and in 
the Congress overall, and a voice calling for a smaller Federal 
Government and also smaller Federal spending to accomplish that.
  So I now yield to the gentleman from Texas (Mr. Hensarling).
  Mr. HENSARLING. Mr. Speaker, I thank my good colleague and fellow 
Texan for yielding to me this evening. I appreciate his leadership on 
the issue of helping promote economic growth and helping promote jobs 
in our economy. I also want to thank my colleague, the gentleman from 
Georgia, for his illuminating presentation and, indeed, a picture is 
worth a thousand words, so we benefited by many, many words tonight 
through those pictures.
  There are a number of facts that the American people need to know, 
Mr. Speaker, and I hope that we can help illuminate those this evening. 
As we enter the Christmas season, people are looking for some good news 
and, Mr. Speaker, there is a lot of good news out there. There is good 
news because of the economic policies that have been enacted by this 
Republican Congress at the instigation of President Bush.
  Since we passed tax relief, as the gentlemen have pointed out, 4.4 
million new jobs, jobs with a future, have been created in this 
economy. That is 4.4 million new jobs. Mr. Speaker, that is wonderful 
news at this Christmas season. Now, before we passed the tax relief, 
this economy was struggling. It was struggling after 9/11, it was 
struggling after the wake of all the corporate scandals, and it was 
struggling in the wake of the bust in the high-tech bubble.
  But what this President knew, and what this Republican Congress knew, 
is that if you would only allow the American people to keep more of 
what they earned, put more capital into small business, allow families 
to keep more of what they earn as they go about their daily lives, that 
people would go and they would expand their businesses.

                              {time}  2200

  They would become entrepreneurs, and they would start new businesses. 
And then the greatest housing program, nutritional program, and 
educational program in the history of mankind would be created, and 
that is a job in the free enterprise system.
  Thanks to the tax relief policies of this Republican Congress, that 
is what has been done. Now we are going to have this incredibly 
important vote, I believe, at the end of this week where the Democrats 
are trying to increase taxes yet again on the American people. What is 
odd about the procedures that we have, and my colleague from Texas 
knows this, but when a Member of Congress does something to enact 
spending, spending is forever; but somehow tax relief is only 
temporary. We have to vote to keep it alive. Spending goes on forever 
and ever and ever, but we have to keep tax relief alive.
  This is not about any further tax cut; this is about preventing tax 
increases on the American people. That is what this is about. Already 
the Democrats want to take all of the tax relief that has been enacted 
in past years away. Somehow they want to bring back the death tax so 
Americans will have to visit the undertaker and the IRS on the same 
day. They want to bring back the marriage penalty so that when two 
people fall in love, they are going to have to pay Uncle Sam extra 
money if they want to get married. They would double the child tax 
credit.
  I can tell you as a father of two young children, it is not easy. And 
yet the Democrats want to take that child tax credit and cut it in 
half. They want to take away the accelerated depreciation for small 
business and they want to tax investments, the capital of capitalism, 
that makes all of these jobs possible.
  Mr. Speaker, I have held a number of jobs in my life. I used to clean 
out chicken houses on a poultry farm. I used to tote luggage at a 
Holiday Inn in College Station, Texas, and I used to bus tables. And 
although I am somewhat loathe to admit it, I actually practiced law at 
one time.
  Mr. CONAWAY. Mr. Speaker, if the gentleman would yield, was the 
chicken coop cleaning better or worse than the practice of law?
  Mr. HENSARLING. That is an excellent question. I will say this, 
though. It has proven to be excellent practice for this particular 
avocation of Congress since there are a number of messes that have been 
left here as well that need cleaning up.
  But the point I was going to make is that of all of the jobs I have 
held, no poor person ever hired me. It was somebody who rolled up their 
sleeves, risked their capital, and went out and created a business. So 
Democrats keep on telling us how much they love jobs, they just seem to 
hate everybody that creates them because they want to go out and tax 
and tax and tax and tax. That is no Christmas gift for the American 
people.
  Let me tell you, Mr. Speaker, what is going to happen later this 
week, if we allow the Democrats to impose their tax increases yet again 
on the American people, let me tell you what could happen to the 4.4 
million jobs that have been created because of tax relief. Let me tell 
you about just a few in my congressional district.
  Not long ago, I went to visit a small business in my congressional 
district called Jacksonville Industries located in Jacksonville, Texas. 
They are an aluminum and zinc die cast business. They employ about 20 
people. Prior to passing tax relief, due to competitive pressures, they 
were on the verge of having to lay off two of their workers, two of 20. 
That is 10 percent of their workforce.
  Because of what we call ``accelerated depreciation,'' they were able 
to go out and buy this new piece of equipment. It

[[Page 27588]]

is large. It is noisy. I could not tell you what it does, but it makes 
them more competitive. And because it makes them more competitive, they 
went out and hired three new workers. They did not lay off two. They 
hired three. They hired Roger. They hired Jess. They hired Victor.
  The Democrats now, though, they want to go and increase the taxes on 
Jacksonville Industries. They want to take away the paychecks from 
Roger and Jess and Victor and replace them with welfare checks. Mr. 
Speaker, they call that compassion.
  I will tell you about Hugh Dublin and East Texas Right of Way and 
Tennessee Colony over in Anderson County in my district in east Texas.
  This company specializes in the purchase of leasing and leasing of 
right-of-way for property for many different purposes. Previously, it 
had two full-time employees, a very small business. But once we passed 
tax relief, this business took off. The economy soared. As you have 
seen earlier this evening, we are having over 4 percent economic 
growth. Their business soared, and so East Texas Right of Way went out 
and hired two other people who are unemployed, Dan and David. Those are 
two new workers who now have good jobs.
  Yet the Democrats this week are trying to increase taxes on Hugh 
Dublin and East Texas Right of Way. They want to take away Dan and 
David's paychecks and replace them with welfare checks. And, Mr. 
Speaker, they call that compassion.
  Let me give you one more example. Eddie Alexander of Triple S 
Electric in Henderson County, Texas, once again in my congressional 
district, has a small business that specializes in residential and 
commercial electrical contracting. Up until we passed the tax relief, 
his business consisted of himself with one part-time helper. But since 
the passage of tax relief and the economic boom that has brought on, he 
has hired two new individuals. He hired Jarad. Jarad was unemployed. He 
hired John. John was unemployed. Now they are both full-time employees. 
They started at minimum wage, and they have worked hard. They are now 
making above minimum wage, and they have both been able to go out and 
provide homes for their families, something that earlier they could not 
do.
  Yet the Democrats this week are trying to raise taxes on Eddie 
Alexander and Triple S Electric. They want to take away Jarad and 
John's paychecks and replace them with welfare checks.
  Mr. Speaker, they call that compassion. I do not see the compassion 
in that. I see compassion in keeping the tax relief alive. I see 
compassion in preventing tax increases on small businesses and 
preventing tax increases on American families. That is where I see the 
compassion.
  Let me tell you about some more compassion that I see in the economic 
policies of this President and this Republican Congress. We are seeing 
the highest rate of homeownership in the entire history of the United 
States of America under this administration and this Republican 
Congress. The highest rate of homeownership. Part and parcel of the 
American Dream is to go out and have your own home and put that roof 
over the heads of your own family. That is the American Dream. Under 
this administration, this Republican Congress, our policies, our tax 
relief policies that the Democrats are trying to take away, so many 
people have been able to buy new homes because of the tax relief. Yet 
the Democrats would take that all away with their tax increases. The 
compassion is seeing that we have the highest rate of homeownership in 
the entire history of the United States of America.
  Mr. Speaker, as you have heard earlier this evening, this Nation 
still has a big deficit challenge. But you know what, since we have 
passed tax relief, the deficit has come down. I wish it were because we 
were spending less. Many of us fight the battles up here to try to 
protect the family budget from the Federal budget. But what it is, we 
have cut tax rates and guess what, we have more tax revenues. And do 
not believe me, it is not my opinion, go to the United States Treasury. 
Look at the report. It is there in black and white. Already individual 
income tax receipts are up 14.6 percent over last year since we passed 
tax relief. Business income tax, corporate income taxes are up a 
whopping 47 percent. More revenues, more tax revenues are bringing down 
the deficit.
  Now, for some people that may not make a lot of sense, but it is 
happening. We have the proof. Mr. Speaker, we have seen it in history. 
Under President Reagan when we cut marginal tax rates, guess what? Not 
only did the economy grow but so did tax revenues. Tax revenues grew by 
about 25 percent.
  The same is true under the Kennedy administration. They cut tax 
rates, and real economic growth was promoted at about a 5 percent rate, 
and it increased revenues to the Federal Government by about 33 
percent.
  You can go back to what some people consider fairly ancient history, 
the Coolidge administration. Guess what? They cut tax rates and they 
got more tax revenue, an increase of 61 percent. Why? Again, if you 
will allow the American people, if you will allow small businesses, if 
you allow American families to keep more of what they earn, they will 
go out. They will start that new barbecue stand over on the corner. 
They will start a new transmission shop over there, and they will grow 
a new automobile dealership on that street corner. It is free 
enterprise. We have 200 years of history to show us that is where jobs 
of the future are created. That is where the great nutritional program 
is, the great health care program, the great educational program.
  But to support that free enterprise system, we have to prevent the 
Democrat tax increase that they are trying to impose upon the American 
people. I want to thank my colleague from Texas in leading this Special 
Order this evening and making sure that the American people know that 
due to the economic policies of this Republican Congress and this 
Republican President, there is a lot of good news today, 4.4 million 
new jobs. But that is in peril. It is in peril if we do not prevent the 
Democrat tax increase that we know is coming and coming soon.
  But when the American people know what is at stake, when they know 
that the Democrats want to increase taxes and take away jobs, the 
American people are not going to buy into that; and we will keep this 
economy growing and the American people will truly have a great 
Christmas and a great holiday season.
  Mr. CONAWAY. Mr. Speaker, I thank the gentleman from Texas for coming 
out tonight and sharing his background and his experience in this area. 
He is one of those loud, clear voices on behalf of limited Federal 
Government, limited Federal expenditures; and I am proud that he has 
come out tonight to help us with this.
  Let me flush out what he was talking about in terms of increased 
Federal receipts. Back in January of this year, the CBO estimated that 
fiscal year 2005's tax receipts, Federal receipts, would be about 
$2.045 trillion. CBO is an organization that gets paid to try to 
estimate these things. They generally do a really good job. When we 
finished out the year, I was looking at the same Treasury report that 
my colleague made reference to awhile ago, and for fiscal year 2005 
which ended September 30, 2005, receipts were $2.153 trillion, over 
$100 billion more in Federal tax receipts than we had estimated just 9 
months previously.
  So the numbers we have been talking about tonight, the $50 billion in 
tax cuts, the $56 billion and the impact extending the current tax law 
will have on tax revenues, pale against over 108 to $109 billion of 
increased Federal revenues that has come about as a result of the pro-
growth, pro-job creation tax policy that was put in collectively in 
2001 to 2003.
  In addition to that good news, at the end of last week, the GDP 
growth for the third quarter of calendar year 2005 was 4.3 percent. 
That is a good growth rate on any economy, a developing economy or 
whatever it is. But let us make sure that we understand this is on the 
single largest economy in the world. It grew 4.3 percent in the third 
quarter, and that is staggering growth under any conclusion.

[[Page 27589]]



                              {time}  2215

  The unemployment rate was mentioned earlier as being as low as 5 
percent. That is full unemployment in reckoning of many economists and 
is certainly lower than the averages of unemployment of the previous 3 
decades. The decade of the 1970s, which you remember, we had a big 
depression then, and as a result of a run-up in oil and gas prices. We 
had lower than in the 1980s, when those of us in the oil business 
experienced a significant downturn in 1986 and later, and then lower 
than the boom years of the 1990s when the unemployment rate was as low 
as anybody thought it would ever be. The current unemployment rate is 
actually lower than that. Statistics are full of all kind of odd and 
important indexes that statisticians and economists use to try to make 
projections as to where the economy is going. One of those that you do 
not hear a lot about is the consumer confidence index, and that is 
supposed to be a measure of how consumers feel about themselves, are 
they going to go spend money, do they feel comfortable with their job 
and those kinds of things. It jumped from an 85.2 percent rating in 
October to a 98.9 percent rating in November, a 1-month jump of over 13 
points in consumer confidence. What that tells us is that retailers for 
the Christmas season ought to do very well.
  One of my colleagues today said go try to find a parking spot in the 
mall these days, and for all of the doom and gloom that is out there in 
the media, it is not being reflected in Americans going to the malls 
and working on Christmas gifts and charity gifts for other folks that 
do not have it.
  So the consumer confidence is up. Another statistic that gets talked 
about a little bit is that sales of new homes jumped 13 percent in 
October, the largest 1 month percentage gain in 12 years, and new 
single-family homes also climbed to an all-time record high of 1.42 
million units, more people, again, as we have said several times 
tonight, more people owning a home in America than have ever owned a 
home.
  Now 1 month does not make a trend. But continuing to talk about 
Federal tax receipts and revenues, the first month of fiscal year 2006 
was the month of October of 2005. And during that first month, Federal 
tax receipts were about $149 billion, and a year ago, the equivalent 
month in October of fiscal 2005, which was October of 2004, Federal tax 
receipts was $137 billion, so a $12 billion gain in just 1 month 
against previous years' months.
  Now you have got to be careful. That may or may not be a trend. But 
it is hard to say it is bad news, that the tax receipts for October of 
this year are greater than tax receipts for October of last year. I 
think that is good news. I would also like to point out a couple of tax 
provisions that are included in the extension that we will do later on 
this week that are important, and one of those would continue the tax 
deduction for state and local sales taxes for States that do not have a 
State income tax, States like yours and mine, Mr. Speaker, and my 
former colleague. Texas does not have a State income tax.
  And so this provision would allow Texans to deduct, rather than the 
State income taxes, to deduct State and local taxes, which are used to 
fund many of the exact same programs that States who have income taxes 
use those taxes to provide goods and services to their citizens.
  Another deduction that is extended is the above-the-line deduction 
for higher education expenses. Now, trying not to bore everyone with 
tax returnese or speak, above-the-line deductions means that you get to 
detect that without having to itemize your deductions.
  So higher education expenses, the deduction for that is continued, as 
well as an important expenditure for many teachers who find the school 
budgets do not provide some of the extras, and maybe even sometimes 
some of the essentials that a teacher needs in providing a good 
classroom experience for her students, teachers get to deduct their 
out-of-pocket expenses above the line, which means they don't have to 
itemize deductions to get to deduct those personal expenses that the 
teacher may pay.
  One that I came across tonight, or an example of one I came across 
tonight is the tax incentive to revitalize the District of Columbia. 
Included in the Code of the past two tax cuts has been a $5,000 tax 
credit for anyone, any new first time home purchaser here in the 
District of Columbia. Well, one of the folks on my staff, who as you 
know, staff are legendarily overworked and way underpaid. One of the 
folks on my staff 2 years ago took advantage of this provision and 
bought his first home and has begun to build equity in that home over 
the past 2 years and would not have been able to do that were this tax 
provision not in place. When you sell a home, you have bought it from 
somebody who previously owned it, hopefully, and in all likelihood, 
that person is going to go invest that money in another home, so it is 
important that we have first-time buyers to work into the market, work 
into the housing market, because as we stated earlier, for many 
families, the ownership of a home is the single largest asset that they 
have in their portfolio. And this gentleman now has a home that he is 
paying a mortgage on, of course, but is building equity in that home, 
building equity in his personal wealth, and he is going to be better 
off as a result of having done that.
  Let me talk about something that we probably should have talked about 
right off the bat, and that is the Federal Government does not grow 
this economy. A lot of times, the Federal Government gets a lot more 
credit for good economic news than it deserves, and in all likelihood, 
sometimes a lot more of the blame for bad economies than it deserves. 
But the truth of the matter is a growing economy that we have right now 
is not created by a Federal Government. It was created by hundreds of 
thousands of hard working Americans, employees who go to work every day 
and work for their employer to try to provide a good or a service that 
that employer can sell and make money on.
  Self-employed individuals who have gone out there and taken the 
business risk of leaving that paycheck, leaving the security of a check 
every 2 weeks to try to make it on their own. Those are the folks who 
are building this growing economy, who are adding people to their 
payrolls, who are hiring new people or setting up additional businesses 
to take advantage of opportunities that we are having in this growing 
economy. So we cannot overstate the value of the hard working American 
in growing this economy. But we do have some risks a lot of times of 
overstating the impact the Federal Government has. In my view, the role 
of the Federal Government is to get out of the way of these hard-
working Americans and let them continue to grow this economy, pay their 
fair share of taxes, of course, but let us not do things that puts the 
government in the way of creating jobs, gets in the way of furthering 
homeownership, gets in the way of growing this economy and providing 
new opportunities for men and women in this country.
  I participated in, back in the early 1990s, in a needs assessment for 
Midland, Texas. This was an attempt to survey on a statistically valid 
basis throughout Midland County, what were the needs of people within 
Midland, what were the needs of your family, what were the needs in 
your neighborhood, what were the needs within the overall community. 
And we got all of this information together and began to sort them into 
like items and pared the list down to 10 so that we had, in fact, 10 
top needs that the people in Midland, Texas, told us they were having 
in their homes, their families, their neighborhoods and the community. 
And as you look down that list, nine of those needs would have been 
positively impacted by a family that had a job.
  It has been my experience that jobs cure an awful lot of ills within 
every community. When families are working, the family itself is better 
off. Communities are better off. The strains on the social network, 
that is the United Way, that is all those social charities that we have 
in place to create that safety net that is so vital in every single one 
of our communities, is less strained when more people have jobs. It

[[Page 27590]]

is also better supported when more people have jobs.
  So it is important that we give credit where credit is due with 
respect to this growing economy. The gentleman from Texas (Mr. 
Hensarling) mentioned one of his, or three actually of his constituents 
that are good examples of why these pro growth/pro job creation tax 
policies are in effect now and that we ought to continue them in 
effect.
  I want to talk about Calvin Fryar. Calvin is a good friend of mine 
from Brownwood, Texas. He and his partners own a company that 
distributes gasoline. They also have convenience stores. They hire 
people to work. And he told me the other day at dinner that, because we 
were talking about extension of these current tax cuts. He said that 
the one that was the most important to him as a small business owner 
was the section 179 deduction. Section 179 provides for the immediate 
write-off of certain equipment that is purchased by businesses and put 
into use each year. And I think it is about $100,000. Calvin told me 
that when that came into effect, I think it was 2003, that it helped 
him make a decision to invest additional money into the businesses that 
he was trying to create. And not only did he invest the amount of money 
that qualified him to immediately deduct that amount, he also invested 
a lot of money on top of that, and in doing so, created jobs, and not 
only did he create jobs for the people who built whatever it is he 
bought, but he also created additional jobs for his company because he 
was expanding his opportunities within the gasoline distribution area 
as well as convenience stores.
  So he was adding jobs to his business as a result of that one 
specific Tax Code that is expiring, and under the tax law that we will 
pass, hopefully pass on Thursday, will be continued.
  Another one of those that is very important, and my colleagues 
earlier in the previous hour mentioned it, and that is the tax rate on 
capital gains and dividends. If you were to listen to the colleagues on 
the other side, it is as if the Federal Government has some innate 
claim to some portion of your capital gains, some portion of your 
dividends, and I would argue that that is not logical. Where is it 
stated anywhere that the Federal Government has a claim on selling 
property that you have held, selling property that you have invested 
in, selling a business that you built from scratch? Why is it that the 
Federal Government has a claim to a certain amount of that?
  And right now, under the current tax law, the Federal Government has 
a claim on 15 percent of that capital gain, or 15 percent of those 
dividends. That may or may not be correct. It is the law of the land, 
but certainly, increasing that number, you would have to answer the 
question is, all right, why does the Federal Government have a claim on 
or does it own in some way the capital gain that I get when I sell 
stocks and bonds or when I sell a business? Why is it that the other 
side believes that a higher tax rate on capital gains is somehow some 
right of the Federal Government? That is not. If we were to let those 
current tax provisions expire, capital gains would get thrown back up 
to the previously high percentage rates.
  Everything is going to get thrown back in with ordinary income, the 
taxable income rates and we will be right back into a circumstance 
where we are raising taxes the wrong way, raising taxes by raising 
rates, as opposed to raising taxes by having an economy that is growing 
at a staggering rate providing new jobs to workers in this country.
  So I would argue against that as we close out this hour. If you look 
at the reporting, we are talking about the economy tonight, and if you 
look at reporting of economic news, it is, I guess, an attempt to be 
balanced. Balance is rarely neutral though. You will hear somebody talk 
about, well, you know, this economic statistic is looking up and 
looking better; but if that path continues, it will drive us into 
higher interest rates, or if we have got increased job growth or jobs 
going to be created at too fast a rate, then that is going to drive up 
inflation.
  So it is rare that you ever have good economic news simply presented 
as good economic news. And maybe we will never get to a point where 
that happens. Hopefully, on the nights that we get to come in here and 
talk about the economy, get to brag on the economy actually, we will be 
able to help set the record straight. As I mentioned earlier, my good 
colleague, Mr. Hensarling, has said often that we are all entitled to 
our own opinion but we are only entitled to one set of facts; not our 
own set of facts just the set of facts as are out there.
  Hopefully we can be responsible for what we say in front of these 
microphones, be held accountable for what we say. The other side made a 
lot tonight about accountability and all those kinds of things. I would 
argue that that same accountability ought to go to things that are said 
from behind these microphones.
  If I have said something that is incorrect, if I have made an 
insinuation or made some sort of a comment that was intended to 
mislead, that I am called to account for that. And I would hope the 
other side would ascribe to that same kind of philosophy, that the 
folks in the Chamber tonight who are listening to this debate, or 
listening to these arguments, not really debate since we are not going 
back and forth, but listening to the three of us put out information 
that we believe is important for the American people to hear and to 
understand--and to understand how we are coming to the conclusions that 
we are coming too, that we be held to a very high standard of what we 
say and that we are able to back up each and everything that we do say 
with facts that are verifiable.
  So Mr. Speaker, I want to thank you tonight for being able to lead 
this hour, and I want to thank my colleague from Texas, Mr. Hensarling, 
for his role in our talk tonight and I want to also thank my freshman 
colleague from Georgia, Mr. Price, for his helping me out tonight as 
well. So the message I would leave with the American people is this, 
that we have got a growing economy, we have got an economy that is well 
grounded and is going to sustain this growth; but that what we do not 
need to do is to increase taxes, tax rates on that economy, but that we 
continue the pro growth/pro job creation tax rates that have been in 
effect since 2001 and 2003.

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