[Congressional Record (Bound Edition), Volume 153 (2007), Part 1]
[House]
[Pages 1332-1339]
[From the U.S. Government Publishing Office, www.gpo.gov]




                TAX INCREASES PROJECTED UNDER DEMOCRATS

  The SPEAKER pro tempore (Mr. Wilson of Ohio). The gentleman from 
Pennsylvania (Mr. Shuster) is recognized for 60 minutes.
  Mr. SHUSTER. Mr. Speaker, I rise tonight to talk about and make the 
American people aware that we have 1,446 days counting down to the tax 
increase to the American people which will occur on January 1, 2011, if 
the new majority, the Democrats in Congress, don't act to extend the 
tax cuts that the Republicans put in place in 2001 and 2003.
  So in 1,446 days, we will see that tax increase. The Democrats don't 
have to act, all they have to do is run out the clock. Run out the 
clock, and we will see a $200 billion tax increase. It will be money 
taken out of American people's pockets between now and January 1, 2011, 
if they don't act.
  Those tax cuts as I said were enacted in 2001 and 2003. And what we 
have seen is an expansion in our economy, a great expansion that 
continues to this day that has created over the last 4 years 7.2 
million jobs. Just in the month of December, 167,000 jobs were created 
in this country. The unemployment rate is down to 4.6 percent. It is 
the lowest average we have seen in 4 decades, and that is directly 
attributable to the tax cuts that we passed in this Congress in 2001 
and 2003.
  Again, if we don't extend them, which I believe is the responsible 
thing to do so we see this economy continue to grow, we are going to 
take money right out of the pockets of the American taxpayers.
  Mr. Speaker, we will be debating tomorrow a tax increase. It has not 
taken longer than 20 days for the new Democratic majority to increase 
taxes. There will be a great debate here, and there are many in this 
country who think we should increase taxes on our oil companies. But it 
is the reduction in the tax on our oil companies that has allowed them 
to go out and look for new oil reserves to decrease our dependency. Yet 
the Democrats are, as I said, in less than 20 days, are going to put a 
bill on the floor that is going to increase taxes already on a segment 
of our economy. We will talk more about that later this evening.
  If we don't extend those tax cuts that we put in place in 2001 and 
2003, you are going to take money right out of the American taxpayers' 
pocket, anywhere from $2,000 to $4,000, right in that middle income of 
America. That is money that they can save to put away for their 
children's college. They can save to put a downpayment on a car, or buy 
a new washer and dryer. But the most important thing is if we take that 
money out of the American taxpayers' pockets, it will be some 
bureaucrat deciding how to spend that money, and not an American 
family.
  We removed 10.6 million low-income Americans from paying taxes in 
this country all together. We need to make sure that those people stay 
in that position, that they are not paying taxes when they are low 
income. We lowered the tax rates on small businesses and employers, the 
critical employers in our Nation that create the jobs.
  I hope that those on the other side of the aisle, the Democrats, will 
take a lesson from history from one of their own. Jack Kennedy, 
President Kennedy decreased taxes in the 1960s. What happened, there 
was increased revenue to the Federal Government. President Kennedy in 
the 1960s did the right thing. As I said, the revenues to the United 
States Government increased.
  Ronald Reagan did that in the 1980s, and revenue increased to the 
Federal Government. Once again, history repeats itself. In 2001 and 
2003, we cut taxes and what has happened is the levels of revenue the 
government has received are at greater levels than ever before in our 
history. That is what happens when you cut taxes.
  By raising taxes, all we will do is stifle economic growth in this 
country. We will take money out of our small businesses; we will take 
money away from the American taxpayer. Once again, this economy will 
stop growing. It will stop creating the jobs it has created over the 
last several years.
  I know I am joined here tonight by one of my colleagues who is a 
former small business owner and a former Army Ranger.
  Mr. Speaker, I yield to the gentleman from Kentucky (Mr. Davis).
  Mr. DAVIS of Kentucky. Mr. Speaker, we both had the opportunities to 
pursue the American Dream, to start our own businesses and create jobs. 
I look back on the last time there was a

[[Page 1333]]

large increase was in the administration that came in in 1993 that 
passed one of the largest tax increases in American history. What that 
meant to our business was less jobs, money that could have been 
reinvested and employed more people. The one thing we need to 
understand is that people know how to spend their money better than 
government does, to keep it in their local communities, to stimulate 
that local economy. And the tremendous increases in taxes just went to 
further Federal spending.
  I think the thing that we have seen by policies that allowed people 
to keep more of their own money is we don't raise taxes, we create more 
taxpayers. One of the things that is lost in much of the political 
noise that has gone on over the course of the last year is that 
revenues from income taxes have been at the highest point in American 
history because the most jobs have been created by allowing people to 
keep more of their own money.
  But in the aftermath of the last election, what most folks don't 
realize is that the average working-class family making between $30,000 
and $50,000 a year has voted themselves a tax increase of over $2,000 
that will take place in 1,446 days unless Congress acts as a majority.
  I invite members of the Blue Dog Coalition, those that are fiscal 
conservatives, to join together with us to ensure that those tax cuts 
stay in place.
  I have my son, Geoffrey, sitting behind me tonight who is 8 years 
old. I ask myself what kind of a country will he have. Will he have the 
opportunity to pursue that American Dream, to create jobs, to create a 
future and pursue his desire? That is what this is all about 
ultimately, providing personal freedom and discretion with their income 
to make a difference.
  We cut taxes in every walk of life. We encouraged families by 
eliminating the marriage penalty and we doubled the child tax credit so 
families with a large number of children would not be penalized, but 
made sure that they could make an investment in their children. We 
lowered tax rates for all Americans. We removed 10.6 million low-income 
earners from the tax rolls. To say that these tax cuts were simply for 
the rich was a myth because the person who benefited was the working 
family and small business owner who could put their dollars to work in 
their community to build a nest egg for themselves and ultimately to 
build a future.
  And what did it do on average? It returned $1,670 to the average 
taxpayer who took that money and spent it on personal needs or invested 
it, building a future for their children and their children's children.
  One thing that I found interesting when the resolution on tomorrow's 
energy vote came in, and I think we come from areas that are strong in 
manufacturing in Pennsylvania, Ohio, Kentucky, and Illinois. Energy 
security is one of the most important things that we are facing in the 
future of this Nation. We talk about it and we talk about initiatives 
that are going to create jobs coming from folks who have been in 
business. At the end of the day, what are we seeing, not only a tax 
increase in 1,446 days, but a tax increase on the American energy 
consumer that is coming by taxing domestic energy producers and pushing 
more business to Middle Eastern oil producers.
  I have some comments on some legislation that we have been working 
on, but I yield back for your comments on this.
  Mr. SHUSTER. I thank the gentleman. It is interesting to note, as we 
heard, that they are going to increase taxes in less than 20 days being 
in the majority. So it is going to be very interesting to see how many 
of our colleagues vote. I was interested to hear one of our new 
colleagues, Mr. Wilson, talk about change in America.

                              {time}  2100

  I don't disagree that the American people voted for change, but I 
don't believe that I heard anybody in my district that voted for me or 
against me, and I would be willing to wager that in Mr. Wilson's 
district in Ohio, a Southern conservative Ohio, that anybody there 
voted for a change to see our taxes go up.
  I cannot wait to join with the Blue Dogs when I see what kind of 
budget they get an opportunity, if they get an opportunity to introduce 
a budget in this Congress. I know over the past 6 years that I have 
been in Congress the Blue Dogs have been able to introduce a budget. I 
voted for the Republican budget, but I think, and I hope we get an 
opportunity to vote for the Blue Dogs budget. If they get a chance in 
this new majority to offer one, I think their budget will be much more 
reasonable, much more fiscally responsible than the Democratic 
majority's budget. But once again, I don't believe the American people, 
at least any American I have spoken to, wants to see their taxes go up.
  So once again, I would point out to those Americans that may be 
joining us here tonight, there are 1,446 days before there will be a 
$200 billion tax increase imposed on the American people. And all that 
has to happen is that the Democrats have to run out the clock, and we 
will see many of those tax increases that my friend from Kentucky 
mentioned tonight, the child tax credit and those types of tax cuts we 
put in place that really will affect middle-class America if we don't 
act.
  I would yield to the gentleman from Kentucky if he has a further 
comment.
  Mr. DAVIS of Kentucky. Well, I think we need to put in real terms 
what is going to happen in 1,446 days, and that is a $2,096 tax 
increase for every working family in America.
  What does that translate into? For me, that translates into one 
semester of college tuition for my 21-year-old, who started student 
teaching this week. She is in her third year at Northern Kentucky 
University. And what does it hold for my son's future? What kind of 
opportunity is he going to have by restricting that annuity that could 
grow and remain strong in the future?
  If we look at it in the bigger sense and talk about energy security 
in this tax that is coming, that is going to hit people in their bottom 
line, in the pocketbook and at the pump, one of the things we got to 
experience working together on the Armed Services Committee, we see 
much of the money that America sends to foreign oil producers is sent 
to unstable parts of the world. It is sent to areas like the Arabian 
Gulf that are a hotbed of extremism and instability.
  We see what is happening in Venezuela right now, with a socialist 
dictator who has risen to power and threatening to nationalize the oil 
reserves and fundamentally to cut off America's gasoline supply. 
Fifteen percent of our gasoline comes from that part of the world.
  The one thing that I want to comment on, from that standpoint, is we 
need to reduce our dependency on foreign oil, to keep more of our 
dollars here. And there are tremendous initiatives and opportunities 
that we have today that we could do to address this issue in many ways.
  One of the things we have done in the Ohio Valley is to take 
advantage of the coal-to-liquid technology. It is a proven technology. 
South Africa produces 25 percent of their transportation fuel from 
coal. That is why we have introduced the Coal to Liquids Fuel Promotion 
Act of 2006. It is a bipartisan bill that I introduced with Nick 
Rahall. He and I share the largest inland port in the United States, 
where the majority of America's coal is transited outward. Pennsylvania 
produces a tremendous amount of coal.
  Think what we could do by decentralizing energy production, creating 
jobs here, and literally, as our floor leader, the majority leader in 
the Kentucky statehouse says, we could have another industrial 
revolution in the heartland of this country, creating millions of jobs, 
converting coal to liquids in an environmentally friendly manner, 
reducing our foreign oil dependency, stimulating jobs here, and giving 
our youth a future. And replicate that also with biomass, biodiesel, 
ethanol, and many other types of products.
  And I yield to the gentleman from Pennsylvania to follow on.
  Mr. SHUSTER. Well, that is absolutely as you mentioned. In 
Pennsylvania, in its coal fields, we need to unleash our companies in 
America,

[[Page 1334]]

whether they are coal companies or companies developing biodiesel or 
ethanol or wind. And even our oil companies, we have to encourage them 
to go out there and to continue to look for new oil fields.
  Tonight was a bit of a surprise, but very appropriate that we heard 
that the Rules Committee has put out a rule we will debate tomorrow for 
our very first tax increase under the new Democratic majority.
  We are joined here tonight by Mr. Conaway, another colleague of ours, 
who happens to be not most importantly a CPA, which I think is 
important because he understands the language of business, understands 
the balance sheets and income statements which many people in this body 
I do not think understand, but also he comes from the gas and oil 
business in Texas.
  So with that I would like to yield to Mr. Conaway.
  Mr. CONAWAY. Well, I thank the gentleman from Pennsylvania for 
letting me join tonight's conversation, and I wanted to speak directly 
to that tax rate increase vote that will happen on Thursday as a part 
of what I believe to be a very misguided attempt to punish a segment of 
our economy that quite frankly is doing a job that all of us want.
  It would be curious if I could ask all of our colleagues collectively 
in this House how many of them walked to Washington, D.C. from their 
home district; actually physically walked, or rode a bicycle from their 
district here, or horseback, maybe came on horseback or a horse-drawn 
carriage. Could we get anybody to raise their hand? Even the folks who 
live right across the river. Ms. Norton, I guess, could say she walks 
in. But I would say that every single one of our colleagues comes to 
Washington, D.C. and leaves and goes back to their home districts in a 
car or an airplane or a train, or some mode of transportation that uses 
at its core fossil fuels to get us back and forth.
  The bill on Thursday directly penalizes the folks who provide that 
resource that we all use every single day. It is hypocritical and two-
faced of us to on the one hand say that, yes, we need to be independent 
of foreign crude oil and foreign natural gas, as our good colleague 
from Kentucky said, we are sending billions of dollars into the hands 
of countries and nations that in all likelihood are using some of that 
money to hurt us, to talk about getting away from that and at the same 
time, on the other hand, wanting to directly penalize those small 
producers and large producers in this country that provide the domestic 
crude oil and natural gas supplies.
  I have seen some data which shows that the small independent 
producers in this country in 2005 reinvested 617 percent of their 
profits back in the ground. Now, think about that: Not 50 percent of 
what they made, not 70 or 80, but 600-plus percent of what they made 
back in the ground. So what this legislation will do is take dollars 
away from them and bring them to Washington, D.C., and albeit they are 
going to try to sequester those dollars to be used somewhere else, I 
would argue every dollar we suck out of these producers is a dollar 
that doesn't go back in the ground or produce domestic crude now, which 
we need.
  I don't think anybody argues that we have a short-term problem and we 
have a long-term problem. The long-term problem with coal gasification 
and other things, nuclear, whatever they might be, those are long-term 
solutions. Nobody expects us to be able to put a very big dent in our 
energy needs in this country in the near term from anything but fossil 
fuels.
  And for goodness sakes, why would we begin on Thursday to lay in 
place the groundwork to penalize those very people who are producing 
domestic crude oil and domestic natural gas? It is wrongheaded. Now, it 
makes great drama to be able to beat up on the oil companies.
  In all fairness, I come from an oil and gas producing province, west 
Texas. I am very proud of the oil heritage and I am very proud of the 
supplies of oil and natural gas that those hardworking, risk-taking 
individuals have provided you and I in this country since Spindletop in 
Pennsylvania.
  So it is wrong headed by our Democrat colleagues to want to tax those 
individuals differently than we tax other manufacturers. The specific 
codes section, 199, that we are going to snatch the oil and gas 
producers out of and in effect increase their tax rates, was put in 
place in 2003 by a Congress that said we need to incent manufacturers 
in this country, jobs that stay in America. And we are going to do that 
by a combination of wages paid within the manufacturing environments in 
this country to affect the tax rate.
  The idea was to take the corporate rate from 35 percent down to 
between 32 and 33 percent on manufacturing activities in the United 
States. And the definition was written intentionally by the Congress to 
include oil and gas exploration as manufacturing. It also includes 
timber and other kinds of things that don't normally come to mind when 
you talk about manufacturing.
  But the incentives for 199 weren't put in place just for the oil 
companies. They were put in place for all manufacturers to incent 
people to produce in America, to produce jobs, to produce products that 
we can sell and export or use within this country.
  And now, on Thursday, we are going to have an opportunity to flush 
out where everybody stands. A lot of rhetoric in October about who is 
going to do what to whom and all those kinds of things, but Thursday 
will be our first chance for all of us to decide whether we are tax 
increasers, or we are against domestic oil and gas production in the 
near term and in the long term with this specific vote on the bill, 
H.R. 6, that will be up on Thursday.
  So I appreciate being able to pitch in on that subject, and I have 
some other thoughts later on in the evening, but I would yield back to 
either of my colleagues.
  Mr. SHUSTER. I yield to the gentleman from Kentucky.
  Mr. DAVIS of Kentucky. I just think one thing the gentleman from 
Texas brought up is very important for us to realize, and that is 
manufacturing jobs are the best benefit providing jobs we have for 
working families in this Nation. Eighty-four percent of manufacturing 
jobs provide full benefits, health care, retirement, opportunity for 
the future, and that sense of security.
  What this tax increase is going to do by addressing domestic oil 
producers is not simply a strike at a mythological big oil company. The 
international oil producers are not going to be affected by this. They 
simply have to step back and let the law of supply and demand take 
over. Who is going to be affected? The local oil producers, the 
wildcatters, those small investors in Kentucky, West Virginia, Texas, 
Pennsylvania, Illinois, and other States throughout the heartland that 
create jobs.
  In addition to that, dollars for research and development are going 
to be disincented. With a tax credit is the opportunity to reinvest 
that, to find new sources of oil, and more importantly develop new 
technologies that can bring it forward in a low-cost way and create 
more jobs.
  But it is not just the small producers. It will be the distribution 
chain. Those small refiners, like our Catlettsburg Refinery, which 
creates hundreds of jobs in northeast Kentucky and affects thousands of 
jobs in the local economy, will be adversely affected by this. It will 
impair their ability to grow and it will hurt the future for people 
there. Down the supply chain, the distributors of gasoline and 
petroleum products.
  And, again, it is not Big Oil. It is the local convenience store 
owner, the person who drives that replenishment truck going to the gas 
stations. It is the lawn care business that might be in somebody's 
neighborhood or the individual who is taking parts to the manufacturing 
company. It is going to be the person who distributes milk and food 
products. It will put a cost burden on every single consumer in this 
country.
  Not only will there be a tax increase, but there will be inflation as 
a direct result of this. Ultimately, it comes down to our consumers. 
Because if our

[[Page 1335]]

farmers and manufacturers are all going to be burdened with this, 
ultimately it will pass to us. And what sounds good in reality is a 
big, big mistake, because it is taking money out of the economy, and it 
will send it elsewhere and will keep it away from incentives that will 
create jobs.
  We need to make investments in energy, in natural gas, and in oil. 
Natural gas is critical for our manufacturing economy. But the 
Democrats in Congress overwhelmingly voted repeatedly in the 109th 
Congress. Congressmen Conaway and Shuster and I saw this, where in fact 
one Member was chased down into our Cloakroom to change his vote after 
Hurricane Katrina against expansion of refinery capacity.
  We need to make sure that we have natural gas on the Outer 
Continental Shelf and we use the resources that we have here, like the 
Alaska National Wildlife Refuge, in an environmental friendly way to 
make sure that our economy, our future, is put first, so that children 
like the young man sitting behind me here can have a job and a future 
when they grow up.
  But what we see is this tax increase now and the tax increase in 
1,446 days, and I yield back.
  Mr. SHUSTER. Well, I appreciate the gentleman's yielding back, and I 
don't think anybody should be surprised at what we are seeing. I put a 
quote up here by Representative Rangel from New York, who is now the 
chairman of the Ways and Means Committee. Before the election he vowed 
to put all of President Bush's 2001 and 2003 tax cuts on the chopping 
block.
  Here we go, 20 days into it and this is the start of it. This is the 
start of what we will see over the next 2 years, which is an increase 
in taxes. And some of them they won't even have to enact. They will 
just expire.

                              {time}  2115

  But I wanted to ask a question to the gentleman from Texas who knows 
the oil and gas business much better than I do. But, you know, basic 
economics, if you take away, if you actually disincentivize, put a 
disincentive to a company to go out and explore for oil, when we see 
that, the oil companies and the wildcatters and the small business 
entrepreneurs who are in the oil and gas business, not going out there 
and finding new sources of oil and gas, when we see the supplies go 
down that is going to cause prices to increase. And I wonder if the 
gentleman from Texas would comment on that.
  Mr. CONAWAY. Let me just comment on that. Let me make one clarifying 
point. You said, we are 20 days into this issue. The 18th will be our 
14th day. And the first tax increase will come within the first 2 
weeks, on the 14th day.
  Mr. SHUSTER. It is good to have a CPA on board.
  Mr. CONAWAY. I only bring that up because of the emphasis on the 
first 100 hours. There seems to be some magic about those first 100 
legislative hours. And I want to make sure that the record is straight 
on these numbers.
  Mr. DAVIS of Kentucky. If the gentleman would yield.
  One thing I would like to point out, just having come from an 
entrepreneurial business background like you. The idea of working 100 
hours would normally translate into about 3 days or 4 days worth of 
work, possibly 5 if you had really to get something done, if the 
product had to get out the door at the end of the month, if the system 
had to be implemented, if the equipment had been to be rigged and 
installed. And I think what we have here was somewhat misleading to the 
American people who expected 100 hours in the last Congress would have 
been accomplished in a very short period of time. But I think we are 
taking a more comfortable pace, doing 100 hours 2 hours at a time. 
Instead of having votes ending at midnight or 1 in the morning we are 
getting done at 3 in the afternoon now.
  Mr. SHUSTER. Somebody mentioned to me that we were cramming in 2 days 
of work into 5 days. So if people really, if Lou Dobbs is watching 
tonight then he ought to be talking about our work schedule here, what 
we are really doing, not just the fact that he was ranting and raving 
about us not working on Monday because of the national championship 
game. Let him come down here and see what we are really doing.
  Mr. CONAWAY. Let me comment on what happens, or the mechanics of the 
exploration business in the domestic arena. I have got some statistics 
here that just are almost incomprehensible in their scope. E&P is an 
acronym or initials for exploration and production companies. Those are 
the folks that take the risk. They start by trying to find rock, 
underground, sometimes 2 and 3 miles deep, that has the potential for 
bearing oil and gas. And they do this through a variety of means, 
through seismic and geology, and sometimes just flat out guessing. But 
they do their best science at the project to try to determine where oil 
and gas might occur. Now it doesn't occur everywhere, unfortunately. 
But it does occur in certain spots. And it starts off with a geologist 
or a geophysicist or somebody who has an idea that this particular 
province or this particular area may produce oil and gas. So they spend 
some up front money trying to decide whether or not there is the 
potential for oil and gas being in place. They then will send out a 
land man to acquire the rights to drill in the acreage that they think 
is prospective. And this land man will go to the land owners and the 
mineral interest owners and others and he will try to lease this 
property, lease the mineral rights, lease the ability to drill for oil 
and gas from each and every one of those. And that can take a great 
deal of time. Again, more money invested, salaries and travel and other 
kinds of things trying to put the prospect together.
  Once they have got the right to drill in the area, then the operator, 
the person putting this thing together in all likelihood generally does 
not have the money to risk 100 percent of the well. As an example, we 
have got some, Barnett Shale Wells in Texas, that it is 4 to $6 million 
for dry hole costs, meaning you are going to risk 4 to $6 million 
before you know whether or not there is any oil and gas in that 
particular horizon. A lot of money at risk.
  So this operator will go to, let's keep this simple. He will go to 
three friends in the business and he will say I want you to take a 
quarter of this deal and I will take a quarter, you take a quarter and 
a good colleague Mr. Shuster will take a quarter, and let's go find 
somebody else to take that fourth of it. And together we will share 
this risk of drilling this prospect. So you put up a million and my 
good colleague from Kentucky takes petty cash for his million, and I 
squeeze my cookie jar for my kids, and I get my million together, and 
we go drill this well.
  Now, the drilling of the well involves hiring a drilling contractor, 
because the operator is not going to own any drilling equipment, so he 
goes out to a drilling contractor to hire the rig on a day rate basis 
or a footage basis or a turnkey basis, all these kinds of special 
terms, to actually drill the hole into the ground. And you have got all 
kinds of service companies that go along with it, pipe and mud and 
logging and all kinds of equipment and services go into trying to 
decide whether or not there is oil and natural gas in this rock.
  And then if there is you do the appropriate test, then you run pipe 
and you incur additional costs. The completion costs in our example, 
let's say that is another 2 million. So we have put up our 4 million. 
Now I have got to come back to you for the other $500,000 each in order 
to be able to complete the well and begin the process of producing that 
oil. And right now, all of this is sunk cost. There is no way to 
recover much of this cost. You can get a little bit of the pipe out of 
the ground, but most everything else is sunk. And so if we don't 
produce oil and gas from that well our investment is worthless. I mean, 
it is just flat out worthless.
  Mr. SHUSTER. $4 million gone.
  Mr. CONAWAY. Gone. And much of the $2 million we spent completing the 
well will also be gone and there is no way to recover that. So the 
folks in this business are big time risk takers.
  Now, let me show you how big time they are. In the 5 years in between 
1999 and 2005, I guess that will be 6 years,

[[Page 1336]]

the smallest U.S. E&P companies reinvested 898 percent of their profits 
back in the ground. Now what that means is they took their profits, as 
well as borrowed a lot of money against the reserves that they found in 
the ground to reinvest in the oil business. All the way up to the super 
E&P companies, those are the large publicly traded companies that are 
in the exploration and production business. They have reinvested 247 
percent of their profits back in the ground to find additional oil and 
natural gas reserves.
  The integrated, U.S. integrated oil companies, the very largest in 
our country, ExxonMobil, Chevron, Phillips, all these guys, 174 percent 
of their profits back in the ground.
  So, as we take dollars, whether in this tax increase that we are 
going to, however they come out of it, those are dollars that will not 
go back into the ground to find additional supply of domestic oil and 
natural gas. And each time we do that, it reduces the investment, it 
reduces all of the activities that are associated with that. And the 
bottom line is that we have a shortage of supply of crude oil and 
natural gas. And the law of supply and demand generally works in most 
businesses. It clearly works in this business. And if we have a 
shortage of, as we saw, as Katrina, shortages as a result of natural 
disasters and other things, you get a spike in prices.
  Well, we have got a systemic problem with crude oil and natural gas 
worldwide because, in addition to the supply not going up nearly as 
fast as the demand is going up, with China becoming an industrialized 
country and India becoming an industrialized country, the demand for 
crude oil worldwide has outstripped our ability to produce and increase 
the production in crude oil.
  That could be temporarily offset if we could drill in places like 
Iraq and Iran, where they have let their oil and gas industry languish 
for lack of investment and upgrading. But even then that would only be 
a short-term fix.
  So the impact that this tax rate increase will have on Thursday, if 
it turns out to be a law, is that there will be less searching for 
domestic crude oil and natural gas. And it seems counterproductive to 
me to talk, on the one hand, about reducing our reliance on foreign 
crude oil and natural gas, and then turn around and penalize and rein 
in the people who are trying to provide domestic crude oil and natural 
gas.
  Mr. SHUSTER. And we are seeing right now, I think the latest thing I 
read was the price of a barrel of oil was down to $51 a barrel of oil. 
Average gas prices going down. And some of that is a direct response to 
the supply people out there finding oil. It is also in response to some 
of the demand has cooled off. People are trying to use less.
  Mr. CONAWAY. If the gentleman would yield. One of the things that it 
was a bit counterintuitive in west Texas, there was no bumper sticker. 
The old business has gone through a series of booms and busts that, I 
suspect are typical in most businesses, but they are pretty dramatic in 
the oil business. In 1986 there was a bust. In the early 1990s there 
was a bust. Late 1990s there was a bust. In the early 1990s, when the 
price of crude oil dropped, there was this bumper sticker that said 
Dear Lord, give us one more boom and we promise not to screw it up.
  And then we had the real dramatic bust in 1998-1999 where the price 
of crude went to 10 bucks a barrel for sweet crude, and even less than 
that for sour crude. Things were really grim. Thousands and thousands 
of jobs pushed out of the oil business.
  And so when the prices began to rise, in the early 2000s, and when 
they began to push past 40 and 50 bucks a barrel and into those ranges 
there was a real lag in the up tick in activity. Most folks would have 
said, what do you think the drilling, the number of drilling rigs 
working in the United States would be if the price of crude oil was 45 
bucks a barrel? And when it was at that point, 2002 and 2003 and 2004, 
most folks would have said, the number of drilling rigs operating in 
the United States would have been much, much higher than it really was. 
And the reason for that was there was a real cautiousness on the part 
of these exploration and production companies as to whether or not that 
price would really hold, were they going to get a drop in price. So 
there was a real cautious reinvestment in the business that was going 
on during that time frame because, quite frankly, the pros in the oil 
business weren't sure it was going to last.
  Now, we have been in these prices for a lengthy time now and you are 
seeing the kinds of drilling rig rates and activities in the domestic 
production that ought to be happening when you have got prices at this 
level. So it is a wonderful industry. It provides great jobs. Those 
jobs provide benefits, and it is a wonderful experience. Most of those 
jobs are ``living wages,'' is that phrase that is bandied around from 
time to time. And to penalize them directly on Thursday is wrongheaded 
and extreme.
  Mr. SHUSTER. And I think we mentioned earlier, Mr. Davis mentioned 
about pushing it off to other countries in the world. We are going to 
penalize our own domestic production, and those folks around the world 
that aren't necessarily our friends, Iran being one of them, they can 
bring up that crude out of Iran. And it is a scary situation what has 
happened. I know that the President of Iran was down in Venezuela. Iran 
has no refining capacity or not much to speak of, and Venezuela is one 
of the largest refiners. So what we are going to see, I believe, is 
Iran making a deal with Venezuela, that they will pump the crude in 
Iran, and another one of our enemies, Venezuela, will refine it for 
them. So this is a national security issue. It is not just about taxes. 
It is about making sure that our domestic producers are out there 
looking for oil and keeping our reliance, lowering our reliance on 
foreign oil sources.
  Mr. DAVIS of Kentucky. I think you bring up a good point when you 
talk about the national security implications before we come back to 
some of the domestic impact of this. Looking at the news today, we see 
threats. In particular, we are dealing with some very complicated 
situations in Iran. They are committed to developing nuclear weapons, 
possibly as a deterrent, possibly for an offensive capability. 
Sometimes they think about, people want to look with a simplistic view 
on what Iran might do to the world energy market by closing the Straits 
of Hormuz. But the Iranians are good businessmen, too. And the one 
thing they understand is they don't have to have a military solution to 
impact world oil markets. By reducing their production by 10 percent 
would cause a devastating disruption in Europe and Western oil 
commodity prices. It would ripple through all prices in America, and 
they would still make the same amount of money on the gross margin that 
they made with a greater amount of production by the impact on the 
market.
  This tax is simply irrational that the Democratic majority is 
bringing forth this week for a vote. It is anti-jobs. It is anti-health 
care, and it is anti-education. It is anti-jobs because dollars that 
would be invested in job creating technologies are going to be removed. 
And who gets affected by this?
  The view in the TV commercials supporting these types of things is 
the wealthy super executive on the big corporate jet. But what they 
forget about is the welder who depends on that, the small welding shop 
that does fabrication work in Ponka City, Oklahoma. They forget the 
seismic vibration technology manufacturer that makes the big heavy 
trucks with the seismic vibrators that go out and read the ground 
working with seismic engineers to help find where those oil reserves 
are.
  And as my colleague from Texas pointed out, there is a tremendous 
amount of risk. It is not a science. Purely there is an art to this, to 
find those resources and then once they are found to see how they can 
be pulled out of the ground economically.
  In my own district we have Newport Steel, a tube and casing 
manufacturer that almost exclusively supports domestic oil exploration 
and production. They are going to be hurt by that. Those are jobs in a 
troubled industry

[[Page 1337]]

right now that is fighting to compete internationally.

                              {time}  2130

  We talk about concerns over foreign competition, concerns over 
competition with China. Guess what the Chinese are doing? Last week or 
week before last, the executive vice foreign minister, the incoming 
foreign minister in China announced, that they are making heavy 
investments in alternative fuel technology to create transportation 
fuels, coal-to-liquid technologies, biomass. They are investing in 
other technologies to offset those demands that they see the rest of 
the world growing from demands in Middle Eastern oil.
  In addition to that, let us think about the working families who 
needs this. There is a reason that the International Brotherhood of 
Boilermakers supports investing in these alternative technologies, in 
coal-to-liquids and biomass and ethanol to build these plants, to 
decentralize our energy supply and localize it so a storm like Katrina 
will not hurt it.
  But guess what, if we raise these tax that this bill purports to do 
this week, the investment capital that would create those jobs, that 
would take those risks instead of the private citizens spending their 
money would be gone. Who is going to get hurt by that? The very people 
they say they are going to help, because not only will it eliminate 
jobs, those manufacturing jobs, 84 percent of which have health care 
benefits provided for their employees, they are going to be affected.
  It is anti-education. How? The one thing that we talk about, and I 
talk about with teachers and educators throughout my district is the 
need for money, for investment in learning, to keep up, building 
schools, providing books, training teachers, continuing professional 
education for our teachers.
  I have a daughter who has begun her student teaching now looking at a 
career in education. Where will the dollars come to pay for her future 
or my son's future? That comes out of the property tax; it comes out of 
income taxes. That means that you have to have taxpayers to do that.
  The government cannot magically wave a wand and create money. It is 
going to be people investing in labor, adding value and creating a 
profit. When we see that the last refinery that was built domestically 
was in 1976, we have a very serious issue, considering our population 
has increased by over one-third since then.
  I would be curious of your experience looking at manufacturing in the 
energy industry in Pennsylvania and your comments from that 
perspective.
  Mr. SHUSTER. You are absolutely right. This tax increase that is 
going to occur is going to have a ripple effect throughout the economy. 
There are those on the other side that think they are going to punish 
the oil companies. They are not. Plain and simple, it is going to 
punish manufacturing, it is going to punish people that are employed in 
this country, people that are paying taxes in this country.
  But once again, we should not be surprised. Nobody in America should 
be surprised when we see, I was corrected, 14 days into this Democratic 
majority, when you have the new chairman of the Ways and Means, Mr. 
Rangel from New York, who said back in an interview before the 
election, back last spring, actually, that the tax cuts that President 
Bush put in place were beyond irresponsible, and he also said he cannot 
think of one of those tax cuts in the first term of President Bush that 
deserves merit.
  Does that mean the R&D tax credit, which I think we successfully 
extended, does that mean that they will repeal that and repeal some of 
those R&D tax credits for alternative fuels? When you think, I see 
Geoffrey here, you told me he is 8 years old. If a family of four has 
their taxes increased, that is going to be about $2,100 a month.
  Well, if you had that $2,100 a month, which you do today, and you 
took the $2,100 and invested it every year in the banks, so that 
Geoffrey, 8 years old, 10 years from now to go to college, he would 
have $30,000 in the bank. That's a great nest egg for your children to 
help put them through school so when they get out of school they don't 
have debt. You know, we talk about all these government programs, when, 
in reality, let the American people keep more of their hard-earned 
dollars so they can save that money for 8-year-old kids like Geoffrey 
so that he can go to college in the future.
  Mr. CONAWAY. Looking at the tax cuts for 2001 and 2003, it might be 
helpful to get into the Record what one of the impacts has been from 
those, from that tax policy being in place. I may be the only guy in 
Congress who drags this out once a month, but once a month the Treasury 
Department publishes a statement of the cash receipts and cash 
disbursements for the United States Government.
  It makes for some interesting reading. For the first quarter of 
fiscal 2007, which was last year's, October, November, December of 
2006, the Federal Government's deficit for those 3 months was $119 
billion. That is a lot of money.
  For the equivalent period this year, for the first 3 months, fiscal 
year 2007, which we have just finished in December, the deficit is $80 
billion, so a $40 billion improvement over last year. Why is that?
  Mostly because tax receipts and government receipts are significantly 
higher again this year for that quarter than they were last year. Last 
year was a double-digit increase. The year before that was a double-
digit increase in tax receipts.
  This year we have collected year-to-date from income taxes from 
individuals, $251 billion, versus $230 billion last year. This year, 
corporate income taxes are up the first quarter, almost $99 billion 
versus $81 billion. That has happened because this economy continues to 
grow.
  More people are working now than have ever worked. When those folks 
worked, they paid taxes. That doesn't count the Social Security taxes 
and all the other excise taxes that come into this Federal Government, 
but the truth of the matter is this economy is working and working 
well.
  Let me brag real quickly on taxes, which might surprise you that I 
would brag on taxes. In 2003 when our legislature, which meets every 
other year, came into session, they were facing a $10 billion deficit. 
The comptroller was projecting the State revenues over the next 2 
years, 2003-2004, would be $10 billion short of what the spending was 
going to be. The Texas legislature dealt with that and that 
legislature, the senate and the house and the Governor did a great job 
with it. The legislature that went into session a week ago today in 
Texas, for this year's biennial, is facing a $15 billion surplus, 
pretty dramatic turnaround in 4 years.
  The reason for that is this economy is continuing to jet along and to 
boom, no matter what the naysayers are talking about. All the angst 
that is in the American public, when you look at facts, every criterion 
you look at, this economy is better that it used to be, better than it 
was this time last year. So the change that was talked about that 
happened on November 7, I don't think the change, as you said earlier, 
was to change this economy, to drive people out of work, to reduce 
homeownership, to increase tax rates on those who do have jobs.
  I didn't sense anybody campaigning for that. I certainly didn't have 
any folks in my district come up to me and tell me that is what they 
wanted to have happen as a result of this change on November 7. I 
appreciate the gentleman letting me get those facts into the record.
  Mr. SHUSTER. I agree with you the American people didn't vote for a 
change of this economy. They didn't vote for a change to increase 
taxes. We are in deficit not because we tax too much; it is because we 
spend too much.
  You know, our colleagues from the Blue Dog Democrats side, they are 
right when they talk about fiscal responsibility. They are right about 
controlling spending. I think their number one of their 12 points is to 
have a balanced budget except in time of war or in a time of recession. 
Well, that is what we had in early 2001, 2002. We are still at war. We 
are not in recession any more. But the way to solve this problem is to 
control spending.
  As I said earlier, I am eager to see what the leadership of the 
Democrats

[[Page 1338]]

allows the Blue Dogs to propose. I know that over the last 12 years, I 
think the Blue Dogs, every year, produced a budget that was voted on 
here on the House floor.
  Once again, I am eager to see what the Democratic leadership allows 
the Blue Dogs to do, because I think they will propose a responsible 
budget more so than I think the Democratic leadership will. Again, we 
are going to wait and see what happens.
  Once again, I don't believe that the American people want to see us 
increase taxes. If we don't act, if the Democrats don't act in the next 
4 years, we are going to see a slow expiration and an increase in the 
taxes the American people pay to the tune of $200 billion by the first 
of 2011.
  Mr. CONAWAY. If you look at those numbers, we have had tax receipt 
increases here, but they have come in the right way. They have come in 
the way where you have had more people paying and all those kinds of 
things. I am hopeful that the budget that does come forward understands 
that we have got a spending problem and not a revenue problem.
  If you are in business, as you did in the car business, and my good 
friend did in his small businesses, and you are looking at deficits, 
you rarely have the option of raising revenues when you are in 
business. Yes, you have got to put more emphasis in sales; you have to 
do all those kinds of things. But the way you are most assured of being 
able to deal with your deficit is to cut your expenditures.
  That is where most responsible businessmen go at first when they are 
in circumstances where they need to eliminate a deficit. There is more 
emphasis on the cutting of spending and trimming back on expenditures 
and then try to do what you can with revenues. It is only in this arena 
where revenues can magically appear by the signing of a pen without a 
great deal of hard work to go in and do that.
  Mr. SHUSTER. It is the equivalent, it is one thing if you own a 
business to have more sales; but what we do, you raise the price, and 
when you are in business and in trouble and in deficit, you can't just 
go out and say, oh, I am going to raise the price of the car, raise the 
cost of the washer or dryer. That usually doesn't work. Usually what 
happens when you raise the price, the market, the demand is not great 
enough, it will drive down your revenues.
  What we are doing here is raising the price. It will drive down 
revenues, as it always does. As we said earlier, whether it is 
President Kennedy in 1960 or Ronald Reagan in 1980 or President Bush in 
the early 2000s, when you cut taxes it spurs the economy, and it 
creates more revenues.
  Mr. CONAWAY. One thing that does happen to you, when you raise the 
prices of your goods, your competitor across the street, who may not be 
in the same financial circumstances, keeps his or her price the same. 
Wouldn't it be interesting if we had some alternative to government, 
where the folks said, which one of you folks can do the government the 
best and raising prices in that arena would be much more difficult than 
we have today, where all it takes is 218 of us on this side and 51 on 
the other side to make that happen as opposed to hard work and sweat 
and labor that is usually required for folks to make money in the 
private sector.
  Mr. DAVIS of Kentucky. I think the gentleman from Texas brings up a 
good point. I come back to what made this country great, and it was 
entrepreneurial spirit where an individual could take a small amount of 
assets, invest it, start a small business.
  In the smallest vein, these policies, my son, who was running around 
here a moment ago, and his brother, Daniel, and sister, Miriam, decided 
they were going to start a lemonade stand because they wanted to create 
economic opportunity for themselves. They pooled their allowances, they 
went to the store, they bought their resources, and they began to sell 
it.
  Mr. CONAWAY. Did they pay rent on the front steps of the shop?
  Mr. DAVIS of Kentucky. I did a long-term note for them for room and 
board. We will work that out with the family tax man over time.
  But the good news is, I think all young people, when you see kids in 
this country have that natural desire to create opportunity, and what 
do we do with Big Government? Big Government stifles that opportunity.
  We stifle it by creating excessive regulations. We stifle it by tax. 
What might sound good, again, I come back to the politics of class 
warfare where they say, oh, we have got to just stop these profits from 
going to companies. It is not fair for somebody who is working 100 
hours a week in reality to be more successful than you. But it is those 
people who are creating the jobs for others. They are fueling the 
economy for research. They are fueling the education and research and 
development programs in our universities.
  I look at another time in history where there was a government 
attempt to control energy prices, when OPEC began to assert itself in 
1973 and 1974. There was an attempt to control prices. What did we end 
up with? I remember when I was in high school.
  Mr. CONAWAY. That is your Gas Policy Act in 1978 under Carter is what 
you ended up with.
  Mr. DAVIS of Kentucky. There you go, what did we have? We had 
rationing; we had gas prices skyrocketing.
  Mr. SHUSTER. We had lines.
  Mr. DAVIS of Kentucky. The next aspect of this was the markets for 
investment to create jobs in the private sector began to drop. When I 
graduated from college, I was glad I enlisted in the Army because there 
were no manufacturing jobs left in western Pennsylvania when I was 17 
years old.
  The next thing that we saw was inflation at the highest rate it had 
been in anybody's memory. When I graduated from college, I think the 
prime rate was under 17 or 18 percent. It was impossible for a working 
family to afford a mortgage or to buy a house. It was driving the very 
people these Big Government tax solutions were designed to help, 
actually were hurting more than anything else, which concerns me with 
this vote 14 days into the new Congress. We are going to raise taxes on 
the fundamental bedrock economy that drives the entire economy, the 
energy that fuels it all, literally, and in 1,446 days every working 
family in this country, unless we stop that, will have a $2,096 tax 
increase.

                              {time}  2145

  Mr. SHUSTER. Does the gentleman have closing remarks?
  Mr. CONAWAY. Mr. Speaker, I appreciate the gentleman sponsoring this 
hour again tonight. We tend to spend a lot of time trying to scare each 
other into actions one way or another. I am as guilty as everybody 
else. It is almost as if whoever of us can scare us the most wins the 
argument.
  The truth of the matter is, the policies in place now are helping the 
economy. We don't have this great economy because of the policy; we 
have this great economy because we have great men and women throughout 
the country willing to take risks and work hard, get up every morning 
to go to work and provide for their families and build this country. 
That is why it is there.
  What these policies have done is make their job less difficult. It is 
not easy. It is hard to make money. In the real world, it is a very 
difficult prospect to make money. So low tax rates and a consistent tax 
policy that people can count on help pave the way for that. It makes it 
less difficult for the hard-working men and women of this country to do 
what is being done, and that is to grow this economy, and by growing 
the economy, the tax receipts into this government have increased 
double digits for the last 2 years, and in all likelihood we may have a 
double digit increase again this year for a record collection. So that 
is doing it the right way.
  As this Congress begins to try to lead toward a different direction, 
toward a different policy that says bigger government, higher tax rates 
on these folks, it is my opinion that it will make it much more 
difficult for the entrepreneurs in this country to continue to do what 
they do.
  They will continue to do it in the face of an insurmountable odds, 
that is

[[Page 1339]]

just their nature, but by this 1,446 days away, if that does happen the 
way we think it will, then the tasks of growing this economy, 
continuing to provide greater opportunities for most Americans, will be 
much, much more difficult than currently today.
  Mr. SHUSTER. Mr. Speaker, I thank both of you gentleman for joining 
me, Mr. Davis and Mr. Conaway, for your thoughts tonight. You pointed 
out rightfully so that the government doesn't create jobs, the 
government doesn't create wealth, it is people out in America, working 
hard, day in and day out, saving their money, investing their money, 
sweating at a job, and it is just wrong for us here in Congress to take 
more of their money than we should.
  I put up 1,446 days to remind the American people that they are going 
to receive a tax increase unless we act, and that is a little less than 
4 years. I am so grateful that the gentleman from Texas is a CPA and 
got my numbers right, that it is not 20 days into this new Congress, it 
is only 14 days, and we are already starting to hear about the first 
tax increase that the American people will see coming out of this 
Congress.
  Mr. CONAWAY. This is on top of the unfunded mandate on small 
businesses that the minimum wage increase that was done last week will 
be.
  Mr. SHUSTER. Absolutely. Except for the Marianas Islands.
  Mr. CONAWAY. American Samoa, which the average rate there is $3.15 an 
hour. So apparently StarKist wants tuna that pack cheaply instead of 
good taste.
  Mr. SHUSTER. I thank both of you gentleman for joining me tonight.

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