[Congressional Record (Bound Edition), Volume 155 (2009), Part 24]
[House]
[Pages 32530-32537]
[From the U.S. Government Publishing Office, www.gpo.gov]


                         JOB CREATION THEORIES

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Missouri (Mr. Akin) is recognized 
for 60 minutes as the designee of the minority leader.
  Mr. AKIN. Mr. Speaker, it's a treat to be able to join you and my 
colleagues and fellow Americans that might possibly be tuned in. This 
is a bit like the last day of school. We think the voting is done for 
this year, and yet the work is not done. In fact, America, among other 
things, is suffering from a considerably high level of unemployment. 
And that was going to be the topic for this evening.
  I want to talk a little bit about employment, spending and the 
different theories that people have as to how jobs are created. And 
there are some theories out there that don't work very well, and there 
are some that do work well. And history tells us the difference between 
the two.

[[Page 32531]]

  I thought what I might do this evening would be to start with 
something which, in a way, may seem remedial. It should seem fairly 
basic because most Americans have plenty of common sense. And I think 
that it's important, though, to start at the basic level and start 
defining your terms as we talk about the problem of unemployment.
  Now, there are certain series of things, I have identified six--there 
may be other ways economists might look at it differently--but there 
are six things that are job killers. To start with, we need to 
understand where jobs come from. Jobs come from businesses. What sort 
of businesses? Well, if you take a look at businesses that have 500 
employees or less, those businesses employ about 90 percent of the 
Americans that have jobs in the private sector. Five hundred or less 
employees, those, many people would say, are small businesses.
  Well, what are the things that these small businesses need in order 
to create these jobs, 90 percent of the jobs in America? Well, the 
first thing is that there are certain things that are killers of jobs. 
The first is economic uncertainty. Let's talk about that for just a 
minute. Economic uncertainty. Put yourself in charge of a business. Say 
you have 100 employees and you're manufacturing some product, and you 
just really don't know what's going to happen with the economy. And so 
there is a level of uncertainty. Maybe political things are going on 
which increase your level of uncertainty. You don't know whether or not 
perhaps we are going to go into some kind of economic slump.
  And so what are you going to do if you are a president of a small 
business? Well, what you're going to do is, in the State of Missouri, 
they call it hunkering down. You say, I'm not going to take a lot of 
risks; I'm going to prepare for some sort of an economic storm, or at 
least be prepared that I'm not too extended. I don't want to take a lot 
of risk when there is economic uncertainty.
  And what sort of risks might those be? The risk might be to add a 
wing on your building, to buy a new machine, to start a new process, to 
patent a new invention and decide to try to produce it and sell it on a 
market. All of those things create jobs. But you're not liable to take 
a high-risk position if there's a high level of economic uncertainty. 
So economic uncertainty is a job killer.
  The next thing is consumption reduction. That's a fancy word for 
saying you got a business slowdown. People aren't buying as much stuff. 
Everybody is worried. People are having a hard time economically. They 
are not spending as much money. People aren't making investments, and 
so your business is going along with all the other businesses around 
you, when you are in a time when there is a recession going on, it's an 
economic uncertainty. It's a form of economic uncertainty, I suppose, 
and that is you're thinking, hey, it used to be last year we had orders 
for 100 widgets. But this year, it looks like we are only getting 
orders for 50. So you're not going to be thinking about getting a 
machine that will make widgets more efficiently. You're not going to be 
thinking about making investments in adding to the building so you can 
increase production because you're expecting that you're going to sell 
less this year than you did because of the fact that there is a 
slowdown in the economy. So a slowdown in the economy tends to affect 
businesses and therefore affects jobs. Pretty much common sense, I 
think.
  And then excessive taxation. How does that hurt jobs? Well, here is 
the deal. You're, again, the president of a business. Maybe you have 
100 employees. And you find out, all of a sudden, that your taxes are 
really going up. Now, if you have a lot of taxes, that means you don't 
have very much choice, you're going to have to pay those taxes. What is 
the tax going to be paid with? Well, it's going to be paid with the 
money from your company, from the profits and the proceeds of the 
company that you have.
  And, hopefully, you have 100 employees, you're paying them, you're 
selling product, and you're selling product for more than it costs you, 
and so you're making some profits, and you're pocketing those profits. 
But now you understand that there's going to be a whole lot of taxation 
coming down the pike.
  So one of the things that taxation is going to do is take money away 
from the guy that owns the business. And when you do that, he doesn't 
have the money to spend on adding additions to the building or perhaps 
taking a risk on introducing new products or maybe even inventing some 
different ways of doing things. And so the taxation takes the place of 
investment that would normally be made in the company. When that 
investment is made, that usually results in hiring more people. But the 
hiring more people isn't going to happen if you have excessive 
taxation.
  In fact, we have found historically that if you drive the business 
owners with enough taxation, you can not only stop job creation; you 
can stop the whole business and bring it into bankruptcy and destroy 
the engine that creates jobs. So excessive taxation is a big factor in 
killing jobs.
  Another thing is insufficient liquidity. Now, that sounds like a 
fancy thing. There's nothing too fancy about it. The fact is that 
businesses need money to run on, just like the engine in your car needs 
oil. And what happens is the business, let's say it's a machine shop, 
decides that they want to buy a new piece of equipment. That new piece 
of equipment is going to cost them $5 million. Well, you have got your 
machinists there in your company, but you don't have any $5 million to 
buy this new piece of equipment; but you figured out that if you had 
that piece of equipment that in a matter of 2\1/2\ or 3 years, you 
could pay for the whole piece of equipment just by the kinds of 
products that you could make on it so you can say, hey, this is a great 
investment. I can pay this off relatively quickly, but I don't have 
that million, couple million, dollars to buy this new piece of 
equipment.
  So what do you do? Well, you're going to have to go out and a get a 
loan. And when you take a loan, you're going to pay interest on that 
loan. But then you get that piece of equipment in, and it's running 
just beautifully for you. You get all those orders, you make these 
parts, and pretty soon you pay off the piece of equipment.
  How did that happen? It happened because you were able to borrow 
money, which people call liquidity, and you can borrow money and get 
that tool or whatever it was. When you did it, you hired a few people 
to run the new piece of equipment and, of course, you created jobs.
  If you do not have that liquidity, if you can't borrow money that you 
need, then what happens? Well, then you can't buy the new pieces of 
equipment. And guess what? You're killing jobs or the potential for 
creating jobs.
  Another thing is excessive government spending. Oh, now wait a 
minute. Now, how can the government spending affect jobs in America? 
Well, it turns out that there is an effect indeed. And what it is is 
when the government spends a lot of money, it has to get that money 
from somewhere. Guess where the money comes from? The private sector. 
Where does the money come from? From taxes. And so as the government 
tries to collect more and more money to appease its appetite for 
spending, what happens is that affects liquidity, and it plays out as 
taxation. And so as the government does a whole lot of spending, you 
find that it tends to kill jobs.
  Now, it may not appear to kill jobs in the short term. If the 
government does a whole lot of spending--let's just say the government 
decides to spend $150 billion. We just decided to do that a few hours 
ago here on the floor, $150 billion for ``son of stimulus.'' This is 
stimulus Jr., mini-stimulus, $150 billion stimulus, still real money to 
most people, and real money to the U.S. Government, although you 
wouldn't know it by the way we spend it. Today, by the way, we did a 
pretty good job of spending money. We spent about $1.1 trillion today, 
but mini-stimulus was just $150 billion, still a lot of money.
  And that government spending, let's say you go out and hire a whole 
lot of

[[Page 32532]]

people. Well, wouldn't you create jobs, Congressman Akin? Well, you 
would in a temporary sense. You could put some people on a government 
payroll. But what economists have found is that when you temporarily 
hire someone from the government, what you're doing is you're taking 
money out of the economy through this government spending.
  In fact, what happens is for every one job you create in government, 
you're taking 2.2 jobs out of the private sector. So it's one of these 
things where it may seem like you're doing well. It's a little bit like 
drinking salt water. You're getting a drink, but the salt makes you 
even more thirsty than you were before. So it's kind of very much a 
losing proposition when you start to get into this excessive government 
spending.
  And then the other thing, of course, is excessive government mandates 
and red tape. We have a picture here that my staffer found of some poor 
CEO buried in red tape, all kinds of memos, pieces of paper, and all 
kinds of regulations. I think that your common sense will show why this 
is a problem, because let's say particularly you're a small business. 
Well, you have a certain number of employees. Those employees, you have 
them working right away, making product that you can sell because you 
have a clean, lean and efficient process. And you don't have very many 
people that are management people, just a few people to try to keep an 
eye and organize things and get some orders in the door.
  And all of a sudden, somebody from the government knocks on your 
door, knock knock knock, and says, hey, you didn't fill out such and 
such form. And somebody else knocks or calls and says, you didn't fill 
out this form. You didn't fill out this form. Did you do this? Have you 
applied for this? Did you get this? And pretty soon, you have all kinds 
of employees. And what do they produce? They produce paperwork. 
Paperwork for whom? For the government.
  And so if you get more and more red tape and excessive mandates, 
obviously that is one of the things where you may seem like you're 
creating jobs; but in effect, you're making the business less efficient 
so it cannot grow and really put those good producing jobs on to the 
payroll.

                              {time}  2000

  In a sense, those are like excessive government spending because 
they're really government jobs that in fact tend to get rid of the 
actual productive private.
  So all of these things, all of these conditions kill jobs. So if the 
Federal Government wants to create jobs--first of all, we have to 
understand something: The Federal Government can't create jobs. The 
whole concept of stimulus is a false assumption. The only thing the 
Federal Government can do is create the conditions so the people in the 
private sector can create the jobs. We can create an environment that 
is helpful in producing jobs, but the Federal Government, when it tries 
to hire people, all that does is take jobs away from the private 
sector. So all of these things are job killers.
  So let's go in a more positive light and say, well, what do you do to 
create jobs? Well, just the reverse of these things, and that will tend 
to create jobs. In fact, you might even have some trouble in a couple 
of areas, but you're doing very well in some other areas, and you could 
create some jobs.
  This whole bit about the problem with unemployment in America is not 
really that complicated when you understand that the jobs come largely 
from these 500-employee and smaller size companies, and that they're 
created by the fact that those companies and the owner of those 
companies have enough money they can invest in their company and can do 
the new processes, innovation and the ideas that Americans are so great 
in doing. That's what makes the economy strong, and that's what makes 
jobs.
  Now, we have here a cartoon. We have the President here speaking to a 
small businessman, and the President is saying here, Now, give me one 
good reason why you're not hiring? And what do we have coming into the 
china shop? Well, we have three big bulls: One is the health care 
referendum; there is cap-and-trade, or cap-and-tax; and then another is 
a war tax. Well, the point here in a cartoon form, obviously the bulls 
are not going to have a good influence on the china shop. And the 
President doesn't seem to get what's going on with the businessman. 
He's not looking too excited about a good reason for why you're not 
hiring with these guys coming in the door.
  Now, let's take this back to what we were just talking about, health 
care reform. Health care reform was going to introduce probably, at a 
minimum, $1 trillion worth of spending, or close to it. So what happens 
if the government does a whole lot of spending? Well, they're going to 
do a whole lot of taxing. Guess who is going to be taxed with several 
different types of taxes to pay for socialized medicine? Well, it was 
going to be the small businessman.
  So now what have you done relative to our chart here when you have 
the Senate--and the House has already passed this $1 trillion 
socialized medicine bill that has all these mandates on small 
business--what have you done in terms of jobs when you pass this 
socialized medicine? Well, first of all, you are creating economic 
uncertainty, because the bill hasn't passed. We don't quite know what's 
going to happen. So there is uncertainty. There is also the slowdown in 
the economy, which of course is not helped by a tremendous level of 
spending and debt.
  Excessive taxation. Of course the taxation in the socialized medicine 
bill is going to fall very heavily on these small business owners. If 
you take their money away and force them to provide all this health 
care, they're going to have an incentive, one, to get rid of employees, 
because they can't afford them anymore because the health care is so 
expensive for them. So they're going to figure out ways to get rid of 
employees, not hire them. And what they're going to do, because of the 
excessive taxation, is they're not going to be investing in new 
equipment. So it's going to be a job killer. That was what one of these 
bulls is.
  And then cap-and-trade, or cap-and-tax here, bull number two. That, 
of course, is the large tax that was going to be part of the solution 
to global warming. And we're going to talk about that a little bit too, 
but that also had a very, very large tax associated with it. Not only 
did it have a very big tax to increase the cost of energy, it had a 
very large tax in terms of red tape. In fact, I suppose that the red 
tape and the amount of additional Federal authority to regulate 
anything in the energy area, including even how individual American 
citizens' houses are built--that is, building codes at the Federal 
level, building codes regulating how you build your house and whether 
it has the proper carbon footprint or green footprint all in this bill 
with not only the largest tax in history, but also a great deal of red 
tape.
  These are all things that hurt jobs. And so should we be surprised 
that we're getting a high level of unemployment? We should not be 
surprised. We are breaking all the basic laws.
  Here is the first stimulus bill. We were told last spring--late 
spring and early summer--that we needed to pass a $787 billion stimulus 
bill. And what was the idea of the stimulus bill? The idea of the 
stimulus bill was that government is going to spend a whole lot of 
money, and by spending money, the economy is going to be better. Now, 
that entire premise is suspect. If the economy was going to be better 
by us spending money, we would have one of the most robust, healthy 
economies in the whole world. We wouldn't have any unemployment. We 
would be going gangbusters if Federal spending was the thing that was 
going to make the economy good.
  But most people with a little common sense, if your family budget is 
in trouble, the thing you're going to do is not run down to the local 
store with your credit card and stack up a whole lot of debt and spend 
like mad--unless you're a little bit nutty or had too much to drink.
  But anyway, we were told that the thing to do is we've got to pass 
this $787 billion stimulus bill. And we were

[[Page 32533]]

told, if you don't pass it, do you know what's going to happen, 
America, and you, Congressmen, that are representing Americans? If you 
don't pass this stimulus bill, you may see unemployment go up to 8 
percent if you don't pass this stimulus bill.
  So this is the President's forecast of what's going to happen if we 
pass this stimulus bill right here. You see this is 8 percent 
unemployment, and he says we're going to keep it under 8 if you just 
get this $787 billion into our hands to spend. Without the stimulus, he 
said, this is what's going to happen; if you don't pass the stimulus, 
it's going to do this:
  First, the red line here is what has actually happened. Is this red 
line a surprise? No, it wasn't a surprise at all. I stood here on this 
floor 6 months ago with similar charts and said this stimulus isn't 
going to work. Is it because I'm very smart or brilliant? No, it's not 
at all. It's simply because I know a little bit about history. I know 
what will and I know what will not work.
  If the Democrats had known something about history, they would have, 
at a minimum, learned something from a fellow Democrat. This Democrat's 
name was Henry Morgenthau. He was Franklin Roosevelt's Treasury 
Secretary, and he appeared before the House Ways and Means Committee, 
right here in Congress, in 1939. Now, we have some old people in 
Congress; not too many people probably remember Henry Morgenthau, but 
they could know something about history and about Franklin Delano 
Roosevelt. And here is what Henry Morgenthau said: After 8 years of 
spending money on this--it's called Keynesian economics. Henry 
Morgenthau was a close buddy and associate of little Lord Keynes--he 
was a strange little fellow, that British man--and came up with this 
idea that we could stimulate the economy by spending money. And so they 
went at it, hammer and tongs, stimulating away, spending lots of money.
  At the end of 8 years, this is how well it works: Henry Morgenthau 
appears before the House Ways and Means Committee: We have tried 
spending money. We are spending more than we've ever spent before, and 
it does not work. That's pretty straightforward English, we've been 
spending money, more than we ever did before, and it doesn't work. I 
say, after 8 years of the administration, we have just as much 
unemployment as when we started, and an enormous debt to boot.
  And so it's not rocket science to see that this idea of spending $787 
billion that we don't have, it's not rocket science for us to be able 
to stand here 6 months ago and say, hey, we hope it works, but it's not 
going to work. It has never worked in history before; it's a lousy 
solution, it's going to make the problem worse. We said all of those 
things. Dozens of people stood on this floor and said those things. And 
it's not because they're so smart, it's just because we understand the 
basics of what it takes to make jobs. And the thing that kills jobs is 
too much government spending.
  Now, I will say about the stimulus bill that we put in place, it 
would have made Henry Morgenthau very uncomfortable, because it wasn't 
even traditional, old-fashioned stimulus. Old-fashioned stimulus is 
like making highways or building hydroelectric plants or hard job 
creation. This thing was more an expansion of wealth here. It was 
giving money so that organizations like ACORN could apply for community 
organizing, and a lot of things that really were never going to create 
jobs in the first place, or if they were, they were government jobs. 
And those things, the result has been, look, we've got unemployment; by 
the time you get into the latter part of this year, up in excess of 10 
percent, not 8 percent, but 10 percent unemployment. And that's not a 
big surprise.
  And so today, what did we do? We passed mini-stimulus, little brother 
to big brother stimulus. This was only, instead of $787 billion, $150 
billion today. And did we learn anything from our experience? No, 
nothing at all, apparently. I think it was Einstein who said that if 
you repeat the same thing over and over again expecting a different 
result, you may just be crazy. And that's what we have done today. We 
came up with a junior stimulus bill, and we passed it on this floor. 
And the people who voted for it were the Democrats. They were a little 
reluctant in voting for it because it didn't work very well the first 
time when they did the stimulus, and they're not so confident that it's 
going to work again.
  So, what are we looking at in terms of Obama-Pelosi spending? Well, 
you've got the second half of the Wall Street bailout here, $350 
billion. Then you've got this economic stimulus thing that has not 
worked, that we said it wouldn't work, it doesn't work, it will never 
work, and yet they spent $787 billion--well, they haven't spent it all, 
they're just slopping it into other government programs. And then 
you've got the SCHIP, and then the appropriations, another $410 billion 
over there. IMF bailout--that chart is wrong, it's probably about $110 
billion.
  And then the House got really excited about doing some really serious 
spending, and they passed this cap-and-tax, which is that global 
warming bill. And that was--let me see what the number on that is here, 
get the chart turned around--that was $846 billion. The reason on this 
chart that that's a little hazy is because the Senators weren't 
brilliant enough to go along with this $800 billion cap-and-tax or cap-
and-trade bill. Now, this is going to extend a huge government net over 
the energy business, and it was probably worse in terms of red tape and 
government than it was in terms of its tax.
  Now, the ironic thing is that I'm an engineer. And the thing about 
this bill that's particularly frustrating is that it doesn't appear 
that there is a consistency between the stated purpose and what the 
bill does. Let's assume for a minute that global warming is an imminent 
threat, it's something that we need to spend billions of dollars on 
that sometimes people don't call it global warming anymore because it 
isn't clear that the planet is warming, and so they call it ``climate 
change.''
  But anyway, the theory runs along the lines that there are these 
various organic kinds of pollutants, particularly CO2, 
carbon dioxide, that's the bubbles in soda pop. And the theory runs 
that if mankind makes enough of this CO2--which we make by 
burning carbon or burning coal or burning gasoline or diesel, or 
whatever, we make CO2. And if we make enough of this, what 
happens is the CO2 then reacts with other kinds of effects, 
particularly water vapor and clouds in the atmosphere, and they amplify 
the effect of the CO2, and the sun warms it up, and the 
climate gets hot and melts down. That's the general idea.
  Now, let's just assume for a moment that that were true, and that it 
were a bad thing for us to make CO2--I don't believe that 
that's entirely true, some of that is true, but a lot of it's not. But 
let's just say, for instance, that we really did believe CO2 
is a big problem and we needed to spend billions of dollars.
  Do we need to give the Federal Government all this regulatory 
authority over building codes, how you put a wing on your house and all 
this kind of stuff? The answer is of course it's not necessary at all. 
Let's say that instead what we wanted to do was to reduce the 
CO2 in America, reduce the CO2 by the amount of 
all of the passenger cars that drive on the highways in America. Let's 
say that's our objective. Just to start with, we're worried about 
CO2, we want to basically make it so that it was the 
equivalent, from a generation of CO2, of turning off all of 
the American passenger cars on our roads in America. That would be a 
pretty ambitious goal. If you were worried about CO2, that 
would be a pretty good place to start maybe.

                              {time}  2015

  How would you possibly accomplish something like that?
  Well, the fact is you could accomplish it relatively easily for much, 
much less money than what is here and with much less government 
regulation. What you would have to do would be to simply take the coal-
fired plants that produce 20 percent of America's electrical output and 
replace them with nuclear plants. Currently, 20 percent of the 
electricity in America is produced

[[Page 32534]]

in nuclear plants. If we were to go from 20 to a little over 40 percent 
in nuclear generation, we would eliminate the CO2 from 
effectively every passenger car in America. That is not that 
complicated, and the nuclear plants are pretty efficient. Over time, 
they would probably prove to be not much different in cost than the 
coal-fired plants are, but that is the question.
  Is that really the objective--to get rid of CO2 or is it 
that we just want more taxes and government control? I've become a 
little cynical because the engineering solution to this problem is not 
where the legislation went in the House.
  Then, of course, we've got this other thing here. It's a little bit 
of a sidetrack.
  The bottom line is, if you make energy cost expensive and if you tax 
people a whole lot for energy, what is that going to do to jobs? It's 
going to get rid of jobs. So everything we've been doing here--
everything we are doing--is killing jobs, and we can't seem to 
understand why the small business can't make the jobs.
  Now we go on to the government health care proposal passed here on 
this floor not so long ago. What is the price tag on that? Well, even 
with a little bit of financial hocus-pocus, it is still up there in 
terms of $1 trillion. We spent $1.1 trillion today, but some of it was 
for the appropriations for the defense of our country. To add to this 
big socialized medicine bill, to add $1 trillion more on top of all of 
these other things, is going to bury our economy.
  Well, now wait a minute, Congressman Akin. Aren't you overstating 
your case? I mean you are a Republican, and it seems like you're 
bashing those Democrats for overspending. Under the Bush 
administration, didn't you spend too much money? Well, let's just take 
a look at that question.
  The worst deficit of the Bush administration occurred in 2008 under 
the Pelosi Congress. That worst deficit was $455 billion. Now, that was 
a bad deficit, $455 billion. Maybe even a more effective number to ask 
is, What was that deficit as a percent of the gross domestic product of 
America? That's a way of looking at that number. That was about 3.1 
percent, which is actually fairly common as you look back over a number 
of Presidents who did that kind of spending. Anyway, that was 2008 
under a Pelosi Congress, Bush's worst spending--$455 billion.
  What happened this year? Under a Pelosi Congress and President Obama, 
instead of $455 billion, it was $1.4 trillion. That's more than three 
times more than Bush's biggest spending. I wasn't fond of his biggest 
spending, and people who know my voting record know I did not support 
some of the costly elements that were there. This year, we're three 
times over what we were with Bush--at $1.4 trillion.
  What does that do to our deficit as a percent of GDP? We go from 3.1 
to 9.9 percent of our debt to GDP, which is, by the way, the highest 
level since World War II. So this track record here doesn't make a lot 
of sense--billions and trillions of dollars.
  Well, what does this all mean? If you put it in context, what we're 
saying here is, this year, there was three times more spending than 
Bush's most aggressive spending. We're making Bush look like Ebenezer 
Scrooge with the level of spending this year.
  What does that spending do? Of course it affects unemployment. It 
affects jobs because that spending has to come out of the pockets of 
American taxpayers. Some of those pockets--in fact, some of the deep 
pockets--are the people who own the businesses who can no longer do the 
innovation and make the improvements to create jobs. That is a very, 
very serious problem.
  You have to say that this is a new era of irresponsibility, the 
national debt of the United States at $16.17 trillion. So, in other 
words, have we been spending too much money? Yeah, we sure have, but 
this year has been a regular budget buster, and that is of serious, 
serious concern. Of course, in the long term, we have the concern with 
Medicare and Medicaid growing over time, absorbing more and more of the 
budget.
  There is a certain level the American economy can sustain in taxes. 
If you raise the taxes higher, what happens is that the economy suffers 
so badly that you don't actually collect any more money from the 
government, and that overtaxing is pointed out by a guy by the name of 
Laffer. He had a thing called a Laffer curve. It's an interesting idea. 
You think, Well, look. We really want to spend all this money because 
it's really good to take care of global warming and to pay for 
everybody and to give them all free health care with a socialized 
health care system, and we've got to do this because this is all kinds 
of additional money that we're schlepping around and giving to 
different people. We've got the Wall Street bailout. We've got to pick 
winners and losers, and so we're going to be having to spend this Wall 
Street.
  Then as people come back and pay back some of the Wall Street, now 
what we're going to do is turn that money around and give it to other 
businesses, so now the government is playing in the private business. 
If we'd had a President who'd fired the president of General Motors a 
number of years ago, that would have raised some eyebrows, indeed.
  So, when we get done with all of this, the problem is that it is 
creating unemployment. It's a problem of jobs. It gets back to these 
things here, which are just awfully simple, but they're inflexible, 
immovable kinds of facts, and that is when you follow the policy that 
we've been doing, which is, first of all, we're increasing red tape and 
government regulation; we're engaging in excessive government spending 
unlike anything that has ever happened before in our history; we have a 
problem--and I haven't talked about this--of insufficient liquidity. 
This is also a problem. We've got about a perfect storm going on for 
small businesses in America. Here is what has happened:
  The Federal Reserve doesn't actually print money, but they call it 
``printed money.'' They've increased the liquidity in America, and they 
did that by a factor of 10 last year. In other words, if you look at a 
chart of the amount of M1 money supply, it runs along, up and down like 
a saw tooth, and all of a sudden, we get to last year and--boom. Excuse 
me. I think it was the end of last year--this year--and the thing jumps 
by a factor of 10. So the Federal Reserve created all of this money. 
Boom. It printed a whole lot of it, and that's available at a very low 
interest rate, and the big banks have access to that.
  The question is: Does all of that liquidity get down to the small 
business man? Because if you could get that liquidity into the hands of 
the small business man and if you could knock his taxation back, all of 
a sudden, presto zingo, you've got the formula to get the economy back 
chugging and churning.
  It's not the government that is going to fix the economy. It's 
American individuals. It's the free enterprise spirit of Americans. 
It's the people who love freedom, who have the ingenuity, who say 
there's a better way to do this. I think I could do it. I think I could 
build my own business, and I could make a living for my family this 
way. These people have the courage to take the risks, to put the 
equipment together, to put the systems together, to put the inventions 
together. America grows one dream at a time. They are the people who 
pull us out of recessions, and it is those people who we are hurting 
with excessive taxation.
  As to this liquidity thing, the problem now is that the small 
businesses can't get their hands on money at a reasonable interest 
rate. Here is what happened. That liquidity that the big bank has 
trickles down to the little bank, and the little bank gets some of it. 
All of these Federal regulators are running around, and the bank is 
saying, Man, I am not going to loan money to any small business unless 
I know it's a slam dunk. They're going to pay me back because I'm 
already skating on a very thin edge. I've got a lot of assets that my 
bank owns that are not too strong, and I'm afraid they're going to shut 
me down and that my bank is going to go out of business, so I am not 
going to loan money very easily to just anybody who comes down the 
pike. When you do come down the pike and want to borrow money, I'll 
tell you

[[Page 32535]]

what: I'm going to charge you a pretty good interest rate on that 
money.
  So what happens is the small business man is already intimidated 
because of the threats of all of these taxations that are coming along, 
and the economy has slowed down. He has got economic uncertainty. He 
has got a slowdown in the economy. He's getting excessive taxation. 
Now, I haven't even talked about all of the taxes he's facing.
  First of all, the Bush tax cuts are expiring, so the death tax is 
coming back. The dividend tax, the capital gains tax, all of those are 
coming due because those tax things are expiring, and they're coming 
back, resetting at a higher rate.
  So the small business man sees the death tax, capital gains, dividend 
taxes. Now he's seeing the other taxes we talked about, which are 
socialized medicine, energy taxes and cap-and-trade. What other things 
has he has got coming? He has got these taxations coming. Now, with 
that, he's thinking, Oh, my goodness. I'm not too sure I really want to 
borrow anything.
  Even if he does get the courage to borrow something because he has 
to, he'll go to the bank, and the bank will say, Ah. Before, I was 
giving you a couple percent interest on those loans. It was a 3-year, a 
5-year loan for your business. Now I'm going to need to get a little 
more interest from you. I think about 4 or 5 or 6 percent is what I 
want now.
  All of a sudden, the small business man, even if he qualifies and if 
he has a solid, strong business, it's going to be harder for him. These 
days, it's increasingly harder for him to get liquidity. So, aside from 
the taxation, excessive government spending, aside from the red tape 
and mandates, the economic uncertainty and the slowdown, now he's also 
getting hit with the problem of liquidity. This is fairly close to a 
perfect storm for small business. So guess what? We're not very 
surprised that unemployment has been going up.
  Now, do we have any good news? It's always nice to have a little bit 
of good news somewhere. Until we fix these things or at least a number 
of them, you are not going to hear much about good news. People can 
say, Oh, the stock market is fine, and everything is going well. We've 
hit the bottom. Everybody looks at these things like they're cycles 
that repeat. It doesn't have to be a cycle. You know, FDR managed to 
take a recession and turn it into a Great Depression because he did the 
wrong things. We can follow in his footsteps, but we don't have to.
  The point is we don't have to follow Keynesian economics. We don't 
have to do all of this tremendous level of spending and taxation. It's 
not necessary. It's not what the Republicans are proposing. We know it 
won't work, and we have learned from Morgenthau, and we have learned 
from other people as well.
  What is the solution? Well, actually, it's kind of interesting. One 
of the people who learned the solution was JFK, a Democrat. What he did 
was what? Well, he cut taxes. Oh, my goodness. A Democrat cutting 
taxes? Yeah, JFK actually did. We had a recession. He understood that 
businesses have to have some breathing room, so he cut taxes. Guess 
what? The economy improved.
  Then Ronald Reagan comes along. Ronald Reagan had the same basic 
idea. He said, Hey, we've got a bad economy. How can we ever compete 
with the Soviet Union when our economy is all in trouble? So what did 
he do? He had a huge tax cut--two or three times what George Bush's tax 
cut was. Everybody called it trickle-down economics and made fun of 
Ronald Reagan for about a year or so until the economy turned around 
and took off like a horse, and it pulled us on ahead. He continued to 
spend money on defense. He bankrupted the Soviet Union. The Berlin Wall 
fell down, and the Western World was freed from the threat of an 
aggressive, Marxist/communist regime that was bent on taking over the 
free world. This is all because he understood these basic principles.
  So who is it who has given us the model? JFK, Ronald Reagan, and also 
President Bush--the last President--all understood this principle. 
You've got to get off of the taxation and big government spending.
  Here is the funny thing that is interesting. It was called sometimes 
``supply side economics.'' People made fun of it, but here is how it 
works, and you can see, in your own logic, how it would be. Let's say 
somebody appointed you to be king for the year and that your job was to 
raise money for your little government and your kingdom and that the 
only thing you could do was tax loaves of bread. People in your kingdom 
liked to eat bread. They bought loaves of bread, so you had the power 
to tax them on loaves of bread.
  Well, you start thinking in your own mind, How would you do that? 
Well, you might say, first of all, Well, I could put a penny a loaf on 
the bread, and I could collect a certain amount of money. You could 
figure out how many loaves of bread are sold. At a penny apiece, you 
could figure out some revenue. Then you get to thinking, You know, I'll 
bet I could raise more money for my little kingdom if, instead, I put a 
$10 tax on every loaf of bread. Then you'd think, Wow, that would be a 
whole lot except what would happen is people wouldn't buy as much 
bread, so I really wouldn't get as much tax as I first thought I would.
  So, as you play with this back and forth in your mind, you come to 
the conclusion that there is an optimum point where, if you raise or 
lower the taxes, you will get less tax revenue. Well, that's the thing 
that Ronald Reagan, JFK, and Bush II understood. They understood that, 
if you get off the taxes, the government can actually take in more 
money than they would have taken in if the taxes were higher. It sounds 
like making water run uphill, but it isn't. As you think about the loaf 
of bread, you think, Wait a minute. You can tax something so much that 
no one will buy it anymore, and you'll basically stall the economy.

                              {time}  2030

  What happened when Bush was faced with a recession when I first came 
to Congress in 2001, he was criticized roundly for this. After a little 
while--I guess it was about 2003--he got around to this, he reduced 
dividends, capital gains and death taxes. Now those things affect the 
guys that own these small businesses.
  When he did that, almost immediately, what happened was government 
revenues went up even though the taxes, rate of taxation, went down. 
Well, how in the world could that be? It's this same principle. It was 
called the Laffer curve. It was first published, I think, by Art 
Laffer, an economist.
  The solution to this doesn't mean that Americans have to sit around 
with no jobs and suffer tremendously with a lousy economy. The solution 
is available. The solution has been used time after time in American 
history. The thing that we are doing now has also been used to turn a 
recession into a depression.
  What we have to do is stop spending too much money. It's not very 
complicated; the same thing you would do in your family budget. You 
can't say that you are fiscally responsible, criticize George Bush for 
creating all of these problems when his highest level of spending at 
455 billion is less than one-third of what we have just spent in this 
year at $1.4 trillion.
  When we get the ratio of debt to gross domestic product higher than 
it's been since the Second World War, you know something is wrong, and 
it is not that complicated. This whole idea of employment and what 
makes jobs is very straightforward.
  What I hear the Democrats frequently doing is beating on their drum. 
We are going to tax that old rich man. We are going to get the rich 
man. We are going to take his money away from him and give it all to 
other people.
  Well, the only trouble with that is, the trouble with socialism is 
sooner or later you run out of other people's money. Guess who it is 
you are going to tax? If you say you are going to tax the rich man, 
some of those rich men are the guys that own these companies, the men 
and women, the entrepreneurs who own the companies. Many times the 
amount of profit that the company makes is like their profit. They plow 
it back into more jobs.

[[Page 32536]]

  Now, if you tax those people out of their hides, guess what's going 
to happen. They don't have any money to reinvest in their company, and 
you kill jobs. You cannot separate the people that run the business and 
the jobs. They are not separable.
  If you really want jobs, you have to have employers. You can't have 
employees with no employers.
  If you tax the employers too much, then they can't have employees. 
It's not that very complicated. Yet what we hear constantly is all 
these fat cats, we are going to run the tax up on these well-to-do 
people.
  Well, as it is today, you might be amused to know that 50 percent of 
Americans pay about 1 percent of the tax revenue in America. Fifty 
percent of Americans pay about 1 percent--I believe my numbers on that 
are pretty close to right. You could also say that a very, very large 
percent of taxes are paid by a very small percent of Americans.
  Now, if you drive that too hard, what happens again is you squeeze 
the small business and the wheels come off the tracks. That's what we 
have been doing, and we have not been making the situation better.
  It's not complicated. We can fix it, but we can't fix it with what we 
did today. Today the Democrats decided to increase the debt ceiling, 
another $300 billion. They decided to spend money on the defense of our 
country, which I supported and voted for, but also another $150 billion 
in this stimulus kind of thing which didn't work before, and we know 
it's not going to work again.
  We are not using the right approach. We are not going back to the 
basics of how jobs are created. What we are doing is we are spending 
Americans' money. Not just our own money, not just our kids' money, our 
grandchildren's money at this kind of rate. We cannot afford these 
kinds of programs in the condition of our economy.
  We can right the economy. There's things that can be done to fix it. 
There's a great deal that can be done with health care. Even if you 
believe in global warming, and it is a high priority to spend billions 
of dollars on it, even if you believe that, there are a whole lot of 
better solutions and a whole lot of government redtape and taxes.
  You can move to the nuclear model, which is going to reduce 
CO2 significantly. This economic stimulus, we saw how 
effective that was. That's the thing that we are claiming we are going 
to keep our unemployment below 8 percent, and here we are closer to 10.
  Now, of course, the Wall Street bailout: this was a failed idea from 
the start. It was sold to the Congress that the entire American economy 
was going to collapse, that there was going to be sulfurous smoke 
billowing out of the earth. There are going to be hail storms and brick 
bats falling from the sky if we didn't come up with $700 million in 
unmarked bills, and we wanted it in a big hurry because we made a big 
public announcement, the stock market is watching you, Congress.
  Congress obliged. I think it was a bad decision. They passed that 
stimulus bill. Now we have got politicians running around inside the 
private sector deciding on the salaries of private employees.
  The recent bill that we passed here just last week gives the Federal 
Government the authority to regulate financial transactions and, at 
least in theory, could give them the power to determine the salary of a 
bank teller. Do we really think that that's a job that Congress and the 
Federal Government can do efficiently, is to determine the salary of 
people in private industry?
  Is that what we really want our government doing? Do we trust our 
government to be telling us whether we can put an addition on our house 
and we have to prove that the carbon footprint of our house is just 
right to be able to allow us to put an addition on our house?
  Do we need to have a energy taxed a whole lot more when the economy 
is in the condition it is now? Is this threat of global warming which--
by the way, a whole series of emails and electronic files were released 
from the scientific university in England that is the center for 
collecting all the data on global warming, it found that these 
scientists had been fudging the data. What they found was, in fact, 
that they were very less than professional and had been doing 
everything they could to quash any article appearing in a journal that 
would question the absolute rigid science that global warming was an 
imminent disaster on this planet.
  Well, when the evidence of the fact that the data had been doctored, 
that they had been intentionally trying to quash the opinions of 
dissenters, trying to say that it's settled science--it's nothing 
settled at all, what these emails revealed in East Anglia. But that was 
kind of dubious science all the way along.
  The question is, is that as important as our dependence on foreign 
oil? I am not so sure that it is.
  Even if it is, there's a solution to that which is replacing coal-
fired, carbon-burning plants with nuclear plants. France has 80 percent 
nuclear generation. If we went to 40, we would, equivalent, get rid of 
the CO2 from all of those passenger cars.
  This is not the approach we have been taking. The whole wrong 
economics of what we have been doing is wrong. That's why people are 
feeling pain. They are feeling unemployment. That's why people can't 
make their mortgage payments. That's why people are having to move in 
with their parents and all kinds of other sacrifices are being made.
  That's a tragedy, because this is something that's not that 
complicated. It's something that--there are models that show us what we 
should be doing in government. The Republican Party has proposed all of 
the things that I am talking about in solutions, that is, in terms of 
health care, are we saying there isn't something that should be done? 
Of course there are things that should be done in health care.
  If you have got a problem with the plumbing in the kitchen sink, it 
doesn't mean you remodel the entire kitchen. That's what the Democrats 
have proposed. In socialized medicine, the government could take over 
all of health care. You don't have to do that, but there are things 
that we can do to improve the situation and can build on what we have.
  We have a very, very good health care system in terms of delivery. 
The pay-for piece of it is broken, and it's because about a third of 
Americans don't pay anything for their health care. No wonder that 
starts to create stress in the system.
  There are things that we can do to improve the efficiency and the way 
our health care system works, but it doesn't mean scrap the whole thing 
and give it to the government. In each of these areas there are good 
proposals, ways to solve these problems.
  When we are talking about jobs and employment, we have to remember 
what the basic principles are. The basic principles are those small 
businesses have to be healthy, and they are never healthy when we spend 
too much money, when we create too much redtape and when we tax too 
much and also when we don't get the right rules in terms of liquidity.
  I heard on the floor here not so long ago, the Democrats saying that 
this entire recession is the fault of George Bush. Of course, he is the 
one that brought the hurricane--it's always convenient to find somebody 
to blame.
  But what's to blame in this recession? What's to blame in terms of 
job losses? Well, it's these things here. Anybody who has ever run a 
small business, you can check these with anybody who has a friend, talk 
to somebody who runs a small business. Ask them: Is economic 
uncertainty a problem in terms of creating jobs? Oh, yes, yes. Slowdown 
in the economy? Yes, that makes me concerned. Excessive taxation? Oh, 
yes, you are going to tax me a whole lot.
  We have got this thing called a death tax. The death tax, the way it 
works is when it goes back into effect in 2011 or 2012, let's say you 
have got a business, maybe it's a farm. You have got the thousand acres 
and Dad is running the farm. Dad dies and passes the farm on to his 
son.
  The government says, well, your dad died so we are going to tax you. 
Well,

[[Page 32537]]

how come you are taxing? He already paid his taxes. Yes, we are going 
to tax him again. It's a double taxation, and we want 45 percent of the 
value of the farm.
  The son says, well, that means I would have to sell half the land 
from a thousand acres and go to 500. I would have to get rid of half of 
my tractors and combines and other equipment. The farm really wouldn't 
work at 500 acres. It needs a full thousand acres. Sorry, Bub, you owe 
Uncle Sam the death tax.
  What that does is what? It kills small business when you do that 
death tax. These are things that people know you just can't do this and 
expect to have a strong economy.
  That's where we have been making some mistakes. Unfortunately this 
last year these mistakes have come home to roost.
  You could say, well, this is Bush's mistake because he got the whole 
economy messed up in the first place.
  Well, let's go back to that record. Let's go back to that 
conservative newspaper, the New York Times. On September 11, September 
11, 2003, the New York Times reported, first of all, that President 
George Bush was worried about what was going on with Freddie and 
Fannie. Freddie and Fannie had apparently lost a few billion dollars, 
didn't know where they had put it.
  That said, these financial institutions that were quasi-public, the 
implication was that the government would be in the bag if something 
went wrong with Freddie and Fannie.
  He is quoted, September 11, 2003, in the New York Times saying that 
Congress needs to give him authority to regulate Freddie and Fannie 
more. In a matter of a year or two, we here in the House, it was a 
Republican House at that time, passed a bill to give the President 
authority to get into Freddie and Fannie's finances and to regulate 
them more because they were out of control.
  The bill went to the Senate, as you can expect; but it was killed by 
the Democrats in a filibuster on the floor. It never saw the light of 
day. It was never passed.
  So it was that Freddie and Fannie, failing, along with other parts of 
that real estate market, which was created by laws that we had made, 
saying that banks had to make loans to people who couldn't afford to 
pay them, and also this wild speculation that came from a very, very 
low interest rate and a lot of liquidity created by Greenspan, you put 
that all together and you get a bubble in the real estate market. The 
bubble pops and things come apart.
  Now, you could try and blame that thing on Bush, but it really 
wouldn't be accurate to do that. He saw, at least in 2003, that we were 
in trouble and recognized we should do something about it. It's easy to 
try to blame problems that are created by overspending and overtaxation 
on the Republicans, but the fact of the matter is this Congress has got 
80 Democrats more than it does Republicans. This is not exactly what 
you call a Republican control of the Congress or the House.
  Over in the Senate, the Democrats have a working 60-vote majority, so 
they could even break filibusters and pass what they want. They have 
had a year to work on this, and we can see what they have done.
  We have seen what happened to their spending. We have seen all these 
different things they put money into. These ones that are foggy are the 
ones that are just done by the House. The Senate has not passed them.
  We have seen what's happened to employment as a result of that 
excessive spending. It has not been good, and it's not been good for a 
reason.
  We have, today, again, continued in the same policy. I think 
Americans are getting tired of it. I think they realize you can't blame 
it on someone else, that these are basic factors that people 
understand. It's businesses that create jobs; and if you tax the 
businesses too much, and if you have the wrong environment for the 
businesses, they are not going to be able to keep the economy going.

                              {time}  2045

  Ironically, something that suffers a great deal in a poor economy are 
governments. Governments depend on tax revenues for their revenues, and 
the States really take a beating because many of them have balanced 
budgets that they have to meet. So if you happen to be some poor 
governor in a State when you have a Congress like this that's spending 
money wildly and forgetting the basic principles of economics, you've 
got a lot of problems.
  So this cartoon is as a lot of cartoons that have a certain amount of 
sense and humor to them. ``Now give me one good reason why you're not 
hiring.'' Well, we've seen a whole lot of reasons why we're not hiring, 
and the trouble is that we have essentially exasperated every single 
one of these things, and that's why there are not jobs here.
  So we're closing up here, then, on this segment on unemployment and 
on spending and what it is that creates it. There's nothing here that's 
very complicated. Like most things in life, if you understand the 
mechanics and how they work, they're not very difficult. We're doing 
some things that are wrong in terms of jobs. If we want to have jobs, 
we can do it. It's not the government that's going to create the jobs. 
It's you, my friends, the American people that will create the jobs. 
But we have to give you an economic environment that is conducive to 
creating jobs, and that does not mean a whole lot more money in 
spending, such as our $150 billion in stimulus II, ``son of stimulus,'' 
if you want to call it that, the failed bill from last summer that 
didn't work. It does not include increasing the debt limit, as we did 
today, by $300 billion. What it includes is the same basic principle 
that JFK, Ronald Reagan, and Bush used, which is getting the government 
off the backs of the people of the United States.
  This is a sad situation. My father fought in World War II, and their 
mindset was, we're going to give of ourselves a whole lot so the next 
generation, our children, can have more than we did. Some of them 
didn't go to college, and they said we want our kids to go to college. 
We want to leave America a better place.
  Is that the heritage of this day, that we want to leave America a 
worse place, that we want to leave our kids and our grandkids up to 
their ears in debt, having a less bright future than what we had? Can't 
we learn from the great generation that fought World War II that we 
want to leave America a better place?
  I believe the American public will say we want to go back to leaving 
this a stronger, better, freer country than when we inherited it, and I 
think we will do that. But we will do that by changing these false 
premises and policies that are leading us down the primrose path.
  I thank the Speaker for allowing me to talk on these very important 
questions, and I would say Merry Christmas, wonderful holidays to 
Americans. God bless you and goodnight.

                          ____________________