[Congressional Record (Bound Edition), Volume 155 (2009), Part 3]
[House]
[Pages 3529-3535]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  HOW TO DEAL WITH THE ECONOMIC CRISIS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Iowa (Mr. King) is recognized for 
60 minutes.
  Mr. KING of Iowa. It's an honor and a privilege to be recognized to 
address you here on the floor of the United States House of 
Representatives. It's interesting and intriguing for me to listen to 
the dialog that flows forth from earlier this evening, the gentleman 
from Texas, and now the voices of the Congressional Progressive Caucus 
as they put their poster up on the floor that directs people to their 
Web site and make their argument as to the things that are in this 
stimulus package that they believe should stay and the things that are 
not in and may have been taken out that they believe should have stayed 
in or be put back in.
  I think, Mr. Speaker, that this debate that we have is much deeper 
and much more profound than the components that have been discussed 
here in the previous hour. I think it goes to our vision of America 
itself. And the question that is before this country is, in some sense, 
What will we do in the middle of this economic crisis, this one that 
came tumbling down upon us on September 19, the date that Secretary of 
the Treasury Paulson came to the Capitol and very intensely insisted 
that we provide $700 billion for him to spend at his discretion, 
without a lot of oversight, perhaps with no oversight, and provided 
that bailout money in two different increments, $350 billion in the 
first increment, and then congressional disapproval would have been 
required in order to block the second $350 billion.
  So the entire $700 billion of the bailout money has been advanced 
into the hands of the Secretary of the Treasury who has some problems 
of his own. Those would be of his own intent to pay his taxes, et 
cetera, Mr. Speaker.
  This discussion that we are in, this discussion that is being led by 
the President of the United States and his position that we must do 
something, we must do it fast, we can't do it halfway, we must do it 
all the way, and his insistence that we not flag and that we not fail, 
and that we come forward and support this stimulus plan has galvanized 
its support in the House of Representatives and in the Senate behind a 
single simple philosophy that seems to justify the capitulation of the 
responsibility to each of us Members to draw a reason and informed 
judgment and do the right thing for our country, for our State, for our 
district.
  And this decision is this. Pulling back in behind this logic, which 
is, President Obama has called for a stimulus plan. It shall spend $800 
billion, or more, plus the interest, which will be about $350 billion 
in addition to that, and it will have a mix that has some small 
business stimulation in it, some infrastructure in it, and a lot of 
other things, which are the bells and whistles and wish list to the 
left, Mr. Speaker. It's all packed in there.
  And the Members, especially the Members on the Democrat side of the 
aisle here, and the U.S. Senators of the same political party, they 
will argue and defend component by component. But the rationale that's 
going on in the minds of the Members and the caucus is this: Well, we 
must do something. We know we have an economic crisis. This is the only 
thing that we can choose from because that is what has been served up 
to this Congress by the Speaker of the House, by the majority leader in 
the United States Senate, and by the President of the United States, 
who happened to be, not coincidentally, the three people in the United 
States that could come together in one room and set the direction for 
this entire country and not have to go outside that room and ask 
anybody for their input, for their knowledge, their wisdom base, that 
of their constituents.
  A lesson from history, a look through the looking glass into the 
future? Sometimes it feels like we have gone through the looking glass 
here, Mr. Speaker.
  But here's the question that is before us. In an economic crisis, 
with a crisis of confidence in our financial institutions, a crisis of 
capital that arises more out of that lack of confidence than it does 
out of a slowdown of production or slowdown in the markets--it's the 
other way around. It's the crisis in the capital that is backing up and 
causing these slowdowns.
  But to look through the history of the economy of the United States, 
or the free world, for that matter, and for an economist to ask 
themselves, and all of us should be at least amateur economists here. 
We're making decisions for the people of the United States of America.
  But they ask themselves, What has happened historically and 
economically that we have addressed from this Congress that has been 
improved, and how did we do so? So, we take ourselves back through this 
history, and I can think of the economic crisis we had in the eighties. 
I saw the charts, Mr. Speaker, that were put up here on the floor that 
show--well, what shall I call them? Bush 41's recession and then Bush 
43's recession. That seems that's how it was presented by the 
Congressional Progressive Caucus.
  No. We have had some real economic crises in our past. One of them 
was what we called in the Midwest the farm crisis, which was not 
limited to the farm crisis but it also was a real estate and an energy 
crisis. And during those years of the eighties, when things were very 
tough economically and statistically worse than they are today, 
although I won't argue that things today will not get that bad, Mr. 
Speaker.
  But in the eighties we lost 3,000 banks. Many, many farms went under. 
We lost a lot of oil rigs out there that they were producing and 
tapping into our energy. The crisis in the real estate was a big piece 
of it too. Three thousand banks. The FDIC came in and closed a lot of 
them. In fact, they shut my bank down on April 26, Friday afternoon, 
three o'clock, 1985. I remember the red tag on the door. Closed by 
order of the banking commissioner. Highway patrol guarding the door, 
Mr. Speaker.
  Those were some tough times. And what did we do then? Well, we didn't 
do a lot of the things that are being proposed today. There was some 
plans that came out. One of the things we did was we provided net worth 
certificates to shore up some of the banks that needed some collateral. 
They accepted a look over their shoulder from the FDIC and asked them 
to shore up their operations. Those banks that received

[[Page 3530]]

that kind of collateralization, all came out of it. Every one of them 
was part of that. All succeeded.
  We found a way through this, and we sold some real estate down to the 
value of the real estate. New buyers came in that could borrow the 
money or had the cash to make the purchases because there were some 
bargains out there. When those bargains got picked up, the markets came 
up. Real estate prices stabilized. Banks became stable again. The 
confidence was back in our economy again.
  That was a long decades of the eighties. A lot was wrong. A lot was 
more wrong going into the eighties than we are seeing today. We had 
high unemployment then. We had high inflation then--inflation that ran 
up towards 20 percent. And I personally paid 22 percent interest for 
operating capital to keep my business running through a tough, tough 
decade of economic times.

                              {time}  2215

  We are not seeing 22 percent interest today, Mr. Speaker. And our 
employment rates, yes, they are going up, and we have over 10 million 
people in America that are at least statistically looking for jobs. It 
is not as bad as it was then, yet. And the eighties were not as bad as 
they were in the thirties. And when we look at the thirties, there 
should be some lessons there for us. And I sat in classroom after 
classroom getting my classical education; and one historian, government 
teacher, economist after another would fill our little brains full of 
the knowledge base that has been learned from history, that we had an 
economic calamity in 1929 and the stock market crashed and people 
jumped out of the windows to their death because they couldn't sustain 
the grief of watching their net worth go down. Well, if you look 
historically, it is pretty hard to find anybody that jumped out of the 
window. It wasn't as bad as they said, from that standpoint of Wall 
Street suicides, at least.
  Then, through those times Herbert Hoover was President, and he had 
great confidence in his ability to manage. And so he came forward with 
the Smoot-Hawley Act, which was trade protectionism, and there was 
global retaliation. And then our industry and our manufacturing and our 
exports lost a lot of their markets because of the trade protectionism. 
Each country around the world did a lot of the same thing; they pulled 
back within themselves, and the economies began to shut down in that 
fashion. They opened up the legislation so that unions had a little 
more powerful leverage when it came to striking. They passed the Davis-
Bacon Wage Act; that followed.
  But as this economy went down, Herbert Hoover believed that he could 
manage his way through that. He didn't trust the marketplaces like 
Calvin Coolidge did, but he trusted his ability to manage, and he lost 
his reelect. My only Iowa President lost his reelect in 1932 to 
Franklin Delano Roosevelt.
  Franklin Delano Roosevelt came in, and he had been influenced by the 
famous economist Keynes, who advocated that if government just spends 
enough money, it will create an economy that will have apparently its 
own inertia, and it will bring us out of this great depression.
  So FDR's programs came in one after another, the WTPA, the PWA, the 
CCC, on and on and on, the TVA. And each time that the Federal 
Government stepped in and started another program, they competed with 
the private sector; they competed with the private sector for capital 
and they competed with the private sector for labor.
  Now, if you go back and look at wealthy nations and see what Adam 
Smith has to say about the value of any product, he will say and he has 
written there very extensively that the value of any product is the sum 
total of the capital and the labor that it takes to produce it, deliver 
it, market it, and get it into the hands of the consumer. So if you buy 
a gallon of milk, you add up so many ounces of milk is for the capital 
that it took, and the balance of it is for the labor that it took for 
it to deliver. And that is how Adam Smith analyzed it.
  But the capital and the labor in the United States was being 
swallowed up in government. And capital, when it comes in significant 
quantities in the private sector, the productive sector of the economy, 
smart money goes to the sidelines rather than compete with government. 
And that is what happened in the thirties during the great depression: 
The smart money went to the sidelines, our economy stagnated, and we 
had soup lines and we had make-work projects and we had hand labor, 
stoop labor building dams and roads and parks. We commissioned and paid 
people to go out into the cemeteries and write down everything that 
they could read off of the stones in the cemeteries so there would be a 
record. We paid writers to write; we paid painters to paint, because we 
wanted to pay people to do something, or nothing, so that the borrowed 
money and those tax dollars could flow out into the economy, into the 
hands of the people that would spend it.
  Sounding pretty familiar right now, Mr. Speaker, this idea of taking 
dollars and putting it into the hands of people so that they spend it 
to stimulate the economy. In fact, Keynes himself had I think some 
fairly radical ideas: Spending money would stimulate the economy. In 
fact, his approach was that the worse utility that a project had, the 
more useful it was from a government perspective, from the standpoint 
that if the government spent money on something that was completely 
ridiculous, at least they weren't competing with the private sector. So 
Keynes understood some of the argument that I have just made. He went 
so far to make the argument that he could solve the unemployment 
problem during the thirties if we would just take those good old 
Treasury notes or Federal bills, greenbacks, U.S. cash, put them in 
jars and take them out to a big old abandoned coal mine and bury those 
jars around there in that old abandoned coal mine--this is Keynes 
talking--and then fill the old coal mine up with garbage and turn the 
laissez fair loose, the free enterprise loose. Let the entrepreneurs go 
out and dig through the garbage to dig up the money, and that would 
solve, through the competition of digging up this money that had been 
buried by the Federal Government, that would solve unemployment.
  Now, he may have been a little facetious in that description, I don't 
know his personality, so I can only speculate that. I hope he was a 
little facetious. But I think his point that he wanted to make, that it 
didn't need to be useful work, it didn't need to be productive work.
  President Obama said, ``Well, we are not just going to pay people to 
dig a hole and fill it back up.'' I thought that was my vernacular; I 
am the person who spent my life in that business of moving dirt, and on 
one occasion actually did dig a hole and fill it back up with nothing 
in it, only one occasion. The man changed his mind in the middle of 
that operation. But for the President to say we are not just going to 
dig a hole and fill it back up, but he is modeling his economic model, 
the President's ``new'' new deal off of Franklin Delano Roosevelt's 
``old'' new deal, which really was dig a hole and fill it back up 
sometimes.
  And here is the point that I intend to make, Mr. Speaker; and that 
is, however one would analyze the ``old'' new deal in the thirties, it 
is not possible to look at the numbers and come to the conclusion that 
the new deal solved the depression, the great depression for America. 
In fact, the best conclusion that one can come to, the most charitable 
conclusion is that it may have, may have, Mr. Speaker, diminished the 
depths to which we might have fallen without the new deal in place. 
Maybe the economy would have gone into a complete straightjacket and 
tanked and gone forever downward and waited another decade or two to 
get its confidence back. Maybe. Maybe. I don't believe it would have, 
but that is the best that one can say. And the trade-off is, if a new 
deal, a huge massive spending gets poured into the economy for make-
work projects, if that diminishes the depths to which we might 
otherwise fall, the trade-off is certainly it delays the recovery as 
well. It delays the recovery, because smart money sits

[[Page 3531]]

on the sidelines. Entrepreneurs have been hired by the government to 
dig a hole and fill it back up, and smart money always goes where there 
is some profit, and right now smart money is pulled back to the 
sidelines. That is why we had some bonds that actually went into the 
red for just a little bit, for a little while.
  There are two sectors of this economy, Mr. Speaker, that we don't 
talk about very often. The one that is being stimulated and is 
attempted to be stimulated by the President's proposal, by the 
components of it that are the Speaker's proposal, or the Senate's 
proposal, in its aggregate, that one seeks to spend money for the sake 
of getting it in the hands of consumers. We did that with the rebate 
program not quite a year ago; and you can look back on the charts for 
that, Mr. Speaker, and you will not see a blip that that money was 
spent and injected as stimulus into the economy. $150 billion in the 
hands of the American people, and about 30 percent of it actually got 
spent on new goods and about 70 percent of it went to pay off credit 
card bills or went into savings. So only 30 percent of the overall 
proposal, less than $50 billion, actually went into the economy. It 
doesn't even show up as a little tick on the line.
  Now, $150 billion I understand, Mr. Speaker, is chump change compared 
to this massive piece that the Senate has now passed that we expect 
will be before us very soon. And this piece, when you add it all 
together, is over $1 trillion, but it is not much of it money spent 
that is going into the productive sector of the economy.
  The productive sector of the economy is the private sector of the 
economy; it is the sector that actually produces goods and services 
that have value. And I have said from this microphone many times, Mr. 
Speaker, all new wealth comes from the land. You either raise it out of 
the soil, or you mine it out of the earth. You can seine some fish out 
of the ocean. That is about the end of it. Otherwise, it comes out of 
the land. And it has to start there. And out of it comes food and 
fiber, and from the food and fiber comes the thing we need to live. And 
as we add on to that, the services that come from the food and the 
fiber, then you get your insurance man and your doctors and your 
lawyers and your teachers, and all of the facets of our economy flow 
from the new wealth that comes from the land. But the things that we 
need in order to live, the housing, the clothing, the food, the 
necessities of life and then the niceties of life, they come from the 
productive sector of the economy.
  Then, we have this nonproductive sector of the economy that I 
sometimes call the parasitic of the economy; and that is the sector 
that looks over the shoulder of the productive sector and decides: 
Well, I am going to regulate you and I am going to tax you, and I am 
going to justify my existence by making it harder for the productive 
sector to produce. That is what government often does. Government 
overdoes the overseeing, the overregulating, the taxation, and inhibits 
production.
  So, on the one hand we have the productive sector of the economy that 
has to carry the entire burden of government, the entire burden of, let 
me say, the nonproductive sector of the economy in my charitable 
moments, and we are loading up on the nonproductive sector of the 
economy and we are not giving enough relief to the productive sector of 
the economy.
  That is what this argument is about: Are you going to have an economy 
that is stimulated by producing more things that have value, and 
building the kind of infrastructure that supports commerce and trade, 
and reducing the kind of taxes that allow smart money to make 
investments with the confidence that they won't be punished for their 
success by a Congress or a President that has the idea that a windfall 
profits tax, for example, is a good way to punish someone who turns a 
resource into value and puts it into our economy and pays their share 
of taxes as it is.
  We are heading down this wrong road, this road that the President has 
identified as: We have to construct the leg of a stool. He didn't say 
how many legs, but generally, if it is a three-legged stool, they will 
say so. If it is a two-legged stool, they will say so. It is not a 
milking stool, I wish it were, Mr. Speaker. But this single leg of this 
multi-legged stool that the President announces we have to construct 
and we are going to do it one leg at a time without an idea of what the 
stool looks like or what the other legs look like or what they are made 
out of except money. We have one leg that may be back to the floor of 
this Congress tomorrow and likely this week that cost $150 billion for 
a rebate plan not quite a year ago, $700 billion-plus for the bailout 
last fall, and 830 or so billion dollars plus $350 billion in interest 
on that that is sitting here now waiting to land on the floor of this 
House. Just add it up in round terms, Mr. Speaker, let's just call it 
$2 trillion: $2 trillion to construct a single leg, and I am tracking 
the President's words, of a stool that is supposedly going to get us 
out of this mess that we are in; $2 trillion. And no one will stand up 
and say: Here is the effect of this money? Here is what you can expect 
with the economic indicators? Here is how you will see jobs in the 
productive sector of the economy grow or investment increase or capital 
be freed up for entrepreneurs? None of that is there, except to say 
that we are going to create or save, well, 2.5 million, 3 million, then 
4 million jobs. And sometimes they get a little lazy and forget to say 
create or save, and they just say create 4 million jobs, but in their 
lucid moments they revert back to the create or save.
  Now, I would like to be the one who would announce that I am here, 
Mr. Speaker, and I am going to create or save 10 million jobs. And 10 
years from now you can go back and look, and even if I didn't point to 
a single job that I created, I can easily point to 10 million jobs that 
have been saved.

                              {time}  2230

  A saved job is not a measurable, quantifiable means of determining 
any level of success. But it's a word that lets you slip away from 
being held accountable for a policy that is utterly destined to fail. 
The New Deal failed. It was a mistake. Historians looking back on it 
and economists looking back on it can only point to high employment 
numbers, low economic activity and a stock market that crashed in 
October of 1929. And in spite of all of the billions of dollars in new 
Federal spending in the New Deal program, the stock market still didn't 
reach the peak that it was at in 1929 until 1954.
  Now, Mr. Speaker, the President says that World War II was the best, 
the largest economic stimulus plan ever. Now I don't exactly quibble 
with those words on their face. I would just add to that, that it makes 
it clear that the New Deal didn't solve the Great Depression. He 
understands that. He argues that FDR should have spent more money, not 
less, that he lost his nerve, he shouldn't have worried about a 
balanced budget, and if he had just done enough, if he had just doubled 
down two or three more times, he would have come out of there as a 
winner. But World War II came along as the largest economic stimulus 
plan ever. I won't disagree with that statement.
  But I will say this: It didn't quite solve our economic problems. But 
I believe it did start us on the path to recovery. And by the end of 
World War II, we hadn't yet recovered. The stock market was still 9 
years away from reaching its former apex that it was at in 1929. But I 
believe that the post-World War II industrial might of the United 
States, because we were the only industrialized nation in the world 
that hadn't seen our industry devastated in World War II, gave us a 
comparative advantage. The greenback was good currency all over the 
world. We built products for everybody because we could. And many of 
them had to put back their entire infrastructure in order to be up and 
running again.
  So, yes, World War II was a stimulus plan. But the aftermath of World 
War II gave a marketplace for America's industrial might to continue, 
to switch from making tanks to making cars and making other products 
and exporting them around the world. So a quarter of

[[Page 3532]]

a century later, after the stock market crashed in 1929, we reached the 
previous apex and Dow Jones Industrial Average, if that is our measure 
of recovery, in 25 years.
  So here we are today, Mr. Speaker, with an economy that has had its 
ups and downs. And I could take you back through the short-term history 
of this. We have created a lot of capital, trillions of dollars worth 
of capital. Some of it was false. Some of it didn't represent the 
actual, real value of the assets underneath it. Some of it was because 
Wall Street had run amok, and they were betting on a long run of a bull 
market. And the checks and balances weren't in place. And AIG was not 
calculating the risk and didn't have the capital underneath them in 
order to back up the insurance that they were providing.
  So this has tumbled. But in the end, we need to come back to what is 
the real estate worth that is underneath this? What are the businesses 
worth that are part of the shares that are there in our stock market? 
Let's get down to some real values. And the $2 trillion leg on a multi-
legged stool and not knowing what the stool looks like or how many legs 
there are, but we just know the idea is spend money, spend money, spend 
money, and spend it over here, and spending brings us back out of this 
economic situation that we are in. Production will do that.
  Mr. Speaker, I submit that we need to suspend capital gains taxes and 
do so for 2 years. Let that smart money find a place to go without 
being penalized for coming back into this economy. The smart money that 
is on the sidelines, the $13 trillion or so that are overseas that are 
invested in the economy in other parts of the world that are faced with 
a capital gains tax, if it is corporate, if it comes back into the 
United States, we can free that up, Mr. Speaker. And that $13 trillion 
is a number as of last September. So chances are that today it's not 
quite $13 trillion any more. And we won't get it all back. But we will 
get back 1 or 2 or $3 trillion. We will get back more money that is 
stranded outside the U.S. economy because of the impediment of facing 
capital gains tax that we're going to be able to put into this economy 
with this so-called stimulus plan that is before us, this Congress, as 
we speak. We will get more money into the economy.
  And then the groan goes up on this side of the aisle because if we 
suspended capital gains tax, we will be giving up an opportunity to tax 
one of these greedy capitalists. How could you live with yourself if 
you passed up a chance to tax somebody and you let their money come in 
and get invested in our economy? Well, I can live with myself to do 
that. If you have a good argument, I will be happy to yield and hear 
that argument. But I don't think you have one. We need to bring this 
capital back into the United States and get it into this economy. But 
the lost revenue for an immediate suspension of capital gains if we did 
so for the year 2009 would be, Mr. Speaker, $68 billion. Now I'm going 
to say this: Only $68 billion as compared to a couple of trillion 
dollars in bailout money, $68 billion in lost revenue for suspending 
capital gains taxes to bring in $1 or $2 or $3 trillion from overseas, 
maybe more, into this economy to find its way to where it would do the 
most good, because smart investors will do that. If we suspend capital 
gains tax on picking up the toxic debt that is there, those were 
Secretary Paulson's words, suspend capital gains tax on the income off 
of those investments, smart money would go pick up these mortgage-
backed securities. They would take them off the marketplace. Smart 
money would then go out into the communities and work with the people 
that have been evicted, or I should say about to be evicted, from their 
homes, find a way to renegotiate some of those terms or sell the home, 
turn around and remarket it to somebody that can make some reasonable 
payments.
  But we've got to go through this. We've got to bite the bullet. We've 
got to take the pain. We've got to make the adjustments. And it is not 
going to work for us to borrow from our children, our grandchildren and 
our grandchildren's children trillions of dollars with no idea of how 
to pay them back and no way to even move towards a balanced budget, but 
to put all that demand out there in the world market for capital, 
borrowed money from the United States Government.
  And where will we borrow that money from, Mr. Speaker? Do we borrow 
that money, then, from China with their economy going south? Because 
when we catch a cold, the Chinese get sick, as well. They're tied to 
our economy. Are the Saudis going to have that kind of cash that they 
will loan to us? Perhaps. But the interest rates are going to go up. To 
borrow that kind of money and put it into the economy in that fashion 
is irresponsible. It denies the very values of the economic lessons 
that we know. It denies that we need to produce something that has 
value.
  Now, if Keynes is right and we can go out, borrow the money and then 
bury it in the coal mine, cover it up with garbage and turn people 
loose to dig it up and that would solve the unemployment problem, then 
I think he is way off, Mr. Speaker. I'm of the other side, of the 
supply side of this economy.
  Let me take this to another step. Immediately, I would suspend 
capital gains tax for 2 years. I would lock it in in stone so smart 
money would know they had 2 years to find a place to settle it. And 
maybe I would back it up even and look at the numbers, perhaps even 1 
year. But if it's 2 years, we will be giving up $68 billion worth of 
revenue for not collecting any capital gains tax for 2009, $61 billion 
for 2010, that's it, $129 billion, that would be the total cost of 
putting 3 to 5 or more trillion dollars into this U.S. economy in the 
right place where smart money would go.
  Now that is one of the things we could do. We can go down through the 
list. We ought to be talking about reform. We ought to be talking about 
repealing the Community Reinvestment Act and about privatizing Fannie 
and Freddie and requiring them to be capitalized and regulated like the 
other banks are. And we need to be talking about amending the mark-to-
market accounting rules, the credit-default-swap rules, putting these 
trades up on the Internet so that there is sunlight on all of them so 
they can be tracked and they can have oversight.
  All of those things need to happen, Mr. Speaker, and all of those 
things are things that should be done immediately, along with having a 
commission to examine the situation of the finances in this country and 
the economy in this country to come to a conclusion as to where we went 
wrong and to make some more of those changes. I have listed some. What 
we need to do is build a structure so it doesn't happen again. It's 
unlikely to happen, Mr. Speaker, when we have the chairs of the 
committees that have been part of the problem in the first place. 
Albert Einstein once said that you never solve a problem with the same 
mindset that created it. And we're dealing with people that have gavels 
that have the same mindset that created this problem.
  All of these things I have talked about need to be done in the short 
term and in the temporary. There is a broader solution that needs to 
come, Mr. Speaker, and that is to set up our taxes so that we can be 
free of these kind of burdens for all time. I have many times come to 
this floor and spoken about the need to eliminate the IRS, to move to a 
national sales tax and to understand a principle which is this, that 
what you tax you get less of. The Federal Government and the United 
States has the first lien on all productivity in America. If you're 
going to earn, Mr. Speaker, Uncle Sam is there with his hand out to 
tax. If you're going to save, he taxes the earnings off the savings. He 
taxes your proceeds off your investment. Uncle Sam is there with his 
hand out to tax it, earnings, savings and investment. If you're a 
producer, you're punished by being taxed. If you're a consumer, that's 
fine. Some of the States, many of the States have a sales tax. Beyond 
that, consumers consume without being taxed except for an additional 
excise tax that exists in some places as well.
  What you tax you get less of. But we tax all of the productivity in 
America. And taxing all the productivity in

[[Page 3533]]

America virtually ensures that there won't be as much productivity in 
this country as there would be if we passed a national sales tax. The 
Fair Tax, Mr. Speaker, took the tax off of our production and put it 
over on consumption. If we do that, we will allow the American 
producers an unlimited amount that they can produce, they can earn, 
save and invest all they want to earn, save and invest.
  When I think about people that are working a job and they're working 
the angles on that job and they're thinking, well, let me see, I have 
got my 40 hours in this week, now when I start working overtime, I go 
into a different bracket, my withholding is a little different, I don't 
know, my payroll per hour isn't as good as I would like to have it, I'm 
going to limit the overtime hours I'm going to work. Or it might be 
somebody in sales that gets paid on commission. And they do a 
calculation on the taxes that they would pay the IRS. And they reach a 
certain point, and they realize how big a chunk Uncle Sam is taking out 
of them, and they decide, I'm just not going to produce any more than 
that. I can live comfortably enough down here without having to work 
twice as hard to get half again more out of that labor because the tax 
rate swallows up that much.
  Now that is just an individual working sometimes on commission or on 
overtime. But think about the calculus when it's an investment for a 
small business, maybe a small business that employs six or eight or ten 
people, and a business that gets to the point where it's kind of 
comfortable. They can see some new market opportunities. But the owner 
of the business understands that the tax burden is such that it's not 
worth the risk. And so they don't invest the capital. They don't create 
that extra three or four or five or 10 new jobs. And the business sits 
there and stagnates. And the real estate that is there that perhaps is 
paid for gets tied up because there is a capital tax gains tax that 
will be paid if he sells his real estate and he hands that over so that 
maybe a new entrepreneur can take that location and take it up to the 
next level.
  We have all kinds of property in America that is tied up because of 
tax reasons, not business reasons. Every single business calculation 
that you make in the United States of America is impacted by Federal 
taxes. And every calculation has to take into account the tax 
ramifications. When that happens, then our smart people are using their 
brains to figure out how to minimize or avoid their income taxes rather 
than figure out how to maximize their productions and their profits to 
create more wealth in this country.
  Mr. Speaker, believe me, if we had more wealth in this country and 
that wealth doesn't fear the government, that wealth will create more 
jobs and there will be more wealthy people. You cannot help the poor by 
punishing the rich. Moving to a national sales tax just totally 
revolutionizes this economy. It opens up our production and makes 
unlimited production. Unlimited wealth can be created, and then the 
taxes are paid voluntarily by the people when they decide that they're 
going to consume. So we have voluntary taxpayers. We have voluntary 
producers. We have an economy that is virtually unleashed.
  And here is one of the ways to draw a comparison. We have to rebuild 
U.S. manufacturing in the United States. We have watched a lot of our 
manufacturing go overseas because the price of labor has gotten low 
enough in comparison to U.S. labor that those factories would shut down 
and relocate overseas. The difference is also the taxes that are 
embedded. Now we tax corporations. We tax payroll taxes. When you add 
up the embedded taxes in a retail product in the United States, say on 
this ink pen, on average it is 22 percent. Let's say it's a $1 ink pen. 
Twenty-two percent of that would be built into the price, embedded 
taxes, so that the company that is producing them can pay their 
business income tax, likely their corporate income tax and their 
payroll tax. That puts us at a competitive disadvantage, Mr. Speaker.
  And so here is an example. If we pass the Fair Tax, then the embedded 
Federal income tax comes right out of that price. Competition will 
drive it out of the price. So here would be an example. If there is a 
Mazda that is made 100 percent in Japan, and there are at least $800 
million dollars worth of those Mazdas coming into the United States 
every year, and it's sitting on the dealers' lot at $30 thousand 
sticker price, that price is set by competition, what you can market 
at. And across the street on the other dealers' lot is a Chevy, or a 
Ford, but let's say a Chevy. That would happen to be built 100 percent 
of it in the United States.

                              {time}  2245

  It has also a $30,000 price tag on it. And that's because competition 
now, two comparatively valued vehicles, selling for identical price, 
competing directly against each other, $30,000 each. Now, we pass the 
FAIR tax and over time, and not a very long period of time, perhaps 
some would be immediate, some would be longer, but about 18 months we'd 
see most of these adjustments. You pass the FAIR tax and your $30,000 
Chevy price will go down to $24,600. That's the 22 percent embedded 
Federal tax. It's part of that price that General Motors has to have in 
order to recover the taxes that they're paying. Your $30,000 Mazda 
stays at $30,000 because the embedded Federal tax isn't part of their 
price. That machine, that car is made in Japan. So now you pull into 
the dealer's lot and here's a Chevy for $24,600 and a Mazda for $30,000 
and they're of comparable value.
  What do you buy, Mr. Speaker?
  Does this lower the price of the Mazda too? Maybe. But the consumer 
is going to look and say I'm going to go for the $24,600 Chevy. I like 
that that much better. I like it 28 percent better than the $30,000 
Mazda. And then we have to add back in the sales tax on these cars and 
that's an embedded tax of 23 percent that covers your corporate income 
tax, a rebate, so that we untax everybody to the poverty level, and the 
payroll tax that's associated with the labor that goes in. So your 
$24,600 Chevy goes up to $30,400. That's with the sales tax added on. 
You would write the check to drive the Chevy off the lot for $30,400. 
But to drive the Mazda off the lot you'd have to write the check for 
$39,000. That's the difference. It is a 28 percent marketing advantage, 
$8,600 advantage, American car over Japanese-made car or Korean or any 
other car.
  What's that tell us, Mr. Speaker? I'll submit that it tells us that 
there would be many more American automobiles built and sold here in 
the United States because they would be competitive again. Imagine 
being able to take 28 percent off the price of every American-made 
vehicle today, at least for the components of them that are made in the 
United States. That's what the FAIR tax would do. Our auto 
manufacturers in Detroit can't seem to get to this conclusion, and 
neither can they carry a cogent argument against it. But they're stuck 
in their ways. They're negotiating with the unions who haven't made any 
concessions that I can see at this point. And we have a simple solution 
to a complex problem, that, like a Rubik's cube, and I've turned this 
over and looked at it every way I can for 29 years, Mr. Speaker, and 
every time I turn the Rubik's cube of a national sales tax again and 
look at it another way it looks better and better and better, not 
worse, not weaker, not something that has a flaw, better and better and 
better. And it always wins the debate, it always wins the argument if 
given an opportunity to match up against any other idea out there on 
tax reform. In fact, the FAIR tax, the national sales tax does 
everything good that anybody's tax proposal does, it does all of them 
and it does them better. And I'd put it up against anybody else's tax 
proposal. If you take the tax off of production and you put on it 
consumption, you also provide an incentive for savings and an incentive 
for investment. But you have more production. You will have a slight 
diminishment in consumption because there's a tax there, but over time 
there's more money in a person's

[[Page 3534]]

pocket, a worker will get 56 percent more take home pay, and then they 
decide when they pay those taxes. This is where America needs to go, 
and in a short period of time, if we suspend the capital gains taxes 
and do that on a 2-year period and pass the FAIR tax, even just 
suspending the capital gains tax, we will see the Dow Jones industrial 
average jump up 30 percent or more, and it will be in a matter of weeks 
or months, not a long term, a short-term, you see immediate reaction 
and this thing would start to come around. If we pass the FAIR tax and 
on the night that the ball drops in Times Square, I'd set it up for 
December 31, 2009, midnight, and end the IRS as we know it. Abolish 
them and the Federal income Tax Code, set it over up as a national 
sales tax and we will see a dynamic economy role again, Mr. Speaker.
  We have the solutions here. Republicans have the solutions here. 
Spending trillions of dollars for a leg of a stool that we have no idea 
what it looks like or what kind of results we're going to get is folly. 
And it's the kind of folly that Einstein was talking about when he said 
you can't solve a problem with the same mindset that created it.
  So, I'll be opposed, Mr. Speaker, to this stimulus package because I 
think it has an oxymoronic name. I don't think it's a stimulus at all. 
I think it's a burden, an albatross that's hung around the neck. I 
think it is, as Michelle Malkin says, intergenerational theft, to put 
the burden up against our children and grandchildren and great 
grandchildren. We can't balance the budget today. We couldn't balance 
the budget 5 years ago, and if we can't do that in the environment that 
we were in, how in the world do we think that we're going to pay off a 
debt that's multiple trillions of dollars and a national debt that 
maybe ends up doubling during the Obama term? No, that's folly, Mr. 
Speaker.
  And let me just cap off one more thing here, before I close, and that 
is that there has been a significant achievement that's been reached in 
the nation of Iraq. I've made six trips over there. I know our leader 
just arrived back from there over the weekend. The reports I get from 
that delegation that visited Iraq and Afghanistan is that things look 
pretty good in Iraq. I had a long conversation with Ambassador Crocker 
last week on Wednesday morning, and we talked about many of the 
accomplishments that have been reached there; and how though, it is 
still delicate and there are political solutions that need to be 
provided, and there still are some military tactical things that have 
to happen, specially up in the Mosul region.
  But here are some things that we know. The Iraqi people have had 
three successful elections. They have ratified a constitution. They are 
distributing their oil wealth from Baghdad out into the provinces and 
into the cities. They are producing more sewer, water and lights than 
they have ever have. The hours of electricity across the country are 
significantly greater than there's ever been. There are girls that have 
gone to school in the last 6 years for the first time. More Iraqi kids 
in school as well. The stability and the safety in the streets is 
significant. I've gone shopping in Ramadi, it's a place that a year 
earlier I couldn't even set foot because it was too dangerous. And I 
met with the mayor of Fallujah who said Fallujah is a city of peace and 
we're going to rebuild this city to where there's not a sign of war in 
this entire city. And I believe him and they're working on it and 
they're working on it hard.
  This Congress imposed a series of benchmarks on Iraq and the 
President of the United States, 18 different benchmarks, Mr. Speaker. 
I've gone back and reviewed those benchmarks. And of those benchmarks, 
17 of the 18 benchmarks have been wholly or substantially completed.
  I thought it was inappropriate for this Congress to set those 
standards because that was definition of victory in Iraq, and those who 
voted for those standards believed that they were unachievable. They 
believed that the war was lost. They argued that it was a civil war 
that couldn't be won, that it was sectarian violence that could never 
be controlled, that al Qaeda was uncontrollable in Iraq. And sometimes 
they argued that al Qaeda didn't exist in Iraq until we attracted them 
there. I think that was the bug light theory.
  But what's been accomplished in Iraq today is phenomenal. Three 
successful elections, the ratification of a constitution, Iraqi 
military forces that have been stood up and trained and deployed, 
613,000 strong, Mr. Speaker, and a security and a stability to the 
point where they pulled off an election a weekend ago in Iraq without a 
single significant security incident, with the Iraqi people taking 
their children to the polls so they could experience with them what 
it's like to go and vote and be a free people. It's been phenomenal 
progress. 17 of 18 benchmarks reached. The 18th benchmark, by the way, 
that is not wholly or substantially reached is the one that requires 
the Iraqi security forces to be completely independent of American 
forces, and that would mean logistics, intelligence, communication, 
supply, training, all of those things would have to be Iraqi. They're 
not going to be that independent, not this year or next year or the 
year after. You don't stand up a military like that in no time. It 
takes years to do that. But 17 of 18 benchmarks have been reached. The 
casualties in Iraq, and we had a tough time in Iraq here a little over 
a day ago. We lost four soldiers up by Mosul in a bombing. Regardless, 
as precious as those lives are and all of them that have been lost, 
since the first day of July, we've lost more Americans to accidents 
than we have to the enemy. Another measure of a definable victory in 
Iraq, achieved, Mr. Speaker, by our noble military under the leadership 
of Commander in Chief, President Bush, who had the clarity of vision 
and the courage and the leadership skills to order a surge when his 
advisors told him don't go there, Mr. President, this war can't be won. 
It's a definable victory today, by all of the metrics that I can 
identify, including a more than 90 percent reduction in civilian 
violence and sectarian deaths, so that they're almost immeasurable. The 
list goes on and on and on of the accomplishments in Iraq. And I charge 
and I challenge our current President of the United States to sustain 
the achievements of his predecessor or be judged by history as to have 
failed. That, Mr. Speaker, is an important message for the American 
people to understand tonight, that level of success in Iraq.
  We need to also understand what made this a great country; that's the 
free enterprise system and the accountability that's in. There has to 
be successes and failures for our system to adjust itself. That will 
not happen with trillions of dollars of borrowed money and this huge 
debt to resolve itself.
  And I would point out, as a matter of an example, that when Bill 
Clinton was elected President in 1992, he came to this Congress in 1993 
and he said, I want a $30 billion economic stimulus plan because we 
have this recession that was brought about by Bush 41. I notice these 
new Democrat presidents always have a Bush recession to blame their 
economy on. But in any case, he asked for $30 billion. And that $30 
billion was negotiated down to $17 billion. I think that ended up over 
in the Senate, and finally they decided well that's not enough money to 
make any difference so we're just not going to do a $17 billion 
economic stimulus plan. But $30 billion was a lot of money to this 
Congress then. And that's why they debated it. And $17 billion wasn't 
enough to make a difference. But today $17 billion isn't even loose 
change in a $2 trillion bailout/stimulus plan. That's how far we have 
come in a matter of two presidential terms, two different presidents, 
Mr. Speaker, to the point where $17 billion, $30 billion is loose 
change in the maw of it all. And it will swallow us up.
  And then, reverting back, Mr. Speaker, to the subject matter of Iraq, 
I'm a little disturbed that there's such a standard that has been 
raised that we should honor our troops and we should honor their 
families for the price that they paid, and a moment of silence on this 
floor is appropriate, an hour of silence would be appropriate, a long 
and

[[Page 3535]]

enduring prayer every day for what they have done for our freedom and 
all of us would also be appropriate, Mr. Speaker. But that, brought out 
today by the same person that brought 45 different votes to the floor 
of the House of Representatives, those votes designed to underfund, 
unfund or undermine our troops is disturbing to me.
  In the 110th Congress, we had brought by the Speaker of the House, 
these 45 votes to the floor that I said, underfunded, undermined or 
unfunded our troops. Some of those that I have in mind, supplemental 
appropriations H.R. 2642 that would prohibit establishing a permanent 
base in Iraq, among other things and reduce some funding.
  We have another one, which is H.R. 5658, require the President to 
submit a report within 90 days of the bill's enactment for the long-
term costs in Iraq and Afghanistan, including the cost of operations, 
reconstruction and health care benefits for how long, Mr. Speaker? 
Through at least fiscal year 2068 is what this report says.

                              {time}  2300

  That can't be constructive to tie the Commander in Chief up to 
produce a report that predicts costs until 2068. That undermines our 
troops, Mr. Speaker.
  Here is another one. It followed along H.R. 5658, and it said that 
the United States Defender Act would have to be authorized by Congress 
in order to enter into any kind of an agreement with Iraq from a 
military perspective. Congress would have to authorize it. I don't 
think the Speaker of the House was going to allow the congressional 
authorization of those kinds of agreements. That undermined our troops 
again, Mr. Speaker.
  Here I have H.R. 2082, which is to authorize funds for the 
intelligence portion of fiscal year 2008. It defines how we can 
interrogate prisoners. It's another way to handcuff the President of 
the United States and our military, whose lives have been in harm's way 
and remain in harm's way.
  Here is another one on the same subject--on interrogation techniques 
and micromanagement. This Congress should not be trying to operate a 
war by micromanagement. The Continental Congress tried to do that. It's 
one of the reasons we have a stronger central government today.
  The list of these kinds of transgressions goes on, Mr. Speaker. Here 
is another one.
  The State-Foreign Operations Appropriations--Iraq Study Group 
establishes that. We know what came out of that. There is another one 
that reduces the spending, and it identifies the 18 benchmarks which I 
mentioned. On and on and on.
  There were 45 different votes, Mr. Speaker, on the floor of this 
House of Representatives, 45 of those votes aside from the seven that 
were brought by Republicans, to recommit, defend or seek to overturn 
those. They all underfunded, unfunded or undermined our troops.
  So a moment of silence is appropriate, but I cannot break from the 
thought that American lives have been put at risk and that we have lost 
some lives because of the actions on the floor of this Congress. These 
actions, Mr. Speaker, encouraged our enemy. In spite of all of this, we 
have a definable victory in Iraq today, and it is a definable victory 
that needs to be maintained by the current President of the United 
States and enhanced with a prudent utilization of the forces that are 
there and with a prudent transfer as the direction it is going over to 
the Iraqi security forces with a political, economic and military 
solution in Iraq so that they can sustain and defend themselves and can 
remain our ally in the Middle East to inspire the other moderate Muslim 
nations that are there.
  With that, Mr. Speaker, I would yield back the balance of my time.

                          ____________________