[Congressional Record (Bound Edition), Volume 156 (2010), Part 13]
[House]
[Pages 18564-18570]
[From the U.S. Government Publishing Office, www.gpo.gov]




               CONDITION OF OUR ECONOMY AND WORLD ECONOMY

  The SPEAKER pro tempore (Ms. Titus). 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. Madam Speaker, I appreciate the opportunity to join you and 
my colleagues tonight in a discussion that has been very much in the 
attention of people now for a number of years and something that 
because it is so important it has maintained the attention politically 
for many, many months, and that is the condition of our economy, 
indeed, the condition of the world economy as well.
  This might seem like kind of an esoteric topic, but it affects 
Americans all across this great land, and the main effect is that 
people don't have jobs. When you don't have jobs, things don't go so 
well.
  The American Nation was founded by many, many courageous people over 
a period of hundreds of years, and they came to this land with dreams 
in their hearts, an idea to try something out, idea to test their 
abilities, to make something that had not been made before, do 
something that had not been done before.
  And so they came. Initially I talked a couple of weeks ago about that 
brave band of mothers and fathers and kids that we call the Pilgrims. 
They came to this land with a dream of starting a new Nation.
  In the first few months half of them almost died, just slightly under 
half. And yet when the Mayflower left Plymouth Harbor, those people 
that had that dream in their heart stayed because they believed that 
this could be a special and a unique Nation. And they saw themselves, 
as Governor Bradford wrote, as stepping stones to others who were 
coming to found a new nation.
  Starting with that little group and with others even before them at 
Jamestown, you have people like Thomas Edison. He had the idea that he 
would make a light bulb. So he made a 100 different lightbulbs, all of 
them failures, and his attitude was, well now I know 100 ways not to 
make a light bulb.
  So it was that America, with all of these courageous people that had 
that perseverance and that grit, one person at a time started building 
this Nation, one dream at a time. It became such a common thing, we 
gave it a name: We called it the American dream. The dream was to be 
able to come here with barely the shirt on your back and end up in much 
better condition than when you started. And so the condition we find 
ourselves in with unemployment high, and the economic conditions 
difficult, is something that we should view is not very consistent with 
our past or what we expect from this country or the standards that we 
would hold up.
  The condition of the economy is one of those things that if you look 
at it from a mathematical point of view, there are basic principles in 
economics that govern how things work. If you violate those principles, 
there are bad results. But if you keep to the principles, you do pretty 
well.
  Unfortunately, over the last number of years, and with both 
Republican and Democrat sometimes at the helm, we have violated some 
basic principles, and now we are starting to see the fruit of that in a 
high level of unemployment.
  Now, I have here a little cartoon. This is the President, and he is 
wanting to know, how come you are not hiring people? You have coming 
into the china shop, triple bulls here, the health care reform and the 
cap-and-trade or cap-and-tax bill, and the war tax. And this poor guy 
that has got the china shop is looking a little bit worried. This is a 
nice cartoon.
  But the point of the matter is that there are things that we can do 
which are going to make it very hard to create jobs. Now if you were to 
try to categorize those things, and I have had a chance to go to my 
district in the St. Louis and St. Charles area in Missouri and talk to 
many small businessmen, medium-size businessmen, but people from across 
the Nation too up here in Washington D.C., and if you ask them this 
question, people who are in the business world, what are the ways that 
you can make sure you are going to kill jobs?
  Maybe this is a reverse way of looking at it. I apologize for that, 
but there is a reason for why I am approaching it this way.

                              {time}  1850

  One of the things to do if you want to make sure that there's not 
going to be jobs for people, well, I think about the first thing 
usually, and I don't know that these are necessarily exactly in the 
right order, but certainly this first one is the one that comes to the 
mind of most people if you ask them, ``What are you going to do if you 
want to kill jobs?'' and the first thing they think of is excessive 
taxation.
  Now, that might seem kind of theoretical, but it really shouldn't be 
any surprise to us. If you picture yourself with a lemonade stand or 
making some other kind of product and you figure out how much it costs 
you to buy your raw materials--you have, maybe it's a lemonade machine, 
so you have to put the lemons in it. You have sugar that you have to 
buy. You have to have some good water. You have to have an ice maker. 
So you put that all together and figure out what it's going to cost you 
to make some lemonade, and you look at the cost of the ingredients. 
People come and buy. It's a hot day, and so they are buying the 
lemonade you're making. There's a difference between what it costs you 
and what you can sell it for, and you make a profit. And that is 
basically the lemonade stand idea. It's not complicated.
  But if the government comes along and taxes every glass of lemonade 
that goes out, it makes it a little harder to try and make a living. 
What happens if the government raises the tax too much on your 
lemonade? Well, nobody will buy it, and now you're out of business.

[[Page 18565]]

  So this isn't a very complicated idea, that if you do too much 
taxation on a business, either the business sort of hibernates and 
tries to weather the storm, or they actually just plain go out of 
business and you kill the potential for creating any new jobs as well 
as getting rid of old ones. So excessive taxation is usually at the top 
of a lot of businesspeople's things if you want to kill jobs.
  Another one, and this sounds like a big thing, insufficient 
liquidity. What that is saying is that businessmen need to borrow money 
at various times, and they have to get the loans from banks. And if the 
bank policy is such that the businessman has trouble getting a loan, 
then it makes it harder for him or her to expand the business.
  In the current conditions, what we're dealing with, you find that a 
lot of Federal regulators are all over the banks and telling the banks 
to be very, very careful about any loans they make, and they have to 
have a tremendous amount of security to make sure that they can even 
have that loan on their books. And so depending particularly on Federal 
regulations toward banks, the liquidity is a big deal in our time right 
now. That liquidity is very tight.
  The subject of our talk tonight is taxation. What should we do about 
the largest tax increase in history that's coming down the pike the 
beginning of next year? That's the question. But I want to put it in 
the context of jobs, because tax increases may sound theoretical. But 
having a place to work, being able to pay your mortgage and being able 
to put food on the table for your kids are very real things for 
Americans. The stress of being a good citizen, wanting to take care of 
your family and not being able to do that just puts a horrible stress 
on families and on Americans all over. And it's not the right thing, 
and it's because we in Congress have not done the right things.
  So these are some job killers: excessive taxation, liquidity, and the 
economic uncertainty. That might not seem to people, right off the bat, 
is that really such a big deal? Well, it really is. If you own a 
business, every day, every week, every year you're in business, there 
are two degrees of gamble. You are gambling that you can keep your cost 
of making a product lower than what you can sell it for. But what 
happens if you're not quite sure what's going on with the economy? 
You're not quite sure about what's going on with the economy. You're 
not sure whether anybody wants to buy your product at all next month, 
and you have a whole lot of costs coming along. How do you figure that 
out?
  Well, each businessman has to live in that area of taking risks. But 
you're not going to take many risks if it seems like every time you 
turn around there's something you weren't expecting that's coming and 
whacking you upside the head, something that's affecting your business 
and making it harder for you to operate. And so if there's uncertainty, 
that's one of the things that's going to guarantee that a business 
owner is going to hunker down and wait for better times. So economic 
uncertainty is a very big factor in employment or unemployment.
  The other one here is, I guess, pretty self-evident, and that is 
government red tape and government mandates. Obviously, you have a 
lemonade stand and you've got your equipment and understand what the 
taxes are going to be, but all of a sudden somebody comes up and says, 
Are those glasses you're using clean enough? Have they been government 
certified? And you say, Well, we put them in a dishwasher.
  That's not good enough. You have to turn in this, this, and this 
report. And, by the way, have you done this? Have you done that?
  And all of these things may not affect your product at all, but it 
sure affects the cost of doing business, because you have to hire an 
accountant to keep up with all the red tape that the government lays on 
you. And so red tape, regulations and mandates is particularly 
difficult for small businesses because they don't have lots of 
employees, so they can just designate one person to cover it. It takes 
a whole lot of the owner of the business' time.
  So all of these things are job killers. And, unfortunately--I have 
left one off the list--unfortunately, in every one of these areas, the 
last number of years we have been doing exactly these things. We've 
been killing jobs. We've been doing all of these things in spades. The 
last one is excessive government spending.
  You put that package of five together, and I don't care what the 
chairman of the Fed does or what people want to say about the 
razzmatazz of Wall Street. The facts of the matter are, you do these 
five things and you do them aggressively and you will see jobs being 
scarce and actually going away.
  Currently, supposedly, the unemployment rate is 10 percent. Is it 
really 10 percent? No. It's worse than that because, if you haven't had 
a job for a certain number of months, they just take you off the list. 
They say, Oh, you don't count anymore. But there are a lot of people 
who haven't had a job in a long time. They're not considered 
unemployed, and so they are not considered part of that 10 percent 
unemployment number. So the real number is even higher than what the 
government publishes.
  All of those things, though, are largely the result of policies made 
by Congress, made by our President, that are job killers. And we have 
to turn this around if we really want to see the economy turn back and 
return to some version of normal and for the American Dream to work.
  Now, obviously, in the political world there are different theories 
about what you should do in government and what would work, and during 
the days of FDR there was a theory that became quite popular. It was 
proposed by Little Lord Keynes, but also another person who was very 
much involved in that was Henry Morgenthau. And the theory was that if 
the economy were not doing well, if the government would just spend a 
whole lot of money, the money that the government spends would buy 
stuff, get people buying things and get the economy going, and 
therefore, by the government spending money, you could solve the 
problem of a recession. It was sort of the siren call to people in 
politics because it sounded like a good deal. You just take and spend a 
whole lot of money, which makes you popular because you get to spend 
money on all kinds of pet projects, and presto zingo, the economy is 
going to turn around and you're going to do better. That was the 
theory.
  The problem is that the theory never worked. It never did work, and 
it's never going to work in the future because it defies the basic laws 
of economics.
  Now, in my State, we talk a little about common sense. And the people 
in Missouri I don't think would buy this theory that the way to get out 
of economic trouble is to spend a whole lot of money. In fact, I think 
they would look at it a little bit like you grab your bootstraps and 
lift up and try and fly around the room. If you were the head of a 
family and you came home to your family and said one night, ``Hey, we 
have all kinds of credit card bills. We've overspent the budget and 
things are not looking good. I don't have a job anymore. What are we 
going to do for the family budget?'' and somebody proposes, ``Well, 
hey, let's go spend a whole lot of money,'' people would think you were 
nuts. They'd probably put you in a funny little white jacket there if 
you did that.
  Well, this is what Henry Morgenthau, who was FDR's Treasury 
Secretary, did. And so they tried this little scheme. And then at the 
end of about 8 or 9 years, before the Ways and Means Committee, this 
was as late as 1939, Henry Morgenthau said, We have tried spending 
money. We're spending more than we've ever spent before, and it does 
not work.
  Now, we just passed that supposed stimulus bill, and we were told it 
was going to work. We knew it wasn't going to work because we knew 
Henry Morgenthau knew it wouldn't work. It's never worked in the past. 
But we had to try it again. And we tried that last year. And guess 
what? It just does not work. And then he says, They say after

[[Page 18566]]

8 years of the administration, we have just as much unemployment as 
when we started and an enormous debt to boot.
  What they had also done, which he does not mention, they had taxed 
businesses to the point that the businesses closed. And it takes time 
to open a new business, start a new business and get it going. So we 
were able to turn a recession into the Great Depression.
  We should learn from the people that went before us. And 
particularly, I believe the Democrats should pay attention to this 
Democrat Secretary of the Treasury that worked for FDR, because he told 
us in 1939 it would not work.

                              {time}  1900

  And what are we doing, we are spending money at the Federal level at 
a rate unlike anything we have seen before. The budget this year is 
about the same in terms of deficit as last year. People said of 
President Bush that he spent too much money. Well, perhaps he did. When 
he was President and Speaker Pelosi was Speaker, he had his worst year 
of spending, about $450 billion of deficit. That is not good. But the 
deficit in 2009 was $1.3 trillion, and it looks like it is very close 
to $1.3 trillion for 2010. That is three times worse than the Bush 
years. We should be learning, it just does not work. We can't continue 
to spend money and think that we are going to deal with the problems of 
unemployment. In fact, we are making it worse.
  Now, one of the things that the Bush administration did that was 
smart and that was right, they learned from previous Presidents. They 
learned that when you are in a recession that what you need to do is 
get off of taxation. You want to reduce taxation. They learned that not 
only from Ronald Reagan; they learned it from JFK. JFK, of course, was 
a Democrat. I wish the Democrats learned from JFK. He understood, cut 
taxes when you have a recession going on.
  We had a recession when I first came to Congress in 2001. It started 
in 2000; 2001-2002, the economy was not good. President Bush understood 
that you needed to cut taxes. He told people that, and we were able to 
cut taxes. And so in 2003 particularly we cut three taxes that were 
very, very important. We are going to take a look at the result of that 
in just a minute. He understood that.
  When we cut the taxes, what happened was the economy sprung around, 
and we had a number of good years in the economy until we turned back 
around and started getting into more taxes again. The taxes that we 
cut, those tax cuts are going to expire next year. A lot of people are 
talking about what are we going to do with this huge tax increase that 
is coming on top of us at the beginning of next year. Are we going to 
make the Bush tax cuts permanent? Are we going to extend the Bush tax 
cuts, or are we going to talk about it and do nothing? What is going to 
happen here?
  Well, ordinary income, these are the top rate increases, moves from 
35 percent to almost 40 percent. Capital gains goes from 15 to 20. 
Qualified dividends, 15 to almost 40 percent. And particularly the 
death tax, probably one of the most insidious, one of the most unfair 
and one of the most ridiculous of our taxes goes from zero percent to 
55 percent. That is a killer of a lot of small businesses that have not 
protected themselves against these tax increases that are coming up. 
There are some other different ancillary tax increases that will be 
coming. The bottom line is the biggest tax increase in the history of 
the country. And when is it coming, when the economy is weak, when 
unemployment is high. This is a formula for disaster. We are going to 
talk about why that is so bad and why we must do something, and the 
thing we have to do is to make those Bush tax cuts permanent unless we 
want an even worse level of unemployment.
  I am joined by my good friend, Congressman Scalise, and I would 
yield.
  Mr. SCALISE. I thank my friend from Missouri for hosting this hour 
and for focusing on this important issue. At a time when we are just 
weeks away from facing what would be the largest tax increase in the 
history of our country, we have been pushing to make the current tax 
rates permanent, to prevent, to stave off what would be that large, 
massive, job killing tax increase that is pending on January 1 if no 
action is taken. Unfortunately, the liberal leadership that is running 
this Congress right now will not address this issue in a proper way 
that ends that uncertainty.
  You know, when you look out there throughout the country, when we 
talk to small businesses in our districts and all throughout the 
country, so many companies would like to hire, would like to make 
investment, even in these tough economic times; but because of the 
uncertainty created by the threat of these massive tax increases, it is 
holding back the economy. It is holding back the ability for these 
companies to make that investment and to create those good jobs. It is 
so unfortunate because we are at a point where there should be, and 
there is, I think, bipartisan agreement that, especially now in tough 
economic times, you shouldn't raise taxes on anybody, especially those 
small business owners who create the bulk of our jobs in this country, 
and yet that is exactly what they are facing and it is exactly what we 
are hearing from the people who say that they can't make decisions, 
they can't make those investments because they are looking out and they 
are seeing if Congress takes no action, or tries to play class warfare, 
which would be even worse, to try and pick winners and losers and say 
some people are going to see a tax increase and some aren't, what a bad 
message that sends to those people who are trying to get the economy 
back on track.
  What is so sad about all of this is that history tells us, history 
tells us, whether you go back to John F. Kennedy, Ronald Reagan, you 
can go to President Bush, when taxes were cut, especially when you did 
aggressive tax cuts, not only did you see job growth, but you also saw 
a tremendous amount of money, billions of dollars more coming into the 
Federal Government, which goes against this myth that is out there, the 
President and others say, we can't afford to cut taxes.
  Well, I think we can't afford not to keep the current tax rates. We 
surely can't afford to have a tax increase; but history tells us, any 
administration you look at, you can go to 1920, you can go to the 
sixties, the eighties, and 2003, when taxes are cut, job creation 
follows and more money follows and flows into the Federal Government. 
The reason we get deficits is because Congresses, both Republican and 
Democrat, have spent too much money. The deficits come because we spend 
too much money.
  So the formula that has always been proven to be successful and the 
formula we should be following right now is cut taxes, make sure 
nobody's taxes go up and control spending at the same time. That way 
you not only stop getting more deficit spending, but you can actually 
get on a path to balancing the Federal Government budget, which is what 
we really need to do.
  Mr. AKIN. I am delighted you made those points. And I have some 
charts here that have been kicking around my office for 4 or 5 years on 
the very points you are making because you are so absolutely correct. 
It seems to me that somehow President Obama and the other leadership 
here in Congress have forgotten some amazingly simple things, but we 
make life too complicated sometimes.
  One thing is the American Dream was not to make rich people poor. The 
American Dream was about making people who didn't have much money to be 
richer. Sometimes richer economically, sometimes because they come here 
without a high school education and watch their kids pick up a college 
diploma. There are a lot of ways that American Dream works, but it was 
never to tear people down. It was always to build people up. That seems 
like kind of a basic idea, but it seems like the focus is we are so 
worried about somebody being rich that we are willing to melt the 
economy down just to try to get them. And the funny thing is that 
people who are very rich have ways of hiding their money, and all you 
do is hurt a lot of innocent people.

[[Page 18567]]

  The other thing that seems so simple to me is if you are really 
honestly worried about unemployment and jobs, it seems like the obvious 
thing is jobs come from employers. And if you destroy employers, how 
are you going to have jobs? That is not a complicated formula. In 
Missouri we would say that is kind of a no-brainer; and yet somehow 
here in Washington, D.C. we make it too complicated. We have a 
tremendous level of Federal spending, bury people in red tape, mess 
with their liquidity, create uncertainty in the markets, spend money 
like mad, and tax all of these businesses, create uncertainty, and then 
wonder why there aren't any jobs. It doesn't seem like it is that 
complicated an issue.
  Getting back to what you said, my good friend, right here, and this 
is May 2003, there were a series of tax cuts that happened right here 
in May 2003. The tax cuts was capital gains, dividends, and the death 
tax. Those are not really popular taxes. When the Republicans passed 
them, we were criticized, you are trying to do special deals for rich 
people and blah, blah, blah. The question is when we cut these taxes, 
the liberals were saying you've spend all of this money because if you 
cut the taxes, you won't get this revenue that comes in.

                              {time}  1910

  And that was their reasoning because their mindset is the government 
owns everything and we're going to let the people who work keep a 
little bit of it.
  Well, we did this tax cut, even though it wasn't popular, in May of 
2003, and this talks about job creation. I started on the subject of 
jobs. This is the job creation before and after taxes, and anything 
that's going down means we lost jobs. Any line that goes up says we 
gained jobs. Well, here's the tax cut here, and look at this. Look at 
this graph of the job creation. Now, that says that something is going 
on at this point. Now, why would that be the tax cut made jobs? Well, 
simply because you let the businessman keep more of what he owns. So, 
in terms of job creation, these taxes had a very beneficial effect.
  What happens if we reverse this? What happens if we go from here? 
Now, right here, we have a lot of unemployment. What happens in a time 
of unemployment if we reverse this effect? What we're going to do is 
it's going to be the same process but backwards. We're going to take 
jobs that existed and destroy them. Are we in a position with 10 
percent or more unemployment to turn around and destroy more jobs? That 
seems like a definition of an insanity.
  And these are month by month, year by year. This is what happens 
after this tax cut and this is the job effect, and I will allow you to 
comment on it if you want. I've also got two other kinds of interesting 
charts here, not just jobs but gross domestic product, and your last 
point, which was government revenues, quite interestingly. I yield.
  Mr. SCALISE. I thank the gentleman again for yielding.
  The chart that you just showed really lays out in a very good 
graphical form what really does happen when you cut taxes, and 
unfortunately you don't hear this on the mainstream media. It's 
something that a lot of the pundits try to ignore. It's unfortunately 
something that the President I think has tried to cloud over and, in 
fact, speaks in contradiction to what really did happen when taxes were 
cut. You know, and the President is going around saying that he can't 
afford to keep the tax rates where they are and he needs to raise taxes 
on certain people, otherwise the government will lose money.
  The problem with that is, it flies in the face of history. It flies 
in the face of facts; and in fact, your chart shows just what really 
did happen when taxes were cut for 48 consecutive months after those 
2003 tax cuts. For 48 consecutive months our country had job growth. 
Every single month for 48 months, more American people were working 
than the month before, and during that same period of time of 
unprecedented job growth, 8 million new jobs were created, and your 
chart shows it very clearly. Not only were those 8 million jobs 
created, but the Federal Government took in over $750 billion more 
money.
  Of course when I say that, somebody listening might say, well, hold 
on a second, the President just said, if you cut taxes, it costs money. 
If you maintain these current rates, rather than raising taxes, you 
have got to raise the taxes because it's going to cost the Federal 
Government money. The opposite happened, anytime in history, not just 
in 2003.
  As I said in the 1980s when taxes were cut under President Reagan, 
tremendous job growth and tremendous growth in revenue to the Federal 
Government. Now, yes, we had deficits, because even though the Federal 
Government was taking in more money, they still spent even more money 
than all of that coming in, which gave you a deficit. But if they'd 
controlled spending, if they would have just frozen levels and had 
normal cost of living increases, just normal growth, you would have 
actually had surpluses because more money was coming into the Federal 
Government, and the same thing happened in the 1960s when President 
Kennedy cut taxes.
  So this isn't a partisan issue, but this is history. Let's follow 
history. Instead of people making things up and saying things that are 
just flat out untrue, if we go back and use history as our guide, when 
we cut taxes in this country, job creators go out and create jobs, and 
the facts prove it.
  I used the President's own Web site when I pulled the numbers to find 
out what really happened in terms of job growth which we confirmed on 
the President's own Web site and in terms of more money coming into the 
Federal Government. So when they say that they can't afford to keep the 
current tax rates the way they are, they think they need to raise taxes 
in order to bring in more money, just the opposite is true.
  Mr. AKIN. They're exactly wrong. They've got it upside down, just as 
they have it upside down the American Dream is to make people that are 
poorer richer, not richer people make them poorer. They've got it 
exactly reversed.
  If you want jobs, you don't have an employer. It's kind of a basic 
thing. I very much appreciate your perspective; and what you're saying 
is, absolutely, you can prove it by taking a look at the economics.
  But when I first heard that, I was kind of scratching my head. I'm 
not a wizard at economics but I'm an engineer, and I was trying to say, 
now, wait a minute, you're telling me that if the Federal Government 
reduces taxes, they're going to take in more money? That sounds like 
making water run uphill, you know. And so I started to think about it, 
and actually it makes a whole lot of sense.
  But here's the way it seems to work to me. Let's say that Congressman 
Scalise is king for the year, and your job is to raise revenue for your 
government and the only thing you can do is tax bread. And so you start 
rolling this around in your mind, and you say I could put a penny tax 
on a loaf of bread, or I could put $10 on a loaf of bread. You think, a 
penny, nobody'd notice it, but I'd have to sell a lot of bread in order 
to make very much money; but if I did $10 a loaf, wow, wouldn't take 
too many loaves. I'd get a lot of money. Well, on the other hand, 
nobody would buy the bread. So your common sense says probably 
somewhere between $10 tax on a loaf of bread and a penny tax, there's 
some number that's an optimum; and if you raised it, you get less 
government revenue, and if you lowered it, you get less government 
revenue.
  And what this effect is showing is that we're overtaxing; and by 
overtaxing, we're actually losing Federal revenue. So what you're 
saying is exactly right. It's been proven by history. We cannot afford 
to not cut the taxes. Certainly we cannot afford to allow a massive tax 
increase when the economy is on its knees and unemployment is running 
at 10 percent.
  Let's take a look at what the numbers were. I think people might be 
curious about this. Here we've got job creation. Here's the tax. This 
is capital gains, dividends, death tax. That's what the tax cuts were. 
This is what happened to job creation. Let's take a look at another 
number here.

[[Page 18568]]

  Let's look at the gross domestic product of our country. This is kind 
of a neck snapper of a chart, it seems like to me. If you can get into 
these funny economic charts, this, though, is a reflection of what our 
future could or could not be. This was the gross domestic product here 
before the tax cut. Here, again, is the tax cut right here, and take a 
look at the national GDP, even have a couple of times when we're 
actually losing GDP in a couple of months when the recession is bad, 
2001. You see it coming up a little bit up here to sort of a sluggish 
two, but you see it's spotty; it's up and down.
  And then we put these tax cuts in place. Not only did employment 
change but take a look at gross domestic product. Kabaam. You know, 
we're talking, we had one quarter where we had 7.5 percent GDP growth. 
That's a pretty decent level, but you can see quite an improvement 
after this tax cut went into place.
  Now, as you would expect if you got GDP going along the right 
direction, employment going the right direction, here's the other 
thing, and this was your point. My respected colleague, take a look at 
Federal revenues. If the example of the loaf of bread and the tax line 
up seems a little bit odd, here's the evidence. Here's the tax cut. 
This is Federal revenues. Federal revenues are tanking because the 
economy is in trouble.
  We do the tax cuts in 2003, just as we did with JFK, with Ronald 
Reagan. All of a sudden, you see Federal revenues coming up. Now, this 
is totally opposite to everything the President and the liberals are 
saying. They cannot explain this. This completely puts the lie to what 
they're saying.
  If you do not cut the taxes, what's going to happen is we're going to 
continue in this death spiral that we've created, and we've created it 
out of stupidity because the facts are here. After that tax cut, four 
straight years of increases in Federal revenue, and so there you have 
the effect.
  We are overtaxing. We have stalled the economy. It's a little bit 
like you're in that little World War I, World War II biplane, whatever 
it is, and you're in that spiral headed to the ground and you grab the 
stick and you pull the stick up and you pull the stick up and the plane 
just keeps spiraling and the ground gets bigger and bigger as you're 
losing altitude; and you pull the stick up and you say, oh, my 
goodness, everybody has gotten in a graveyard spiral and almost died 
and then one guy came along and said I'm going to do something that's a 
little counterintuitive.

                              {time}  1920

  What I'm going to do is I'm going to push the stick forward. It's 
going to allow the plane to stabilize even though it's going down, and 
when it gets stable, then I'll pull the stick back up.
  In a way, that's what we did. We have got the economy in a spiral 
where we are taxing people and where we are red-taping them to death. 
Liquidity is a problem; there is uncertainty, and we are spending money 
like a bunch of fools. What we are going to have to do is use some 
sense from the past, from the people who came before us.
  I would be happy to yield to my good friend from Louisiana.
  Mr. SCALISE. You know, when you look at these charts, all it really 
is, you know, is a reflection of what really happened historically. 
They say, If you don't learn from the mistakes of history, you are 
doomed to repeat them. You can flip that around and say, Go look at 
what has always been proven to work. There are things that have been 
good and bad throughout history. You can go into the 2000's and look at 
2003 when taxes were cut. There were some good things and some bad 
things that came out of that.
  The good thing was, when the taxes were cut in 2003, you had, as your 
chart shows very clearly, a tremendous increase in Federal revenue, and 
you had a tremendous increase in job creation. Eight million jobs were 
created. The bad thing that happened was that you had deficits, but it 
wasn't because of the tax cuts. It was because more money came into the 
Federal Government, but Congress spent even more than that. When 
Congress spends more money than that which comes in, you end up with a 
deficit.
  You can control that not by raising taxes, because if you raise 
taxes--again, use history as a guide. When taxes are increased, one of 
two things happens. In some cases, you'll get a flat line--you'll get a 
flat revenue intake--but in many cases, you'll actually get a decrease. 
Even though you're raising taxes--and it might seem intuitive to some 
liberals--what happens is it's the cost of doing business. If a company 
is looking to hire people and now it costs more money in America to 
create that job or to manufacture that product, then it explains why so 
many of our manufacturing jobs have been leaving this country and going 
to other countries.
  The tax increase that President Obama is creating might be good for 
economies, but it's good for foreign economies because it's pushing 
more and more investment out of this country. So the jobs that will be 
created will be created in countries like India and China and other 
places where they don't punish somebody for manufacturing. In our 
country, unfortunately, there is this mentality, and there are some in 
this leadership who continue to try to play this class warfare game and 
pit one American against another.
  What we ought to be doing here in Congress and at the White House is 
working together to put policies in place that will help everybody, 
that will not just help the job creators but will help the people who 
are struggling at the bottom, the people who want to find jobs. There 
are millions of Americans out there who want to find jobs.
  You know, in my State of Louisiana, we are seeing the negative 
repercussions of these policies coming from President Obama: how it's 
costing us jobs with this permitorium, as we call it now, on drilling, 
and how the President bragged about lifting the moratorium on drilling 
but now has replaced it with a policy where they're just not issuing 
permits.
  Then today, just today, the President and Secretary of the Interior 
came out and said they were going to shut off more areas around the 
country that were getting ready to be opened for the exploration of 
energy. They're shutting those off. So now they're not issuing permits 
in the Gulf of Mexico, which, according to the White House, has already 
led to about 12,000 more Americans losing their jobs. This is not 
because of a downturn in the economy. Because of the policies of 
President Obama, 12,000 more people have lost their jobs, and billions 
of dollars have left the Federal Government and are going to foreign 
countries. Our energy security in our country has decreased, and we are 
now more dependent on foreign oil because of the policies of this 
President.
  So, on one hand, he is trying to raise taxes on our small businesses, 
which, as your chart shows, is going to devastate the economy and is 
not going to bring in more money to the Federal Government. On the 
other hand, he has got policies, like the permitorium and the lack of 
open areas for the exploration of drilling for natural resources, which 
are taking away what would have been thousands of more new jobs, and 
now he is shipping those jobs to other countries, like Brazil and 
Egypt, which is where some of these rigs are going.
  You know, it's sad to think, but it's true. It's a sad day in America 
when it's a better business climate to do business in Egypt, which is 
where some of these rigs are going, than in the United States of 
America because of the President's own policies. This is reality. This 
is what is really happening, and that's why we have got the job 
creation problems. That's why we have got the lack of jobs we have 
today. It is because of the policies of this administration.
  Mr. AKIN. You know, you're giving a very concrete example, and maybe 
I was being too general.
  My point was, if you punish the business, you shouldn't be surprised 
if there are no jobs there. The business is the one that hires people. 
It's not that complicated. There is a direct connection between 
employer and employee.

[[Page 18569]]

What you have just given an example of is: When you shut the company 
down, then you can't say, ``Well, I'm so surprised that there is 
unemployment.'' You created the unemployment by the policy. It's crazy. 
It's really crazy.
  I understand that the President did support some drilling, but it was 
off of a foreign coast, and it was with American tax dollars. We are 
encouraging them to drill, but we can't drill on any of the American 
sites. That just doesn't make any sense. I think that's what the voters 
were concerned with in this last election. I think they are concerned 
with that. They see that there are ways that we should be going as a 
country, things that we can learn from history, and if there is one 
thing we should be dealing with immediately, right now, it's making 
those Bush tax cuts permanent because the economics of that thing works 
both ways.
  If you cut the taxes, you saw what happened to the gross domestic 
product. It goes up. Unemployment goes down. If we create jobs, we 
create more revenue for the government. If you do the opposite, then 
the result is going to be the opposite. You're going to have more 
unemployment. You're going to have less revenue, and you're putting us 
farther into this downward spiral. Our country can't take a whole lot 
more hits like that, especially with the incredibly aggressive spending 
schedule.
  I don't recall specifically, gentleman, whether you were there with 
Dr. Laffer today as he was visiting us.
  Mr. SCALISE. Yes, I was.
  Mr. AKIN. He has some very simple and easy-to-understand ways even 
though he's one of these Ph.D.-type economists and all.
  In fact, what we're talking about here was named after him, the 
``Laffer curve,'' showing that when you cut taxes--and he has proven 
that--that you're going to actually get more Federal revenue--if you do 
the right kind of taxes, that is. What he was saying today sort of 
captured my attention.
  He said, Look at it from a simple point of view. If you're a 
business, are you going to hire somebody?
  Well, what you're going to say if you're a businessman is, ``It's 
going to cost me this much money to hire this guy, and if I do hire 
him, he is going to make this much.''
  So you take a look at that. If he is going to make more for you than 
what it costs you to employ him, then you're going to hire him because 
that's the way businesses work. You hire people in order to make a 
profit, to make your business grow.
  Now, what happens in this equation if the Federal Government says to 
the businessman, ``Okay. Now, before you hire that guy, just remember 
this, that we're going to tax you. We're going to put these additional 
costs into what you're going to have to pay if you hire this guy''?
  Well, you don't have to be a rocket scientist to say, Oh, my 
goodness. If the government starts adding things that the businessman 
has to pay, it's going to make it harder and harder for him to find the 
economic ease to hire somebody.
  That's another way of saying what we have done by these policies is 
we have essentially driven that unemployment number. We have actually 
created that by the foolish policies down here, by forgetting the 
simple fact that, if you destroy an employer, then you're not going to 
have employees.
  The simple fact is that America wasn't based on class warfare, on 
uncovetousness, saying, ``Don't you hate that rich guy? Look at how 
much fun he's having. Are you having as much fun as that rich guy?'' 
That wasn't what made America great. What made America great is we're 
all on the same team, that everybody wants to see everybody else 
prosper, everybody working together, being honest with each other, each 
following the dream that God put in their own hearts. That's the 
America that our Founders built. That's the America that most Americans 
want to see us returning to. They want to see a win-win scenario, and 
they want to see us do the policies that are right here. We know we 
don't create any jobs here in Washington, D.C. Any time we create a 
government job, it takes two jobs out of the economy. We don't create 
jobs, but we do affect the playing field that jobs are on.
  Why do we want to send our jobs to foreign countries? I can't see why 
we should be doing that.
  Mr. SCALISE. You know, the gentleman referred to the meeting that we 
were both at today with Art Laffer, the brilliant economist who worked 
for President Reagan in the White House, who helped create a lot of 
those tax policies that gave us that unbridled economic growth. He goes 
into detail and talks about the decisions that went into that and what 
works and what doesn't work.

                              {time}  1930

  And there are things that don't work, but there are things that have 
been proven again historically throughout time.
  Going back to the 1920s, you can go before that, things that you can 
do that have always worked in terms of cutting tax rates. And there are 
levels where you get above certain levels, and in the 20s is where you 
are starting to get into dangerous territory. Right now the President 
is trying to bring the highest rate up to 39.6 percent taxes, plus he's 
going to try to continue to allow this death tax to go to 55 percent. 
It's at zero today. If someone were to die today and have a family 
business that they built up over their lifetime, they could pass that 
onto their family, and there is a zero percent tax on their passing 
away, a tragic event that shouldn't be made even more tragic by 
government coming in and confiscating 55 percent of their business to 
the point where the children's decision, more of their grief is dealing 
not with the loss of their loved one but now the fact that they have to 
dismantle the company that their father built for his entire lifetime 
just to pay the taxes to the Federal Government. And that will happen. 
Starting January 1, that death tax goes up to 55 percent. It's one of 
the most onerous, obnoxious, and evil taxes, because you're talking 
about people who have already paid taxes to create that wealth.
  I think one of the other things Art Laffer talked about today is if 
that person, instead of building up that company, creating that wealth 
and creating all those jobs that went along with it, if he would have 
just gone out and blown the money, he wouldn't have been taxed on that. 
There's no tax on just going out and spending the money and blowing it. 
But if he built his business and created hundreds of jobs and then 
wanted to pass that on to his children, the government is going to come 
in--starting January 1 if Congress doesn't take action--and tax that 
business 55 percent just by the virtue that that business owner passed 
away, to the point where now the family has to sell and dismantle the 
entire business and maybe have to lay off all those employees just to 
pay the taxes. That's not what America is all about, that's not what 
made America great, and yet that is tax policy that President Obama 
wants to put in place starting January 1.
  Mr. AKIN. You know, the thing that was amazing, the way he explained 
it was really a contrast. You have a person, and say he's a couple of 
years away from dying and he has this business and this business is 
worth millions of dollars. Now there are two courses he can take. The 
first is he goes and drinks like mad, does drugs, chases women, gambles 
it all away, and in every way wastes the money. Does he pay any tax on 
it? He has already paid the taxes. No. So the government lets him off 
scot-free for that. So we encourage that behavior. But what happens if 
he says, hey, I have a son, I would like to pass the business on to my 
son. And he has some employees and they want to buy part of the 
business, so I'm going to not squander my money, but I'm going to save 
it. So he waits 5 years, saves his money, dies, and now what do we do? 
We tax the family 55 percent.
  Now how many people have a business--picture if it's a farm or a 
manufacturing business--where you've got to take more than half of it, 
liquidate

[[Page 18570]]

it to sell it in order to pay the tax on it. It's going to destroy the 
business. And so we have a policy that rewards people for being totally 
irresponsible and punishes people for doing the right thing. As Dr. 
Laffer said, that's just so contrary to common sense.
  And what are we going to do? We're going to let that death tax go 
from zero to 55 percent. That is just nuts. And what it's going to do 
of course is, guess what? It's going to destroy jobs, it's going to 
reduce Federal revenues, and it's going to hurt the GDP. And yet here 
we go because we figure we've taxed them every which way, but we 
haven't gotten them one last clip when they die. And why we would even 
have a death tax, it just seems so abhorrent that we would possibly let 
that go on.
  Mr. SCALISE. It is such a sad state of affairs that in the greatest 
country in the history of the world--and you and I both know we've got 
really serious challenges, we've got real big problems in this country 
that we're facing, but with all of those problems this is still the 
greatest country in the history of the world. But what that light of 
freedom, the Statue of Freedom at the roof of this building right here, 
the Capitol dome, what that statue stands for, and when you pass 
through Ellis Island and you see the Statue of Liberty, it represents a 
freedom that exists nowhere else in the world. All of that is at risk 
if these kinds of policies continue. I know that's a dramatic 
statement, but I think most people across the country have recognized 
that when you take into account the radical level of spending, the 
unsustainable level of spending going on here in Washington--trillion-
dollar-plus deficits as far as the eye can see, the first trillion-
dollar deficit in the history of our country was last year, only 
surpassed now by this year's, and next year looks to be just the same--
everybody knows we can't sustain this level of spending. And then you 
look, and the President and Speaker Pelosi's plan for taxes is to raise 
taxes on American families and small businesses. And the American 
people get it. They know what that means to job creation. They know 
it's going to stifle job creation. It's going to make it harder for 
businesses to compete globally. And for many of them, it's going to 
make it harder for them to even keep their doors open. And yet those 
are policies that are continuing to be put in place by this 
administration.
  But people know, I think--what's more than all of that, to a small 
business, if they don't make as much money as they did last year--you 
want everybody to be able to be profitable so that they can continue to 
create jobs. But I think to most people what is the most concerning is 
not maybe this year they're making less than last year, that's bad, but 
what I think is concerning most people is that the one great tradition 
of this country, from the day George Washington took that oath of 
office until this day today, every generation has had better 
opportunity than the one that came before them. Every single generation 
in the history of our country has had better opportunity than the one 
that came before them. And I think we all know if we stay on this 
unsustainable path of spending and taxing, with unemployment like it 
is, the next generation is not going to have that same opportunity, and 
we cannot let that happen. I don't think the American people are going 
to let that happen. And I think that's why in November, in that 
historic election that was just held a few weeks ago, people said 
they're not sitting on the sidelines anymore because they know what's 
at stake. They know we can't keep going down this road. And if we want 
to keep the light lit on that Statue of Freedom, if we want to make 
sure that the promise that's envisioned and represented in the Statue 
of Liberty, if we want to keep that torch lit for the next generation, 
we have to make serious changes right now starting today.
  Mr. AKIN. I think you're absolutely right. I think that's what the 
American public is seeing and sensing. I might put it in slightly 
different words, and maybe just because I'm a little older than you 
are, but my sense is we had a tradition that the government was to be 
the servant of the people. It seems to many of us as though that has 
started to tilt, and the government is now a fearful master. I think 
the public is saying we have had way too much government, we're taking 
a look. The problem isn't the outside, the problem is the government, 
and the government has to be reduced back to its servant status, back 
to the basic principles of economics, back to honoring the traditions 
of our Founders and the dream of allowing people to use their 
imagination and their ingenuity, and to succeed or to fail. If we 
didn't let Thomas Edison fail hundreds and hundreds of times, we 
wouldn't have any lightbulbs. You have to allow freedom to work. I 
think that's where we have to go as a country; we have to go back to 
the traditional paths that have always worked for us.
  We are a very unique Nation in so many different ways. People around 
the world, when there's an earthquake or when there's a problem, the 
Americans are there. After World War II, we defeated our enemies and we 
taxed ourselves to rebuild our enemies. We established no empires. We 
built no kingdoms. We are absolutely unique in the history of mankind, 
and it's because we have high standards, high traditions, and we 
believe in freedom and the American way. This is the way to turn things 
around.
  My good friend, Congressman Scalise, I thank you so much for joining 
us tonight. I know our time is starting to get a little bit short here.
  I would once again encourage Americans--we know the solution to move 
forward, but we are not going to be moving forward if we allow the 
largest tax increase in the history of our country to settle in on 
January 1. It will have the same negative effect as its positive effect 
when it first went into place. We do not want that. We have to keep 
those tax cuts in place, and we have to make that decision and move 
forward for the good of all of America.
  Mr. Speaker, thank you so much.

                          ____________________