[Congressional Record (Bound Edition), Volume 160 (2014), Part 11]
[House]
[Pages 15888-15891]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        A ROADMAP FOR PROSPERITY

  The SPEAKER pro tempore (Mr. LaMalfa). Under the Speaker's announced 
policy of January 3, 2013, the Chair recognizes the gentleman from 
South Carolina (Mr. Rice) for 30 minutes.
  Mr. RICE of South Carolina. Mr. Speaker, I am here to talk about a 
roadmap for prosperity of this country.
  I think the elections last week, in large part, didn't deal as much 
with Republicans and Democrats as it dealt with a frustration over the 
lagging lack of prosperity this country has experienced for the last 7 
years. I think that there are ways to solve that, that are complicated, 
but there is a pathway that we can pursue that involves a lot of common 
sense.
  If you will look at these charts that I have here, Mr. Speaker, what 
I have here with this blue line that goes up until 2007 and trends down 
thereafter is median household income. You can see, Mr. Speaker, it 
drops from a peak of $56,000 annually in 2007 down to just over $51,000 
today, a drop of over 10 percent for the median American family.
  Mr. Speaker, at the same time, this red line represents the cost that 
these families incur. The red line actually is food cost. You can see 
that they have risen from an inflation-adjusted basis of 190 to 240, 
almost 20 percent, Mr. Speaker. At the same time their incomes have 
declined over 10 percent, their costs for food have gone up over 20 
percent.
  Then the bottom graph here represents their cost for fuel and 
utilities, and you can see here that they have risen almost 20 percent 
as well.
  My belief, Mr. Speaker, is that the cause of the decline in the 
income, as well as the cause of the rise in the cost in fuels and food, 
is largely from policies that come out of Washington. These are not 
things that are beyond repair. These are things that we can fix, so 
what we have to do is lay out a roadmap, a plan, to restore the 
prosperity that we have enjoyed for over 200 years.
  Mr. Speaker, before I forget, I want to credit my good friend, 
Professor Michael Porter from Harvard, with a lot of these slides that 
I am using because I am stealing a lot of those from him, but this 
chart here, Mr. Speaker, is a breakdown of jobs in the American 
economy.
  The red at the bottom is jobs that we have to compete with, with the 
rest of the world, manufacturing jobs, for example, that can be done 
anywhere in the world. The top part is jobs that serve local markets, 
things like health care that have to be delivered here, things like 
services, like, for example, real estate or tourism services, things 
that have to be delivered here.
  This chart begins at 1998, but you can actually go back even further, 
and what you would see is in the area of service jobs, things that have 
to be handled locally, the number of jobs has risen. It certainly 
dipped around 2007, but it is coming back up.
  But in the areas of what we call tradeable jobs, jobs that can be 
done anywhere in the world, the number of Americans working in those 
jobs has declined in this chart over the last 16 years, but you could 
go back even further, a very disturbing trend.
  Now, why is that occurring? Why is it that tradeable jobs have left 
our shores and continue to leave our shores? Mr. Speaker, why is it 
that we continue to read in the newspapers every month about another 
American iconic company like Pfizer or like Burger King moving their 
headquarters out of our country?

                              {time}  1845

  Well, there are a number of reasons for that, and the most obvious 
reason is because we have the highest corporate tax rate in the world. 
If they

[[Page 15889]]

want to be an American company, they have to pay extra for that.
  This chart at the top represents the corporate tax rates of the OECD 
countries, and you can see the red line at the end represents America. 
The average rate is 25\1/2\ percent, and we are at 39 percent.
  When the President says things, Mr. Speaker, like, ``Our American 
companies should be willing to pay the highest tax rate in the world to 
be patriotic,'' he is missing some real important points.
  One is that any company, American or otherwise, doing business in 
America will pay American tax rates on the profits they earn in our 
country, but these iconic American companies that are leaving our 
shores have to compete worldwide, and competition is tooth and nail, 
and only the strongest competitor will survive.
  Mr. Speaker, if you have an iconic American company that has to pay 
taxes at 39 percent here in this country competing on the same product 
line with a company that has to pay 15 percent in Ireland or in Canada, 
in the end, which company will survive? You see, Mr. Speaker, it is not 
about patriotism. That is nonsense. It is about survival.
  Mr. Speaker, how do we end this cycle? How do we convince our iconic 
American companies, our large employers, to stay in this country and to 
convince those that have left our country to come back?
  Before I came here, I had one other elected office. I was a tax 
attorney and a CPA for 25 years, and I helped companies structure their 
business in the smartest way for taxes, for regulatory purposes, and to 
make a profit.
  Once I retired from that, I ran for one other office, and that was as 
the chairman of Horry County Council in Horry County, South Carolina, 
where Myrtle Beach is.
  Horry County had a problem because most all of its job creation was 
in the tourism industry, and the tourism industry is great, but it 
produces an inordinate amount of seasonal jobs and jobs with relatively 
low pay. They needed to diversify their industry, and many other 
counties in the State were doing a better job of it.
  Once I became chairman of the county council, I started to look at 
why that was and what we needed to do, and it was obvious that we had 
many, many assets. The problem was we weren't even in the game. We 
weren't even trying to compete.
  Once we laid out a roadmap to enter the competition to attract 
industry and jobs, it didn't take very long. Companies responded 
quickly. Thousands of jobs had been created. All we had to do was enter 
the competition.
  Counties across this country compete with other counties for jobs. 
States across this country compete with other States for jobs, States 
like Texas, which has done a fantastic job. South Carolina has done a 
fantastic job of creating a favorable business tax environment, 
favorable regulatory environment, and has done tort reform, and lo and 
behold, companies come.
  Company after company after company leave States like California or 
Washington State and come to States like Texas or South Carolina, and 
you can see the result in South Carolina with BMW, Amazon, Boeing, 
Michelin, Continental, and on and on and on. All they had to do was 
decide to compete, and industry responded.
  You see, before I became chairman of the county council in Horry 
County, the attitude there was that we were the leader in tourism, and 
they are great at tourism. We are big, and we have a lot of advantages, 
and we really don't need to compete for business. But guess what, it 
wasn't working.
  Once we changed our attitude, people responded quickly, and I believe 
the attitude here in Washington is the same. Look, we are big. We don't 
have the biggest economy in the world anymore. China overtook us. We 
have one of the biggest economies in the world. We have great capital 
markets. We have great consumer markets.
  We don't have to try to compete. Business is going to come anyway. 
But guess what, just like in Horry County, it is not working in the 
country either, and if we simply decide to compete for industry, with 
all of the advantages that we have, I believe no one can stop us.
  My friend Michael Porter is, as I said, an economics professor at 
Harvard Business School. He has been there for decades. He has written 
multiple books on competitive theory. He has come here to Congress with 
me, and we scheduled seminars with Congressmen from both sides of the 
aisle to talk about what this country needs to do to be competitive. We 
have been in front of over 100 Congressmen, and this is the roadmap 
that he lays out. I am not going to claim authorship. This is the 
roadmap that he lays out.
  His book is, ``On Competition,'' by Michael Porter. It is one of 
many. Michael Porter sits on the board of public companies. He 
represents countries around the world. He has written this roadmap for 
the United States. If we will adopt the attitude that we are going to 
be competitive in the world, we can expect to see American companies 
coming back, more foreign investment in the United States, and millions 
and millions of American jobs created and our economy lifted from its 
meager growth to above trend and restore our American prosperity.
  Mr. Speaker, let's look at these things one by one. One of them is 
lowering the corporate tax rate, and as I pointed out earlier, this one 
is common sense. We have the highest corporate tax rate in the world. 
Does that mean that we have to collect less revenue? No.
  Our corporate Tax Code is incredibly complex. It is filled with 
deductions and credits, many of which make sense but others that don't. 
It needs to be cleaned up. Dave Camp and the House Ways and Means 
Committee put out a proposal to do it last year.
  I agree with, by far, the bulk of it. The House needs to take it up--
or something like it--and we need to get it over to the Senate, and we 
need to get corporate tax reform. The President agrees we need 
corporate tax reform, but the President thinks we need to raise 
revenue.
  The goal here, Mr. Speaker, is not to increase taxes. The goal here 
is to make our country more competitive. Why? Because then we will have 
more business and we will have more jobs and we will raise revenue that 
way, rather than by raising taxes. If we boost our economy, the revenue 
will come.
  The second item on this menu, Mr. Speaker, is taxing overseas profits 
earned by American companies only where they are earned. We are the 
only remaining OECD country with a global tax system. Everywhere else, 
they pay taxes where they earned the money, and they can bring the 
money home without paying taxes.
  But here in America, our multinational companies--companies like GE, 
GM, and every alphabet soup company that you can name--if they earn 
profits overseas and they pay taxes at the lower rate over there, they 
know if they ever bring that money back to the United States, they have 
to pay it at 39 percent.
  So what do they do? They park that money overseas. It is only common 
sense. They are competing tooth and nail worldwide. To make any other 
choice puts them at a huge disadvantage.
  So let's say we have an American company that has a billion dollars 
in profits in India and they need to build a factory and are looking 
for where to build that billion dollar factory. Do you think they are 
going to bring that money back and pay 40 percent taxes in the United 
States to build that factory? No.
  What they are going to do is build that factory in India and employ a 
thousand people there instead of employing a thousand Americans, so we 
need to change our global tax system.
  We need to ease the immigration of highly-skilled immigrants. Mr. 
Speaker, I am for comprehensive immigration reform, but I am not for 
the kind of immigration reform the President is talking about.
  Mr. Speaker, we have the most liberal legal immigration system in the 
world. We allow 1.2 million legal immigrants every year. The problem 
with

[[Page 15890]]

our system is that most every OECD country that has looked at this has 
decided they are going to use immigration as a mechanism to be more 
competitive. Other countries are already working on this.
  So what they do is they say, ``Okay. You can immigrate into our 
country if you have a skill that we need. They allow people with high 
skill sets and high education to come to the front of the line to 
immigrate.''
  Our immigration system is exactly the reverse. It is completely 
counterintuitive. Sixty-five percent of the immigration that we allow 
is not based on skill set but based on family relationship.
  Only 12 percent of our immigration is based on skill set, and what is 
the result? The result of that, as I have read, is that as many as 42 
percent of the new applications for Medicaid come from immigrants. At a 
disproportionately large amount, legal immigrants rely on our social 
safety net, and that makes us less rather than more competitive.
  We need comprehensive immigration reform, but what that means to me 
is that we need to base our immigration largely on skill set. I am not 
saying eliminate immigration based on family relationship, but I am 
saying make that a much smaller piece of the pie.
  Another problem with our immigration system is with our student visa 
program. We have the best universities in the world. People come from 
all over. In fact, I think I read yesterday that there were a record 
number of foreign students in American universities.
  So the problem is when they get their degree and after their student 
visa expires, under our immigration system, we require that they go 
back to their home country. We prevent them from staying here.
  They have to go back to their home country for a period of years 
before they can even apply to come back to the United States. We have 
given them the best education in the world, and we force them out of 
this country.
  So what does that mean, practically? Let's say we have a gentleman 
from China who gets an engineering degree from MIT and has the best 
idea in the world to manufacture whatever it might be, but he can't 
stay here and do that. He can't even apply.
  He has to go back home and do his initial public offering and build 
his plant there and employ thousands of people there, rather than using 
the education that our American universities gave him to create 
thousands of jobs here in this country.
  There are so many things about our immigration system and there are 
so many things about so many areas of Federal law that are clearly 
counterintuitive. They are exactly the opposite of what they need to be 
to make this country competitive.
  Next, we have addressing distortions and abuses in our trading 
system. I am not going to spend a whole lot of time on this, but let me 
just say that, at one time, we were so advanced, we were so 
competitive, we were so much far ahead of the rest of the world, that 
we could adopt trading plans that weren't necessarily to our benefit.
  We can't afford to do that anymore. We need to have free trade. We 
need to have fair trade.

                              {time}  1900

  Improving American logistics, communications and energy 
infrastructure. Everybody knows we need infrastructure to be 
competitive. We do so many things to hold ourselves up: roads, bridges, 
pipelines, and everything else. Federal regulation drags out projects 
for not just years--decades--and drives up cost.
  When the Port of Miami has been working on trying to get their 
environmental permit to deepen their port to 50 feet for post-Panamax 
ships for over a decade; when the Port of Charleston, in my home State 
of South Carolina, has been under study for 4 years to determine 
whether they can go from 46 feet to 52 feet so that they can take these 
post-Panama Canal ships, and they are hoping that they get that port 
deepened by the year 2020, in the end everybody knows that port is 
going to get done. In the end, there will be little or no environmental 
damage, and what there is will be mitigated, but it is going to take a 
decade of wrangling to get to where we can deepen our port.
  Let me tell you how important that is. Right now, I think one in five 
families' incomes in South Carolina are related to the use of that 
port. Companies in South Carolina, shipping or importing or exporting, 
it takes $3,000 to ship a container from the Port of Charleston to 
Shanghai on ships as they exist today. When the Panama Canal opens and 
the new ships come through, that will drop the cost of transportation 
by 20 to 30 percent. So instead of it costing $3,000 to ship a 
container from Charleston to Shanghai, it will cost $2,200.
  If an importer or exporter in South Carolina or in the Southeast 
doesn't have access to one of those ports, they start out $800 per 
container behind the rest of the world. So there are only two of those 
ports that can take these ships right now on the east coast: Norfolk 
and Baltimore. If a manufacturer or an importer or an exporter is 
looking to where they are going to locate their business, do you think 
they are going to locate in a place that they are going to start out 
$800 per container behind the rest of the world?
  And it is going to take us till 2020 to get approvals to get this 
port deepened?
  So many of these environmental rules are just mechanisms to delay 
progress. In the end, we know this port is going to get done. Let's get 
busy and dig this port, and then we can talk about what we need to do 
to mitigate. But why are we going to hold it up for a decade and put my 
home State and this country at another competitive disadvantage?
  We need to work on infrastructure. We need to find a way to get the 
highway trust fund funded. We need to eliminate a lot of the 
uncertainty. So many of these problems that are listed here, because 
they haven't been solved, they create so much uncertainty in the 
economy. It makes it very difficult for businesses to invest.
  The Federal Government is an incredibly complex organization, yet it 
hasn't had a budget in 5 years until last year--not even a budget, not 
even for a year. Any complex organization, to make rational decisions, 
has to have long-term planning, and we can't even do a budget for a 
year.
  We continually kick the can down the road, things likes the highway 
trust fund, things like the SGR, the doc fix. The Federal Government 
has got to resolve these things, remove these uncertainties so that 
people know how to plan and invest.
  I skipped over one here: responsible development of our oil and gas 
reserves. The administration has thrown up every roadblock that you 
could throw up to development of our reserves. We have had the largest 
oil and gas boom in history in the last 6 years.
  Eight years ago, when President Bush was in, they were talking about 
something called peak oil theory, where they said we had already 
discovered all of the recoverable oil and it was going to get lower and 
lower, and it was going to be harder and harder to recover and that we 
were at our finite limits.
  That shows you how wrong science can be, because in the last 5 years 
we have had the largest oil boom in history right here in the United 
States. Yet, at the same time, the day that President Obama was sworn 
in, gas was $1.80 a gallon. Google it. It went up as high as $3.75 a 
gallon just a few months ago, and it has been gradually backing down 
because, despite all of the roadblocks and all of the burdens that we 
have placed on developing this oil, private industry is figuring out 
how to get it done. We won't let them build pipelines, so they put it 
on rail. We try to regulate them out of the rail business, and they 
figure out a way around that.
  The administration is using executive orders to broaden the clean air 
rules and the Clean Water Act to do everything they can to prevent the 
development of these oil and gas reserves, and the result of that is 
that the price of fuel is artificially high because they want us off of 
these fossil fuels and they want us on alternative energy.
  You know what? So do I. But I want it when the technology can deliver 
it

[[Page 15891]]

at a competitive price. I don't want to artificially inflate the cost 
of fossil fuels simply to force us on to alternative energy, because, 
you see, cheap, reliable energy is another factor that makes us 
competitive.
  How does it make us competitive? Well, number one, it lowers the cost 
of a company doing business in the United States if they have cheap, 
reliable energy. That is obvious.
  But another problem is we do have the largest consumer market in the 
world. Two-thirds of our economy is based on consumer spending. And 
when you have declining income, what does that do to consumer spending? 
Obviously, it goes down. When you have increasing expenses for fuel and 
home utilities, with the war on coal, that affects the cost of food, so 
all these things rise. That takes money out of the consumers' pockets 
when they already have declining income.
  What do you think that does to our economy? What do you think that 
does to our competitiveness?
  So we need low-cost energy because, A, it makes it cheaper for 
companies to do business here and will bring jobs here, but it also 
puts more money in consumers' pockets.
  When the President was first elected, he said we need a stimulus 
program, and he put in something called a payroll tax holiday that gave 
everybody, the average working man, $90 a month more in his pocket. But 
at the same time, with his policies for energy, with the war on coal 
taking our coal plants offline, that increases the cost to the average 
consumer by about $40 per household a month.
  If putting $90 a month in his pocket is stimulus, what does taking 
$40 a month out of his pocket do? That is ``de-stimulus.''
  Then when his policies forced up the price of gasoline from a $1.80 a 
gallon--it was $3.80 a gallon; now it is $2.80 or $3--every dollar a 
gallon costs the average consumer another $90 a month. Now the payroll 
tax holiday is gone. Instead of putting $90 a month in the consumers' 
pocket to stimulate the economy, we are taking $200 a month out of 
their pocket. What does that do to the economy?
  This one is a no-brainer. We need to do everything we can to 
responsibly develop our fuel reserves; and we need low-cost, reliable 
energy in this country to, A, encourage companies to come here for the 
low energy cost and, B, to put more money in consumers' pockets to 
stimulate our economy.
  The last thing on this list is create a sustainable Federal budget, 
including entitlement reform. I will run through this, but I am about 
out of time.
  Entitlements are on a collision course with bankruptcy. Nobody who 
understands it will argue that point. These things have got to be done. 
They create so much uncertainty. They create instability in our 
economy, and they are nothing but future taxes.
  The House Budget Committee, of which I am a member, has put out a 
budget that would balance in 10 years. For the last 2 years in a row 
that I have been in the Congress, and I believe 2 years before that, 
they have not even been taken up by the Senate. We need to put our 
budget on a path to balancing. The nonpartisan Congressional Budget 
Office agrees and says that where we are is unsustainable.
  Mr. Speaker, thank you for your patience with me. Thank you for 
allowing me to lay out my road map. I hope that the Republicans and the 
Democrats and everybody will consider this as a pathway to a prosperous 
future.
  Mr. Speaker, I yield back the balance of my time.

                          ____________________