Peter DeFazio

Mr. DeFAZIO

Mr. DeFAZIO. Well, I would certainly be chastened by the Chair, and I just listed the millions of dollars that flowed to candidates Cheney and Bush. I would just observe that they are at a $25,000 plate fund- raiser downtown where they are going to collect a minimum of $15 million, and many of these same companies that are doing so well in this energy policy will be present tonight. However, I certainly would not link in any way those contributions to policy decisions by this administration. Any such linkage is merely certainly beyond the bounds of this Member to impugn.

Mr. DeFAZIO. Remember, as we are having this conversation, that the Republicans adjourned the House earlier today so they could go down to a $15 million, $25,000 a plate fundraiser. I have to say, most of the issues we are talking about here tonight are not very well represented at that event. If I could just go back to tax cuts for a moment, one thing, of all the strange things this administration has said recently, or of this 1950s energy policy they gave us, which is just a tremendous, tremendous windfall for the oil, gas, and coil industry, was one where the administration said, well, we are putting an immediate stimulus, so-called, into the tax cut, around $100 million, and that money can be spent by the American people to pay the higher fuel bills. First off, of course, approximately half of that is going to go to the people at the top who are not noticing the higher prices. Then when we divide up the rest of that among all the other Americans, it is not going to pay for a tank of gas at this inflated price-gouging we are seeing at the gas pump, let alone what we are seeing with the thousand percent run-up in electric prices in the West. It is almost kind of like a Marie Antoinette ``Let them eat cake'' kind of thing; we are giving them some crumbs, what is their problem? They are going to get a little bit of money back. So what if they are being gouged at the pump by Enron, Dynegy, Synergy, all these other companies, Reliant, of course, being my favorite. Just a minute on that. I have to refer to the fact that the Reliant Energy Company, based in Houston, Texas, according to the San Francisco Chronicle on Sunday, was gaming the California energy market on 10- minute increments. That is, they actually had their plant operators in the two crummy plants they bought in California at a very cheap price, old plants, they actually had them on the line to their traders on the floor in Houston. The traders on the floor in Houston, as soon as they saw energy prices go down, would tell them to shut the plants down. As soon as they saw energy prices go up, they would tell them to crank the plants up. Of course, this wears the plants out quickly, causes them to go down, and hurts the energy supply. But Reliant and Enron and Dynegy and Synergy and Exxon-Mobil and all the others, they are downtown eating caviar, popping very expensive champagne, and having a good old time with the President, and the Americans are being told, do not worry, there is a tax bill moving through Congress that will help you pay for a tank of gas. Now, of course, you buy more than one tank a year. You are going to be kind of netted out on this issue. Well, we cannot do anything about that. That is the free market. It is not the free markets. It is market manipulation. It is price gouging. It is lack of action against the OPEC cartel. It is lack of action by the Bush Federal Energy Regulatory Commission to reign in what their own staff has said are unjustifiable prices in the wholesale energy. The pattern here just runs through everything and it all comes back to follow the money. The money runs straight down to 1500 Pennsylvania Avenue, or whatever the address is at the White House there. That is where it is going and that is where it is flowing. Announcement by the Speaker pro tempore

Mr. DeFAZIO. I was being conservative, 43.

Mr. DeFAZIO. Just to follow up on that, Mr. Speaker, the point about the extraordinary, galloping increase in CEO salaries, whether or not the corporations are profitable, and absent the whole dot.com craziness, the gentleman is right, it is more than 500 times the average line worker's salary, up from a mere 20 years ago, when it was 27 times the average line worker's salary. Just to break that down, in 365 days in a year, though people do not work that many days, say 220, basically a CEO earns more in one-half of one day than their line workers who work day in and day out 50 weeks a year, 40 hours a week. Something is a little bit wrong with that equation, the people who are producing the wealth. What is the answer we get? We hear a lot of talk about the so-called surplus here in Washington, D.C., which is based upon some pretty funny budget estimates. I fear that we will be like Texas. Two years ago the legislature cut taxes twice at the behest of then Governor Bush in Texas. Now they are down there saying, hey, what were we thinking? What were we smoking? They have a $700 million deficit, and they are going to raise taxes. This group here, should they jam through these tax cuts, particularly these tax cuts so heavily tilted towards the people who earn over $373,000 a year, and 43 percent of the benefits go to people who earn over that, will be in a very similar situation. The programs for everybody else, student loans for their kids, prescription drug benefits for seniors, the Coast Guard, I had the Coast Guard come in and they said, we have to cut patrols 20 percent. The Corps of Engineers are saying, we are cutting back on flood controls. I asked, are they not part of the Bush administration? Do we not have a surplus? How come they were telling me about the cuts they are going to make? Those were the orders from the White House: cut, cut, cut. Programs that serve the American people are being cut. Then the big bonus goes to this tiny fraction of people at the top. The American people are supposed to be happy with the crumbs they get at the table. We cannot replace for $400 a year the cuts in Pell grants, the cuts in services to one's parents or oneself in Medicare; or when we are out there and the boat sinks and the Coast Guard says, ``Well, sorry, we had to cut back 20 percent of the patrols because the budget is tight because we had to have the tax cuts for the wealthy,'' and by the way, they have crews and lifeboats on their yachts, and so we are out there in our dingy boat and we sink, that is too bad.

Mr. DeFAZIO. Very interesting, or nonexistent?

Mr. DeFAZIO. Well, Mr. Speaker, certainly, big news in the Pacific Northwest recently was that the Boeing Company, after about a half a century, has moved its headquarters out of Seattle, and the rumor, and I have to unfortunately think it is true, is that the Boeing executives wanted to get out of town before they shipped the jobs to China. They have already outsourced some manufacturing to China. We know they would like to outsource more of their manufacturing of their planes to China. The CEO of the company has said he cannot wait until the day that he does not have to say it is an American corporation, that it is something else, a stateless company, and we know that they can get labor much cheaper in China. They are producing significant components of their planes there. So the pressure on this administration, as the last administration, from the biggest corporations in this country, Boeing, Nike, IBM, Westinghouse, we can go down the list, is no matter what the Chinese do, so what if they sold nuclear weapons to terrorists, so what if they held our men and women hostage, so what if they are the most unfair trading nation on earth and they are stealing our jobs. A few companies are making a little bit of money over there, and that is what drives U.S. policy and, unfortunately, and pathetically, this administration is going to be no different than the last, the Clinton administration no different than Bush I and Reagan on this issue; that is, whatever the dictators, the bloody dictators in Beijing want, they will get, no matter how high the price. Last year the price was an $83.8 billion deficit with China, the most unfair trading nation on earth. Pick up the report of the U.S. Trade Representative. It is about this thick, and read page after page after page after page of the ways that the Chinese have discriminated against U.S. manufactured goods. They are not buying our goods, except when they want to make copies of them. That is the only time they buy them. They are very studiously developing a market in the U.S. and avoiding U.S. goods coming into their country. Last year, the wheat farmers from eastern Oregon came in to see me and they were just hysterical about the idea that they could get into China if we just only gave them permanent, Most Favored Nation status, and I said, I disagree. I gave them transcripts of radio talks by the Chinese agriculture minister saying there is no way we are going to allow our country to become dependent upon imports of food. In fact, we intend to be exporting wheat and other goods. We only want access to their markets. And in trade we have to say nice things, but that is not what we mean and we are really going to do something totally different. I gave them the transcripts. They said, no, that is not true. In fact, just before we voted here in this House of Representatives, a majority of our colleagues voted to give the Chinese everything they could ever dream of and, despite all of their misbehavior, they took in a boatload of wheat. Guess what? It is the last one they ever took. In fact, the same farmers came in to see me this year, they sat down quietly, and we were just sitting there on opposite sides of the office and they said, well, are you going to say it? I said, say what? They said, are you going to say you were right? I said yes, I was right, but what are we going to do about it? Mr. Speaker, group after group of Americans has been snookered on this free trade rhetoric. They believe, and they are good Americans and they are hard-working Americans and they care about their family farms and their small businesses or their industrial small manufacturing plants. Group after group after group has come to me over the years on these trade issues and said, no, Congressman, they tell us it is going to benefit us, and group after group after group has come back 1 or 2 or 3 years later and said, we have been devastated. They are doing exactly the opposite of what they told us, and exactly the opposite has happened to our wheat folks. Not a grain of Oregon wheat has gone into China since that agreement was penciled. Now, maybe they will take another boatload this spring because they need to get another vote here in this Congress, or maybe it will be apples from Washington or maybe it will be who-knows-what. It is a pretty cheap price to them when they are running an $83.8 billion unfair trade surplus with the U.S. By the Commerce Department's own numbers, that is $1,660,000 U.S. manufacturing jobs that are gone to China. They always want to talk about oh, hey, every billion dollars of trade is 20,000 jobs. The only thing is they never talk about the net. We sent like $16 billion worth of stuff to China and we imported over $100 billion of stuff from China. That is the net number. That is our job loss. Why will they not talk about that?

Mr. DeFAZIO. Mr. Speaker, just before we do that, just to go after this WTO thing for a moment, one of the concerns I have had about the WTO, and we are part of it, and I led the Democratic side with the gentleman from Texas (Mr. Paul) leading the Republican side, on a vote to withdraw from the WTO last fall, and we were defeated resoundingly; I do not think we even got 100 votes, and people around the country should check out their Members of Congress and see how many of them voted to withdraw from this manipulated trade organization, which is set up for multinational corporations, not for consumers, not for the environment, not for people who consume energy, not for people concerned about working conditions, but for the corporations; that the U.S. has changed laws, weakened laws because the WTO has found against us because we wanted to protect dolphins; the WTO has found against the United States for clean air. We have to import dirty gasoline from overseas under WTO rules from Venezuela because they found our clean air restrictions were an illegal international trade constraint. Under NAFTA, the horrible pollution of our water table about the substance called MTBE, the United States may have to pay Canada hundreds of millions of dollars under NAFTA to stop the production and the introduction of MTBE into poisoning our water supply, because of that trade agreement, and the U.S. accedes to all of these things. We pay the penalties, we repeal the laws. Not myself, but other Members of Congress vote for these things because they bow to the World Trade Organization and to the NAFTA tribunals. But somehow, when it comes to the American consumers, when it comes to people pulling up to the pump in their cars, when it comes to people from my rural areas pulling up, and we hear a lot about Americans and their brand-new SUVs and the bad gas mileage, but I have a heck of a lot more people in my district who are driving their beat-up pickup trucks to the pump in the few rural gas stations we have left in my State, they are getting gouged twice as much as some of the big city folks, and somehow, the United States of America, the President of the United States cannot stand up for them in the World Trade Organization and against OPEC. I find that absolutely pathetic. I would trace it back to the Rollcall I was reading before. The profits: Exxon-Mobil, $15.9 billion; Chevron, $5.1 billion; Texaco, $2.5 billion; Conoco, $1.9 billion; Philips Petroleum, $1.9 billion; Duke Energy, $1.8 billion; I am sorry, we are getting into electricity; maybe we will get to that later. Occidental Petroleum, $1.6 billion; and so on and so on. The list goes on and on. I think that has a little bit more to do with it than the fact that American consumers are getting gouged.

Mr. DeFAZIO. The gentleman raises a very interesting point. In fact, I consulted with experts at the Congressional Research Service. Like the gentleman, I opposed the formation of the World Trade Organization; I opposed NAFTA; opposed Most Favored Nation status for China, and unfortunately and pathetically the Clinton administration was as bad as the Reagan administration, the Bush I administration and the Bush II administration on these issues. There seems to be sort of a thread that runs through there. I was concerned when I read about Mr. Chavez, the President of Venezuela, who is head of OPEC, saying, we can squeeze them. All we have to do is constrain production. I thought, well, wait a minute. What about this free trade stuff that I hear from President Clinton and I am hearing now from President Bush? They are all for rules-based free trade. That is why we are going to have the WTO and put China in there. We are going to have rules, by God; we are going to have rules. Well, I checked out the rules. I am not a lawyer, but it is pretty clear when I read the rules that OPEC cannot do what they are doing under the rules. So I consulted with the Congressional Research Service, and I said I am not a lawyer and I read this stuff and it kind of looks to me like OPEC, the seven countries in OPEC now, I did raise this issue with Vice President Cheney and he looked at me very smugly and said did I not know that Saudi Arabia was not in OPEC? I said, well, Mr. Vice President, I know that Saudi Arabia is not in OPEC, but the seven members who are in OPEC are members of the World Trade Organization. Saudi Arabia is an observer nation, and they want to be in the WTO so they have to follow the rules, too. Did not have much of a rejoinder to that. I have sent a letter to President Bush and Vice President Cheney and their trade representative asking them on behalf of the consumers of the United States, who are footing the bill every day when they pull up to the gas pump, to file a complaint for illegal constraint of trade and production under the World Trade Organization agreement and GATT by the OPEC nations. There has been a resounding silence. I think what is really going on here is one finds that the American oil companies use the constriction of production by OPEC as an excuse to raise the price even more. I mean, we go back to the ExxonMobil profits, that $15.9 billion, that is $159,000 million in profits, a 102 percent increase by ExxonMobil. It had to come from somewhere. It came from two places. Mobil was manipulating and constricting gas supply to drive up the price across the country to people who use natural gas to produce energy to heat their homes or run their business; and Exxon, specializing on the other side of the equation, and Mobil to some extent, was using the excuse of constricted supply from OPEC to drive up the price twice as much as OPEC had and increase their profits. So it appears that the Bush administration, no big surprise given their oil background, will not use the rules-based trade that they want us to be in. In fact, they want to expand this to a giant super NAFTA which covers the entire western hemisphere. They will not use the rules of that to file a complaint against the OPEC countries, a complaint that according to the legal resources I have contacted the United States would win recouping billions of dollars of refunds for U.S. consumers. Now, why will they not do that? If I were President of the United States and I had an opportunity to go out against foreign nations who are manipulating a product that is essential to my economy, I would do it in a second; and I would refund that money to all the American consumers who had been gouged by this manipulation. Strangely enough, the Bush administration will not do that. As I say, to be fair, the Clinton administration before them would not do it either. It is a pathetic comment.

Mr. DeFAZIO. Mr. Speaker, I thank the gentleman. Just in following up on that train of thought, there is 1 billion, ``b'' as in billion, that is 1,000 million dollars spent by candidates for Congress in this last cycle; by far a new record, more than a $200 million increase. I have to say sadly most of that money came from powerful special interests whose interests is not good public policy, not universal health care, not how to rein in the outrageous cost of prescription drugs, not how to have a sustainable energy policy for the United States of America that benefits small business, big business and residential ratepayers and working people alike, but no, they are narrow special interests. Mr. Speaker, I would like to read sort of a roll call here from the energy industry of their contributions. Now, number one, it is hard to choose. I do not know whether to go to Enron because the CEO of Enron is Mr. Ken Lay, who is the largest single contributor to George Bush, $2 million over George Bush's political lifetime, and all of his company executives were required to give substantial funds to President Bush, and they raised millions of dollars. This is one company. What is at stake for them? Well, last year, they had a billion dollars of income or a billion dollars of revenue and $100 million of income, a lot of it through manipulating energy markets. They do not produce things. They just manipulated energy markets. So I am going to give them the number one spot, as I said, $2 million from the CEO of Enron. When Mr. Cheney, who wrote our national energy policy, was asked to name people who he had met with, he said, well, I met with lots of people, lots of people; but the only one he could name, the only person that Cheney in that press conference, Vice President Cheney, could name, was Ken Lay, the head of Enron, because he said they have a different take on things. That is right. They do not produce oil and gas. They do not produce electricity. What they produce is money by speculating on these markets, driving up the price and manipulating the markets to extract the money from consumers, but they do not add anything productive to the mix. It was reported by the Wall Street Journal last Friday that Mr. Lay of Enron chose two key regulators who he had to call over to the White House to get appointed to be on the Federal Energy Regulatory Commission to make certain that policies that benefit his billion dollar company are put in place. Number two, close behind Enron, they could have been number one, is ExxonMobil; ExxonMobil, $15.9 billion in profits in the last year. It is a 100 percent increase. Americans are seeing it every day at the pump; and they are also seeing it in their homes, because Mobil has very substantial interests in the natural gas market which has been manipulated to extraordinary new highs. They are kind of pikers, though. With that $15.9 billion of profits far outstripping the billion dollars of profits of Enron, they only gave $1.2 million to George Bush's election. They could have done a little better, but hopefully they are downtown tonight and they are making up for that deficit because certainly this so-called national energy policy which we received, this glossy, wonderful thing last week, in fact James Watt said that they dusted off his work from 20 years ago. I actually kind of think it was probably written more like 50 years ago in terms of how enlightened it is in moving us beyond the petroleum, coal, and nuclear economy. They certainly would do very well under that. Let us go to number three here. Looks like number three goes to Chevron, $5.1 billion of profits; 150 percent increase. Total pikers, less than a million dollars to the Republican Party, only $770,000. I am certain, again, that they are making up for that tonight. There is a direct linkage between this so-called national energy policy and massive, massive contributions from the energy industry in this country. It is just scandalous what is going on, the influence we have, two people from Texas, although Mr. Cheney did move his residency to Wyoming in order to meet constitutional requirements, where he had formerly lived; but they both lived in Texas up until the election; both working previously for oil companies, Mr. Cheney for Halliburton, and Mr. Bush a long history with the industry. People wonder what is this big run-up in prices at the pump? What is going on with energy deregulation in California? How can the price of the electricity sold in California in 2 short years go from $7 billion to $70 billion? The same amount of electricity will be sold in California this year as 2 years ago. Despite what one reads in the press, they are conserving. They will consume probably as much or a little bit less than they did 2 years ago, and the price has gone up by 1,000 percent; 1,000 percent. Every small business, every big business, every residential ratepayer is paying through the nose for the same essential commodity that keeps these lights on in this so-called deregulated market; and this national energy policy says this is such a great plan it is working so well, so well in the State of California that according to an unnumbered page in the summary of recommendations, in appendix one of President Bush's and Vice President Cheney's national energy policy, that every State in the Union, despite, of course, the normal States' rights position of my colleagues on the other side of the aisle, should be required to implement California-like deregulation because it would be unbelievably profitable for Enron. It is such a great deal. The lights go out. You do not know if you can afford your bill, but they think this is a model for the future and we should model this in every State in the union. It has failed every place it has been tried.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, this is a continuing discussion of the so- called national energy policy of the Bush administration. Buried way back in the back of this report, under appendix one, under summary of recommendations, on an unnumbered page, is a recommendation that the Federal Government and, of course, the States' rights party, my Republican friends, should mandate that every State in America adopt energy deregulation. Now, if it was working somewhere, that might be a good idea, but we have all seen the extraordinary disaster in California. The disaster in California is spreading across the western United States. It is extracting billions, billions of dollars from residential ratepayers, small businesses and large businesses, and upstreaming that money to a few special companies. It happens that three or four of them are based in Houston, Texas, in particular, one really outstanding corporate citizen named Reliant Energy. Now, Reliant saw its profits go from $27 million last year to over $500 million in 1 year. What great new thing did they invent or provide? Nothing. What they managed to do was buy cheap a couple of energy plants in California and begin the most sophisticated gaming of the energy market as reported in Sunday's San Francisco Chronicle, and all of us in the west are paying. In fact, in the Pacific Northwest, we are paying higher average wholesale prices than are the people of California. This manipulation is spreading across the entire western United States, and now the Bush administration thinks this is such a great thing, we should spread it across the entire United States with a new mandate that every State adopt this. Now, my colleagues may say, ah, well, the California system is flawed. Well, I tell my colleagues, take out the flaws of the California system and go to Montana. You will find that all the large manufacturers in Montana are closing down because Pennsylvania Power & Light bought their generation, gaming them, and they cannot afford the power any more. Or let us go to New England. In New England, PGE of California, that says they are broke in California, sent the money to the parent company. The parent company created a new company, which is PGE of New England. And PGE of New England is manipulating the market there and has raised the prices substantially. This is the great new thing the Bush administration wants to bring to all of America: more profits, rolling blackouts, price gouging, and a mandate from the Republican administration that every State be subject to this sort of case. Now, this is because of the undue influence of Enron, the largest energy conglomerate in the world. In fact, the CEO of Enron has personally, personally, over the years, given George Bush $2 million to run for office, and has personally chosen the two new appointees to the Federal Energy Regulatory Commission to make certain that his interests are protected. And he is the only person that Vice President Dick Cheney could name when he said he had been meeting with lots of people, lots of people, outside of certain special interests. In fact, he mentioned Ken Lay, Enron. Of course, he does happen to be the head of the largest energy conglomerate in the world, and they are profiting well. But let us get back to Reliant for a moment. Here is what came out in the paper. They are cycling their plants up and down, destroying the plants, in fact, causing additional maintenance and long-term outages and long-term deterioration to game the market in 10-minute increments. They have a direct phone line from Houston, Texas, to their plant operators in California. And the guys in Texas are not looking to see whether the lights are on or off or the people need the juice or the businesses need the electricity. They are looking to see what the price is. And when the price starts to go down, they call the plant and they say, shut it down. They shut down. They watch, they watch, and 10 minutes later, if the price starts to go up, crank it up, we can make more money. This is the future. I thought that the key for electricity was reliability, affordability and service. We were promised that deregulation would be more reliable, more affordable with better service. And instead we find that deregulation is rife with market manipulation, profiteering, and unreliable service, with rolling blackouts and brownouts, bankrupting businesses and residential consumers alike. And now the Bush administration thinks that is so spiffy that everybody in America should be subject to that. That is definitely one part of their plan that has to go when this Congress acts on the so-called national energy policy.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Chairman, I intend to vote against the Vitter amendment not because I personally believe military recruiters should be excluded from school grounds but because I strongly support the ability of local communities to determine what is best for their schools and their children.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, I come to the floor this evening for a brief discussion of a part of the President's proposed national energy policy, the document of May, 2001. This goes to the issue of electricity and electricity supply. If we look in Appendix I, way in the back of the report here under ``Summary of Recommendations,'' there are a couple of things which I think Members of the House and members of the public should pay attention to. At the top of this unnumbered page, in Appendix I it says, ``The NEPD Group recommends the President direct the Secretary of Energy to propose comprehensive electricity legislation that promotes competition, protects consumers, enhances reliability, promotes renewable energy, improves efficiency, and repeals,'' there is the key part, ``the Public Utility Holding Company Act and reforms the Public Utility Regulatory Policy Act.'' What does that mean? That means national deregulation. Now, of course there is a little problem in proposing national deregulation. We have the California model, where this year the same amount of electricity will be sold as 2 years ago. Two years ago, that electricity sold for $7 billion. This year that same amount of electricity, despite the myths about huge increases in the demand and all that, the same electricity as 2 years ago will sell for $70 billion, a 1,000 percent increase in the price in 2 years. That money has to be going somewhere, and it is. A good deal of it is flowing to a number of large energy companies based in Houston, Texas. They are saying this is such a successful model. The lights were on in parts of California for part of the day yesterday, and most people still can afford to pay their energy bills, although they are about to get a retroactive 47 percent-plus rate increase and tiered rates, which will penalize anybody with an all-electric home. The President, under the guise of the summary buried in the back of this report, wants to take that across the Nation. People will say, that is not fair. The California plan was poorly written. Look at some of the other great models of deregulation. Let us look at some of the other great models of deregulation. We have Montana, right near my State. Montana, until 2 years ago, had the sixth cheapest electricity in the United States of America. They were producing 150 percent, 1\1/2\ times their peak demand, on their own hydro power; affordable, cheap, reliable. But what happened? They deregulated. Montana Power sold all of its generation resources to PP&L, Pennsylvania Power & Light, who now controls the generation in Montana. Pennsylvania Power & Light finds they can sell Montana's electricity more lucratively elsewhere, and they have lifted the cap on industrial customers, so industry after industry in Montana is closing. They are laying people off. They are saying they cannot afford the huge increase in electric rates. Luckily for residential consumers, their prices are capped for another year. But a year from today, it will hit them, too. They will say, Montana did not work out too well, California did not work out too well, but look at the deregulation in Pennsylvania. Look how well it is working. First off, dereg is supposed to give us choice. I have yet to have a consumer come up to me and say, Congressman, I want to choose my energy company. I am tired of this company that just delivers the electricity day in, day out, reliably at a low price. I would like to choose, to gamble. I would like to see what would happen. Nobody, nobody wants that except a few big energy companies that are getting filthy rich off this scheme. So they gave choice to Pennsylvanians, and very few of them chose it. Now, even though they had rate caps, and that is why people say it is a success, rates did not go up; yes, if we have capped rates. What happens when the caps go away? The same thing that has happened in California, the same thing that is happening in Montana: huge increases in price. This is nothing but a scheme to extract more money from tens of millions of Americans and small businesses and big businesses across this country, and move that money to a few big energy companies. So I would hope that this Congress, as it has in the last two Congresses when President Clinton proposed national energy, as they want to call it now, restructuring, because deregulation has become a dirty word, we cannot use that. It is like around here we do not talk about the estate tax, but we call it the death tax. Now they call deregulation restructuring, as does this report. It is a scam on the American public. Let us not have it perpetrated under the guise of this report.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, I have a long list here, and I am not going to read all of it, but we could start in 1994, Union, Kentucky. 1995, Redlands, California; Richmond, Virginia. 1997, Bethel, Alaska; Pearl, Mississippi. 1998, Jonesboro, Arkansas; Edinboro, Pennsylvania; Fayetteville, Tennessee; and Springfield, Oregon, my hometown. 1999, Deming, New Mexico. 2001, Santee, California; Williamsport, Pennsylvania; and El Cajon, California, all in 1 month. This is, unfortunately, only a partial list of school shootings in the United States over the last decade. Mr. Speaker, we have got to ask what has been the coordinated and thoughtful response of our policymakers here in Washington, D.C., and I think we would find it lacking. Now, there is certainly no easy answer. There is no one-size-fits-all solution to these problems. But, Mr. Speaker, there are proven programs that are underfunded that could be better funded that might help prevent future tragedies, that might get to one disturbed youth, one at-risk family, that might bring forward some other students before the fact, and we should be doing all we can to encourage and fund those programs. Mr. Speaker, we often expect that somebody somewhere is going to take care of the violence, is going to make things better, but really who is the somebody here? We all have to take some responsibility, every one of us. In my own hometown of Springfield, there was an incredible community response and a response from other communities, and statewide, and people from other States who came to help us, and even some help from the Federal Government in working through the immediate aftermath. But I fear some some of that urgency is gone now, as the violence has gone elsewhere, and now those communities are in a crisis. Mr. Speaker, we need a more coordinated approach. I am reintroducing legislation today that has a number of parts. It is not comprehensive, but it is a good start at helping to address these problems. First and foremost, increased funding for Head Start and other early intervention prevention programs, a program for Federal funding for community programs, like the Birth to 3 in my State that intervenes with young, at-risk women and helps them before they become a problem or get into a situation that is a problem with their children. More money for child abuse programs that focus on community-based family preservation and crisis intervention, a funding increase for the Juvenile Justice Delinquency Prevention programs, including court schools. I visited court schools. It is a tremendous program. We take a kid today who threatens violence or has been expelled from school, and what do we do? There they are, they are out on the street for the most part. Those kids need a more structured environment. For many of them, it does not even seem like punishment to be thrown out of school. They should be removed and placed in a court school, which is a more rigid environment, which brings in community resources and counseling resources to help them deal with their problems in the hope that we can get them back into the public school environment, and that they can become productive citizens. Do not just send them down to the mall or out in the streets with an expulsion order. Court schools work, and we need some more Federal assistance for those programs. The National Guard has a very, very successful program, the Youth Challenge Program. It is underfunded. There is a long waiting list of States that want to have programs. We have one in Oregon that has been inadequately funded. The rate of recidivism of the kids that get in that program is minuscule. It works. It is not for every kid. That is not the solution for every kid, but it is a part of the puzzle, and it works, and why not put more money there. We can afford that. If we can afford to give tax breaks to billionaires, we can afford a few more dollars for the National Guard Youth Challenge program, assistance to schools and local police departments to combat juvenile crime, including funds for placing police officers in schools. Mr. Speaker, let us help the communities who want to engage in prevention and intervention. We can institute a 72-hour hold, a mandate for a 72-hour hold for juveniles caught with a firearm on school grounds. The list goes on and on. These are simple things. They are things we could be doing, I say to my colleagues. Mr. Speaker, I urge my colleagues to support my wide-reaching package as a beginning of an indication that the Federal Government cares and will work in partnership with communities and concerned citizens and parents and kids to resolve this problem.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, this weekend is notable in that Sunday is April Fool's Day, and the Government of Canada, the Province of British Columbia in particular, is about to play a very sick April Fool's joke on the American people and particularly those in rural communities in the western United States. On Saturday night at midnight, the U.S.-Canadian Softwood Lumber Agreement expires, and nothing has been put in its place to stop a tide of subsidized Canadian lumber from flooding south beginning on April Fool's Day. Since the administration of Ronald Reagan, Presidents have recognized and strongly fought against the unfair competition of the wholly subsidized Canadian lumber and sawmill industry. This administration must act strongly to perpetuate those controls and protections against unfair competition. Mr. Speaker, in Canada the Crown owns 95 percent of the timber; and in Canada the Crown gives away that precious resource. They have a bizarre bidding process. Well, it is not a bidding process; they just contract with companies, no bidding process, and then they say we will look at the logs on the first truck you bring out and we will grade them and set a price. So the companies go in and find the rattiest trees and bring out a truckload of ratty trees, and the government scalers look at them and say we are going to charge you $10 for that truckload. Then the lumbermen go back in and gather up precious old growth and other priceless timber, and they begin trucking it out. They pay virtually nothing for the resource. They observe no environmental constraints; there are no riparian protections. They are devastating their salmon and our salmon by these harvest practices, and now they want to take those subsidies and supplant our much more responsible industry here in the United States. Mr. Speaker, they are sounding pretty tough, too. Here is Gordon Wilson, minister of forests from British Columbia: ``Why should we turn the energy tap on going south at the same time we cannot export our lumber to the biggest market we have?'' He is talking about cutting off natural gas supplies to the western United States which is already staggering under extortion- ately high natural gas prices. One Canadian timber executive said the United States better ``learn to speak Arabic and read by candlelight.'' Pretty tough words. Mr. Speaker, I would hope that the Bush administration could be tougher in their response. If we retaliate against Canada for bringing in these subsidized lumber imports, the Canadians will fold in a second. Nationally they are running a huge trade surplus with the United States. They cannot afford irresponsible actions or words like this on the part of one province to undermine their trade relationship with the United States. Mr. Speaker, I am asking and I have asked the Bush administration, along with a large number of Members of the House and Senate, to continue restrictions on the import of subsidized Canadian lumber. Just a 5 percent increase in this subsidized, unfairly produced, irresponsibly environmentally produced lumber coming across our border will cost 8,000 jobs in the Pacific Northwest. Just a 5 percent increase. And they have got it piled up because part of their sweet deals with these companies, they not only give the timber away, they require them to harvest it whether or not there is a market. So they have piles and piles of processed lumber waiting to come south from Canada. Mr. Speaker, it is not free and fair trade by any measure of the imagination. Now, there are some special interests in the U.S. who would like to wipe out our lumber and sawmill industry and get that cheaper Canadian lumber. They have taken a shortsighted view. After the U.S. industry is gone, the Canadians will probably jack up the price. They will probably still give it away to their companies; but they will jack up the price, just like they have done to us on natural gas. Mr. Speaker, I would ask the home builders and others who are pushing the Bush administration to back off. It is not in the long-term interest of the United States to not have a healthy and robust industry in this country, and it is also going to cost some customers because those customers will not be buying houses, they will be abandoning houses when those communities close down. Mr. Speaker, let us not let a bunch of hardliners in British Columbia play an April Fool's joke on the American people in the Bush administration. Let us retaliate against unfair trade practices and continue the restrictions that have been in place, that were first put in place under the Reagan administration, continued under the first Bush administration, continued under the Clinton administration, and they must be continued under the Bush administration. Nothing has changed. They are still competing unfairly, and they are still going to destroy American communities and jobs if the administration does not act.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, I move that the House do now adjourn.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Chairman, I thank the gentleman for yielding me this time. Mr. Chairman, everything in the majority's budget revolves around a $2.6 trillion tax cut of which 43 percent will go to the people in the top 1 percent, people who average over $912,000 a year. In order to do that, they are going to cut education, Head Start. They are going to jeopardize Medicare, Social Security. They are going to pay down the debt more slowly than the Progressive alternative. We have offered a responsible alternative based in reality. We are not going to spend the money before it comes in. One-third for debt reduction, one-third for the priorities of the American people, and one-third for targeted tax cuts. Yes, targeted tax cuts toward middle- income families who are struggling to make ends meet, not the people at $920,000 a year. I have not noticed that they are having such a hard time. It is time that the Federal Government began to pay attention to the needs of average Americans in this country, not just the special interests and the wealthy.

Mr. DeFAZIO. Mr. Chairman, the gentleman will not yield for a misstatement of fact?

Mr. DeFAZIO. Mr. Chairman, will the gentleman yield for a misstatement of fact?

Mr. DeFAZIO. Mr. Chairman, I thank the gentleman for yielding me this time. The question here is are we going to have a people's budget, a budget that addresses the real needs and priorities of average Americans; or are we going to have a special-interest budget that cuts the programs important to most Americans in their daily lives, such as education, Medicare and others, and returns to the days of huge deficits? If we care about education, school construction, smaller class size, Pell grants to access higher education; if we care about Head Start, if we care about a real Medicare prescription-drug benefit, not a subsidy to the pharmaceutical industry, they are doing just fine, thank you very much. If we care about election reform, if we care about real tax cuts targeted to average Americans and not to those at the very top who have done so well already, then the Progressive budget is a much and far better alternative than the Republican budget. It pays down more debt more quickly, despite this new concern about the Republicans about not paying down the debt too fast. No, that is a sham. Then, if we are concerned about our veterans, we had better fund our veterans, particularly for the aging veterans population, World War II and Korea. If we care about our young men and women in the military, their quality of life, we will vote for this budget. Yes, if Members care about the continuing waste at the Pentagon, I hear again and again, do not throw money at problems, do not throw money at problems. The Pentagon has huge problems. They cannot keep track of the money they spend. They are still paying $400 for $40 items. They have spent $50 billion on Star Wars, and they cannot hit anything. They have three new jet fighter programs in the works, two of which are over budget, behind schedule; a new helicopter that does not work, cannot meet its mission, way over budget. They have huge management problems at the Pentagon, and their answer is throw more money at them. If it were any other part of the Federal budget, if it is education or the concerns of average Americans, no, we cannot put more money there. Do not throw Federal money at it. But the Pentagon, yes, throw more money at it. This budget essentially does all the things the American people need most, and reforms the Pentagon and pays down the debt. This is the best alternative before the Congress today.

Mr. DeFAZIO

Mr. DeFAZIO. Madam Speaker, the Pacific Northwest is locked in an unprecedented drought. We have lost hydropower generation and we are going to have to buy energy. But the energy markets have gone haywire because of the failed California deregulation. Prices are 10 times what they were a comparable month 2 years ago. This is outrageous price gouging and profiteering on the part of some national energy companies. It is threatening residential ratepayers and businesses alike in the Northwest and California. The Northwest delegation just met with Vice President Cheney, and we have had the response of the Bush-Cheney administration. They will do one thing to help us, one thing to help the residential ratepayers and the businesses of the Pacific Northwest in the face of this catastrophe that is coming with huge rate increases for profiteering by a few national energy companies based, strangely enough, in Texas. They will do one thing to help us, they told us, and that one thing is nothing.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, I regret that the leadership, the Republican leadership, saw fit to have such a limited debate on a $2 trillion tax cut today. Basically, it worked out, for the portion of the tax cut adopted today, to about $5 billion a minute. I was one of many Members who is not a member of the Committee on Ways and Means who did not have an opportunity to speak and give my reasons for opposing this tax cut so I am going to lay them out now, because we know that this is not the end of the debate. The Senate will not even take this bill up until late this spring, if then. Now first, the tax cut is predicated upon a wish, a dream, a projection, a prediction, a prediction. Now, remember all the economists 10 years ago said we see deficits as far as the eye can see, huge and growing deficits. We were supposed to have a $400 billion deficit this year, but here we are fighting about how to spend the surplus. There is an actual real surplus this year. How long will it last? What are the assumptions behind it? This is a very interesting chart which comes from the official Congressional Budget Office chaired and headed up by a Republican appointee. This is what we are predicating a $2 trillion tax cut on. These are future projections. If one notices, there is a little bit of uncertainty here. In fact, when we get to the year 2006, according to the official projections of the Congressional Budget Office, we could be running anything from a $100 billion deficit to a $1.1 trillion surplus, but today the Republican leadership locked into place tax cuts that are going to spend this surplus even if it does not exist, and they did it under the rationale it is a stimulus for the economy. Now remember, the tax cuts do not even begin until next year. Well, they added a little bit for this year. Mr. Speaker, 1/100th of 1 percent of the GNP will be devoted to a so- called retroactive tax cut this year; minuscule amount, totals just tens of dollars, for most families, $15 or $20. Yet what they have done here is begun the same strategy that fooled this Congress before I served here in the early 1980s, the Trojan horse strategy. Dress it up, get it inside the gate and then out pops a big surprise. The big surprise is most likely to be a return to huge and growing deficits a few years out. No, we should base tax cuts on actual surpluses received, not on projections by pointy-headed economists who are wrong a lot more times than they are right. If they can project the economy 10 years out, they would not be working at the Congressional Budget Office for a government salary. They would be living on their private island somewhere if they had that much knowledge about the future of our economy, and even they, with this chart, admit they really do not have a clue. So this Congress is being incredibly irresponsible in locking in place those tax cuts now heavily weighted toward people who earn over $329,000 a year, on the bet that these surpluses might exist or maybe knowing that the surpluses will not exist and not really caring that we could return to the huge days of deficits. Now, this is reality, folks, right here. This is reality. The United States of America's debt, that is black and white. We owe that. Every American from the tiniest baby to the oldest senior citizen owes a share of that, and if we divided it up equally it would be over $20,000 per person. They are going to not even address that as effectively as the budget last year. They are proposing under their optimistic projections to leave a much bigger debt for future generations, not to reduce it as much. Under a worst case scenario, they are going to increase that debt and leave it as a gift or a burden to future generations. That is irresponsible. I have supported the plan to do one-third, one-third, one-third, once we have a surplus in hand. One-third to reduce the debt, and if these wild projections come true we could pay off the debt in 12 years; one- third to invest, to invest in education, in infrastructure. I just got a report today from the National Society of Civil Engineers. We have a $1.3 trillion shortfall in infrastructure. Our infrastructure is crumbling over the next 5 years. That is about what they are spending here, betting that we are going to have these surpluses. We could be investing it. We could be investing it in education. Then finally, yes, let us have responsible tax relief. There was an alternative today. I voted and proposed other alternatives in the past. A tax relief based on reality, targeted at those who carry the heaviest burden, and that is middle-income families and lower-income families. When we look at the burden of the FICA tax, about more than half of American families pay more in Social Security taxes than they do income tax, they will get no relief under this proposal, even if it puts us massively in debt for the future. This was not a proud day for the United States House of Representatives.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, today is a big day on Capitol Hill. The President is sending a $1.6 trillion tax cut plan to Congress. A very big day. A big day for the White House, a big day for Congress. The only three problems that I can discern with the President's plan thus far, despite the huge size of it: it is not based on reality, it is not fair, and it is not affordable. Other than that, it is a pretty good idea. Now, the plan is based on an economic scenario that does not exist. The plan is based upon a rosy economic scenario. Even as the country is sliding into recession, and on the one hand, they use the excuse of a projected future tax cut, particularly favoring those at the top, as a rationale for rushing it through Congress, they say, the economy is actually going to grow at 2.4 percent this year, so we will have a surplus to spend, and more than 3 percent every year thereafter. Mr. Speaker, they are defying the reality of the current economy. Others are saying, in fact, that growth has slowed to near zero and, in fact, that we may even slide into negative growth. So first off, it is not based in the reality of our current economy or current economic assumptions. So we are spending money we might not have, or forgoing income that would drive us back into periods of deficits and add to the national debt. Secondly, it is not fair. It is very heavily slanted toward people at the top. The top 1 percent, those who earn over $320,000 per year and up, will average $46,500 in savings under this legislation. So if one earns over $320,000, one gets $46,000 back, on average. Now, if one is in the lower 40 percent of American families for income, they will get an average of $110. So what does that translate to? Well, the family that earns over $320,000 a year can go out and buy a nice new Yukon Denali XL with heated leather seats; not bad, nice ride, and the average American family can take and invest their $110 in a lube, oil change and minor tune-up for their 8-year-old family jalopy. That is not fair. That is not fair. Finally, it is not affordable. It is a lot like a very honest man, David Stockman, told us at the beginning of the Reagan administration. He said he knew we could not cut taxes, dramatically increase military spending, and balance the budget; that, in fact, it was a Trojan horse to get at all those social programs and to make Congress reduce funding for or eliminate those social programs, because they knew they could not defeat them frontally. The American people support Social Security and Medicare and more funding for education and help with our kids getting a higher education. They know they cannot take those things on frontally, so we are back to the Trojan horse scenario, locked in tax cuts projected out over 10 years with the huge tax cuts coming toward the end of the 10 years, projected on a rosy scenario that does not exist. Then, when we go into deficits or we are threatened with deficits, they say, oh, my God we have locked in the tax cuts and people have planned their estates and things around it, so we cannot change the rules now. We will just have to cut spending, cut Medicare, cut Social Security. We cannot afford those increases in education. Mr. Speaker, that is where this is really headed. People just need to know that when they support it. Now, it is not fair to criticize if one does not have an alternative, and I have an alternative which has been put together by the Progressive Caucus. Our alternative is fair, it is based on reality, and it is affordable, and it is very simple. Every American would share in the surplus, from the tiniest, teeniest baby to the oldest senior citizen in a nursing home, all would share and share alike, because all have played a role in building the prosperity of this Nation. The American people's dividend. This year, it would average about $300 per person, a family of four, $1,200, no matter what their income. So for that family of four who falls into that lower 40 percent who would only get $110 under the Bush plan, they would get $1,200. They could afford more than a lube and the oil change on the family jalopy and the minor tune-up. Of course it is a little disappointing to the family who earns over $320,000 a year. They would only get $1,200. One cannot buy a Yukon Denali for $1,200; but I think that they could probably finance one, and it would be a couple of months' payments on a 6-year payment plan. So it is fair. I hear so much from my colleagues on the other side of the aisle that we should go to a flat tax; that would be fair. Somehow, to extract money from the American people on a flat tax is fair, but they will say it is not fair to give it back in an equitable way. Mr. Speaker, my plan is fair, affordable, based in reality, not spending money we do not have. A better plan.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, I rise in strong opposition to the legislation. We again find ourselves debating replacing a rather arcane section of the tax code that allows corporations to avoid a portion of their tax bill by establishing largely paper entities in a filing cabinet in a tax haven like Barbados with the equally arcane tax provisions of H.R. 4986, the FSC Repeal and Extraterritorial Income Exclusion Act of 2000. And, once again, the legislation has been brought to the floor under suspension of the rules, which cuts off any ability to improve what is a truly dismal bill. Creating this new, expanded loophole to assist corporations in escaping their fair share of the tax burden in the U.S. makes a mockery of pleas by my colleagues to simplify the tax code and improve fairness. For nearly two decades, beginning with the Revenue Act of 1971 (P.L. 92-178), the U.S. provided tax incentives for exports. However, our trading partners complained that these incentives violated our commitments under the General Agreement on Tariffs and Trade (GATT). While not conceding the violation, in 1984, Congress scrapped the Domestic International Sales Corporation (DISC) provisions and created the Foreign Sales Corporation (FSC) provisions. The differences are highly technical and probably only understood by international tax bureaucrats. Under the FSC provision, corporations can exempt between 15 and 30 percent of their export income from taxation by routing a portion of their exports through a FSC. Our trading partners, specifically the European Union (EU), were not satisfied with the somewhat cosmetic changes made to the U.S. tax code. Going back on a verbal gentleman's agreement not to challenge our respective tax codes under global trading rules, the EU filed a complaint with the World Trade Organization (WTO), successor to GATT, essentially arguing the same thing that was argued about DISCs. Namely that export subsidies were illegal under global trading rules by conferring an unfair advantage on recipient companies. A secretive WTO tribunal ruled against the U.S. Dutifully, the U.S. appealed the decision. Earlier this year, the WTO appeals panel upheld the earlier decision and ordered the U.S. to repeal the FSC provision or risk substantial retaliatory measures. Specifically, the WTO appeals panel wrote, ``By entering into the WTO Agreement, each Member of the WTO has imposed on itself an obligation to comply with all terms of that Agreement. This is a ruling that the FSC measure does not comply with all those terms. The FSC measure creates a `subsidy' because it creates a `benefit' by means of a `financial contribution', in that government revenue is foregone that is `otherwise due.' This `subsidy' is a `prohibited export subsidy' under the SCM Agreement [Agreement on Subsidies and Countervailing Measures] because it is contingent on export performance. It is also an export subsidy that is inconsistent with the Agreement on Agriculture. Therefore, the FSC Measure is no consistent with the WTO obligations of the United States.'' In other words, it is unfair and illegal under global trade rules for the U.S. tax code to provide welfare for corporations by allowing them to escape taxes that would otherwise be due. At this point, one would expect that my colleagues who, on most occasions eloquently defend the need for ``rules based trade'' and ``free markets'', to adhere to the WTO directive and repeal FSC. Because I assumed my colleagues would want to be intellectually consistent, I introduced legislation shortly after the WTO ruling to repeal FSC. After all, precedent proved the U.S. was more than willing to bend to the will of the WTO. When the WTO ruled against a provision of the 1990 Clean Air Act, the Environmental Protection Agency gutted its clean air regulations in order to allow dirtier gasoline from Venezuela to be sold in the U.S. Similarly, when Mexico threatened a WTO enforcement action on a 1991 GATT case it had won that eviscerated the Dolphin Protection Act, the U.S. went along to get along. In fact, the Clinton Administration sent a letter to Mexican President Ernesto Zedillo declaring that weakening the standard by which tuna must be caught in ``dolphin-safe'' nets ``is a top priority for my administration and me personally.'' The WTO also ruled against the Endangered Species Act provisions that required U.S. and foreign shrimpers to equip their nets with inexpensive turtle excluder devices if they wanted to sell shrimp in the U.S. market. The goal was to protect endangered sea turtles. The Clinton Administration agreed to comply with the ruling. Given this record of acquiescing to the WTO, one could be forgiven for assuming the Clinton Administration and Congress would behave in a similar manner when losing a case on tax breaks for corporations. Of course, sea turtles and dolphins don't make massive campaign contributions, or any campaign contributions for that matter. But, the large corporations who would be impacted by the WTO decisions against FSCs do. Apparently not bothered by the hypocrisy, immediately after the ruling by the WTO appeals panel, the Clinton Administration, a few Members of Congress, and the business community openly declared the need to maintain the subsidy in some form and began meeting in secret to work out the details on how to circumvent the WTO ruling and maintain these valuable, multi-billion dollar tax incentives. Now, it is will-known that I am not a big fan of the WTO. It is an unaccountable, secretive, undemocratic bureaucracy that looks out solely for the interests of multinational corporations and investors at the expense of human rights, labor standards, national sovereignty, and the environment. But, by pointing out that export subsidies like FSCs are corporate welfare, however, the WTO has done U.S. taxpayers a favor. Unfortunately, this legislation before us today only does wealthy corporations a favor. I have several problems with H.R. 4986 besides the intellectual inconsistency. I will touch on each of these now. First, and perhaps most importantly, there is little or no economic rationale for export subsidies like FSCs or the provisions of H.R. 4986. In its April 1999 Maintaining Budgetary Discipline report, the Congressional Budget Office (CBO) noted ``Export subsidies, such as FSCs, reduce global economic welfare and may even reduce the welfare of the country granting the subsidy, even though domestic export-producing industries may benefit.'' Similarly, in August 1996, CBO wrote, ``Export subsidies do not increase the overall level of domestic investment and domestic employment . . . In the long run, export subsidies increase imports as much as exports. As a result, investment and employment in import- competing industries in the United States would decline about as much as they increased in the export industries.'' Need further evidence? The Congressional Research Service (CRS) has written ``Economic analysis suggests that FSC does increase exports, but likely triggers exchange rate adjustments that also result in an increase in U.S. imports; the long run impact on the trade balance is probably nil. Economic theory also suggests that FSC probably reduces aggregate U.S. economic welfare. Of course, protests will be heard from supporters of H.R. 4986 that it gets rid of the export requirement. In testimony before the Ways and Means Committee, Deputy Secretary Eizenstat said the Chairman's mark is ``not export-contingent.'' Of course, that claim is absurd. If a company sells products solely in the U.S., they don't qualify for the tax subsidy. That is, by definition, an export subsidy. Therefore, the criticisms of export subsidies previously mentioned would apply to this new legislation as well. President Nixon originally proposed export subsidies, which became the DISC and then FSC, because he was alarmed at the size of the U.S. trade deficit, which was $1.4 billion in 1971, a number that seems almost quaint by today's standards. As Paul Magnusson noted in the September 4, 2000, Business Week, FSC ``produced some hefty tax savings for big U.S. exporters, but it never did actually do much to narrow the trade deficit, which hit a record $339 billion last year.'' And which, I should add, has continued to set new records virtually every month this year. I can't understand why it makes sense to subsidize U.S. exporters to the tune of $5 billion or more when the economic impact is ``probably nil'' or worse. The economic rationale further deteriorates when one realizes, as the previous quotes suggest, that export subsidies discriminate against mom-and-pop stores who don't have the resources to export and against U.S. industries that must compete with imports. This means that export subsidies distort markets by pre-ordaining winners and losers. The winners? Large exporters and foreign consumers who get to enjoy lower priced U.S. products subsidized by U.S. taxpayers. The losers? Small businesses, U.S. taxpayers, and import-competing industries. I find it interesting while Treasury has spent a great deal of time figuring out how to combat corporate tax shelters that have no economic rationale, as discussed in a July 1999 report, that they would push this corporate welfare, which also has no economic rationale. So, who specifically benefits? The journal Tax Notes conducted a revealing study of FSCs in its August 14, 2000, edition. The article profiled the 250 companies that reported $1.2 billion in FSC tax savings in 1998. The top 20 percent of the companies in the sample claimed 87 percent of the benefits. The two largest FSC beneficiaries were the General Electric Company and Boeing, which saw their tax bills reduced by $750 million and $686 million, respectively from 1991-1998. What are some of the other top FSC corporate welfare queens? Motorola, Caterpillar, Allied-Signal, Cisco Systems, Monsanto, Archer Daniels Midland, Oracle, Raytheon, RJR Nabisco, International Paper, and ConAgra. The list reads like a who's who of extraordinarily profitable multinational corporations. Hardly companies that should need to feed from the taxpayer trough. Furthermore, American subsidiaries of European firms take advantage of U.S. taxpayers through export subsidies. British Petroleum, Unilever, BASF, Daimler Benz, Hoescht, and Rhone-Poulenc are all FSC beneficiaries. The fact that foreign companies can also claim export benefits pokes a large hole in the argument that these tax benefits are needed to ensure the competitiveness of U.S. businesses. Similarly, isn't it a bit odd that economists and U.S. policymakers like to lecture European nations about their high tax burdens, but now, suddenly their tax burden is too low and, therefore, U.S. companies need subsidies in order to compete? Let's be clear, this legislation is not about the competitiveness of large, wealthy, multinational corporations based in the United States. It is about wealthy campaign contributors wanting to keep and expand their $5 billion-plus tax subsidies and elected officials willing to do their bidding. Not only does H.R. 4986 allow these companies to continue receiving billions in tax breaks, but it actually expands them. This legislation will cost U.S. taxpayers another $300 million a year or more. It is also unfortunate that this legislation subsidizes a number of industries--such as defense contractors, tobacco companies, and pharmaceutical firms--that have no business receiving any more taxpayer hand-outs. Take the defense industry, for example. Under the current FSC regime, defense contractors can only claim 50 percent of the tax benefit available to other industries. The legislation before us today allows the defense industry to claim the full benefit available to others. Leaving aside the fact that U.S. taxpayers are already overly generous to defense contractors, which no doubt they are, expanding this corporate welfare will have no discernable impact on overseas sales. The Treasury Department noted in August 1999, ``We have seen no evidence that granting full FSC benefits would significantly affect the level of defense exports.'' In 1997, the CBO made a similar point, ``U.S. defense industries have significant advantages over their foreign competitors and thus should not need additional subsidies to attract sales.'' Even the Pentagon has acknowledged this fact by concluding in 1994, ``In a large number of cases, the U.S. is clearly the preferred provider, and there is little meaningful competition with suppliers from other countries. An increase in the level of support the U.S. government currently supplies is unlikely to shift the U.S. export market share outside a range of 53 to 59 percent of worldwide arms trade.'' As Ways and Means Committee Member, Representative Doggett, noted in his dissenting views on H.R. 4986, ``In 1999, without the bonanza provided by this bill, U.S. defense contractors sold almost $11.8 billion in weapons overseas--more than a third of the world's total and more than all European countries combined.'' The U.S. should stop the proliferation of weapons and war, not expand it as this bill intends. The pharmaceutical industry is another industry that does not need or deserve additional subsidies from U.S. taxpayers. The industry already receives substantial research and development tax credits as well as the benefits flowing from discoveries by government scientists. As Representative Stark noted in his dissenting views, drug companies lowered their effective tax rate by nearly 40 percent relative to other industries from 1990 to 1996 and were named the most profitable industry in 1999 by Fortune Magazine. The industry sells prescription drugs at far cheaper prices abroad than here in the U.S. For example, seniors in the U.S. pay twice as much for prescriptions as those in Canada or Mexico. It is an affront to U.S. taxpayers to force them to further subsidize an industry that is already gouging them at the pharmacy as this bill would do. In direct contradiction of various federal policies to combat tobacco related disease and death in the U.S., this legislation would force U.S. taxpayers to subsidize the spread of big tobacco's coffin nails to foreign countries. This violates the American taxpayers' sense of decency and respect. Their money should not be used to push a product onto foreign countries that kills one-third of the people who use it as intended. By placing H.R. 4986 on the suspension calendar, debate is prematurely cut off and amendments to reduce support for drug companies, the defense industry or tobacco companies can not be considered. But, I guess that is just par for the course for a process that has taken place in relative secrecy between a few Members of Congress, the Administration, and the industries that stand to benefit from this legislation. You may not hear this in the debate much, but it is important to point out that the EU has already put the U.S. on notice that H.R. 4986 does not satisfy its demands. According to the EU, H.R. 4986 still provides an export subsidy, maintains a requirement that a portion of a product contain U.S.-made components, and does not repeal FSCs by the October 1st deadline. Therefore, it is likely the EU will ask the WTO to rule on the legality of the U.S. reforms. Most independent analysts agree with the EU critique of H.R. 4986. So, it is reasonable to assume the WTO will again rule against the U.S. and allow the EU to impose retaliatory sanctions against U.S. products. According to some press accounts, the EU would be able to impose 100 percent tariffs on around $4 billion worth of U.S. goods. These would be the largest sanctions ever imposed in a trade dispute. In other words, this inadequate reform of export subsidies will open up the U.S. to retaliatory action by the EU, which will harm exports as much or more than any perceived benefit that would be provided by H.R. 4986. Of course, the exporters that will be hurt by retaliatory sanctions probably won't be the same businesses that will enjoy the tax windfall provided by this legislation. Mr. Speaker, ADM is not suffering. Cisco Systems is not suffering. Raytheon is not suffering. Miscroft is not struggling mightily to keep its head above water. But, the American people are. Schools are crumbling, 45 million Americans have no health insurance, individuals are working longer hours for less money with the predictable stress on families, million of seniors do not have access to affordable prescription drugs, and poverty remains stubbornly high, particularly among children. Rather than debating how to preserve billions in tax subsidies for some of our largest corporations, we should be figuring out how to address some of these issues. How many times over are we going to spend projected, and I stress projected, surpluses. If we want to pay down the national debt, provide prescription drugs, shore up Social Security and Medicare, and increase funding for education, Congress cannot keep showering wealthy corporations with unjustifiable tax subsidies. I will end with a quote from a newspaper I'm not normally inclined to agree with editorially, the Washington Times. In an editorial on September 5, 2000, the Washington Times wrote, ``The Ways and Means Committee boasts that support for its revised FSC bill was bipartisan and near unanimous. It remains a bipartisan and near unanimous blunder.'' I urge my colleagues to vote against H.R. 4986.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, this is the latest a Congress has met, absent a national emergency like World War II before an election. Now the work is not done. We do not yet have a fiscal year 2001 budget and the fiscal year began on October 1, which means that many essential government functions have yet to receive regular funding. In an effort to achieve that, furious negotiations took place over the weekend. In fact, at 1:20 in the morning, night, agreement was reached between the Republicans in the House and the Senate, and the Democrats in the House and the Senate, and the White House. There has been much talk on the other side of the aisle about the fact that the President was not in the room. They are right, the President was not in the room. They had 210 items in disagreement. This was grinding work for legislators and staff, but the President did something that the Republican leadership did not do. The President empowered and sent his head of office of management and budget and gave him the authority to negotiate and said I will stand behind you. Go get the best deal you can get. At 1:20 in the morning the people in the room decided they had the best deal they could get. Now, the next morning, the President stood behind his negotiator. The Republicans in the Senate stood behind their negotiator. The Democrats on the Senate stood behind their negotiator. The Democrats in the House stood behind their negotiator, but the whole agreement was blown up and Congress is still here because of one group, the Republican leadership. When their negotiator came in who they had thought, he thought they had, empowered to negotiate for them, they said you did what? You did what? You reached an agreement on workplace health and safety? Do you not know that the people who are paying for our elections, paying for us to keep the House of Representatives and win the Presidency object to that. And the phone has been ringing off the hook. They already heard about it. The National Association of Manufacturers called. The U.S. Chamber of Commerce called. By God we would not even want to have contingent, contingent workplace health and safety regulations, which is what the agreement was. Everybody says we do not know who the President is going to be, and what the Republicans negotiated was we will have new workplace health and safety regulations, but they will not go into effect until next June. Apparently, the Republican leadership who is touting they are leading in the polls for the House and for the Presidency does not even trust their candidate for President not to sign these reasonable workplace health and safety regulations come next June, because they blew up the negotiations. Since then they have pretended, by keeping us here, that we are negotiating. We are not negotiating. In fact, the Republican who last night, the leader who stood up to engage in the discourse with the Democrat side of the aisle, when he was asked where and when will the negotiators next meet, he said, we will get back to you on that. Well, guess what? They have not called. They have not called. The Senate left town in disgust, Democrats and Republicans alike. We are still here, and they are pretending that they are being reasonable in negotiating, because they are trying through a stealth agenda to hide what they are going to do if they control everything next year, and that is something people need to think about is what if they control everything. Workplace health and safety increases out the window. Deal with global warming, very serious problem, no way. They do not believe in it. How about the oil companies? The oil companies are gouging the heck out of the American people. I have introduced legislation here to deal with that problem. No, cannot deal with the oil companies. They are big contributors too. We heard earlier about a Medicare prescription drug benefit. Well, that was pretty inaccurate, because actually what the so-called bipartisan agreement which had about a dozen Democrats on it, Blue Dogs, that passed here was not on Medicare. It was to set up a new, very expensive, privatized system of pharmaceutical coverage for seniors that provided actually nothing. Because the head of the Health Insurance Industry of America said, well, you know, we are really not interested. None of my companies are interested in offering a pharmaceutical benefit only. Then the Republicans came up with a new plan, we will bribe you to do that. We will give subsidies to you. We will give you the subsidies. You get the subsidies, you take them, no matter what, if you say you will offer a plan, with no conditions on the plans they will offer, no conditions on deductibles, no conditions on who they would redline out and not cover, no conditions on patients' appeals or rights. They said that is not enough, some of those drugs are pretty expensive. They said well, we do not want to get in the face of the pharmaceutical industry, then they give subsidies to the pharmaceutical industry also. This is a farce.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, here we are 2 nights after Halloween, more than a month after the budget is due, engaged in some sort of bizarre charade. Let us not pretend to be working on the budget agreement. Just do not pretend anymore. Agreement was reached, last weekend, and the Senate Republicans stood behind their negotiators. The Senate Democrats stood behind their negotiators. The House Democrats stood behind their negotiators. The President stood behind his negotiators. But the Republican leaders, at the last second, pulled the plug after the phones rang off the hook from the National Association of Manufacturers and the U.S. Chamber of Commerce, who objected to any possibility that at some future date even a President Bush, if he gets elected, might not have the guts to kill workplace health and safety reforms. That is what is going on here, plain and simple. Let us not pretend. Do not pretend. The American people do not like lies.